<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
-----------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-10059
STERLING CHEMICALS HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0185186
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1200 SMITH STREET, SUITE 1900 (713) 650-3700
HOUSTON, TEXAS 77002-4312 (REGISTRANT'S TELEPHONE NUMBER,
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
COMMISSION FILE NUMBER 333-04343-01
STERLING CHEMICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0502785
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SMITH STREET, SUITE 1900 (713) 650-3700
HOUSTON, TEXAS 77002-4312 (REGISTRANT'S TELEPHONE NUMBER,
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Sterling Chemicals, Inc. meets the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q, and is therefore filing this form with
the reduced disclosure format provided for by General Instruction H(2) of Form
10-Q.
-----------------------
Indicate by check mark whether each of the registrants (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of July 30, 1999, Sterling Chemicals Holdings, Inc. had 12,752,907
shares of common stock outstanding. As of July 30, 1999, all outstanding equity
securities of Sterling Chemicals, Inc. were owned by Sterling Chemicals
Holdings, Inc.
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<PAGE> 2
IMPORTANT INFORMATION REGARDING THIS FORM 10-Q
Readers should consider the following information as they review this Form 10-Q.
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The forward-looking statements
include all statements contained in this Form 10-Q (other than statements of
historical facts) regarding the cyclicality of the industries in which the
Company (as defined herein) is engaged, current and future industry conditions,
the cost of remediating Year 2000 issues and the effect of any unremediated or
undiscovered Year 2000 issues on the Company's operations, and the potential
effects of such matters on the Company's business strategy, results of
operations, and financial position, including without limitation the statements
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations". Although the Company believes that the expectations reflected in
the forward-looking statements contained herein are reasonable, no assurance can
be given that such expectations will prove to have been correct. Certain
important factors that could cause actual results to differ materially from
expectations ("Cautionary Statements") are stated herein in conjunction with the
forward-looking statements or are included elsewhere in this Form 10-Q or
Holdings' and Chemicals' combined Annual Report on Form 10-K for the fiscal year
ended September 30, 1998 (the "Annual Report"). See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Certain Known
Events, Trends, Uncertainties, and Risk Factors" contained in the Annual Report.
All subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements.
SUBSEQUENT EVENTS, ETC.
All statements contained in this Form 10-Q, including the forward-looking
statements discussed above, are made as of August 12, 1999, except for those
statements that are expressly made as of another date. The Company disclaims any
responsibility for the correctness of any information contained in this Form
10-Q to the extent such information is affected or impacted by events,
circumstances, or developments occurring after August 12, 1999, or by the
passage of time after such date and, except as required by applicable securities
laws, the Company does not intend to update such information.
2
<PAGE> 3
This combined Form 10-Q is separately filed by Holdings and Chemicals (each
as defined herein). Information contained herein relating to Chemicals is filed
by Holdings and separately by Chemicals on its own behalf. Certain capitalized
terms used in this Form 10-Q are defined in the Notes to Consolidated Financial
Statements included herein.
PART I.--FINANCIAL INFORMATION
ITEM 1.--FINANCIAL STATEMENTS
3
<PAGE> 4
STERLING CHEMICALS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ..................................................... $ 6,327 $ 11,168
Accounts receivable ........................................................... 117,678 114,571
Inventories ................................................................... 78,915 73,225
Prepaid expenses .............................................................. 11,202 15,571
Deferred tax asset ............................................................ 8,817 5,140
------------ ------------
Total current assets ........................................................ 222,939 219,675
Property, plant and equipment, net ............................................... 432,827 450,315
Deferred tax asset ............................................................... 7,370 --
Other assets ..................................................................... 94,597 95,966
------------ ------------
Total assets ................................................................ $ 757,733 $ 765,956
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS)
Current liabilities:
Accounts payable .............................................................. $ 64,912 $ 46,983
Accrued liabilities ........................................................... 64,297 71,873
Current portion of long-term debt ............................................. 2,633 8,909
------------ ------------
Total current liabilities ................................................... 131,842 127,765
Long-term debt ................................................................... 923,613 873,616
Deferred tax liability ........................................................... -- 11,123
Deferred credits and other liabilities ........................................... 78,095 80,289
Common stock held by ESOP ........................................................ 2,946 5,938
Less: unearned compensation ..................................................... (595) (2,845)
Redeemable preferred stock ....................................................... 20,225 18,249
Commitments and contingencies (Note 4) ........................................... -- --
Stockholders' equity (deficiency in assets):
Common stock, $.01 par value, 20,000,000 shares authorized, 12,305,000 shares
issued and 12,098,000 outstanding at June 30, 1999, and 12,273,000
shares issued and 12,073,000 outstanding at September 30, 1998 .............. 123 123
Additional paid-in capital .................................................... (542,712) (542,701)
Retained earnings ............................................................. 174,892 229,590
Pension adjustment ............................................................ (121) (121)
Accumulated translation adjustment ............................................ (28,052) (32,559)
Deferred compensation ......................................................... (70) (111)
------------ ------------
(395,940) (345,779)
Treasury stock, at cost, 207,000 and 200,000 shares at June 30, 1999 and
September 30, 1998, respectively ............................................ (2,453) (2,400)
------------ ------------
Total stockholders' equity (deficiency in assets) ......................... (398,393) (348,179)
------------ ------------
Total liabilities and stockholders' equity (deficiency in assets) ....... $ 757,733 $ 765,956
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE> 5
STERLING CHEMICALS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, NINE MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues ..................................................... $ 181,789 $ 205,414 $ 506,190 $ 640,154
Cost of goods sold ........................................... 169,591 182,886 472,963 586,968
------------ ------------ ------------ ------------
Gross profit ................................................. 12,198 22,528 33,227 53,186
Selling, general and administrative expenses ................. 9,137 10,641 27,594 28,094
Other expense ................................................ 1,733 3,022 10,809 5,962
Interest and debt related expenses, net of interest income ... 24,760 25,748 74,711 76,021
------------ ------------ ------------ ------------
Loss before income taxes ..................................... (23,432) (16,883) (79,887) (56,891)
Benefit for income taxes ..................................... (7,017) (3,765) (25,552) (17,340)
------------ ------------ ------------ ------------
Net loss ..................................................... (16,415) (13,118) (54,335) (39,551)
Preferred stock dividends .................................... 672 607 1,975 1,826
------------ ------------ ------------ ------------
Net loss attributable to common stockholders ................. $ (17,087) $ (13,725) $ (56,310) $ (41,377)
============ ============ ============ ============
Net loss per common share (Note 5) ........................... $ (1.37) $ (1.13) $ (4.43) $ (3.40)
============ ============ ============ ============
Weighted average shares outstanding .......................... 12,516 12,185 12,469 12,007
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
5
<PAGE> 6
STERLING CHEMICALS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................. $ (54,335) $ (39,551)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization .......................... 42,375 42,205
Interest amortization .................................. 1,781 2,830
Deferred tax benefit ................................... (19,198) (14,557)
Discount notes amortization ............................ 13,738 12,898
Early retirement programs and benefit changes .......... 6,782 --
Other .................................................. 1,089 1,890
Change in assets/liabilities:
Accounts receivable .................................... (2,604) 36,246
Inventories ............................................ (5,195) 9,810
Prepaid expenses ....................................... (4,896) (1,672)
Other assets ........................................... (12,553) 1,055
Accounts payable ....................................... 31,747 (19,247)
Accrued liabilities .................................... (16,616) (2,221)
Other liabilities ...................................... 6,366 7,836
------------ ------------
Net cash provided (used in) by operating activities ............ (11,519) 37,522
------------ ------------
Cash flows from investing activities:
Capital expenditures ...................................... (17,836) (18,861)
------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt .............................. 220,769 48,562
Repayment of long-term debt ............................... (196,412) (62,448)
Other ..................................................... (58) 104
------------ ------------
Net cash provided (used in) by financing activities ............ 24,299 (13,782)
------------ ------------
Effect of United States /Canadian exchange rate on cash ........ 215 (390)
------------ ------------
Net increase (decrease) in cash and cash equivalents ........... (4,841) 4,489
Cash and cash equivalents - beginning of year .................. 11,168 7,958
------------ ------------
Cash and cash equivalents - end of period ...................... $ 6,327 $ 12,447
============ ============
Supplement disclosures of cash flow information:
Interest paid, net of interest income received ............ $ (56,534) $ (58,534)
Income tax refunds received ............................... 5,042 6,833
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
6
<PAGE> 7
STERLING CHEMICALS, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ......................................... $ 6,307 $ 11,159
Accounts receivable ............................................... 117,701 116,398
Inventories ....................................................... 78,915 73,225
Prepaid expenses .................................................. 9,031 13,632
Deferred tax asset ................................................ 8,817 5,140
------------ ------------
Total current assets ............................................ 220,771 219,554
Property, plant and equipment, net ................................... 432,827 450,315
Other assets ......................................................... 91,635 92,634
------------ ------------
Total assets .................................................... $ 745,233 $ 762,503
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY IN ASSETS)
Current liabilities:
Accounts payable .................................................. $ 63,008 $ 46,764
Accrued liabilities ............................................... 64,051 71,884
Current portion of long-term debt ................................. 2,633 8,909
------------ ------------
Total current liabilities ......................................... 129,692 127,557
Long-term debt ....................................................... 781,180 745,709
Deferred tax liability ............................................... 9,431 23,301
Deferred credits and other liabilities ............................... 81,095 83,288
Common stock held by ESOP ............................................ 2,946 5,938
Less: unearned compensation ......................................... (595) (2,845)
Commitments and contingencies (Note 4) ............................... -- --
Stockholder's equity (deficiency in assets):
Common stock, $.01 par value ...................................... -- --
Additional paid-in capital ........................................ (140,013) (139,786)
Accumulated deficit ............................................... (90,260) (47,868)
Pension adjustment ................................................ (121) (121)
Accumulated translation adjustment ................................ (28,052) (32,559)
Deferred compensation ............................................. (70) (111)
------------ ------------
Total stockholder's equity (deficiency in assets) ................. (258,516) (220,445)
------------ ------------
Total liabilities and stockholder's equity (deficiency in assets) . $ 745,233 $ 762,503
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
7
<PAGE> 8
STERLING CHEMICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, NINE MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues .................................................... $ 181,789 $ 205,414 $ 506,190 $ 640,154
Cost of goods sold .......................................... 169,591 182,886 472,963 586,968
----------- ----------- ----------- -----------
Gross profit ................................................ 12,198 22,528 33,227 53,186
Selling, general and administrative expenses ................ 9,034 10,393 27,235 27,066
Other expense ............................................... 1,733 3,022 10,809 5,962
Interest and debt related expenses, net of interest income .. 19,640 21,188 59,881 62,867
----------- ----------- ----------- -----------
Loss before income taxes .................................... (18,209) (12,075) (64,698) (42,709)
Benefit for income taxes .................................... (5,814) (3,027) (20,694) (13,219)
----------- ----------- ----------- -----------
Net loss .................................................... $ (12,395) $ (9,048) $ (44,004) $ (29,490)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
8
<PAGE> 9
STERLING CHEMICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ........................................... $ (44,004) $ (29,490)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization ................... 42,375 42,205
Debt fee amortization ........................... 1,461 2,362
Deferred tax benefit ............................ (19,198) (10,451)
Early retirement programs and benefit changes ... 6,782 --
Other ........................................... 307 1,890
Change in assets/liabilities:
Accounts receivable ............................. 188 36,208
Inventories ..................................... (5,195) 9,810
Prepaid expenses ................................ (4,662) (1,658)
Other assets .................................... (7,928) 1,017
Accounts payable ................................ 28,612 (20,182)
Accrued liabilities ............................. (16,616) (2,221)
Other liabilities ............................... 6,348 8,030
----------- -----------
Net cash provided by operating activities ............... (11,530) 37,520
----------- -----------
Cash flows from investing activities:
Capital expenditures ................................. (17,836) (18,861)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt ......................... 220,769 48,562
Repayment of long-term debt .......................... (196,412) (62,448)
Other ................................................ (58) 104
----------- -----------
Net cash provided by (used in) financing activities .... 24,299 (13,782)
----------- -----------
Effect of United States /Canadian exchange rate on cash . 215 (390)
----------- -----------
Net increase (decrease) in cash and cash equivalents .... (4,852) 4,487
Cash and cash equivalents - beginning of year ........... 11,159 7,958
----------- -----------
Cash and cash equivalents - end of period ............... $ 6,307 $ 12,445
=========== ===========
Supplement disclosures of cash flow information:
Interest paid, net of interest income received ....... $ (56,545) $ (58,534)
Income tax refunds received .......................... 5,042 6,833
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
9
<PAGE> 10
STERLING CHEMICALS HOLDINGS, INC.
STERLING CHEMICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments necessary to present fairly the
consolidated financial position of Sterling Chemicals Holdings, Inc.
("Holdings") and its subsidiaries (Holdings and its subsidiaries collectively,
the "Company") and Sterling Chemicals, Inc. and its subsidiaries (Sterling
Chemicals, Inc. and its subsidiaries collectively, "Chemicals") as of June 30,
1999, and their consolidated results of operations and cash flows for the
applicable three month and nine month periods ended June 30, 1999 and 1998. All
such adjustments are of a normal and recurring nature. The results of operations
for the periods presented are not necessarily indicative of the results to be
expected for the full year. The accompanying unaudited consolidated financial
statements should be, and are assumed to have been, read in conjunction with the
consolidated financial statements and notes included in Holdings' and Chemicals'
combined Annual Report on Form 10-K for the fiscal year ended September 30, 1998
(the "Annual Report"). The accompanying consolidated balance sheets as of
September 30, 1998, have been derived from the audited consolidated balance
sheets as of September 30, 1998, included in the Annual Report. The accompanying
consolidated financial statements as of and for the three month and nine month
periods ended June 30, 1999, have been reviewed by Deloitte & Touche LLP, the
Company's independent public accountants, whose reports are included herein.
Certain amounts reported in the financial statements for the prior periods
have been reclassified to conform with the current financial statement
presentation with no effect on net loss or stockholders' equity (deficiency in
assets).
2. INVENTORIES
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
----------- -----------
<S> <C> <C>
Inventories consisted of the following (in thousands):
Finished products ...................................... $ 46,641 $ 42,436
Raw materials .......................................... 14,753 8,089
Inventories under exchange agreements .................. 1,830 3,031
Stores and supplies .................................... 15,691 19,669
----------- -----------
$ 78,915 $ 73,225
=========== ===========
</TABLE>
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
----------- -----------
<S> <C> <C>
Long-term debt consisted of the following (in thousands):
Revolving credit facility ................................. $ 36,450 $ --
Term loans ................................................ 273,000 274,000
Saskatoon term loans ...................................... 44,764 49,552
ESOP term loan ............................................ 2,031 3,250
11-1/4% Notes ............................................. 152,568 152,816
11-3/4% Notes ............................................. 275,000 275,000
----------- -----------
Total Chemicals' debt outstanding .................... 783,813 754,618
13-1/2% Notes ............................................. 142,433 127,907
----------- -----------
Total Holdings' debt outstanding .................. 926,246 882,525
Less:
Current maturities ................................... (2,633) (8,909)
----------- -----------
Total long-term debt ...................................... $ 923,613 $ 873,616
=========== ===========
</TABLE>
10
<PAGE> 11
On July 23, 1999, Chemicals completed a private offering (the "12-3/8%
Notes Offering") of $295,000,000 of its 12-3/8% Senior Secured Notes due 2006
(the "12-3/8% Notes"). The 12-3/8% Notes are senior secured obligations of
Chemicals and rank equally in right of payment with all other existing and
future senior indebtedness of Chemicals and senior in right of payment to all
existing and future subordinated indebtedness of Chemicals. The 12-3/8% Notes
are guaranteed by all of Chemicals' existing direct and indirect U.S.
subsidiaries (other than Sterling Chemicals Acquisitions, Inc.) on a joint and
several basis. Each subsidiary's guarantee ranks equally in right of payment
with all of such subsidiary's existing and future senior indebtedness and senior
in right of payment to all existing and future subordinated indebtedness of such
subsidiary. However, the 12-3/8% Notes, and each subsidiary's guarantee, is
subordinated to the extent of the collateral securing Chemicals' new secured
revolving credit facilities described below. The 12-3/8% Notes and the
subsidiary guarantees are secured by (i) a second priority lien on all of
Chemicals' U.S. chemical production facilities and related assets, (ii) a second
priority pledge of all of the capital stock of each subsidiary guarantor, and
(iii) a first priority pledge of 65% of the stock of certain of the Company's
subsidiaries incorporated outside of the United States.
In addition, on July 23, 1999, Chemicals established two new secured
revolving credit facilities providing for up to $155,000,000 in revolving credit
loans (the "New Revolvers") under a single Revolving Credit Agreement (the "New
Credit Agreement"). Under the New Credit Agreement, Chemicals and each of its
direct and indirect U.S. subsidiaries (other than Sterling Chemicals
Acquisitions, Inc.) are co-borrowers and are jointly and severally liable for
any indebtedness thereunder. The New Revolvers consist of (i) a $70,000,000
revolving credit facility (the "Fixed Assets Revolver") secured by a first
priority lien on all of Chemicals' U.S. chemical production facilities and
related assets, all of the capital stock of Chemicals and all of the capital
stock of each co-borrower and a second priority lien on all accounts receivable,
inventory and other specified assets of Chemicals and each co-borrower, and (ii)
an $85,000,000 revolving credit facility (the "Current Assets Revolver") secured
by a first priority lien on all accounts receivable, inventory and other
specified assets of Chemicals and each co-borrower.
Funding under the 12-3/8% Notes Offering and the New Revolvers occurred on
July 23, 1999. The proceeds of the 12-3/8% Notes Offering and the initial
borrowings under the New Revolvers were used to completely repay all outstanding
indebtedness under Chemicals existing senior credit facility. Accordingly,
amounts classified as current under the terms of the existing senior credit
facility have been reclassified as long-term under the terms of the 12-3/8%
Notes and the New Revolvers.
Borrowings under the Fixed Assets Revolver bear interest, at Chemicals'
option, at an annual rate of either the "LIBOR Rate" (as defined in the New
Credit Agreement) plus 3.75% or the Alternate Base Rate plus 2.25%. Borrowings
under the Current Assets Revolver bear interest, at Chemicals' option, at an
annual rate of either the LIBOR Rate plus 3.00% or the Alternate Base Rate plus
1.50%. The "Alternate Base Rate" is equal to the greater of the Base Rate as
announced from time to time by The Chase Manhattan Bank in New York, New York or
the "Federal Funds Effective Rate" plus 1/2% (as such terms are defined in the
New Credit Agreement.). The New Credit Agreement also requires Chemicals and the
co-borrowers to pay an aggregate commitment fee ranging from 0.75% to 1.25% on
the unused portion of the commitment for the Fixed Assets Revolver, depending on
the amount drawn, and an aggregate commitment fee of 0.5% on the unused portion
of the commitment for the Current Assets Revolver. Available credit under the
Current Assets Revolver is subject to a monthly borrowing base consisting of 85%
of eligible accounts receivable and 65% of eligible inventory with an inventory
cap of $42,500,000. In addition, the borrowing base for the Current Assets
Revolver must exceed outstanding borrowings thereunder by $12,000,000 at all
times.
The Fixed Assets Revolver matures in five years, with quarterly commitment
reductions totalling 30% of the total commitment in year four and 70% in year
five. The Current Assets Revolver matures in five years, with no scheduled
commitment reductions prior to that time. However, the commitments for each of
the Fixed Assets Revolver and the Current Assets Revolvers will be permanently
reduced to the extent required under the New Credit Agreement upon prepayments
made out of specific sources of funds, including asset sales and certain equity
issuances by Holdings.
The indenture governing the 12-3/8% Notes (the "Indenture") and the New
Credit Agreement contain numerous covenants, including, but not limited to,
restrictions on the ability of Chemicals and certain of its subsidiaries to
incur indebtedness, pay dividends, create liens, sell assets, engage in mergers
and acquisitions and refinance existing indebtedness. In addition, the Indenture
and the New Credit Agreement specify various circumstances that will constitute,
upon occurrence and subject in certain cases to notice and grace periods, an
event of default thereunder. However, neither the Indenture nor the New Credit
Agreement requires the Company to satisfy any financial ratios or maintenance
tests.
The Indenture, the indenture governing the 11-1/4% Notes, the indenture
governing the 11-3/4% Notes, and the New Credit Agreement contain provisions
which restrict the payment of advances, loans and dividends from Chemicals to
Holdings. The most restrictive of the covenants limits such payments during
fiscal 1999 to approximately $2.0 million, plus any amounts due Holdings from
Chemicals under the intercompany tax sharing agreement.
11
<PAGE> 12
4. COMMITMENTS AND CONTINGENCIES
Product Contracts
The Company has certain long-term agreements that provide for the
dedication of 100% of the Company's production of acetic acid, plasticizers,
tertiary butylamine, and sodium cyanide, each to one customer. The Company also
dedicates a significant portion of its acrylonitrile, methanol, and styrene
production under long-term arrangements. Some of these agreements provide for
cost recovery plus an agreed profit margin based upon market prices.
Environmental Regulations
The Company's operations involve the handling, production, transportation,
treatment, and disposal of materials that are classified as hazardous or toxic
waste and that are extensively regulated by environmental and health and safety
laws, regulations, and permit requirements. Environmental permits required for
the Company's operations are subject to periodic renewal and can be revoked or
modified for cause or when new or revised environmental requirements are
implemented. Changing and increasingly strict environmental requirements can
affect the manufacturing, handling, processing, distribution, and use of the
Company's chemical products and the raw materials used to produce such products
and, if so, the Company's business and operations may be materially and
adversely affected. In addition, changes in environmental requirements can cause
the Company to incur substantial costs in upgrading or redesigning its
facilities and processes, including waste treatment, storage, disposal, and
other waste handling practices and equipment.
While the Company believes that its business operations and facilities
generally are operated in compliance in all material respects with all
applicable environmental and health and safety requirements, there can be no
assurance that past practices or future operations will not result in material
claims or regulatory action, require material environmental expenditures, or
result in exposure or injury claims by employees, contractors and their
employees or the public. Some risk of environmental costs and liabilities is
inherent in the operations and products of the Company, as it is with other
companies engaged in similar businesses. In addition, a catastrophic event at
any of the Company's facilities could result in liabilities to the Company
substantially in excess of its insurance coverages.
Legal Proceedings
Ammonia Release. A description of the ammonia release lawsuits is found
under "Legal Proceedings" in Note 7 of the "Notes to Consolidated Financial
Statements" of the Annual Report and is incorporated herein by reference. As
discussed therein, the Company continues to vigorously defend against the claims
of the approximately 100 remaining plaintiffs. The Company has settled the
claims of a majority of the original plaintiffs and is engaged in ongoing
settlement discussions with the remaining plaintiffs. The Company believes that
all or substantially all of its future out-of-pocket costs and expenses
(including settlement payments and judgements) relating to these lawsuits will
be covered by the Company's liability insurance policies.
Nickel Carbonyl Release. A description of the nickel carbonyl lawsuit is
found under "Legal Proceedings" in Note 7 of the "Notes to Consolidated
Financial Statements" of the Annual Report and is incorporated herein by
reference. As discussed therein, a total of eighteen contractor employees
allegedly exposed to nickel carbonyl have filed a lawsuit against Chemicals
seeking unspecified damages for personal injuries. A majority of these claims
have been settled. Additional claims and litigation against Chemicals relating
to this incident may ensue. The Company believes that all or substantially all
of its future out-of-pocket costs and expenses (including settlement payments
and judgements) relating to these lawsuits will be covered by the Company's
liability insurance policies and/or indemnification from third parties.
Ethylbenzene Release. A description of this release is found under "Legal
Proceedings" in Note 7 of the "Notes to Consolidated Financial Statements" of
the Annual Report and is incorporated herein by reference. There is no lawsuit
pending against the Company based on this release, but the Company has received,
and in some instances resolved, claims from individuals for alleged damage from
this incident. The Company believes that its liability insurance coverage is
sufficient to cover all out-of-pocket costs and expenses stemming from this
incident in excess of its $1 million deductible.
Other Lawsuits. The Company is subject to various other claims and legal
actions that arise in the ordinary course of its business.
12
<PAGE> 13
Litigation Contingency
The Company has made estimates of the reasonably possible range of
liability with regard to its outstanding litigation for which it may incur any
liability. These estimates are based on the Company's judgments using currently
available information as well as consultation with the Company's insurance
carriers and outside legal counsel. A number of the claims in these litigation
matters are covered by the Company's insurance policies or by contractual
indemnification obligations of third parties to the benefit of the Company. The
Company, therefore, has also made estimates of its probable recoveries under
insurance policies or from third-party indemnitors based on its understanding of
its insurance policies and indemnification arrangements, discussions with its
insurers and indemnitors, and consultation with outside legal counsel, in
addition to the Company's judgments. Based on the foregoing, as of June 30,
1999, the Company has accrued approximately $9.9 million as its estimate of its
aggregate contingent liability for these matters and has also recorded aggregate
receivables from its insurers and third-party indemnitors of approximately $8.8
million. At June 30, 1999, management estimates that the aggregate reasonably
possible range of loss for all litigation combined, in addition to the amount
accrued, is between zero and $12 million. The Company believes that this
additional reasonably possible loss would be substantially covered by insurance
or indemnification.
While the Company has based its estimates on its evaluation of available
information and the other matters described above, much of the litigation
remains in the discovery stage and it is impossible to predict with certainty
the ultimate outcome of such litigation. The Company will adjust its estimates
as necessary as additional information is developed and evaluated. However, the
Company believes that the final resolution of these contingencies will not have
a material adverse impact on the financial position, results of operations, or
cash flows of the Company.
The timing of probable insurance and indemnity recoveries and payment of
liabilities, if any, are not expected to have a material adverse effect on the
financial position, results of operations, or cash flows of the Company.
5. LOSS PER SHARE CALCULATION
For purposes of computing net loss per common share, net loss has been
reduced by an amount equal to the fair market value of Released Shares (as
hereinafter defined) at the end of the period minus the sum of the amount
previously recognized as compensation expense with respect to Released Shares
and the amount of depreciation/appreciation in value of Released Shares in prior
periods. This reduction results from the Company being required, under certain
circumstances, to purchase for cash common stock distributed to participants by
Chemicals' employee stock ownership plan (the "ESOP"). "Released Shares" are
shares held by the ESOP but allocated to employees. The weighted average number
of outstanding shares and computation of the net loss per common share is as
follows (in thousands, except net loss per common share):
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, NINE MONTHS ENDED JUNE 30,
--------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss attributable to common stockholders ..... $ (17,087) $ (13,725) $ (56,310) $ (41,377)
Plus depreciation in value of Released Shares .... -- -- 1,048 505
----------- ----------- ----------- -----------
Net loss for purpose of computing loss per share . $ (17,087) $ (13,725) $ (55,262) $ (40,872)
=========== =========== =========== ===========
Net loss per common share ........................ $ (1.37) $ (1.13) $ (4.43) $ (3.40)
=========== =========== =========== ===========
Weighted average shares outstanding .............. 12,516 12,185 12,469 12,007
=========== =========== =========== ===========
</TABLE>
6. CAPITAL STOCK
In December 1998, the Company entered into separate Standby Purchase
Agreements (collectively, the "Standby Purchase Agreements") with each of Gordon
A. Cain, William A. McMinn, James Crane, Frank P. Diassi, Frank J. Hevrdejs and
Koch Capital Services, Inc. (collectively, the "Standby Purchasers"). Pursuant
to the terms of the Standby Purchase Agreements, the Standby Purchasers
committed to purchase up to 2.5 million shares of the common stock, par value
$0.01 per share, of Holdings ("Common Stock"), at a price of $6.00 per share,
if, as, and when requested by Holdings at any time or from time to time prior to
December 15, 2001. Under each of the Standby Purchase Agreements, Holdings may
only require the Standby Purchasers to purchase such shares if it believes that
the purchase price paid by the Standby Purchasers for such shares is necessary
to maintain, reestablish, or enhance the Company's borrowing ability under its
revolving credit facilities or to satisfy any requirement
13
<PAGE> 14
thereunder to raise additional equity. In order to induce the Standby Purchasers
to enter into the Standby Purchase Agreements, Holdings issued to them warrants
to purchase an aggregate of 300,000 shares of Common Stock at an exercise price
of $6.00 per share. In addition, under the terms of the Standby Purchase
Agreements, Holdings agreed to issue to the Standby Purchasers additional
warrants to purchase up to 300,000 additional shares of Common Stock if, as, and
when they purchase shares of Common Stock under the Standby Purchase Agreements.
Any shares of Common Stock purchased under the Standby Purchase Agreements, any
warrants issued to the Standy Purchasers pursuant to the Standby Purchase
Agreements and any shares of Common Stock purchased pursuant to such warrants
will be subject to the terms of the Third Amended and Restated Voting Agreement
dated as of February 1, 1999, the Sterling Chemicals Holdings, Inc. Stockholders
Agreement dated effective as of August 21, 1996, as amended, the Tag-Along
Agreement dated as of August 21, 1996, and the Registration Rights Agreement
dated as of August 21, 1996.
7. PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS
The Company recorded a net $6.8 million charge, included in Other Expense,
increasing its pension liability and other post-retirement benefits liability in
the second quarter of fiscal 1999, as a result of an early retirement program
for employees at the Texas City, Texas plant and certain benefit changes for all
U.S. employees. The early retirement program resulted in curtailment expense for
the pension plan and special termination benefits expenses for both the pension
and the other post-retirement benefits plans, partially offset by the
curtailment gain from the reduction of post-retirement life insurance benefits
for currently active U.S.
employees.
8. NEW ACCOUNTING STANDARDS
As of October 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS
No. 130 establishes standards for the reporting and displaying of comprehensive
net income and its components. The components of comprehensive net loss, net of
tax, are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss attributable to common stockholders . $ (17,087) $ (13,725) $ (56,310) $ (41,377)
Depreciation in value of Released Shares ..... -- -- 1,048 505
Change in accumulated translation adjustment . 3,007 (5,143) 4,507 (9,371)
----------- ----------- ----------- -----------
Comprehensive net loss ....................... $ (14,080) $ (18,868) $ (50,755) $ (50,243)
=========== =========== =========== ===========
</TABLE>
SFAS No. 131, "Disclosure About Segments of an Enterprise and Related
Information", establishes standards for the way that public business enterprises
report information about operating segments in interim and annual financial
statements. SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits", establishes revisions to employers' disclosures about
pension and other post retirement benefit plans. The Company adopted these
statements as of October 1, 1998, and the disclosures required thereby will be
included in Holdings' and Chemicals' combined Annual Report on Form 10-K for the
fiscal year ending September 30, 1999.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. The Company is evaluating the disclosures
that will be required when this statement is adopted in the first quarter of
fiscal 2001.
14
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Sterling Chemicals Holdings, Inc.
We have reviewed the accompanying consolidated balance sheet of Sterling
Chemicals Holdings, Inc. and subsidiaries (the "Company") as of June 30, 1999,
and the related consolidated statements of operations and cash flows for the
three month and nine month periods ended June 30, 1999 and 1998. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of September 30,
1998, and the related consolidated statements of operations, stockholders'
equity (deficiency in assets), and cash flows for the year then ended (not
presented herein); and in our report dated December 4, 1998 (December 17, 1998
as to Notes 4, 11, and 12), we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying consolidated balance sheet as of September 30, 1998 is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.
DELOITTE & TOUCHE LLP
Houston, Texas
August 10, 1999
15
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholder of Sterling Chemicals, Inc.
We have reviewed the accompanying consolidated balance sheet of Sterling
Chemicals, Inc. and subsidiaries ("Chemicals") as of June 30, 1999, and the
related consolidated statements of operations and cash flows for the three month
and nine month periods ended June 30, 1999 and 1998. These financial statements
are the responsibility of Chemicals' management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Chemicals as of September 30, 1998,
and the related consolidated statement of operations, stockholder's equity
(deficiency in assets), and cash flows for the year then ended (not presented
herein); and in our report dated December 4, 1998 (December 17, 1998 as to Notes
4, 11, and 12), we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of September 30, 1998 is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.
DELOITTE & TOUCHE LLP
Houston, Texas
August 10, 1999
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain capitalized terms used but not defined in this Item 2 have the meanings
assigned to them in the Notes To Consolidated Financial Statements included in
this Form 10-Q or in the Notes to Consolidated Financial Statements included in
Holdings' and Chemicals' combined Annual Report on Form 10-K for the fiscal year
ended September 30, 1998.
OVERVIEW
Holdings is a holding company whose only material asset is its investment
in Chemicals. Holdings' only material liabilities are its obligation to repay
its outstanding 13-1/2% Senior Secured Discount Notes due 2008 (the "13-1/2%
Notes"), its obligation to redeem its outstanding shares of preferred stock, and
certain contingent obligations. Chemicals directly or indirectly owns
substantially all of the consolidated operating assets, and is obligated for
substantially all remaining liabilities, of the Company. Other than the
additional interest expense associated with the 13-1/2% Notes, results of
operations for the Company are essentially the same as those for Chemicals.
Accordingly, the discussion that follows is applicable to both entities, except
as specifically noted. A separate discussion of the results of operations for
Chemicals would not, in the opinion of the Company, provide any additional
meaningful information.
RECENT DEVELOPMENTS
In April 1999, the Company restarted its methanol facility, which had been
shut down since August 1998 for economic reasons. A significant disparity
between prices for domestic and foreign natural gas, one of the primary raw
materials for methanol, has put domestic methanol producers at a disadvantage
when compared to foreign competitors. One of the primary uses of methanol is in
the production of MTBE used in reformulated gasolines. The State of California
has recently announced that MTBE must be phased out of reformulated gasoline
used in that state by December 31, 2002. In addition, in July 1999, the
Environmental Protection Agency announced that it would ask Congress to develop
legislation aimed at phasing out MTBE from the existing reformulated gasoline
program, and to give states the authority to ban MTBE completely. These
developments are expected to negatively impact the Company's methanol business,
as well as the global methanol market. The Company continues to evaluate the
best use for its methanol facility.
The Company's styrene monomer unit at its facilities in Texas City, Texas
(the "Texas City Plant") was shutdown for approximately one month during the
second quarter of fiscal 1999 for scheduled maintenance. Although the styrene
unit was restarted on March 22, 1999, the restart of the ethylbenzene unit, an
important component of the styrene unit, was delayed until April 30, 1999 so
that unscheduled maintenance work could be performed on a process vessel. During
this delay, the Company purchased most of its ethylbenzene requirements on the
spot market. The unscheduled work on the process vessel and the resulting delay
in restarting the ethylbenzene unit negatively impacted pretax earnings for the
third quarter of fiscal 1999 by approximately $3 million.
In May 1999, the Company reduced its pulp chemicals business workforce by
27 employees. The Company recorded a pre-tax charge of $1.7 million, primarily
associated with this reduction, in the third quarter of fiscal 1999. The Company
expects this workforce reduction to generate annual savings of approximately
$1.5 million, although no assurances can be given as to the level of savings
that will actually be achieved.
On July 23, 1999, Chemicals completed a private offering (the "12-3/8%
Notes Offering") of $295,000,000 of its 12-3/8% Senior Secured Notes due 2006
(the "12-3/8% Notes"). In addition, on July 23, 1999, Chemicals established two
new secured revolving credit facilities providing for up to $155,000,000 in
revolving credit loans (the "New Revolvers") under a single Revolving Credit
Agreement (the "New Credit Agreement"). The proceeds of the 12-3/8% Notes
Offering and initial borrowings under the New Revolvers were used to fully repay
and terminate Chemicals' three outstanding term loans and existing revolving
credit facility.
RESULTS OF OPERATIONS
Revenues for the third quarter of fiscal 1999 were $182 million compared to
revenues of $205 million for the third quarter of fiscal 1998, a decrease of
11%. Revenues for the first nine months of fiscal 1999 were $506 million
compared to $640 million in the prior year period, a decrease of 20%. The
decrease in revenues for the third quarter of fiscal 1999 as compared to the
same period of fiscal 1998 was primarily due to lower acrylonitrile and acrylic
fibers sales volumes and lower acrylonitrile, methanol, acrylic fibers, and
sodium chlorate sales prices. The decrease in revenues for the first nine months
of fiscal 1999 as compared to
17
<PAGE> 18
the corresponding period of fiscal 1998 was primarily due to lower
acrylonitrile, styrene, methanol, and acrylic fibers sales volumes and prices
and lower sodium chlorate sales prices. A net loss attributable to common
stockholders of $17.1 million, or $1.37 per share, was recorded for the third
quarter of fiscal 1999, compared to a net loss attributable to common
stockholders of $13.7 million, or $1.13 per share, for the third quarter of
fiscal 1998. A net loss attributable to common stockholders of $56.3 million, or
$4.43 per share, was recorded for the first nine months of fiscal 1999, compared
to a net loss attributable to common stockholders of $41.4 million, or $3.40 per
share, for the same period of fiscal 1998. The increase in net loss for the
third quarter of fiscal 1999 as compared to the same period of fiscal 1998 was
primarily due to: (i) reduced acrylonitrile and sodium chlorate margins, (ii)
the negative impact of the aforementioned delay in the restart of the
ethylbenzene unit, (iii) weak markets in acrylic fibers, and (iv) costs
associated with the aforementioned pulp chemicals business workforce reduction.
The increase in the net loss for the first nine months of fiscal 1999 as
compared to the same period of fiscal 1998 was primarily due to: (i) reduced
acrylonitrile, methanol, and sodium chlorate margins, (ii) shutdowns in styrene
for routine maintenance and acetic acid for expansion in the second quarter of
fiscal 1999, (iii) the negative impact of the aforementioned delay in the
restart of the ethylbenzene unit, (iv) weak markets in acrylic fibers, and (v)
costs associated with workforce reduction programs and benefit changes, all
partially offset by a modest improvement in styrene margins.
Revenues, Cost of Goods Sold, and Gross Profit
Petrochemicals and Acrylic Fibers
For the third quarter of fiscal 1999, the Company's revenues from its
petrochemicals and acrylic fibers businesses decreased to $134 million, from
$155 million for the same period of fiscal 1998. For the first nine months of
fiscal 1999, the Company's revenues from its petrochemicals and acrylic fibers
businesses decreased to $366 million, from $486 million for the same period of
fiscal 1998. The 14% decrease in revenues for the third quarter of fiscal 1999,
as compared to the same period of fiscal 1998, was primarily due to reduced
acrylonitrile and acrylic fibers sales volumes and reduced acrylonitrile,
methanol, and acrylic fibers sales prices, partially offset by an increase in
styrene sales prices. The 25% decrease in revenues for the first nine months of
fiscal 1999 as compared to the same period of fiscal 1998, was primarily due to
reduced styrene, acrylonitrile, methanol, and acrylic fibers sales prices and
volumes. The economic conditions in Asia continued to negatively impact market
conditions in the fiscal 1999 periods, particularly for the Company's styrene,
acrylonitrile, and acrylic fibers products. The Company's petrochemicals and
acrylic fibers businesses recorded combined operating losses of $5 million and
$26 million for the third quarter and first nine months of fiscal 1999,
respectively, compared to an operating loss of $1 million and $10 million for
the third quarter and first nine months of fiscal 1998, respectively. The
increase in operating loss for the third quarter of fiscal 1999 was primarily
due to weaker operational performance in acrylonitrile, methanol, and acrylic
fibers and the negative impact of the aforementioned delay in the restart of the
ethylbenzene unit. The increase in operating loss for the first nine months of
fiscal 1999 was primarily due to weaker operational performance in
acrylonitrile, methanol, and acrylic fibers, and costs associated with workforce
reduction programs and benefit changes, partially offset by a modest improvement
in styrene margins.
Styrene revenues increased 2% to $62 million in the third quarter of fiscal
1999 and decreased 12% to $163 million for the first nine months of fiscal 1999,
compared to the same periods in fiscal 1998. Styrene sales prices increased 6%
and decreased 5% for the third quarter and first nine months of fiscal 1999,
respectively, compared to the prior fiscal year periods. Styrene sales volumes
decreased 5% and 8% for the third quarter and first nine months of fiscal 1999,
respectively, compared to the prior fiscal year periods. The decrease in sales
volumes for the first nine months of fiscal 1999 was primarily due to the
month-long scheduled maintenance shutdown of the styrene unit during the second
quarter of fiscal 1999. The major raw materials for styrene are benzene and
ethylene. The price of benzene increased 12% in the third quarter of fiscal 1999
and decreased 12% in the first nine months of fiscal 1999, compared to the same
periods of fiscal 1998. The price of ethylene increased 35% in the third quarter
of fiscal 1999 and decreased 14% in the first nine months of fiscal 1999,
compared to the same periods of fiscal 1998. Styrene margins decreased in the
third quarter of fiscal 1999, compared to the same period of fiscal 1998, as
higher sales prices and lower fixed manufacturing costs were insufficient to
cover the increased raw materials and energy costs. Styrene margins increased in
the first nine months of fiscal 1999, compared to the same period of fiscal
1998, as lower raw materials costs and lower fixed manufacturing costs more than
offset the lower sales prices.
Acrylonitrile revenues decreased 35% to $17 million in the third quarter of
fiscal 1999 and 40% to $53 million for the first nine months of fiscal 1999,
compared to the same periods in fiscal 1998. Acrylonitrile sales prices
decreased 24% and 29% for the third quarter and first nine months of fiscal
1999, respectively, compared to the prior fiscal year periods. In addition,
acrylonitrile sales volumes decreased 14% for both the third quarter and first
nine months of fiscal 1999, compared to the prior fiscal year periods. The lower
sales prices and volumes were primarily due to weaker market conditions,
primarily in Asia. The major raw materials for acrylonitrile are propylene and
ammonia. The price of propylene decreased 14% and 29% in the third quarter of
fiscal 1999 and the first nine months of fiscal 1999, respectively, compared to
the same periods of fiscal 1998. The price of ammonia remained constant in the
third quarter of fiscal 1999 and decreased 13% in the first nine months of
fiscal 1999, compared to the same periods of fiscal 1998. Acrylonitrile margins
decreased in the third quarter and first nine months of fiscal 1999, compared to
the same periods of fiscal 1998, as significantly lower sales prices more than
offset the lower raw materials costs and fixed manufacturing costs.
18
<PAGE> 19
Acrylic fibers revenues decreased 32% to $17 million in the third quarter
of fiscal 1999 and 37% to $48 million for the first nine months of fiscal 1999,
compared to the same periods in fiscal 1998. Acrylic fibers sales volumes
decreased 18% and 31% for the third quarter and first nine months of fiscal
1999, respectively, compared to the prior fiscal year periods. The performance
of the Company's acrylic fibers business in the third quarter and first nine
months of fiscal 1999 continued to be negatively impacted by weak market
conditions and imports from foreign suppliers.
Revenues from the Company's business unit that produces acetic acid,
methanol, plasticizers, and certain other petrochemicals ("AMP") decreased 11%
to $37 million in the third quarter of fiscal 1999 and 25% to $103 million for
the first nine months of fiscal 1999, compared to the same periods in fiscal
1998. The decreases in revenues for the third quarter and first nine months of
fiscal 1999 were primarily due to a 26% and 44% decrease in methanol sales
prices, respectively, and a 1% and 19% decrease in methanol sales volumes,
respectively, compared to the prior fiscal year periods. The decrease in
methanol revenues and sales volumes was primarily a result of continued
overcapacity in the global methanol market. The Company's AMP products reported
an increase in operating earnings in the third quarter of fiscal 1999 compared
to the prior period of fiscal 1998 as lower methanol margins were more than
offset by cost reductions. The Company's AMP products reported a decrease in
operating earnings in the first nine months of fiscal 1999 compared to the prior
periods of fiscal 1998 primarily due to the aforementioned weak methanol market
conditions and acetic acid shutdown for expansion in the second quarter of
fiscal 1999.
Pulp Chemicals
Revenues from the Company's pulp chemicals business decreased 5% to $48
million in the third quarter of fiscal 1999 and decreased 9% to $140 million in
the first nine months of fiscal 1999, compared to the same periods in fiscal
1998. The decrease in revenues in the third quarter and first nine months of
fiscal 1999 was primarily due to a decrease in average sodium chlorate sales
prices compared to the prior periods of fiscal 1998. The decline in sodium
chlorate sales prices was primarily due to an increase in North American sodium
chlorate capacity. The Company's pulp chemicals business recorded operating
earnings of $6 million and $21 million for the third quarter and first nine
months of fiscal 1999, respectively, compared to operating earnings of $9
million and $29 million for the same periods of fiscal 1998. This reduction in
operating earnings was primarily due to reduced sodium chlorate sales prices.
Selling, General, and Administrative ("SG&A") Expenses
SG&A expenses were $9 million and $28 million for the third quarter and
first nine months of fiscal 1999, respectively, compared to $11 million and $28
million for the same periods of fiscal 1998. SG&A expenses were impacted
favorably by cost reduction programs which were mostly offset by costs
associated with upgrades of certain of the Company's information technology
systems, including Year 2000 compliance activities.
Other Expense
Other expense was $2 million and $11 million for the third quarter and
first nine months of fiscal 1999, respectively, compared to $3 million and $6
million for the same periods of fiscal 1998. The fiscal 1999 amounts relate to
the aforementioned one-time non-cash charge related to early retirement programs
and benefit changes and workforce reductions in the petrochemicals business and
pulp chemical business. The fiscal 1998 amounts relate to voluntary severance
programs in the petrochemicals business.
Interest and Debt Related Expenses
Interest and debt related expense was $25 million and $75 million for the
third quarter and nine months of fiscal 1999, respectively, compared to $26
million and $76 million for the same periods of fiscal 1998.
Benefit for Income Taxes
Benefit for income taxes for the third quarter and first nine months of
fiscal 1999 were $7 million (effective tax rate of 30%) and $26 million
(effective tax rate of 32%), respectively, compared to $4 million (effective tax
rate of 22%) and $17 million (effective tax rate of 30%) for the comparable
periods of fiscal 1998. The increase in the benefit was primarily the result of
the increase in the Company's pre-tax losses in the fiscal 1999 periods.
19
<PAGE> 20
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1999, the Company's old long-term debt (including current
maturities) totaled approximately $926 million and consisted of: (i) three term
loans under the Old Credit Agreement (defined below); (ii) loans under the Old
Revolver (defined below); (iii) two term loans under the Sask Credit Agreement
(defined below); (iv) Chemicals' 11-1/4% Senior Subordinated Notes due 2007 (the
"11-1/4% Notes"); (v) Chemicals' 11-3/4% Senior Subordinated Notes due 2006 (the
"11-3/4 Notes"); and (vi) the 13-1/2% Notes.
In July 1997, Chemicals entered into an Amended and Restated Credit
Agreement (as amended, the "Old Credit Agreement") with Chase Bank of Texas,
National Association, individually and as administrative agent, Credit Suisse
First Boston, individually and as documentation agent, and certain other
financial institutions. The Old Credit Agreement established a revolving credit
facility (the "Old Revolver") under which Chemicals could borrow, repay and
reborrow funds for general corporate purposes. As of June 30, 1999, Chemicals
had drawn approximately $36 million and had approximately $4 million in letters
of credit outstanding under the Old Revolver.
In December 1998, Chemicals obtained certain amendments to the financial
covenants contained in the Old Credit Agreement which made the financial
covenants less restrictive through December 31, 1999. Chemicals was in
compliance with the covenants at all times, but requested the amendments based
on its revised financial projections. Chemicals was in compliance with all
covenants in the Old Credit Agreement at June 30, 1999.
On July 23, 1999, Chemicals completed a refinancing of its senior debt
outstanding under the Old Credit Agreement by issuing the 12-3/8% Notes and
establishing the New Revolvers with aggregate borrowing capacity of $155
million, approximately $47 million of which was drawn under the Fixed Assets
Revolver (defined below) at closing. The Old Credit Agreement was terminated
upon consummation of the refinancing. The refinancing increased Chemicals'
liquidity by eliminating near-term debt amortization and financial covenants
associated with the Old Credit Agreement that limited availability under the Old
Revolver, as well as by increasing revolving credit availability. Although no
assurances can be given, the Company believes the additional liquidity provided
by the refinancing, when combined with cash flows from operations and other
sources of available capital, will be sufficient to enable Chemicals to operate
through the current cyclical downturn in the markets for its primary
petrochemicals products. Such belief is largely based upon published predictions
of industry experts as to the timing of improvements in those markets. If
conditions in those markets do not improve as predicted, the Company may be
unable to fund its operations and meet its debt service requirements over an
extended period.
The 12-3/8% Notes are senior secured obligations of Chemicals and rank
equally in right of payment with all other existing and future senior
indebtedness of Chemicals and senior in right of payment to all existing and
future subordinated indebtedness of Chemicals. The 12-3/8% Notes are guaranteed
by all of Chemicals' existing direct and indirect U.S. subsidiaries (other than
Sterling Chemicals Acquisitions, Inc.) on a joint and several basis. Each
subsidiary's guarantee ranks equally in right of payment with all of such
subsidiary's existing and future senior indebtedness and senior in right of
payment to all existing and future subordinated indebtedness of such subsidiary.
However, the 12-3/8% Notes, and each subsidiary's guarantee, is subordinated to
the extent of the collateral securing the New Revolvers. The 12-3/8% Notes and
the subsidiary guarantees are secured by (i) a second priority lien on all of
Chemicals' U.S. chemical production facilities and related assets, (ii) a second
priority pledge of all of the capital stock of each subsidiary guarantor, and
(iii) a first priority pledge of 65% of the stock of certain of the Company's
subsidiaries incorporated outside of the United States.
Under the New Credit Agreement, Chemicals and each of its direct and
indirect U.S. subsidiaries (other than Sterling Chemicals Acquisitions, Inc.)
are co-borrowers and are jointly and severally liable for any indebtedness
thereunder. The New Revolvers consist of (i) a $70,000,000 revolving credit
facility (the "Fixed Assets Revolver") secured by a first priority lien on all
of Chemicals' U.S. chemical production facilities and related assets, all of the
capital stock of Chemicals and all of the capital stock of each co-borrower and
a second priority lien on all accounts receivable, inventory and other specified
assets of Chemicals and each co-borrower, and (ii) an $85,000,000 revolving
credit facility (the "Current Assets Revolver") secured by a first priority lien
on all accounts receivable, inventory and other specified assets of Chemicals
and each co-borrower.
The commitments for each of the Fixed Assets Revolver and the Current
Assets Revolver will be permanently reduced to the extent required under the New
Credit Agreement upon prepayments made out of specific sources of funds,
including assets sales and certain equity issuances by Holdings.
The indenture governing the 12-3/8% Notes (the "Indenture") and the New
Credit Agreement contain numerous covenants, including, but not limited to,
restrictions on the ability of Chemicals and certain of its subsidiaries to
incur indebtedness, pay dividends, create liens, sell assets, engage in mergers
and acquisitions and refinance existing indebtedness. In addition, the Indenture
and the New Credit Agreement specify various circumstances that will constitute,
upon occurrence and subject in certain cases to notice and grace periods, an
event of default thereunder. However, neither the Indenture nor the New Credit
Agreement requires the Company to satisfy any financial ratios or maintenance
tests.
20
<PAGE> 21
The Indenture, the indenture governing the 11-1/4% Notes, the indenture
governing the 11-3/4% Notes, and the New Credit Agreement contain provisions
which restrict the payment of advances, loans and dividends from Chemicals to
Holdings. The most restrictive of these covenants limits such payments during
fiscal 1999 to approximately $2.0 million, plus any amounts due Holdings from
Chemicals under the intercompany tax sharing agreement.
Available credit under the Current Assets Revolver is subject to a monthly
borrowing base consisting of 85% of eligible accounts receivable and 65% of
eligible inventory with an inventory cap of $42,500,000. In addition, the
borrowing base for the Current Assets Revolver must exceed outstanding
borrowings thereunder by $12,000,000 at all times.
As Sterling Sask is designated as an "Unrestricted Subsidiary" under the
New Credit Agreement and the indentures governing the 13-1/2% Notes, the 11-3/4%
Notes, the 11-1/4% Notes, and the 12-3/8% Notes, Sterling Sask is generally not
subject to, nor are its results considered in determining Chemicals' compliance
with, the restrictive covenants contained therein. In July 1997, Sterling Sask
entered into a Credit Agreement (the "Sask Credit Agreement") with The Chase
Manhattan Bank of Canada, individually and as administrative agent, and certain
other financial institutions. The Sask Credit Agreement requires that certain
amounts of Excess Cash Flow (as defined therein) be used to prepay amounts
outstanding under the Sask Term Loans. A mandatory prepayment in the amount of
approximately Cdn. $5 million was made in the first quarter of fiscal 1999
pursuant to such obligation. The Sask Credit Agreement provides for a revolving
credit facility of Cdn. $8 million to be used by Sterling Sask solely for its
general corporate purposes (the "Saskatoon Revolver"). No borrowings were
outstanding under the Sask Revolver as of June 30, 1999. Because of restrictions
in the Sask Credit Agreement, the Company will generally not have access to the
cash flows of Sterling Sask. The Saskatoon Credit Agreement contains provisions
which restrict the payment of advances, loans, and dividends from Sterling Sask
to Chemicals or Holdings. The most restrictive of the covenants limits such
payments during fiscal 1999 to less than $1 million, plus any amounts due to
Chemicals or Holdings from Sterling Sask under the intercompany tax sharing
agreement. The indebtedness under the Sask Credit Agreement is secured by
substantially all the assets of Sterling Sask.
In December 1998, Holdings entered into the Standby Purchase Agreements
with the Standby Purchasers. Pursuant to the terms of the Standby Purchase
Agreements, the Standby Purchasers committed to purchase up to 2.5 million
shares of Common Stock, at a price of $6.00 per share, if, as and when requested
by Holdings at any time or from time to time prior to December 15, 2001. Under
each of the Standby Purchase Agreements, Holdings may only require the Standby
Purchasers to purchase such shares if it believes that the purchase price paid
by the Standby Purchasers for such shares is necessary to maintain, reestablish,
or enhance the Company's borrowing ability under its revolving credit facilities
or to satisfy any requirement thereunder to raise additional equity. In order to
induce the Standby Purchasers to enter into the Standby Purchase Agreements,
Holdings issued to them warrants to purchase an aggregate of 300,000 shares of
Common Stock at an exercise price of $6.00 per share. In addition, under the
terms of the Standby Purchase Agreements, Holdings agreed to issue to the
Standby Purchasers additional warrants to purchase 300,000 additional shares of
Common Stock if, as, and when they purchase shares of Common Stock under the
Standby Purchase Agreements.
Working Capital
Working capital of the Company was $91 million at June 30, 1999, down from
$92 million at September 30, 1998. This $1 million decrease in working capital
was primarily due to the timing of working capital items and improved working
capital management.
Cash Flow
Net cash used in operations was $12 million for the nine months ended June
30, 1999, compared to net cash provided by operations of $38 million for the
nine months ended June 30, 1998. This $50 million decrease in net cash provided
by operations was primarily due to the increase in operating losses.
Capital Expenditures
The Company's capital expenditures for the first nine months of fiscal 1999
were $18 million compared to $19 million in the same period in fiscal 1998. The
capital expenditures in the first nine months of fiscal 1999 were primarily
related to the acetic acid expansion, the Company's phenylacetylene reduction
("PAR") project, the Company's disodium iminodiacetic acid project ("DSIDA")
with Monsanto Company, and routine safety, environmental, and replacement
capital. During the remainder of fiscal 1999, the Company expects to spend
approximately $8 million to $10 million on the PAR project, the DSIDA project,
and routine safety, environmental, and replacement capital. The Company expects
to fund its remaining fiscal 1999 capital expenditures from operating cash flow,
plus borrowings under the New Revolvers, if needed.
21
<PAGE> 22
Year 2000 Issue
Some computer systems and other equipment with computer chips store dates
as two digits rather than four to define the applicable year. For example, these
computer systems would store the year "1999" as "99". Any clock or date
recording mechanism (including date sensitive software) which uses only two
digits to represent the year may interpret the digits "00" as the Year 1900
rather than the Year 2000. This could result in a system failure or
miscalculations causing serious disruption of operations. The Company is in the
process, using both internal and external resources, of addressing the Year 2000
issue. The Company is currently engaged in a comprehensive project intended to
upgrade its information technology systems (such as computer systems and
software) and non-information technology systems (such as process control
systems and other equipment that utilize embedded chips to control various
functions) to systems that will consistently and properly recognize the Year
2000 and subsequent years.
The Company has conducted an inventory of its hardware and software and
made a preliminary assessment of the Year 2000 compliance of its business and
process control systems. This preliminary assessment determined which of the
Company's business and process control systems are critical to its business.
Those systems deemed to be critical were assigned a higher priority in the Year
2000 remediation effort. In this phase of the project, the Company discovered
some Year 2000 deficiencies in its business systems and initiated plans to
rectify these issues in the remediation and replacement phase of the project.
The preliminary assessment of the Company's process control systems did not
detect any material Year 2000 difficulties. The Company then engaged a
nationally recognized independent consultant to perform a more detailed survey
of all of its business and process control systems (both critical and
non-critical) to confirm the absence of any additional material Year 2000
deficiencies. This survey has been completed and did not reveal any additional
material Year 2000 deficiencies.
In the second phase of the Company's Year 2000 project, the Company
believes it is taking the necessary steps to rectify all material Year 2000
deficiencies. A major component of this effort involves the replacement of all
critical business systems which may not be Year 2000 compliant with new business
systems intended to be Year 2000 compliant. All of such projects are scheduled
to be completed by October 1999. If the Company determines that any additional
systems under review have material Year 2000 deficiencies, the Company plans to
take appropriate remedial action. At this time, the instrumentation in the
laboratory at the Company's Texas City, Texas facilities requires significant
remediation or replacement. However, that instrumentation can be successfully
operated in its current state with minimal manual intervention. Even without
remediation or replacement, this instrumentation would not jeopardize the
successful operation of the Company's Texas City, Texas facility.
The final phase of the Company's Year 2000 project involves testing all
critical systems to confirm that such systems will react properly to the advent
of the Year 2000. The Company is in the process of conducting tests on all of
its current information technology and non-information technology systems that
were not identified as having Year 2000 deficiencies and anticipates that all
such testing will be completed by October 1999. Once the remediation and
replacement phase is completed, the Company will conduct tests on all newly
installed and updated systems to determine if they are Year 2000 compliant. Such
testing is scheduled to be completed by September 30, 1999.
The total estimated expense for the Company's Year 2000 compliance projects
is approximately $13 to $15 million, of which the Company has incurred
approximately $6 million through June 30, 1999. Such expense has been and will
continue to be funded by the Company out of its operating cash flow and/or
borrowings under its credit facilities.
Irrespective of the efforts of the Company, certain Year 2000 problems,
such as processing failures, error messages, or incorrect data may still occur
in some of its computer systems if the Company receives programs and/or data
from third parties who are not Year 2000 compliant. Moreover, the Company's
business may be disrupted in other ways by Year 2000 problems of third parties,
which may affect, for example, the Company's ability to obtain needed materials
or deliver its products. The Company is in the process of determining whether
its significant vendors, customers, and others with whom it deals are Year 2000
compliant and has requested that such persons (other than those that the Company
believes do not have a material impact on the business of the Company or its
operations) complete and return surveys with respect to their Year 2000 issues.
The Company has not received any survey response which indicates that any of
such persons has any specific Year 2000 problems. However, no assurances can be
given that a Year 2000 problem will not occur for the Company as a result of a
Year 2000 problem of a vendor or customer of the Company or some other person
with whom the Company deals.
While the Company's Year 2000 projects are scheduled to be completed by
September 30, 1999, it is possible that one or more of such projects may not be
completed or that compliance efforts may be ineffective. A failure to properly
and timely correct any Year 2000 deficiencies would affect the Company on
several levels. If the Company's Year 2000 remediation efforts were to prove
unsuccessful, the Company might be unable to take orders, sell products, operate
one or more of its manufacturing facilities, or otherwise generally conduct its
business. Since the Company's business is characterized by large volume sales to
a relatively limited number of customers, the Company believes that, with the
engagement of additional personnel, orders could be processed and deliveries
completed through manual means. In preparation for such a scenario, the Company
has outlined a contingency plan to guide the hiring and training of additional
personnel and the processing of paperwork manually.
22
<PAGE> 23
Although the Company believes that it is taking the appropriate courses of
action to ensure that it is Year 2000 compliant, there can be no assurance that
the actions discussed herein will have the anticipated results or that Year 2000
problems will not have a material adverse effect on the Company's financial
condition or results of operations. Specific factors that might affect the
success of the Company's Year 2000 efforts and the occurrence of Year 2000
disruption or expense include (i) failure of the Company or its consultant to
properly identify deficient systems, (ii) the failure of the selected remedial
action to adequately address any deficiencies, (iii) the failure of the
Company's consultant to complete the remediation in a timely manner (due to
shortages of qualified labor or other factors), (iv) unforeseen expenses related
to the remediation of existing systems or the transition to replacement systems,
and (v) the failure of third parties to become compliant or to adequately notify
the Company of potential noncompliance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk disclosures set forth in the Annual Report
had not changed significantly through the period ended June 30, 1999.
23
<PAGE> 24
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information under "Legal Proceedings" in Note 4 of the Notes to
Consolidated Financial Statements herein is hereby incorporated by reference.
See also "Item 3. Legal Proceedings" in the Annual Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are filed as part of this Form 10-Q.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
4.1 - Revolving Credit Agreement dated as of July 23, 1999 among Sterling
Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp Chemicals US,
Inc., Sterling Pulp Chemicals, Inc., Sterling Fibers, Inc., Sterling
Chemicals Energy, Inc. and Sterling Chemicals International. Inc., as
the Borrowers, The CIT Group/Business Credit, Inc., as the
Administrative Agent, Credit Suisse First Boston, as the Documentation
Agent, DLJ Capital Funding, Inc., as the Syndication Agent, and
various financial institutions, as the Lenders.
4.2 - Deed of Trust, Assignment of Leases and Rents, Security Agreement
and Fixture Filing dated as of July 23, 1999 by Sterling Chemicals,
Inc., Trustor, to Linda H. Earle, Trustee for the benefit of The CIT
Group/Business Credit, Inc., as Administrative and Collateral Agent,
Beneficiary.
4.3 - Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing dated as of July 23, 1999 by Sterling Fibers, Inc.,
Mortgagor, to The CIT Group/Business Credit, Inc., Mortgagee
4.4 - Leasehold Deed to Secure Debt, Assignment and Security Agreement
dated as of July 23, 1999 by Sterling Pulp Chemicals, Inc. to The CIT
Group/Business Credit, Inc., as Administrative Agent, and U.S. Bank
Trust National Association, as Georgia co-agent.
4.5 - Fixed Assets Security Agreement dated as of July 23, 1999 among
Sterling Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp
Chemicals US, Inc., Sterling Pulp Chemicals, Inc., Sterling Fibers,
Inc., Sterling Chemicals Energy, Inc. and Sterling Chemicals
International. Inc., as the Grantors, and The CIT Group/Business
Credit, Inc., as Administrative Agent for each of the Fixed Assets
Secured Parties.
4.6 - Current Assets Security Agreement dated as of July 23, 1999 among
Sterling Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp
Chemicals US, Inc., Sterling Pulp Chemicals, Inc., Sterling Fibers,
Inc., Sterling Chemicals Energy, Inc. and Sterling Chemicals
International. Inc., as the Grantors, and The CIT Group/Business
Credit, Inc., as Administrative Agent for each of the Current Assets
Secured Parties.
4.7 - Parent Pledge Agreement dated as of July 23, 1999 between Sterling
Chemicals Holdings, Inc. and The CITGroup/ Business Credit, Inc., as
Administrative Agent for each of the Fixed Assets Secured Parties.
4.8 - Obligor Pledge Agreement dated as of July 23, 1999 among Sterling
Chemicals, Inc., Sterling Canada, Inc. and Sterling Pulp Chemicals US,
Inc., as the Pledgors, and The CIT Group/Business Credit, Inc., as
Administrative Agent for each of the Fixed Assets Secured Parties.
4.9 - Indenture dated as of July 23, 1999 among Sterling Chemicals, Inc.,
as Issuer, Sterling Canada, Inc., Sterling Chemicals Energy, Inc.,
Sterling Chemicals International, Inc., Sterling Fibers, Inc.,
Sterling Pulp Chemicals US, Inc. and Sterling Pulp Chemicals, Inc., as
Guarantors, and Harris Trust Company of New York, as Trustee.
4.10 - Second Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing dated as of July 23, 1999 by Sterling
Chemicals, Inc., Trustor, to John Dorris, Trustee for the benefit of
Harris Trust Company of New York, Beneficiary.
24
<PAGE> 25
4.11 - Second Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing dated as of July 23, 1999 between Sterling Fibers,
Inc., Mortgagor, and The CIT Group/Business Credit, Inc., Mortgagee
4.12 - Second Leasehold Deed to Secure Debt, Assignment and Security
Agreement dated as of July 23, 1999 by Sterling Pulp Chemicals, Inc.,
Grantor, to Harris Trust Company of New York, as Collateral Agent, and
U.S. Bank Trust National Association, as Georgia co-agent.
4.13 - Security Agreement dated as of July 23, 1999 among Sterling
Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp Chemicals, Inc.,
Sterling Pulp Chemicals US, Inc., Sterling Fibers, Inc., Sterling
Chemicals Energy, Inc. and Sterling Chemicals International. Inc., as
Assignors, and Harris Trust Company of New York, as Collateral Agent.
4.14 - Stock Pledge and Security Agreement dated as of July 23, 1999 among
Sterling Chemicals, Inc., Sterling Canada, Inc. and Sterling Pulp
Chemicals US, Inc., as Pledgors, and Harris Trust Company of New York,
as Collateral Agent.
4.15 - Stock Pledge and Security Agreement dated as of July 23, 1999 among
Sterling Chemicals, Inc. and Sterling Canada, Inc., as Pledgors, and
Harris Trust Company of New York, as Collateral Agent.
4.16 - A/B Exchange Registration Rights Agreement dated as of July 23, 1999
among Sterling Chemicals, Inc., as the Company, Sterling Canada, Inc.,
Sterling Pulp Chemicals US, Inc., Sterling Pulp Chemicals, Inc.,
Sterling Fibers, Inc., Sterling Chemicals Energy, Inc. and Sterling
Chemicals International. Inc., as Guarantors, and Donaldson, Lufkin &
Jenrette Securities Corporation and Credit Suisse First Boston
Corporation, as Initial Purchasers.
4.17 - Senior Debt Intercreditor Agreement dated as of July 23, 199 among
Harris Trust Company of New York, as Trustee, The CIT Group/Business
Credit, Inc., as Administrative Agent, and Sterling Chemicals, Inc.
4.18 - Amendment Of Intercreditor Agreement dated as of July 23, 1999,
among Sterling Chemicals Holdings, Inc., Chase Bank of Texas, N.A.
(formerly known as Texas Commerce Bank National Association), as
Administrative Agent, and State Street Bank And Trust Company, as
Trustee.
11.1 - Earnings Per Share Calculation.
15.1 - Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
27.1 - Financial Data Schedule of Sterling Chemicals Holdings, Inc.
27.2 - Financial Data Schedule of Sterling Chemicals, Inc.
(b) Reports on Form 8-K.
On July 15, 1999, the Company filed a Current Report on Form 8-K,
reporting under Items 5 and 7.
25
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrants have duly caused this report to be signed on their
behalf by the undersigned thereunto duly authorized.
STERLING CHEMICALS HOLDINGS, INC.
STERLING CHEMICALS, INC.
(Registrants)
Date: August 13, 1999 /s/ PETER W. DE LEEUW
---------------------------------------
Peter W. De Leeuw
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 13, 1999 /s/ GARY M. SPITZ
---------------------------------------
Gary M. Spitz
Vice President-Finance and Chief
Financial Officer
(Principal Financial Officer)
26
<PAGE> 27
INDEX TO EXHIBITS
4.1 - Revolving Credit Agreement dated as of July 23, 1999 among Sterling
Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp Chemicals US,
Inc., Sterling Pulp Chemicals, Inc., Sterling Fibers, Inc., Sterling
Chemicals Energy, Inc. and Sterling Chemicals International. Inc., as
the Borrowers, The CIT Group/Business Credit, Inc., as the
Administrative Agent, Credit Suisse First Boston, as the Documentation
Agent, DLJ Capital Funding, Inc., as the Syndication Agent, and
various financial institutions, as the Lenders.
4.2 - Deed of Trust, Assignment of Leases and Rents, Security Agreement
and Fixture Filing dated as of July 23, 1999 by Sterling Chemicals,
Inc., Trustor, to Linda H. Earle, Trustee for the benefit of The CIT
Group/Business Credit, Inc., as Administrative and Collateral Agent,
Beneficiary.
4.3 - Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing dated as of July 23, 1999 by Sterling Fibers, Inc.,
Mortgagor, to The CIT Group/Business Credit, Inc., Mortgagee
4.4 - Leasehold Deed to Secure Debt, Assignment and Security Agreement
dated as of July 23, 1999 by Sterling Pulp Chemicals, Inc. to The CIT
Group/Business Credit, Inc., as Administrative Agent, and U.S. Bank
Trust National Association, as Georgia co-agent.
4.5 - Fixed Assets Security Agreement dated as of July 23, 1999 among
Sterling Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp
Chemicals US, Inc., Sterling Pulp Chemicals, Inc., Sterling Fibers,
Inc., Sterling Chemicals Energy, Inc. and Sterling Chemicals
International. Inc., as the Grantors, and The CIT Group/Business
Credit, Inc., as Administrative Agent for each of the Fixed Assets
Secured Parties.
4.6 - Current Assets Security Agreement dated as of July 23, 1999 among
Sterling Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp
Chemicals US, Inc., Sterling Pulp Chemicals, Inc., Sterling Fibers,
Inc., Sterling Chemicals Energy, Inc. and Sterling Chemicals
International. Inc., as the Grantors, and The CIT Group/Business
Credit, Inc., as Administrative Agent for each of the Current Assets
Secured Parties.
4.7 - Parent Pledge Agreement dated as of July 23, 1999 between Sterling
Chemicals Holdings, Inc. and The CITGroup/ Business Credit, Inc., as
Administrative Agent for each of the Fixed Assets Secured Parties.
4.8 - Obligor Pledge Agreement dated as of July 23, 1999 among Sterling
Chemicals, Inc., Sterling Canada, Inc. and Sterling Pulp Chemicals US,
Inc., as the Pledgors, and The CIT Group/Business Credit, Inc., as
Administrative Agent for each of the Fixed Assets Secured Parties.
4.9 - Indenture dated as of July 23, 1999 among Sterling Chemicals, Inc.,
as Issuer, Sterling Canada, Inc., Sterling Chemicals Energy, Inc.,
Sterling Chemicals International, Inc., Sterling Fibers, Inc.,
Sterling Pulp Chemicals US, Inc. and Sterling Pulp Chemicals, Inc., as
Guarantors, and Harris Trust Company of New York, as Trustee.
4.10 - Second Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing dated as of July 23, 1999 by Sterling
Chemicals, Inc., Trustor, to John Dorris, Trustee for the benefit of
Harris Trust Company of New York, Beneficiary.
4.11 - Second Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing dated as of July 23, 1999 between Sterling Fibers,
Inc., Mortgagor, and The CIT Group/Business Credit, Inc., Mortgagee
4.12 - Second Leasehold Deed to Secure Debt, Assignment and Security
Agreement dated as of July 23, 1999 by Sterling Pulp Chemicals, Inc.,
Grantor, to Harris Trust Company of New York, as Collateral Agent, and
U.S. Bank Trust National Association, as Georgia co-agent.
4.13 - Security Agreement dated as of July 23, 1999 among Sterling
Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp Chemicals, Inc.,
Sterling Pulp Chemicals US, Inc., Sterling Fibers, Inc., Sterling
Chemicals Energy, Inc. and Sterling Chemicals International. Inc., as
Assignors, and Harris Trust Company of New York, as Collateral Agent.
4.14 - Stock Pledge and Security Agreement dated as of July 23, 1999 among
Sterling Chemicals, Inc., Sterling Canada, Inc. and Sterling Pulp
Chemicals US, Inc., as Pledgors, and Harris Trust Company of New York,
as Collateral Agent.
4.15 - Stock Pledge and Security Agreement dated as of July 23, 1999 among
Sterling Chemicals, Inc. and Sterling Canada, Inc., as Pledgors, and
Harris Trust Company of New York, as Collateral Agent.
4.16 - A/B Exchange Registration Rights Agreement dated as of July 23, 1999
among Sterling Chemicals, Inc., as the Company, Sterling Canada, Inc.,
Sterling Pulp Chemicals US, Inc., Sterling Pulp Chemicals, Inc.,
Sterling Fibers, Inc., Sterling Chemicals Energy, Inc. and Sterling
Chemicals International. Inc., as Guarantors, and Donaldson, Lufkin &
Jenrette Securities Corporation and Credit Suisse First Boston
Corporation, as Initial Purchasers.
4.17 - Senior Debt Intercreditor Agreement dated as of July 23, 199 among
Harris Trust Company of New York, as Trustee, The CIT Group/Business
Credit, Inc., as Administrative Agent, and Sterling Chemicals, Inc.
4.18 - Amendment Of Intercreditor Agreement dated as of July 23, 1999,
among Sterling Chemicals Holdings, Inc., Chase Bank of Texas, N.A.
(formerly known as Texas Commerce Bank National Association), as
Administrative Agent, and State Street Bank And Trust Company, as
Trustee.
11.1 - Earnings Per Share Calculation.
15.1 - Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
27.1 - Financial Data Schedule of Sterling Chemicals Holdings, Inc.
27.2 - Financial Data Schedule of Sterling Chemicals, Inc.
<PAGE> 1
EXHIBIT 4.1
================================================================================
U.S. $155,000,000
REVOLVING CREDIT AGREEMENT,
dated as of July 23, 1999,
among
STERLING CHEMICALS, INC.,
STERLING CANADA, INC.,
STERLING PULP CHEMICALS US, INC.,
STERLING PULP CHEMICALS, INC.,
STERLING FIBERS, INC.,
STERLING CHEMICALS ENERGY, INC., and
STERLING CHEMICALS INTERNATIONAL, INC.,
as the Borrowers,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent,
CREDIT SUISSE FIRST BOSTON,
as the Documentation Agent,
and
THE CIT GROUP/BUSINESS CREDIT, INC.
as the Administrative Agent.
LEAD ARRANGER AND BOOK MANAGER:
DLJ CAPITAL FUNDING, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms...................................................................................3
1.2. Use of Defined Terms...........................................................................43
1.3. Cross-References...............................................................................43
1.4. Accounting and Financial Determinations........................................................44
ARTICLE II COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES, NOTES
AND LETTERS OF CREDIT
2.1. Commitments....................................................................................44
2.1.1. Loan Commitments...............................................................................44
2.1.2. Letter of Credit Commitment....................................................................44
2.1.3. Lenders Not Permitted or Required to Make Loans................................................45
2.2. Reduction of the Commitment Amounts............................................................46
2.2.1. Optional.......................................................................................46
2.2.2. Mandatory......................................................................................46
2.3. Borrowing Procedures and Funding Maintenance...................................................47
2.3.1. Current Assets Loans and Fixed Assets Loans....................................................47
2.3.2. Swing Line Loans...............................................................................48
2.4. Continuation and Conversion Elections..........................................................50
2.5. Funding........................................................................................50
2.6. Issuance Procedures............................................................................50
2.6.1. Other Lenders' Participation...................................................................51
2.6.2. Disbursements; Conversion to Current Assets Loans..............................................51
2.6.3. Reimbursement..................................................................................52
2.6.4. Deemed Disbursements...........................................................................52
2.6.5. Nature of Reimbursement Obligations............................................................53
2.7. Register, Reserves, Notes......................................................................53
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments; Application........................................................56
3.1.1. Repayments and Prepayments.....................................................................56
3.1.2. Application....................................................................................59
3.2. Interest Provisions............................................................................60
3.2.1. Rates..........................................................................................60
3.2.2. Post-Maturity Rates............................................................................60
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
3.2.3. Payment Dates..................................................................................61
3.3. Fees...........................................................................................61
3.3.1. Commitment Fees................................................................................61
3.3.2. The Agents' Fees and the Lead Arranger's Fees..................................................62
3.3.3. Letter of Credit Fees..........................................................................62
ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful.....................................................................62
4.2. Deposits Unavailable...........................................................................62
4.3. Increased LIBO Rate Loan Costs, etc............................................................63
4.4. Funding Losses.................................................................................63
4.5. Increased Capital Costs........................................................................64
4.6. Taxes..........................................................................................64
4.7. Payments, Computations, etc....................................................................68
4.8. Sharing of Payments............................................................................69
4.9. Setoff.........................................................................................69
4.10. Guaranty Provisions............................................................................70
4.10.1. Guaranty.......................................................................................70
4.10.2. Guaranty Absolute, etc.........................................................................70
4.10.3. Reinstatement, etc.............................................................................71
4.10.4. Waiver, etc....................................................................................71
4.10.5. Postponement of Subrogation, etc...............................................................71
ARTICLE V CONDITIONS TO CREDIT EXTENSIONS
5.1. Initial Credit Extension.......................................................................72
5.1.1. Resolutions, etc...............................................................................72
5.1.2. Senior Secured Notes...........................................................................72
5.1.3. Issuance of Senior Secured Notes, etc..........................................................72
5.1.4. Consummation of Transaction, etc...............................................................72
5.1.5. Intercreditor Agreements.......................................................................73
5.1.6. Closing Date Certificate.......................................................................73
5.1.7. Delivery of Notes..............................................................................73
5.1.8. Payment of Outstanding Indebtedness, etc.......................................................73
5.1.9. Closing Fees, Expenses, etc....................................................................73
5.1.10. Financial Information, etc.....................................................................73
5.1.11. Borrowing Base Certificate.....................................................................74
5.1.12. Opinions of Counsel............................................................................74
5.1.13. Filing Agent, etc..............................................................................74
5.1.14. Intercreditor Amendment........................................................................75
5.1.15. Appraisals and Audit Analyses; Environmental Audit Report......................................75
</TABLE>
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<TABLE>
<S> <C> <C>
5.1.16. Pledge Agreements..............................................................................75
5.1.17. Security Agreements Filings, Lockboxes, etc....................................................76
5.1.18. Intellectual Property Security Agreements......................................................77
5.1.19. Insurance......................................................................................77
5.1.20. Mortgage.......................................................................................77
5.1.21. Cash Management Accounts.......................................................................78
5.1.22. Perfection Certificate.........................................................................78
5.1.23. Solvency, etc..................................................................................78
5.1.24. Required Consents and Approvals................................................................78
5.1.25. Statement of Sources and Uses..................................................................78
5.2. All Credit Extensions..........................................................................78
5.2.1. Compliance With Warranties, No Default, etc....................................................78
5.2.2. Credit Extension Request, etc..................................................................79
5.2.3. Satisfactory Legal Form........................................................................79
ARTICLE VI REPRESENTATIONS AND WARRANTIES
6.1. Organization, etc..............................................................................79
6.2. Due Authorization, Non-Contravention, etc......................................................79
6.3. Government Approval, Regulation, etc...........................................................80
6.4. Validity, etc..................................................................................80
6.5. Financial Information..........................................................................80
6.6. No Material Adverse Change.....................................................................81
6.7. Litigation, Labor Controversies, etc...........................................................81
6.8. Subsidiaries...................................................................................81
6.9. Ownership of Properties........................................................................81
6.10. Taxes..........................................................................................81
6.11. Pension and Welfare Plans......................................................................82
6.12. Environmental Warranties.......................................................................82
6.13. Accuracy of Information........................................................................84
6.14. Regulations U and X............................................................................84
6.15. Year 2000......................................................................................84
6.16. Issuance of Subordinated Debt; Status of Obligations as Senior Debt, etc.......................85
6.17. Solvency.......................................................................................85
6.18. Intellectual Property Collateral...............................................................86
6.19. Ownership of Stock.............................................................................86
ARTICLE VII COVENANTS
7.1. Affirmative Covenants..........................................................................87
7.1.1. Financial Information, Reports, Notices, etc...................................................87
7.1.2. Maintenance of Existence; Compliance With Laws, etc............................................89
</TABLE>
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<TABLE>
<S> <C> <C>
7.1.3. Maintenance of Properties......................................................................89
7.1.4. Insurance......................................................................................90
7.1.5. Books and Records..............................................................................90
7.1.6. Foreign Employee Benefit Plan Compliance.......................................................90
7.1.7. Use of Proceeds................................................................................91
7.1.8. Future Borrowers, Security, etc................................................................91
7.1.9. Cash Management Accounts.......................................................................91
7.1.10. Environmental Covenant.........................................................................92
7.1.11. As to Intellectual Property Collateral.........................................................92
7.1.12. Future Real Estate Properties..................................................................93
7.1.13. Non-Consolidation of Unrestricted Subsidiaries.................................................93
7.1.15. ANEXCO Receivables.............................................................................94
7.2. Negative Covenants.............................................................................95
7.2.1. Business Activities............................................................................95
7.2.2. Indebtedness...................................................................................95
7.2.3. Liens..........................................................................................97
7.2.4. Excess Availability............................................................................98
7.2.5. Investments....................................................................................99
7.2.6. Restricted Payments, etc......................................................................101
7.2.7. Capital Expenditures, etc.....................................................................101
7.2.8. No Prepayment of Subordinated Debt or the Senior Secured Notes................................102
7.2.9. Capital Securities of Subsidiaries............................................................103
7.2.10. Consolidation, Merger, etc....................................................................103
7.2.11. Permitted Dispositions........................................................................103
7.2.12. Modification of Certain Agreements............................................................104
7.2.13. Transactions With Affiliates..................................................................104
7.2.14. Restrictive Agreements, etc...................................................................104
7.2.15. Sale and Leaseback............................................................................105
7.2.16. Transfer of the Fibers Business...............................................................105
7.2.17. Canadian Facility.............................................................................107
7.2.18. Attornment....................................................................................107
8.1. Listing of Events of Default..................................................................108
8.1.1. Non-Payment of Obligations....................................................................108
8.1.2. Breach of Warranty............................................................................108
8.1.3. Non-Performance of Certain Covenants and Obligations..........................................108
8.1.4. Non-Performance of Other Covenants and Obligations............................................108
8.1.5. Default on Other Indebtedness.................................................................109
8.1.6. Judgments.....................................................................................109
8.1.7. Pension Plans.................................................................................109
8.1.8. Change in Control.............................................................................109
8.1.9. Bankruptcy, Insolvency, etc...................................................................109
8.1.10. Impairment of Security, etc...................................................................110
</TABLE>
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<TABLE>
<S> <C> <C>
8.1.11. Failure of Subordination......................................................................110
8.1.12. Default Under Senior Secured Discount Notes...................................................111
8.2. Action if Bankruptcy..........................................................................111
8.3. Action if Other Event of Default..............................................................111
ARTICLE IX THE ADMINISTRATIVE AGENT
9.1. Actions.......................................................................................111
9.2. Funding Reliance, etc.........................................................................112
9.3. Exculpation...................................................................................112
9.4. Successor.....................................................................................113
9.5. Credit Extensions by Each Agent and Issuer....................................................114
9.6. Credit Decisions..............................................................................114
9.7. Copies, etc...................................................................................114
9.8. Reliance by Agents............................................................................114
9.9. Defaults......................................................................................115
9.10. The Documentation Agent.......................................................................115
ARTICLE X MISCELLANEOUS PROVISIONS
10.1. Waivers, Amendments, etc......................................................................115
10.2. Notices; Time.................................................................................117
10.3. Payment of Costs and Expenses.................................................................118
10.4. Indemnification...............................................................................119
10.5. Survival......................................................................................120
10.6. Severability..................................................................................120
10.7. Headings......................................................................................120
10.8. Execution in Counterparts, Effectiveness, etc.................................................120
10.9. Governing Law; Entire Agreement...............................................................121
10.10. Successors and Assigns........................................................................121
10.11. Sale and Transfer of Loans; Participations in Loans and Notes.................................121
10.11.1. Assignments...................................................................................121
10.11.2. Participations................................................................................123
10.12. Confidentiality...............................................................................124
10.13. Other Transactions............................................................................125
10.14. Forum Selection and Consent to Jurisdiction...................................................125
10.15. Waiver of Jury Trial..........................................................................126
10.16. Certain Collateral Matters....................................................................126
</TABLE>
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<TABLE>
<CAPTION>
Section Page
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SCHEDULE I - Disclosure Schedule
SCHEDULE II - Percentages; LIBO Office; Domestic Office
SCHEDULE III - Account Obligor Schedule
EXHIBIT A-1 - Form of Current Assets Note
EXHIBIT A-2 - Form of Fixed Assets Note
EXHIBIT A-3 - Form of Swing Line Note
EXHIBIT B-1 - Form of Borrowing Request
EXHIBIT B-2 - Form of Issuance Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Closing Date Certificate
EXHIBIT E - Form of Borrowers' Solvency Certificate
EXHIBIT F - Form of Borrowing Base Certificate
EXHIBIT G-1 - Form of Parent Pledge Agreement
EXHIBIT G-2 - Form of Obligor Pledge Agreement
EXHIBIT H-1 - Form of Current Assets Security Agreement
EXHIBIT H-2 - Form of Fixed Assets Security Agreement
EXHIBIT I - Form of Mortgage
EXHIBIT J - Form of Joinder Agreement
EXHIBIT K-1 - Form of Revolver Intercreditor Agreement
EXHIBIT K-2 - Form of Senior Debt Intercreditor Agreement
EXHIBIT L - Form of Lender Assignment Agreement
EXHIBIT M - Form of Perfection Certificate
EXHIBIT N - Form of Exemption Certificate
</TABLE>
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<PAGE> 8
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of July 23, 1999, among
STERLING CHEMICALS, INC., a Delaware corporation (the "Company"), STERLING
CANADA, INC., a Delaware corporation, STERLING PULP CHEMICALS US, INC., a
Delaware corporation, STERLING PULP CHEMICALS, INC., a Georgia corporation,
STERLING FIBERS, INC., a Delaware corporation, STERLING CHEMICALS ENERGY, INC.,
a Delaware corporation, and STERLING CHEMICALS INTERNATIONAL, INC., a Delaware
corporation, and each other Person who becomes a party hereto pursuant to
Section 7.1.8 (each such Person, together with the Company, each individually a
"Borrower" and collectively the "Borrowers"), the various financial institutions
as are or may become parties hereto (collectively, the "Lenders"), DLJ CAPITAL
FUNDING, INC. ("DLJ"), as the syndication agent (the "Syndication Agent") for
the Lenders, CREDIT SUISSE FIRST BOSTON ("CSFB"), as the documentation agent
(the "Documentation Agent"), and THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT"), as
the administrative agent and the collateral agent (the "Administrative Agent",
and, together with the Syndication Agent, sometimes referred to herein
collectively as the "Agents" and each as an "Agent") for the Lenders and DLJ, as
lead arranger and book manager (the "Lead Arranger").
W I T N E S S E T H:
WHEREAS, the Borrowers are Wholly-Owned Subsidiaries (such capitalized
term and other capitalized terms used in the preamble and in the recitals
without definition shall have the meanings provided for in Section 1.1) of
Sterling Chemicals Holdings, Inc., a Delaware corporation (the "Parent");
WHEREAS, the Borrowers have proposed a refinancing (the "Refinancing")
of certain of their existing Indebtedness, and approximately $349,302,500 will
be required to consummate such Refinancing, including fees and expenses related
to the Transaction (as defined below), which the Borrowers intend to finance
through:
(a) the issuance by the Company of its Series A 12 3/8 %
Senior Secured Notes Due 2006 (the "Senior Secured Notes") for gross
cash proceeds of $295,000,000;
(b) a Borrowing of approximately $50,393,800 of Fixed Assets
Loans hereunder; and
(c) the issuance of Letters of Credit in an aggregate amount
of approximately $3,908,700;
WHEREAS, such proceeds will be used:
<PAGE> 9
(a) to refinance approximately $50,204,200 of Indebtedness
outstanding under the Company's existing revolving credit facility
under that certain Amended and Restated Credit Agreement, dated as of
July 10, 1997, with Chase Bank of Texas, N.A., as administrative agent
thereunder (as amended, the "Existing Loan Agreement") including
accrued interest, commitment fees and letter of credit fees thereon;
(b) to refinance approximately $273,157,100 of term loan
Indebtedness outstanding under the Existing Loan Agreement including
accrued interest thereon;
(c) to refinance approximately $2,032,100 of employee stock
ownership plan term loan Indebtedness outstanding under the Existing
Loan Agreement including accrued interest thereon;
(d) to replace outstanding letters of credit in an aggregate
amount of approximately $3,908,700; and
(e) to pay fees and expenses associated with the Refinancing,
the issuance of the Senior Secured Notes, the financing contemplated
hereunder and all other transactions related thereto (collectively, the
"Transaction") in an amount not to exceed $20,000,000;
WHEREAS, in connection with the Transaction and the ongoing working
capital and general corporate needs of the Borrowers, the Borrowers desire to
obtain the following financing facilities from the Lenders:
(a) a Current Assets Loan Commitment (to include availability
for Current Assets Loans, Swing Line Loans and Letters of Credit)
pursuant to which Borrowings of Current Assets Loans, in a maximum
aggregate principal amount outstanding at any time (together with all
Swing Line Loans and Letter of Credit Outstandings) not to exceed the
lesser of (i) the Borrowing Base Amount less the Minimum Excess
Availability and (ii) the Current Assets Loan Commitment Amount, will
be made from time to time on and subsequent to the Closing Date but
prior to the Current Assets Loan Commitment Termination Date;
(b) a Letter of Credit Commitment sub-facility pursuant to
which the Issuer will issue Letters of Credit from time to time on and
subsequent to the Closing Date but prior to the Current Assets Loan
Commitment Termination Date in a maximum aggregate Stated Amount at any
one time outstanding not to exceed the Letter of Credit Commitment
Amount;
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(c) a Swing Line Loan Commitment sub-facility pursuant to
which Borrowings of Swing Line Loans, in an aggregate outstanding
principal amount not to exceed the Swing Line Loan Commitment Amount
outstanding at any time, will be made from time to time on and
subsequent to the Closing Date but prior to the Current Assets Loan
Commitment Termination Date; and
(d) a Fixed Assets Loan Commitment pursuant to which
Borrowings of Fixed Assets Loans, in a maximum aggregate principal
amount not to exceed the Fixed Assets Loan Commitment Amount
outstanding at any time, will be made from time to time on and
subsequent to the Closing Date but prior to the Fixed Assets Loan
Commitment Termination Date; and
WHEREAS, the Lenders and the Issuer are willing, on the terms and
subject to the conditions hereinafter set forth, to extend the Commitments and
make Loans to the Borrowers and issue (or participate in) Letters of Credit;
NOW, THEREFORE, the parties hereto agree as follows.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Acceptable Account" means any Foreign Account for which the obligor
has long-term debt ratings, or is a Wholly-Owned Subsidiary of a Person having
long-term debt ratings, of at least A- and A3 or short-term debt ratings of at
least A2 and P2, in each case by S&P and Moody's, respectively.
"Account Obligor Schedule" means the Account Obligor Schedule attached
hereto as Schedule III, as it may be supplemented or otherwise modified from
time to time by the Borrowers upon, in the case of Items A and C, the written
consent of the Administrative Agent and in the case of Item B, written notice to
the Administrative Agent of the name of such account obligors that meet all of
the requirements set forth in the definition of "Acceptable Account."
"Additional Senior Subordinated Notes" means the Company's 11-1/4%
Senior Subordinated Notes Due 2007 in an original principal amount of
$150,000,000.
"Additional Senior Subordinated Notes Indenture" means the Indenture
dated as of April 7, 1997 between the Company and Fleet National Bank (now known
as State Street Bank and Trust Company), as trustee, that governs the terms of
the Additional Senior Subordinated
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Notes, as the same has heretofore been supplemented and may hereafter be
amended, supplemented, amended and restated or otherwise modified in accordance
with Section 7.2.12.
"Administrative Agent" is defined in the preamble and includes each
other Person appointed as the successor Administrative Agent pursuant to Section
9.4.
"Administrative Agent's Fee Letter" means the confidential fee letter,
dated July 23, 1999, among the Borrowers and CIT, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person. "Control" of a Person means
(a) the power, directly or indirectly, to vote 10% or more of
the securities (on a fully diluted basis) having ordinary voting power
for the election of directors, managing members or general partners (as
applicable);
(b) beneficial ownership of 10% or more of any class of the
Voting Stock of such Person or 10% or more of all outstanding Capital
Securities of such Person; or
(c) the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person (whether by
contract or otherwise).
"Agents" is defined in the preamble and includes each other Person
appointed as a successor Agent pursuant to Section 9.4.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated or otherwise modified from time to time and
in effect on such date.
"Alternate Base Rate" means, for any day and with respect to all Base
Rate Loans, the higher of (a) 0.50% per annum above the latest Federal Funds
Rate and (b) the rate of interest in effect for such day as most recently
publicly announced or established by The Chase Manhattan Bank in New York, New
York (the "Reference Bank"), as its "Base Rate". (The "Base Rate" is a rate set
by the Reference Bank based upon various factors including the Reference Bank's
costs and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at, above
or below such announced rate.) Any change in the Alternate Base Rate established
or announced by the Reference Bank shall take effect at the opening of business
on the day of such establishment or announcement.
"Amount Drawn" is defined in the definition of Applicable Commitment
Fee.
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"ANEXCO LLC Agreement" means the Limited Liability Company Agreement of
ANEXCO, as amended, supplemented, amended and restated or otherwise modified
from time to time pursuant to Section 7.1.15.
"ANEXCO" means ANEXCO, LLC, a Delaware limited liability company.
"Applicable Commitment Fee" means for (a) the Current Assets Loan
Commitment, 0.50%, and (b) the Fixed Assets Loan Commitment, the applicable
percentage set forth below corresponding to the sum of the average outstanding
daily principal amount of Fixed Assets Loans (the "Amount Drawn") during the
Fiscal Quarter ending on the applicable Quarterly Payment Date:
<TABLE>
<S> <C>
Amount of Fixed Assets Loans Drawn Applicable Commitment Fee
Greater than $50,000,000 0.75%
Less than or equal to $50,000,000 and greater 1.00%
than $25,000,000
Less than or equal to $25,000,000 1.25%
</TABLE>
"Applicable Margin" means for (a) Current Assets Loans maintained as
(i) LIBO Rate Loans, 3.00%, and (ii) Base Rate Loans, 1.50%, and (b) Fixed
Assets Loans maintained as (i) LIBO Rate Loans, 3.75%, and (ii) Base Rate Loans,
2.25%.
"Assignee Lender" is defined in Section 10.11.1.
"Assignor Lender" is defined in Section 10.11.1.
"Authorized Officer" is defined in clause (b) of Section 5.1.1.
"Availability Reserve" means the sum of (without duplication), at the
Administrative Agent's election, reserves: (a) for any matters affecting the
priority of the Administrative Agent's Liens, including (i) rental payments or
similar charges for any Borrower's leased premises or other Current Assets
Collateral locations for which the Borrowers have not delivered to the
Administrative Agent a landlord's waiver or mortgagee's waiver or other similar
subordination agreement, as applicable, all in form and substance reasonably
satisfactory to the Administrative Agent, and (ii) estimated payments due by the
Borrowers to any applicable warehousemen or third party processor, for which the
Borrowers have not delivered to the Administrative Agent a waiver or some other
similar subordination agreement as determined by and in form and
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<PAGE> 13
substance satisfactory to the Administrative Agent; provided, that any of the
foregoing amounts shall be adjusted from time to time hereafter upon (A)
delivery to the Administrative Agent of any such acceptable waiver or
subordination agreement, (B) the opening or closing of a Current Assets
Collateral location and/or (C) any change in the amount of rental, storage or
processor payments or similar charges; (b) upon the occurrence of a Material
Adverse Effect, in the good faith, reasonable judgment of the Administrative
Agent, the Administrative Agent shall have the right to reserve the lesser
amount of (i) 10% of the (Borrowing Base Amount minus the Minimum Excess
Availability) and (ii) $10 million; and (c) pursuant to the explicit terms of
this Agreement; provided, however, it is understood and agreed that no such
reserves shall be taken with respect to those items of Collateral already
excluded from the definitions of "Eligible Inventory" and "Eligible Accounts".
"Backed By Letter of Credit" means an account (a) that is backed by a
letter of credit (payable in Dollars) in form and substance reasonably
acceptable to the Administrative Agent and that is issued or confirmed by an
issuer having ratings of at least A2 or P2 by S&P and Moody's, respectively, or
a rating of at least A2 by International Bank Credit Analysis, Ltd. or at least
LC-1 by Thomson Bank Watch or (b) for which a guaranty agreement guaranteeing
the payment of such account has been executed by a U.S. corporation that is an
Affiliate of the account obligor both in form and substance and from a U.S.
corporation reasonably satisfactory to the Administrative Agent.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Borrower" and "Borrowers" are defined in the preamble.
"Borrowing" means a borrowing of Loans of the same type and, in the
case of LIBO Rate Loans, having the same Interest Period, made by all Lenders
required to make such Loans on the same Business Day and pursuant to the same
Borrowing Request in accordance with Section 2.1 or a continuation or conversion
thereof pursuant to Section 2.4.
"Borrowing Base Amount" shall mean at any time the amount equal to the
sum (without duplication) of (a) 85% of Eligible Accounts plus (b) a percentage
of Eligible Accounts that are Government Guaranteed where such percentage is
equal to the level of insurance coverage under the applicable guaranty net of
any deductibles plus (c) 65% of Eligible Inventory, provided, however, that the
amount available pursuant to clause (c) of this definition shall in no event
exceed $42,500,000. The Administrative Agent shall have the right to review such
computations and if, in its reasonable judgment, such computations have not been
computed in accordance with the terms of this Agreement, the Administrative
Agent shall have the right to correct such errors.
"Borrowing Base Certificate" means a certificate duly completed and
executed by the treasurer, assistant treasurer, chief accounting or financial
Authorized Officer of the Company,
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<PAGE> 14
substantially in the form of Exhibit F hereto, together with such changes
thereto as the Administrative Agent may from time to time reasonably request for
the purpose of monitoring the Borrowers' compliance with the limitations on the
amount of Current Assets Loans that may be outstanding at any time hereunder.
"Borrowing Request" means a Loan request and certificate duly executed
by an Authorized Officer of the applicable Borrower, substantially in the form
of Exhibit B-1 hereto.
"BP" means BP Chemicals Inc., an Ohio corporation.
"BP Joint Venture Agreement" means the Joint Venture Agreement, dated
March 31, 1999, between ANEXCO and BP, as amended, supplemented, amended and
restated or otherwise modified from time to time pursuant to Section 7.1.15.
"BP Production Agreement" means the Amended and Restated Production
Agreement, dated as of March 31, 1998, between BP and the Company.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York; and
(b) relative to the making, continuing, prepaying or repaying
of any LIBO Rate Loans, any day which is a Business Day described in
clause (a) above and which is also a day on which dealings in Dollars
are carried on in the London interbank eurodollar market.
"Canadian Facility" means a revolving loan and letter of credit
facility for loans and letters of credit for the account of any Canadian
Subsidiary in an amount not to exceed $15,000,000 U.S. Dollars or the Canadian
dollar equivalent thereof established in accordance with the terms of this
Agreement including Section 7.2.17.
"Canadian Subsidiary" means any Foreign Restricted Subsidiary that is
organized and existing under the laws of Canada or any province thereof.
"Capital Expenditures" means, for any period, the aggregate amount of
all expenditures of the Borrowers and the Foreign Restricted Subsidiaries for
fixed or capital assets made during such period which, in accordance with GAAP,
would be classified as capital expenditures.
"Capital Securities" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's equity (including any instruments
convertible into equity), whether now outstanding or issued after the Effective
Date.
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"Capitalized Lease Liabilities" means all monetary obligations of the
Borrowers or any of their Foreign Restricted Subsidiaries under any leasing or
similar arrangement which have been (or, in accordance with GAAP, should be)
classified as capitalized leases, and for purposes of each Loan Document, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP, and the stated maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without payment
of a premium or a penalty.
"Cash Collateralize" means, with respect to a Letter of Credit, the
deposit of immediately available funds into a cash collateral account maintained
with (or on behalf of) the Administrative Agent on terms satisfactory to the
Administrative Agent in an amount equal to the Stated Amount of such Letter of
Credit.
"Cash Equivalent Investment" means, at any time:
(a) any direct obligation of (or unconditionally guaranteed
by) the United States of America or a State (or any agency or political
subdivision thereof, to the extent such obligations are supported by
the full faith and credit of the United States of America or a State)
maturing not more than one year after such time;
(b) commercial paper maturing not more than 270 days from the
date of issue, which is issued by
(i) a corporation (other than an Affiliate of any
Obligor) organized under the laws of any State and rated A-1
or higher by S&P or P-1 or higher by Moody's, or
(ii) any Lender (or its holding company);
(c) any certificate of deposit, time deposit or bankers
acceptance, maturing not more than one year after its date of issuance,
which is issued by either
(i) any bank organized under the laws of the United
States (or any State) and which has (x) a credit rating of P-1
or higher from Moody's or A-1 or higher from S&P and (y) a
combined capital and surplus greater than $500,000,000, or
(ii) any Lender;
(d) any repurchase agreement having a term of 30 days or less
entered into with any Lender or any commercial banking institution
satisfying the criteria set forth in clause (c)(i) which
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<PAGE> 16
(i) is secured by a fully perfected security interest
in any obligation of the type described in clause (a), and
(ii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the
repurchase obligation of such commercial banking institution
thereunder;
(e) any money market mutual fund with a daily right of
redemption and a net asset value of $1.00 per share substantially all
the assets of which are comprised of investments of the types described
in the preceding clauses (a) through (d); or
(f) participations in loans (for a tenor of not more than 90
days) to Persons having short term credit ratings of at least A-1 and
P-1 by S&P and Moody's, respectively.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means
(a) a "Change in Control", as defined in any Sub Debt
Document, Senior Secured Discount Notes Indenture or the Senior Secured
Note Indenture;
(b) a change resulting when any Unrelated Person or any
Unrelated Persons, other than the designated shareholders listed on
Item 1.1 of the Disclosure Schedule ("Designated Shareholders"), acting
together, which would constitute a Group (as defined in Section 13(d)
of the Exchange Act) together with any Affiliates or Related Persons
thereof (in each case also constituting Unrelated Persons) shall at any
time either (i) Beneficially Own (as defined in Rule 13d3 of the
Exchange Act) more than 30% of the aggregate voting power of all
classes of Voting Stock of Parent or (ii) succeed in having a
sufficient number of its or their nominees elected to the Board of
Directors of Parent such that such nominees, when added to any existing
director remaining on the Board of Directors of Parent after such
election who is an Affiliate or Related Person of such Person or Group
(as defined in Section 13(d) of the Securities Exchange Act), shall
constitute a majority of the Board of Directors of Parent. As used
herein (a) "Unrelated Person" shall mean at any time any Person other
than Parent or any of its Subsidiaries and other than any trust for any
employee benefit plan of Parent or any of its Subsidiaries and (b)
"Related Person" of any Person shall mean any other Person owning (i)
5% or more of the outstanding common stock of such Person or (ii) 5% or
more of the Voting Stock of such Person;
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<PAGE> 17
(c) the failure of Parent at any time to directly own and
control beneficially and of record on a fully diluted basis 100% of the
outstanding Capital Securities of the Company, such Capital Securities
to be held free and clear of all Liens (other than Liens granted under
a Loan Document);
(d) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
of Parent or the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by
the shareholders of Parent or the Company, as the case may be, was
approved by a majority of the directors of Parent or the Company, as
the case may be, then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of Parent or the Company, as the
case may be, then in office; or
(e) the failure of the Company at any time to directly or
indirectly own and control beneficially or of record on a fully diluted
basis 100% of the outstanding Capital Securities of each other Borrower
and each Foreign Restricted Subsidiary, such Capital Securities to be
held free and clear of all Liens (other than Liens granted under a Loan
Document or pursuant to clause (e) of Section 7.2.3), provided,
however, the Transfer of the Fibers Business shall not be deemed to be
a Change in Control.
"CIT" is defined in the preamble.
"Chem Systems Appraisal" is defined in clause (b) of Section 5.1.15.
"Closing Date" means the date of the initial Credit Extensions, not to
be later than July 30, 1999.
"Closing Date Certificate" means the closing date certificate executed
and delivered by each Borrower pursuant to the terms of this Agreement,
substantially in the form of Exhibit D hereto.
"Code" means the Internal Revenue Code of 1986, and the regulations
thereunder, in each case as amended, reformed or otherwise modified from time to
time.
"Collateral" has the meaning provided for such term in the Security
Agreements, the Mortgages, the Pledge Agreements and any other related documents
in which an Obligor grants a security interest in favor of the Administrative
Agent on behalf of the Secured Parties.
"Commitment" means, as the context may require, the Current Assets Loan
Commitment, the Fixed Assets Loan Commitment, the Letter of Credit Commitment or
the Swing Line Loan Commitment.
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<PAGE> 18
"Commitment Amount" means, as the context may require, the Current
Assets Loan Commitment Amount, the Fixed Assets Loan Commitment Amount, the
Letter of Credit Commitment Amount or the Swing Line Loan Commitment Amount.
"Commitment Termination Date" means, as the context may require, the
Current Assets Loan Commitment Termination Date or the Fixed Assets Loan
Commitment Termination Date.
"Commitment Termination Event" means
(a) the occurrence of any Event of Default with respect to any
Borrower described in clauses (a) through (d) of Section 8.1.9; or
(b) the occurrence and continuance of any other Event of
Default and either
(i) the declaration of all or any portion of the
Loans to be due and payable pursuant to Section 8.3, or
(ii) the giving of notice by the Administrative
Agent, acting at the direction of the Required Lenders, to the
Company that the Commitments have been terminated pursuant to
Section 8.3.
"Commodity Hedging Agreements" means with respect to any Person, all
liabilities of such Person under exchange agreements, swap agreements, cap
agreements, future agreements, forward agreements and all other agreements or
arrangements (of a strictly non-speculative nature) designed to protect such
Person against fluctuations in commodity prices.
"Company" is defined in the preamble.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise, to assure a creditor against loss) the Indebtedness of any
other Person, or guarantees the payment of dividends or other distributions upon
the Capital Securities of any other Person; provided that the term "Contingent
Liability" shall not include endorsements for collection or deposits in the
ordinary course of the Borrowers' business. The amount of any Person's
obligation under any Contingent Liability shall (subject to any limitation set
forth therein) be deemed to be the outstanding principal amount of the debt,
obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
applicable Borrower (or the Company on behalf of such Borrower), substantially
in the form of Exhibit C hereto.
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<PAGE> 19
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with Parent,
the Company or any Subsidiary, are treated as a single employer under Section
414 of the Code or Section 4001 of ERISA.
"Copyright Security Agreement" means any Copyright Security Agreement
executed and delivered by any Obligor in substantially the form of Exhibit C to
any Security Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Credit Extension" means, as the context may require,
(a) the making of a Loan by a Lender; or
(b) the issuance of any Letter of Credit, or the extension of
any Stated Expiry Date of any existing Letter of Credit or the increase
in the Stated Amount of any existing Letter of Credit, in each case by
the Issuer.
"CSFB" is defined in the preamble.
"Current Assets" means all Collateral of the Borrowers other than the
Collateral comprising Fixed Assets.
"Current Assets Lender" is defined in clause (a) of Section 2.1.1.
"Current Assets Loan Commitment" means, relative to any Current Assets
Lender, such Current Assets Lender's obligation (if any) to make Current Assets
Loans pursuant to clause (a) of Section 2.1.1.
"Current Assets Loan Commitment Amount" means, on any date,
$85,000,000, as such amount may be reduced from time to time pursuant to Section
2.2.
"Current Assets Loan Commitment Termination Date" means the earliest of
(a) July 23, 2004;
(b) the date on which the Current Assets Loan Commitment
Amount is terminated in full or reduced to zero pursuant to the terms
of this Agreement; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in the preceding clauses, the Current
Assets Loan Commitments shall terminate automatically and without any further
action.
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<PAGE> 20
"Current Assets Loan Percentage" means, relative to any Lender, the
applicable percentage set forth opposite its name on Schedule II hereto under
the Current Assets Loan Commitment column or set forth in a Lender Assignment
Agreement under the Current Assets Loan Commitment column, as such percentage
may be adjusted from time to time pursuant to Lender Assignment Agreements
executed by such Lender and its Assignee Lender and delivered pursuant to
Section 10.11.1. A Lender shall not have any Current Assets Loan Commitment if
its percentage under the Current Assets Loan Commitment column is zero.
"Current Assets Loans" is defined in clause (a) of Section 2.1.1.
"Current Assets Note" means a joint and several promissory note of each
Borrower payable to any Current Assets Lender, in the form of Exhibit A-1 hereto
(as such promissory note may be amended, endorsed or otherwise modified from
time to time), evidencing the joint and several aggregate Indebtedness of the
Borrowers to such Current Assets Lender resulting from outstanding Current
Assets Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"Current Assets Obligations" means all obligations (monetary or
otherwise, whether absolute or contingent, matured or unmatured) of each Obligor
arising under or in connection with the Current Assets Loans, this Agreement and
each other Loan Document which secures or guarantees the Current Assets
Obligations including obligations under a Rate Protection Agreement where the
counterparty is a Current Assets Lender (or its Affiliate).
"Current Assets Obligations Account" is defined in clause (c) of
Section 2.7.
"Current Assets Required Lenders" means, at any time, Current Assets
Lenders holding greater than 50% of the aggregate Current Assets Loan
Commitments.
"Current Assets Secured Parties" means collectively, the Current Assets
Lenders, the Agents, the Lead Arranger, each counterparty to a Rate Protection
Agreement that is (or at the time such Rate Protection Agreement was entered
into, was) a Current Assets Lender or an Affiliate thereof and (in each case),
each of their respective successors, transferees and assigns.
"Current Assets Security Agreement" means the Current Assets Security
Agreement executed and delivered by each Borrower pursuant to the terms of this
Agreement to secure the Current Assets Obligations, substantially in the form of
Exhibit H-1 hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disbursement" is defined in Section 2.6.2.
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<PAGE> 21
"Disbursement Date" is defined in Section 2.6.2.
"Disbursement Due Date" is defined in Section 2.6.2.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented, amended and restated or
otherwise modified from time to time by the Borrowers with the prior written
consent of the Required Lenders.
"Disposition" (or similar words such as "Dispose") means any sale,
transfer, lease, contribution or other conveyance (including by way of merger)
of, or the granting of options, warrants or other rights to, any of any
Borrower's or any Foreign Restricted Subsidiary's assets (including accounts
receivables and Capital Securities of Foreign Restricted Subsidiaries) to any
other Person in a single transaction or series of transactions.
"Documentation Agent" is defined in the preamble and includes each
other Person appointed as the successor Documentation Agent pursuant to Section
9.4.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Account" means any account for which an obligor is subject to
the personal jurisdiction of federal or state courts in the United States of
America (and is subject to service of process in the U.S.).
"Domestic Office" means the office of a Lender designated as its
"Domestic Office" on Schedule II hereto or in a Lender Assignment Agreement, or
such other office within the United States as may be designated from time to
time by notice from such Lender to the Administrative Agent and the Company.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 10.8.
"Eligible Account" shall mean at any time the invoice or ledger amount
owing on each account of any Borrower, which shall mean (i) any "account" as
such term is defined in the U.C.C. , (ii) any receivable (including royalties)
arising out of the licensing of chlorine dioxide generator technology or other
technology related thereto, (iii) receivables arising out of the profit sharing
component of conversion or production contracts or cost reimbursement
obligations or other obligations to pay money under other contracts to the
extent the parties thereto have agreed in writing as to the amount thereof that
is subject to no further adjustment, or (iv) any "chattel paper" (as such term
is defined in the U.C.C.) of the Borrowers (so long as such chattel paper is
delivered to the Administrative Agent and the Administrative Agent has a
first-priority perfected Lien in any such "chattel paper"), in each case, net of
any reserves reasonably required by the Administrative Agent from time to time
in accordance with the Administrative Agent's
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<PAGE> 22
customary practice, for which each of the following statements is accurate and
complete to the reasonable satisfaction of the Administrative Agent (and the
Company, by including an account in any computation of the Borrowing Base
Amount, shall be deemed to represent and warrant to the Agents, the Issuer and
each Lender the accuracy and completeness of such statements):
(a) Such account is a binding and valid obligation of the
obligor thereon and is in full force and effect and such account debtor
is not an Affiliate of any Borrower (other than Koch Industries, Inc.,
ANEXCO or BP or any of their respective Affiliates);
(b) Such account is bona fide;
(c) Payment of such account is less than 30 days past due (or
60 days past due in the case of any obligor listed in Item A of the
Account Obligor Schedule on payment terms consistent with past
practices of the Borrowers) as determined by the due date stated on the
invoice therefor (or if such account is not paid by reference to any
invoice in the ordinary course of business but instead by reference to
the terms of the agreements creating such account, such account has not
remained unpaid beyond 30 days (or 60 days past due in the case of any
obligor listed in Item A of the Account Obligor Schedule on payment
terms consistent with current practices) after the due date therefor);
(d) Such account is not subject to any dispute, setoff
(excluding any account payable setoff supported by a letter of credit
but including (i) any Exchange Inventory Payable and (ii) any accounts
payable amounts owing by any of the Borrowers to the third party which
owes an Exchange Inventory Receivable to such Borrower), counterclaim
or other claim or defense including rescission, cancellation or
avoidance, whether by operation of law or otherwise, on the part of the
account debtor or any other Person denying liability under such
account; provided, however, that any such account shall constitute an
Eligible Account to the extent it is not subject to any such dispute,
setoff, counterclaim or other claim or defense;
(e) In the case of an account owing to any Borrower, the
Administrative Agent, on behalf of the Current Assets Lenders, has a
first-priority perfected Lien covering such account and, on behalf the
Fixed Assets Lenders, has a second-priority perfected Lien covering
such account and such account is, and at all times will be, free and
clear of all other Liens;
(f) Such account arose in the ordinary course of business of
(i) any of the Borrowers or (ii) any Foreign Restricted Subsidiary
provided that such account arising in the ordinary course of business
of a Foreign Restricted Subsidiary has been duly transferred to a
Borrower and is reflected on the books and records of such Borrower,
and such Borrower is the legal owner of such account;
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(g) Such account is not payable by an obligor who is more than
30 days (or 60 days in the case of any obligor listed in Item A of the
Account Obligors Schedule on payment terms consistent with past
practices of the Borrowers) past due with regard to 20% or more of the
total accounts owed to the Borrowers by such obligor or any of its
Affiliates;
(h) All consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority required
to be obtained, effected or given in connection with the execution,
delivery and performance of such account by each party obligated
thereunder have been duly obtained, effected or given and are in full
force and effect;
(i) Such account is not an account as to which any United
States federal or State Governmental Authority is the account debtor,
except to the extent the applicable Borrower has complied with the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727;
41 U.S.C. Section 15), by delivering to the Administrative Agent a
notice of assignment in favor of the Administrative Agent under such
Act and in compliance with applicable provisions of 31 C.F.R. Section
7-103.8 and 41 C.F.R. Section 1-30.7, or with similar State law;
(j) The obligor on such account is not the subject of any
bankruptcy or insolvency proceeding, has not had a trustee or receiver
appointed for all or a substantial part of its property, has not made
an assignment for the benefit of creditors, nor admitted its inability
to pay its debts as they mature or suspended its business;
(k) With respect to any Foreign Account, such account is
(without duplication), (i) a Foreign Account which is Backed By Letter
of Credit, (ii) an Acceptable Account that is listed on Item B of the
Account Obligor Schedule, provided, however, that any such Acceptable
Account shall be included in Eligible Accounts up to an aggregate
amount not to exceed, at any time, 10% of the total balance due on all
accounts, (iii) a Foreign Account which is not Backed By Letter of
Credit, provided, however, that any such Foreign Account which is not
Backed By Letter of Credit shall be included in Eligible Accounts up to
an aggregate amount not to exceed, at any time, 15% of the total
balance due on all accounts, or (iv) the account debtor has previously
been approved in writing by the Current Assets Required Lenders as an
eligible foreign account debtor for purposes of this Agreement;
(l) In the case of the sale of goods, such goods have been
sold to an obligor on a true sale basis or open account, or subject to
contract, and not on consignment, on approval or on a "sale or return"
basis or subject to any other repurchase or return agreement (other
than for failure to meet specifications), no material part of such
goods has been returned, rejected, lost or damaged, and such account is
not evidenced by chattel
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<PAGE> 24
paper or an instrument of any kind which has not been endorsed and
delivered to the Administrative Agent;
(m) Each of the representations and warranties set forth in
each Security Agreement with respect to such account is true and
correct in all material respects on such date;
(n) Such account otherwise meets the above qualifications and
is (i) due and owing from a Foreign Obligor to ANEXCO and (ii) owing
from ANEXCO to the Company pursuant to the ANEXCO LLC Agreement and the
BP Joint Venture Agreement, net of ANEXCO's operating costs; in each
case subject to the requirements of Section 7.1.15; and
(o) Such account has such other characteristics or criteria as
the Administrative Agent, in its reasonable discretion may specify from
time to time in accordance with the Administrative Agent's customary
practice;
provided that, if any Eligible Account, when added to all other accounts that
are obligations of the same obligor and its Affiliates, results in a total sum
that exceeds 15% (or 25% in the case of any obligor listed on Item C of the
Account Obligor Schedule) of the total balance then due on all Eligible Accounts
(without giving effect to any reduction in Eligible Accounts pursuant to this
clause), the amount of such account in excess of 15% (or 25% in the case of any
obligor listed on Item C of the Account Obligor Schedule) of such total balance
then due shall be excluded from Eligible Accounts.
"Eligible Assignee" is defined in clause (a) of Section 10.11.1.
"Eligible Inventory" shall mean, at any time, all inventory (as such
term is defined in the U.C.C.) of the Borrowers, net of any reserves reasonably
required by the Administrative Agent from time to time in accordance with the
Administrative Agent's customary practice and net of any accounts payable
amounts owing by any Borrower to BP provided that such amounts do not duplicate
those included in clause (d) of the definition of "Eligible Accounts", for which
each of the following statements is accurate and complete to the reasonable
satisfaction of the Administrative Agent and which at all times continue to be
acceptable to the Administrative Agent in the exercise of its reasonable
judgment (and the Company, by including such inventory in any computation of the
Borrowing Base Amount, shall be deemed to represent and warrant to the Agents,
each Issuer and each Lender, the accuracy and completeness of such statements):
(a) Such inventory shall be valued in accordance with GAAP and
(i) shall include raw materials and finished goods but (ii) shall not
include goods that are classified as "work-in-progress", "parts and
supplies" or "stores inventories";
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(b) Such inventory is in good condition, meets all standards
imposed by any Governmental Authority having regulatory authority over
it, its use and/or sale and is either currently usable, undamaged or
currently salable in the normal course of business of the Borrowers;
(c) Such inventory is an Exchange Inventory Receivable or such
inventory is in the possession of the Borrowers, or is in transit in
the ordinary course of business but in respect of which title remains
in the Borrowers and which is fully insured (subject to deductibles
consistent with prudent industry standards for similarly situated
companies) and is not (i) located outside the United States of America
or (ii) such inventory is an Exchange Inventory Receivable or is in the
possession or control of any warehouseman, bailee or any agent or
processor for or customer of the Borrowers unless, it is in any such
Person's possession, the Borrowers shall have notified (in a manner
that effectively under applicable law creates a valid and
first-priority perfected Lien in favor of the Administrative Agent, on
behalf of the Current Assets Lenders, in such inventory) such
warehouseman, bailee, agent, processor or customer of the
Administrative Agent's Lien and such warehouseman, bailee, agent,
processor or customer has subordinated or waived any Lien it may claim
therein and agreed to hold all such inventory for the Administrative
Agent's account subject to the Administrative Agent's instructions;
(d) Each of the representations and warranties set forth in
the applicable Security Agreement with respect to such inventory is
true and correct in all material respects on such date;
(e) In the case of inventory of the Borrowers, the
Administrative Agent, on behalf of the Current Assets Lenders, has a
first-priority perfected Lien covering such inventory and, on behalf of
the Fixed Assets Lenders, has a second-priority perfected Lien covering
such inventory (in each case, except for the Lien granted in connection
with the BP Production Agreement), and such inventory is, and at all
time will be, free and clear of all other Liens (other than inchoate
Liens permitted under Section 7.2.3 or with respect to which all rights
of the holder of such Liens have been waived or subordinated to the
satisfaction of the Administrative Agent);
(f) Such inventory does not include goods that are not owned
by the Borrowers or that are held by the Borrowers pursuant to any
consignment agreement;
(g) To the extent inventory includes any Exchange Inventory
Receivable (i) such Exchange Inventory Receivable shall be reduced by
any accounts payable amounts owing by any of the Borrowers to the third
party which owes such Exchange Inventory Receivable to such Borrower
and (ii) any such accounts payable amount shall be applied first to
clause (d)(ii) of the definition of Eligible Account and second to this
clause (g)(i), without duplication); and
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(h) Such inventory has such other characteristics or criteria
as the Administrative Agent, in its reasonable discretion, may specify
from time to time in accordance with the Administrative Agent's
customary practice.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"Equipment" is defined in the Fixed Assets Security Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to Sections of ERISA also refer to any successor Sections thereto.
"ERISA Affiliate" means any Person which is in the same Controlled
Group as any Borrower.
"ESOP" means the Sterling Chemicals ESOP as in existence on the Closing
Date.
"Event of Default" is defined in Section 8.1.
"Excess Availability" means, at any time of determination, the amount
which is
(a) the then existing Borrowing Base Amount
less
(b) the aggregate outstanding principal amount of all Current
Assets Loans and Swing Line Loans, together with the aggregate amount
of all Letter of Credit Outstandings.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Inventory" means any inventory which is subject to a swap,
exchange or similar agreement or arrangement between any of the Borrowers and a
third party.
"Exchange Inventory Payable" means the net amount of Exchange Inventory
owing by any of the Borrowers to a third party.
"Exchange Inventory Receivable" means the net amount of Exchange
Inventory owed to any Borrower by a third party.
"Exemption Certificate" is defined in clause (e) of Section 4.6.
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"Existing Loan Agreement" is defined in the third recital.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.
"Fee Letter" means the confidential letter, dated July 23, 1999,
between DLJ and the Company, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Fibers Subsidiaries" means Sterling Fibers, Inc. and Sterling
Chemicals International, Inc., each of which is a Delaware corporation and a
Wholly-Owned Subsidiary of the Company.
"Filing Agent" is defined in Section 5.1.13.
"Filing Statements" is defined in Section 5.1.13.
"Fiscal Quarter" means a quarter ending on the last day of March, June,
September or December.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on September 30; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "1999 Fiscal Year") refer to the Fiscal Year
ending on September 30 of such calendar year.
"Fixed Assets" means the real property, buildings, Equipment,
structures and other improvements to any of the foregoing, of the Borrowers and
to the extent any of the following items of property constitute fixtures and/or
equipment under applicable laws, all fixtures, fittings, appliances, apparatus,
Equipment, machinery, building and construction materials and other articles of
every kind and nature whatsoever (including the intellectual property and
technology necessary to operate such assets) and all replacements thereof, now
or hereafter affixed or attached to, placed upon or used in any way in
connection with the complete and comfortable use, enjoyment, occupation,
operation, development and/or maintenance of the real property of the Borrowers
or such buildings, structures and other improvements.
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"Fixed Assets Lender" is defined in clause (b) of Section 2.1.1.
"Fixed Assets Loans" is defined in clause (b) of Section 2.1.1.
"Fixed Assets Loan Commitment" means, relative to any Fixed Assets
Lender, such Fixed Assets Lender's obligation (if any) to make Fixed Assets
Loans pursuant to clause (b) of Section 2.1.1.
"Fixed Assets Loan Commitment Amount" means, on any date, $70,000,000,
as such amount may be reduced from time to time pursuant to Section 2.2.
"Fixed Assets Loan Commitment Termination Date" means the earliest of
(a) July 23, 2004;
(b) the date on which the Fixed Assets Loan Commitment Amount
is terminated in full or reduced to zero pursuant to the terms of this
Agreement; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in the preceding clauses, the Fixed
Assets Loan Commitments shall terminate automatically and without any further
action.
"Fixed Assets Loan Percentage" means, relative to any Lender, the
applicable percentage set forth opposite its name on Schedule II hereto under
the Fixed Assets Loan Commitment column or set forth in a Lender Assignment
Agreement under the Fixed Assets Loan Commitment column, as such percentage may
be adjusted from time to time pursuant to Lender Assignment Agreements executed
by such Lender and its Assignee Lender and delivered pursuant to Section
10.11.1. A Lender shall not have any Fixed Assets Loan Commitment if its
percentage under the Fixed Assets Loan Commitment column is zero.
"Fixed Assets Note" means a joint and several promissory note of each
Borrower payable to any Fixed Assets Lender, in the form of Exhibit A-2 hereto
(as such promissory note may be amended, endorsed or otherwise modified from
time to time), evidencing the joint and several aggregate Indebtedness of the
Borrowers to such Fixed Assets Lender resulting from outstanding Fixed Assets
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Fixed Assets Obligations" means all obligations (monetary or
otherwise, whether absolute or contingent, matured or unmatured) of each Obligor
arising under or in connection with the Fixed Assets Loans, this Agreement and
each other Loan Document which secures or guarantees the Fixed Assets
Obligations including obligations under a Rate Protection Agreement where the
counterparty is a Fixed Assets Lender (or its Affiliate).
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"Fixed Assets Obligations Account" is defined in clause (c) of Section
2.7
"Fixed Assets Required Lenders" means, at any time, Lenders holding
greater than 50% of the aggregate Fixed Assets Loan Commitments.
"Fixed Assets Security Agreement" means the Fixed Assets Security
Agreement executed and delivered by each Borrower to secure the Fixed Assets
Obligations pursuant to the terms of this Agreement substantially in the form of
Exhibit H-2 hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"Fixed Assets Security Documents" means the Fixed Assets Security
Agreement, the Parent Pledge Agreement, the Obligor Pledge Agreement, each
Mortgage and each other Loan Document pursuant to which the Administrative Agent
is granted a Lien to secure the Fixed Assets Obligations.
"Fixed Assets Secured Parties" means, collectively, the Fixed Assets
Lenders, the Agents, the Lead Arranger, each counterparty to a Rate Protection
Agreement that is (or at the time such Rate Protection Agreement was entered
into, was) a Fixed Assets Lender or an Affiliate thereof and (in each case),
each of their respective successors, transferees and assigns.
"Foreign Account" means any account (a) for which the obligor is a
Foreign Obligor or (b) due and payable by a Foreign Obligor to ANEXCO.
"Foreign Employee Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Borrowers, any of its Subsidiaries or any of its
ERISA Affiliates, but which is not covered by ERISA pursuant to ERISA Section
4(b)(4).
"Foreign Obligor" means an obligor that is not subject to the
jurisdiction of federal or state courts in the United States of America.
"Foreign Pension Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA which (i) is maintained or contributed to for the benefit
of employees of the Borrowers, any of its Subsidiaries or any of its ERISA
Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of ERISA,
and (iii) under applicable local law, is required to be funded through a trust
or other funding vehicle.
"Foreign Restricted Subsidiary" mean each Foreign Subsidiary listed on
Item 1.4 of the Disclosure Schedule that is not an Unrestricted Subsidiary.
"Foreign Subsidiary" means any Subsidiary that is not a Subsidiary
incorporated or organized in the United States or any State.
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"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" means generally accepted United States accounting principles,
applied on a consistent basis (except for changes made due to the implementation
of new or revised standards issued by the Financial Accounting Standards Board),
and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles observed in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Government Guaranteed" means Eligible Accounts that are guaranteed by
the full faith and credit of a U.S. or Canadian Governmental Authority.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended; or
(c) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance (including any petroleum product)
within the meaning of any other applicable federal, state or local law,
regulation, ordinance or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards
of conduct concerning any hazardous, toxic or dangerous waste,
substance or material, all as amended.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under currency exchange agreements, interest rate
swap agreements, interest rate cap agreements, Commodity Hedging Agreements and
interest rate collar agreements, and all other agreements or arrangements
designed to protect such Person against fluctuations in interest rates, currency
exchange rates or commodity prices.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
in any Loan Document refer to such Loan Document as a whole and not to any
particular Section, paragraph or provision of such Loan Document.
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"Impermissible Qualification" means any qualification or exception to
the opinion or certification of any independent public accountant as to any
financial statement of the Borrowers:
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examinations of
matters due to limitations imposed by the Borrowers relevant to such
financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause the Borrowers to be in Default.
"including" and "include" means including, without limiting the
generality of any description preceding such term.
"Indebtedness" of any Person means (without duplication):
(a) all obligations of such Person for borrowed money or
advances and all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments and all Capital Securities
which have redemption provisions exercisable at the option of the
holder thereof at any time prior to the Termination Date (in the
absence of any contingency) in whole or in part in cash;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all Capitalized Lease Liabilities of such Person;
(d) for purposes of Section 8.1.5 only, all other items which,
in accordance with GAAP, would be included as liabilities on the
liability side of the balance sheet of such Person as of the date at
which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services excluding trade accounts payable in the
ordinary course of business which are not overdue for a period of more
than 60 days or, if overdue for more than 60 days, as to which a
dispute exists and adequate reserves in conformity with GAAP have been
established on the books of such Person, and indebtedness of the types
otherwise referred to in this definition secured by (or for which the
holder of such indebtedness has an
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existing right, contingent or otherwise, to be secured by) a Lien on
property owned or being acquired by such Person (including indebtedness
arising under conditional sales or other title retention agreements),
whether or not such indebtedness shall have been assumed by such Person
or is limited in recourse;
(g) obligations arising under Synthetic Leases; and
(h) all Contingent Liabilities of such Person in respect of
any of the foregoing.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership or joint venture in which such Person is a
general partner) to the extent such Person is liable therefor as a result of
such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness, ownership interest or other
relationship provide that such Person is not liable therefor.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Independent Financial Advisor" means a reputable nationally recognized
accounting, appraisal or investment banking firm that, in the reasonable good
faith judgment of the Board of Directors of the Company, is qualified to perform
the task for which such firm has been engaged and is independent in all respects
with respect to the Company and its Affiliates.
"Initial Syndication" is defined in clause (a) of Section 10.11.1.
"Intellectual Property Collateral" has the meaning provided for such
term in the Security Agreements.
"Intercreditor Agreements" means, as applicable, the Revolver
Intercreditor Agreement, the Parent Intercreditor Agreement and/or the Senior
Debt Intercreditor Agreement.
"Intercreditor Amendment" is defined in Section 5.1.14.
"Interest Period" means, relative to any LIBO Rate Loan, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Sections 2.3 or
2.4 and shall end on (but exclude) the day which numerically corresponds to such
date one, two, three, six or nine months thereafter, or, if available in the
Administrative Agent's reasonable determination and available to all of the
Lenders, either twelve months thereafter or such other time period less than one
month as may be requested by the Borrowers (a "Non-Standard Period") (or, if
such month has no numerically corresponding day, on the last Business Day of
such month), as the applicable Borrower may select in its relevant notice
pursuant to Sections 2.3 or 2.4; provided, however, that:
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<PAGE> 33
(a) such Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than ten different dates;
(b) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is the
first Business Day of a calendar month, in which case such Interest
Period shall end on the Business Day next preceding such numerically
corresponding day); and
(c) no Interest Period for any Loan may end later than the
Stated Maturity Date for such Loan.
"Investment" means, relative to any Person,
(a) any loan, advance or extension of credit made by such
Person to any other Person, including the purchase by such Person of
any bonds, notes, debentures or other debt securities of any other
Person;
(b) any Contingent Liability of such Person incurred in
connection with loans or advances made by others to any other Person;
and
(c) any Capital Securities held by such Person in any other
Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property at the time of such Investment.
"ISP98 Rules" is defined in Section 10.9.
"Issuance Request" means a Letter of Credit request duly executed by an
Authorized Officer of the applicable Borrower, substantially in the form of
Exhibit B-2 hereto.
"Issuer" means, collectively, The Chase Manhattan Bank or the Person
issuing the Letters of Credit hereunder, as designated by the Administrative
Agent in its capacity as Issuer of the Letters of Credit and any other Lender
designated by any Borrower that issues a Letter of Credit with the consent of
the Administrative Agent which consent shall not be unreasonably withheld.
"Joinder Agreement" means a Joinder Agreement, substantially in the
form of Exhibit J hereto, executed and delivered by each Person who is required
to become (or otherwise becomes, pursuant to the terms of this Agreement) a
Borrower in accordance with Section 7.1.8.
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"Joint Venture Contribution" means any Disposition of the Capital
Securities of the Fibers Subsidiaries or all or substantially all of the assets
of the Fibers Subsidiaries to a Person in which the Company and its Affiliates
will, immediately after giving effect to such transaction, beneficially own or
hold any Capital Securities in such Person to which such contribution is made,
including any such contribution made through any Merger or any agreement to
operate all or substantially all of the assets of the Fibers Subsidiaries under
any similar arrangement, in each case, made in accordance with the terms of this
Agreement.
"Lead Arranger" is defined in the preamble.
"Lender Assignment Agreement" means an assignment agreement
substantially in the form of Exhibit L hereto.
"Lenders" is defined in the preamble and includes any Person that
becomes a Lender pursuant to Section 10.11.1.
"Lender's Environmental Liability" means any and all losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
costs, judgments, suits, proceedings, damages (including consequential damages),
disbursements or expenses of any kind or nature whatsoever (including reasonable
attorneys' fees at trial and appellate levels and experts' fees and
disbursements and expenses incurred in investigating, defending against or
prosecuting any litigation, claim or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against any Agent, any Lender
or the Issuer or any of such Person's Affiliates, shareholders, directors,
officers, employees, and agents in connection with or arising from:
(a) any Hazardous Material on, in, under or affecting all or
any portion of any property of the Company or any of its Subsidiaries,
the groundwater thereunder, or any surrounding areas thereof to the
extent caused by Releases from the Company's or any of its
Subsidiaries' or any of their respective predecessors' properties;
(b) any misrepresentation, inaccuracy or breach of any
warranty, contained or referred to in Section 6.12;
(c) any violation or claim of violation by the Company or any
of its Subsidiaries of any Environmental Laws; or
(d) the imposition of any Lien for damages caused by or the
recovery of any costs for the cleanup, release or threatened release of
Hazardous Material by the Company or any of its Subsidiaries, or in
connection with any property owned or formerly owned by the Company or
any of its Subsidiaries.
"Letter of Credit" is defined in clause (a) of Section 2.1.2.
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"Letter of Credit Commitment" means, with respect to the Issuer, the
Issuer's obligation to issue Letters of Credit pursuant to Section 2.1.2 and,
with respect to each Current Assets Loan Lender, the obligations of each such
Lender to participate in such Letters of Credit pursuant to Section 2.6.1.
"Letter of Credit Commitment Amount" means, on any date, a maximum
amount of $20,000,000, as such amount may be permanently reduced from time to
time pursuant to Section 2.2.
"Letter of Credit Outstandings" means, on any date, an amount equal to
the sum of (a) the then aggregate amount which is undrawn and available under
all issued and outstanding Letters of Credit, and (b) the then aggregate amount
of all unpaid and outstanding Reimbursement Obligations.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the rate per annum equal to the rate at which Dollar deposits are offered for
such Interest Period as set forth on the Telerate Screen LIBO Page, at or about
12:00 noon, New York City time, two Business Days prior to the beginning of such
Interest Period for delivery on the first day of such Interest Period, and in an
amount approximately equal to the amount of the LIBO Rate Loan and for a period
approximately equal to such Interest Period; provided, however, that if there
shall at any time no longer exist a Telerate Screen LIBO Page, "LIBO Rate" shall
mean, with respect to each day during each Interest Period pertaining to a LIBO
Rate Loan, the rate per annum equal to the rate at which the Administrative
Agent or its designee is offered Dollar deposits at or about 12:00 noon, New
York City time, two Business Days prior to the beginning of such Interest Period
in the interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of LIBO Rate Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the LIBO Rate
Loan to be outstanding for a period approximately equal to such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a rate of interest determined by
reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded, if necessary, to the nearest 1/16 of 1%)
determined pursuant to the following formula:
<TABLE>
<CAPTION>
LIBO Rate LIBO Rate
<S> <C>
(Reserve
Adjusted) = 1.00 - LIBOR Reserve Percentage
</TABLE>
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The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans
will be determined by the Administrative Agent on the basis of the LIBOR Reserve
Percentage in effect two Business Days before the first day of such Interest
Period.
"LIBOR Office" means the office of a Lender designated as its "LIBOR
Office" on Schedule II hereto or in a Lender Assignment Agreement, or such other
office designated from time to time by notice from such Lender to the Company
and the Administrative Agent, whether or not outside the United States, which
shall be making or maintaining the LIBO Rate Loans of such Lender.
"LIBOR Reserve Percentage" means, relative to any Interest Period for
LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of or including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment for security purposes, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property, or other
priority or preferential arrangement of any kind or nature whatsoever, to secure
payment of a debt or performance of an obligation.
"Loan Documents" means collectively this Agreement, each Letter of
Credit, each Rate Protection Agreement, each Note, each Security Agreement, each
Joinder Agreement, each Mortgage, each Copyright Security Agreement, each Patent
Security Agreement, each Trademark Security Agreement, each Pledge Agreement,
each Intercreditor Agreement, each Lockbox Agreement, the Fee Letter, each
agreement pursuant to which the Administrative Agent is granted a Lien to secure
the Obligations and each other agreement, certificate, document or instrument
delivered in connection with any Loan Document (including the agreements
executed from time to time pursuant to Section 7.1.8 and the agreements executed
from time to time by the Borrowers pursuant to Section 7.1.12), whether or not
specifically mentioned herein or therein.
"Loans" means, as the context may require, a Current Assets Loan, a
Fixed Assets Loan, or a Swing Line Loan of any type.
"Lockbox" means any lockbox established at a Lockbox Bank for
collection of payments in respect of receivables or other Collateral.
"Lockbox Account" means any lockbox account established at a Lockbox
Bank.
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<PAGE> 37
"Lockbox Agreements" means the deposit account agreements, blocked
account agreements, lockbox agreements or similar agreements, executed by and
among the Borrowers, the Administrative Agent and the financial institutions at
which the relevant accounts are being maintained, each in form and substance
reasonably satisfactory to the Administrative Agent, as such agreements may be
amended, supplemented, amended and restated or otherwise modified from time to
time.
"Lockbox Bank" means each bank identified as such in the Perfection
Certificate that has executed a Lockbox Agreement and has been confirmed by the
Administrative Agent not to be in uncertain financial condition, at which the
Borrowers, or any of their Foreign Restricted Subsidiaries, deposit proceeds of
Collateral.
"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company or the Company and its Subsidiaries taken
as a whole, (b) the rights and remedies of any Secured Party under any Loan
Document or (c) the ability of the Company or the Company and the other
Obligors, taken as a whole, to perform their Obligations under the Loan
Documents.
"Maximum Capital Expenditure Amount" is defined in Section 7.2.7.
"Merge" is defined in Section 7.2.10.
"Minimum Excess Availability" means (a) $12,000,000, as such amount may
be reduced by the Administrative Agent from time to time pursuant to Section
7.2.4, plus (b) any Availability Reserve (as adjusted from time to time pursuant
to clause (e) of Section 2.7).
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means each mortgage, deed of trust or agreement executed and
delivered by any Borrower in favor of the Administrative Agent for the benefit
of the Secured Parties pursuant to the requirements of this Agreement in
substantially the form of Exhibit I hereto, as applicable, under which a Lien is
granted on the real property and fixtures, or the Obligor's leasehold interest
in the real property and fixtures, described therein, in each case as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Net Debt Proceeds" means, with respect to the incurrence, sale or
issuance by Parent, the Borrowers or any Foreign Restricted Subsidiary of any
Indebtedness after the Effective Date (other than Indebtedness permitted by
Section 7.2.2), the excess of (a) the gross cash proceeds received by Parent,
the Borrowers or any Foreign Restricted Subsidiary from such incurrence, sale or
issuance, less (b) the sum (without duplication) of all reasonable and customary
underwriting commissions and legal, investment banking, brokerage and accounting
and other professional fees, sales commissions and disbursements and all other
reasonable fees, expenses
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<PAGE> 38
(including any State filing taxes) and charges, in each case actually incurred
in connection with such incurrence, sale or issuance.
"Net Disposition Proceeds" means, with respect to any Disposition after
the Effective Date, other than either a Permitted Disposition or an issuance or
sale of such Person's own Capital Securities or warrants or options thereon, the
excess of (a) the gross cash proceeds received by Parent, the Borrowers or any
Foreign Restricted Subsidiary from any such Disposition and any cash payments
received in respect of promissory notes or other non-cash consideration
delivered to Parent, the Borrowers or any Foreign Restricted Subsidiary in
respect thereof, less (b) the sum (without duplication) of (i) all reasonable
and customary fees and expenses with respect to legal, investment banking,
brokerage, accounting and other professional fees, sales commissions and
disbursements and all other reasonable fees, expenses and charges, in each case
actually incurred in connection with such Disposition, (ii) all Taxes and other
governmental costs and expenses actually paid or estimated by Parent, the
Borrowers or any Foreign Restricted Subsidiary (in good faith) to be payable in
cash in connection with such Disposition, and (iii) payments made by Parent, the
Borrowers or any Foreign Restricted Subsidiary to retire Indebtedness (other
than the Credit Extensions) of Parent, the Borrowers or any Foreign Restricted
Subsidiary where payment of such Indebtedness is required in connection with
such Disposition; provided, however, that if, after the payment of all Taxes
with respect to such Disposition, the amount of estimated Taxes, if any,
pursuant to clause (b)(ii) above exceeded the Tax amount actually paid in cash
in respect of such Disposition, the aggregate amount of such excess shall be
immediately payable, pursuant to clause (d) of Section 3.1.1, as Net Disposition
Proceeds.
"Net Equity Proceeds" means with respect to the sale or issuance by
Parent, any Borrower or any of their Subsidiaries to any Person of its own
Capital Securities, warrants or options or the exercise of any such warrants or
options, the excess of:
(a) the gross cash proceeds received by such Person from such
sale, exercise or issuance, less
(b) all reasonable and customary underwriting commissions and
legal, investment banking, brokerage and accounting and other
professional fees, sales commissions and disbursements actually
incurred (including any State filing Taxes) in connection with such
sale or issuance which have not been paid to Affiliates of Parent or
such Borrower in connection therewith.
"No Less Favorable Terms and Conditions" means, with respect to any
refinancing of any Indebtedness permitted hereunder, terms and conditions which
are no less favorable to the continuing Lenders and evidenced by documentation
which shall not (a) increase the principal amount of or interest rate on such
outstanding Indebtedness, (b) reduce either the tenor or the average life of
such Indebtedness, (c) change the respective primary obligor(s) on the
refinancing Indebtedness (other than a change from any Borrower to Parent or any
other Borrower or a Foreign Restricted Subsidiary or a change from any Foreign
Restricted Subsidiary to Parent or
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<PAGE> 39
any other Foreign Restricted Subsidiary), (d) change the security, if any, for
the refinancing Indebtedness (except to the extent that less security is granted
to holders of such refinancing Indebtedness) and (e) afford the holders of such
refinancing Indebtedness other covenants, defaults, rights or remedies, taken as
a whole, more burdensome to the obligor(s) than those contained in such
Indebtedness (and in the case of Subordinated Debt, none of the subordination
provisions contained in the refinancing Indebtedness shall be less favorable to
the Lenders, the Issuer, and the Agents than the Indebtedness so refinanced).
"Non-Excluded Taxes" means any Taxes other than net income and
franchise taxes imposed with respect to any Secured Party by (a) any
jurisdiction (or political subdivision thereof) of which such Secured Party is a
citizen or resident, (b) any jurisdiction (or political subdivision thereof) in
which such Secured Party is presently engaged in the active conduct of its
banking business through an office, branch or other permanent establishment, or
(c) the jurisdiction (or any political subdivision thereof) under the laws of
which such Secured Party is organized or in which it maintains its applicable
lending office.
"Non-Standard Period" is defined in the definition of "Interest
Period."
"Non-U.S. Lender" means any Lender that is not a "United States
person", as defined under Section 7701(a)(30) of the Code.
"Note" means, as the context may require, a Current Assets Note, a
Fixed Assets Note, or a Swing Line Note.
"Obligation Accounts" is defined in clause (c) of Section 2.7
"Obligations" means all Current Assets Obligations, all Fixed Assets
Obligations and all other obligations (monetary or otherwise, whether absolute
or contingent, matured or unmatured) of each Obligor arising under or in
connection with this Agreement, each Note and each other Loan Document.
"Obligor" means, as the context may require, Parent, each Foreign
Restricted Subsidiary, each Borrower and each other Person (other than a Secured
Party) obligated under any Loan Document.
"Obligor Pledge Agreement" means the Pledge Agreement executed and
delivered by an Authorized Officer of each Borrower that owns a Pledged
Subsidiary, substantially in the form of Exhibit G-2 hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Offering Memorandum" means the offering memorandum of the Company,
dated July 19, 1999, used in connection with the offer and sale of the Senior
Secured Notes.
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"Organic Document" means, with respect to any Obligor, as applicable,
its certificate of incorporation, by-laws, certificate of partnership,
partnership agreement, certificate of formation, limited liability company
agreement and all shareholder agreements, voting trusts and similar arrangements
applicable to any of such Obligor's partnership interests, limited liability
company interests or authorized shares of Capital Securities.
"Other Taxes" means any and all stamp, documentary or similar taxes, or
any other excise or property taxes or similar levies that arise on account of
any payment made or required to be made under any Loan Document or from the
execution, delivery, registration, recording or enforcement of any Loan
Document.
"Overadvance Amount" means an amount, determined at the sole discretion
of the Administrative Agent and subject to any additional terms the
Administrative Agent deems necessary, which is no more than the lesser of (a)
10% of ((i) the Borrowing Base Amount less (ii) $12,000,000) or (b) $5,000,000;
provided, however, that in no event shall (x) the Overadvance Amount when added
to the outstanding Current Assets Loan and Swing Line Loans, together with all
Letter of Credit Outstandings exceed the Current Assets Loan Commitment Amount
or (y) any Overadvance Amount be outstanding for more than 30 days except with
consent of the Required Lenders.
"Overadvance Rate" means, with respect to any Overadvance Amount, an
interest rate equal to 0.5% per annum plus the Applicable Margin for Current
Assets Loans of the type of Loan for which such Overadvance Amount is
maintained.
"Parent" is defined in the first recital.
"Parent Intercreditor Agreement" means the Intercreditor Agreement,
dated as of August 21, 1996, between Texas Commerce Bank, National Association
(now known as Chase Bank of Texas, N.A.) and the trustee under the Senior
Secured Discount Notes Indenture as amended by the Intercreditor Amendment and
as amended, supplemented, amended and restated or otherwise modified from time
to time.
"Parent Pledge Agreement" means the Pledge Agreement executed and
delivered by an Authorized Officer of Parent, substantially in the form of
Exhibit G-1 hereto, as amended and restated or otherwise modified from time to
time.
"Participant" is defined in Section 10.11.2.
"Patent Security Agreement" means any Patent Security Agreement
executed and delivered by any Obligor in substantially the form of Exhibit A to
any Security Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time.
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"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which
Parent or the Company or any corporation, trade or business that is, along with
Parent or the Company, a member of a Controlled Group, may have liability,
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under Section
4069 of ERISA.
"Percentage" means, as the context may require, any Lender's Current
Assets Loan Percentage or Fixed Assets Loan Percentage.
"Perfection Certificate" means the Perfection Certificate executed and
delivered by an Authorized Officer of each Obligor that is a party to a Security
Agreement pursuant to the terms of this Agreement, substantially in the form of
Exhibit M hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"Permitted Consideration" means (a) the express assumption of
Indebtedness of any Borrower and the release of such Borrower from all liability
on such Indebtedness in connection solely with the Transfer of the Fibers
Business and (b) securities received by any Borrower that are converted by such
Borrower into cash within 90 days of the receipt of such securities.
"Permitted Disposition" means any Disposition that is:
(a) a Disposition of inventory, accounts receivable or any
other assets Disposed of in the ordinary course of business;
(b) the Disposition of personal property (including pipe,
equipment, machinery and vehicles) in the ordinary course of business
or when, in the reasonable judgment of the Company, such property is
worn out or obsolete or no longer used or useful in the conduct of its
business or the business of its Subsidiaries;
(c) a Disposition from a Borrower or a Foreign Restricted
Subsidiary to another Borrower;
(d) a Disposition of assets in exchange for or in connection
with the purchase of replacement assets or assets useful in the
ordinary course of any business meeting all the requirements of Section
7.2.1; provided, that if the Disposition is by a Borrower, such
Disposition shall only be a Permitted Disposition if the replacement
assets are acquired by a Borrower;
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(e) a Disposition that constitutes a Lien which is a Permitted
Lien; provided, however, this shall not include any Lien that secures
any Indebtedness;
(f) the granting of leases (including subleases) and grounds
leases of any underutilized or vacant properties of any Borrower or any
Foreign Restricted Subsidiary to third parties with which such Borrower
or Foreign Restricted Subsidiary has a production, co-production,
co-generation, operating or other agreement or to third party providers
of energy or raw materials in the ordinary course of business, provided
such leases do not materially interfere with the operation of the
business of any Borrower or any Foreign Restricted Subsidiary or
materially diminish the value of any of the Collateral;
(g) sales of the Capital Securities of any Unrestricted
Subsidiary; and
(h) a Disposition of all or substantially all of the Assets of
any Borrower or any Foreign Restricted Subsidiary expressly permitted
under Section 7.2.10.
"Permitted Investment" is defined in Section 7.2.5.
"Permitted Liens" is defined in Section 7.2.3.
"Permitted Parent Dividends" means any of the following, to the extent
permitted by clause (d) of Section 7.2.6:
(a) cash dividends payable to Parent in any Fiscal Year not to
exceed $2,000,000; and
(b) cash dividends to Parent so long as Parent promptly, and
in any event within five Business Days, utilizes the full amount of
such cash dividends for the sole purpose of paying cash interest as and
when due with respect to the Senior Secured Discount Notes then
outstanding to the extent required to be made in accordance with the
terms of the Senior Secured Discount Notes as in effect on August 21,
1996 and without giving effect to any amendment or modification thereof
unless agreed to in writing by the Required Lenders; provided that (i)
the amount of such cash dividends paid pursuant to this clause (b)
shall not exceed the amount necessary to make such required cash
interest payment in accordance with the terms of the Senior Secured
Discount Notes, (ii) no such payment shall be made at any time when the
payment of cash interest on the Senior Secured Discount Notes is not
required to be made pursuant to the provisions thereof and (iii) no
such payment shall be made at any time prior to August 21, 2001.
"Permitted Real Estate Liens" means:
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(a) minor irregularities in title, boundaries or other survey
defects, easements, rights-of-way, restrictions, servitudes, permits,
reservations, exceptions, zoning regulations, conditions, covenants,
mineral or royalty rights or reservations of oil, gas or mineral
leases, rights of others in any property of any Borrower or any Foreign
Restricted Subsidiary for streets, roads, bridges, pipes, pipelines,
railroads, electric transmission and distribution lines, telegraph and
telephone lines, the removal of oil, gas or other minerals or other
similar purposes, flood control, water rights, rights of others with
respect to navigable waters, sewage and drainage rights and other
similar charges or encumbrances existing as of the Effective Date and
disclosed in a Mortgage or shown in the survey (or granted by any
Borrower or any Foreign Restricted Subsidiary in the ordinary course of
business) that do not, in the aggregate, materially impair the value or
ability to sell of the property of any Borrower and the occupation, use
and enjoyment by any Borrower or any Foreign Restricted Subsidiary of
any of their respective properties in the normal course of business:
(b) Liens securing Indebtedness neither created, assumed nor
guaranteed by any Borrower or any of their Foreign Restricted
Subsidiaries upon lands over which easements or similar rights are
acquired by any Borrower or any of their Foreign Restricted
Subsidiaries in the ordinary course of business of any Borrower or any
of their Foreign Restricted Subsidiaries;
(c) terminable or short term leases or permits for occupancy,
which leases or permits expressly grant to any Borrower or any Foreign
Restricted Subsidiary the right to terminate them at any time on not
more than six months' notice and which occupancy does not interfere
with the operation of the business of any Borrower or any of their
Foreign Restricted Subsidiaries;
(d) any obligations or duties affecting any of the property of
any Borrower or any of their Foreign Restricted Subsidiaries to any
municipal or public authority with respect to any franchise, grant,
license or permit that do not materially impair the use of such
property for the purpose for which it is held;
(e) Liens on any property in favor of any Governmental
Authority to secure partial, progress, advance or other payments
pursuant to any contract or statute, not yet due and payable;
(f) Liens with respect to the so-called "greenbelt" or "buffer
zone" properties, for as long as those properties are used solely for
"greenbelt" or "buffer zone" purposes;
(g) leases and ground leases of underutilized or vacant
properties of any Borrower or any Foreign Restricted Subsidiary to
third parties with which such Borrower or such Foreign Restricted
Subsidiary has a production, co-production, co-generation, operating or
other arrangement or to third party providers of energy or raw
materials in
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the ordinary course of business of such Borrower or such Foreign
Restricted Subsidiary, provided such leases do not materially interfere
with the operations, of any Borrower or any Foreign Restricted
Subsidiary, provided such leases do not materially interfere with the
operations of any Borrower or any Foreign Restricted Subsidiary or
materially diminish the value of any Collateral;
(h) easements, rights-of-way, restrictions and other similar
charges or encumbrances granted to others, in each case incidental to,
and not interfering with, the ordinary conduct of the business of any
Borrower or any Foreign Restricted Subsidiary, provided that such Liens
are not violated by the existing property and do not, in the aggregate,
materially diminish the value or ability to sell the Collateral;
(i) the burdens of any law or governmental regulation or
permit requiring any Borrower or any Foreign Restricted Subsidiary to
maintain certain facilities or perform certain acts as a condition of
its occupancy of or interference with any public lands or any river or
stream or navigable waters;
(j) with respect to property located in Canada, reservations,
limitations, provisos and conditions in any original grant from the
Crown or any freehold lessor of any of the properties of any Borrowers
and its Foreign Restricted Subsidiaries; and
(k) and any extensions, renewals, modifications or
replacements thereof.
Notwithstanding the foregoing, no such Permitted Real Estate Liens
shall in any way materially impair the value of or ability to sell any
Collateral or materially impact the occupation, right or enjoyment of the
relevant property by the Borrowers or any Foreign Restricted Subsidiary.
"Person" means any natural person, corporation, limited liability
company, partnership, joint venture, association, trust or unincorporated
organization, Governmental Authority or any other legal entity, whether acting
in an individual, fiduciary or other capacity.
"Pledge Agreement" means, as the context may require, the Parent Pledge
Agreement or the Obligor Pledge Agreement.
"Pledged Subsidiary" means each Subsidiary in respect of which the
Administrative Agent has been granted a security interest in or a pledge of any
of the Capital Securities of such Subsidiary.
"Quarterly Payment Date" means the last day of March, June, September
and December, or, if any such day is not a Business Day, the next succeeding
Business Day.
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"Rate Protection Agreement" means, collectively, any interest rate
swap, cap, collar or similar agreement entered into by a Borrower under which
the counterparty of such agreement is (or at the time such agreement was entered
into, was) a Lender or an Affiliate of a Lender.
"Refinancing" is defined in the second recital.
"Refunded Swing Line Loans" is defined in clause (b) of Section 2.3.2.
"Register" is defined in clause (b) Section 2.7.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of July 23, 1999, among the Borrowers, Credit Suisse First
Boston Corporation and Donaldson, Lufkin & Jenrette Securities Corporation, as
the same may be amended, supplemented, amended and restated or otherwise
modified from time to time.
"Reimbursement Obligation" is defined in Section 2.6.3.
"Related Fund" means, with respect to any Lender which is a fund that
invests in loans, any other fund that invests in loans and is controlled by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"Release" means a "release", as such term is defined in CERCLA.
"Required Lenders" means, at any time, the Current Assets Required
Lenders and the Fixed Assets Required Lenders.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended.
"Restricted Payment" means the declaration or payment of any dividend
(other than dividends payable solely in Capital Securities of the Company) on,
or the making of any payment or distribution on account of, or setting apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of any class of Capital Securities
of the Borrowers or any Foreign Restricted Subsidiary or any warrants or options
to purchase any such Capital Securities, whether now or hereafter outstanding,
or the making of any other distribution in respect thereof, either directly or
indirectly, whether in cash or property, obligations of the Borrowers or any
Foreign Restricted Subsidiary or otherwise other than any such dividends,
payments or distributions that are payable to any Borrower or any Foreign
Restricted Subsidiary (so long as such dividend, payment or distribution payable
to a Foreign Restricted Subsidiary is not payable from a Borrower) or any such
dividends, payments or distributions made by a Foreign Restricted Subsidiary
(solely from such Foreign Restricted Subsidiary's assets) that is not a Wholly
Owned Subsidiary to minority stockholders (or owners
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of an equivalent interest in the case of a Foreign Restricted Subsidiary that is
an entity other than a corporation).
"Return of Capital" means, with respect to any Capital Securities, any
sums paid on or in respect of such Capital Securities (a) as a return, in whole
or in part, of the capital of the issuer of such Capital Securities as
constituted immediately following the consummation of a Transfer of the Fibers
Business pursuant to which such Capital Securities were issued to any Borrower
or either of the Fibers Subsidiaries, (ii) in redemption of, or in exchange for,
such Capital Securities or (iii) in connection with a partial or total
liquidation or dissolution of the issuer of such Capital Securities.
"Revolver Intercreditor Agreement" means the Intercreditor Agreement
executed and delivered pursuant to the terms of this Agreement by the
Administrative Agent and each Lender, and acknowledged by the Company,
substantially in the form of Exhibit K-1 hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"S&P" means Standard & Poor's Rating Services, a division of
McGraw-Hill, Inc.
"Sale of the Fibers Business" means any Disposition of the Capital
Securities of the Fibers Subsidiaries or all or substantially all of the assets
of the Fibers Subsidiaries (other than pursuant to a Joint Venture
Contribution), including, in either case, any such Disposition made through any
Merger.
"SEC" means the Securities and Exchange Commission.
"Secured Parties" means, collectively, the Lenders, the Issuer, the
Agents, the Lead Arranger, each counterparty to a Rate Protection Agreement that
is (or at the time such Rate Protection Agreement was entered into, was) a
Lender or an Affiliate thereof and (in each case) each of their respective
successors, transferees and assigns to the extent permitted by this Agreement.
"Security Agreement" means, as the context may require, the Current
Assets Security Agreement and the Fixed Assets Security Agreement.
"Senior Debt Intercreditor Agreement" means the Intercreditor Agreement
executed and delivered pursuant to the terms of this Agreement by the
Administrative Agent and the Trustee under the Senior Secured Note Indenture,
and acknowledged by the Company, substantially in the form of Exhibit K-2
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.
"Senior Secured Discount Notes" means Parent's 13-1/2% Senior Secured
Discount Notes Due 2008 in an original stated amount of $191,751,000.
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"Senior Secured Discount Notes Indenture" means the Indenture dated as
of August 15, 1996 between Parent and Fleet National Bank (now known as State
Street Bank and Trust Company), as trustee, that governs the terms of the Senior
Secured Discount Notes, as the same has heretofore been supplemented and may
hereafter be amended, supplemented, amended and restated or otherwise modified
in accordance with Section 7.2.12.
"Senior Secured Note Documents" means, collectively, the Senior Secured
Note Indenture, the Senior Secured Notes and each of the other loan agreements,
indentures, note purchase agreements, promissory notes, guarantees, and other
instruments and agreements executed and delivered in connection with the
issuance of the Senior Secured Notes other than the Registration Rights
Agreement and the Senior Secured Note Purchase Agreement, and evidencing the
terms thereof, as amended, supplemented, amended, restated and otherwise
modified from time to time in accordance with Section 7.2.12.
"Senior Secured Note Indenture" means the Indenture, dated as of July
23, 1999, among the Borrowers and the Trustee, as the same may be amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with Section 7.2.12.
"Senior Secured Note Purchase Agreement" means the Purchase Agreement,
dated as of July 19, 1999, among the Borrowers, Donaldson, Lufkin & Jenrette
Securities Corporation and Credit Suisse First Boston Corporation, as amended,
supplemented, amended, restated and otherwise modified from time to time.
"Senior Secured Notes" is defined in the second recital.
"Senior Subordinated Notes" means the Company's 11 3/4% Senior
Subordinated Notes Due 2006 in an original principal amount of $275,000,000.
"Senior Subordinated Notes Indenture" means the Indenture dated as of
August 15, 1996 between the Company and Fleet National Bank (now known as State
Street Bank and Trust Company), as trustee, that governs the terms of the Senior
Subordinated Notes, as the same has heretofore been supplemented and may
hereafter be amended, supplemented, amended and restated or otherwise modified
in accordance with Section 7.2.12.
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person and its
Subsidiaries on a consolidated basis is greater than the total amount of
liabilities, including Contingent Liabilities, of such Person and its
Subsidiaries on a consolidated basis, (b) the present fair salable value of the
assets of such Person and its Subsidiaries on a consolidated basis, is not less
than the amount that will be required to pay the probable liability of such
Person and its Subsidiaries on a consolidated basis on its debts as they become
absolute and matured, (c) such Person does not intend to, and does not believe
that it or its Subsidiaries will, on a consolidated basis, incur debts or
liabilities beyond the ability of such Person and its Subsidiaries on a
consolidated basis to pay as such debts and liabilities
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mature, and (d) such Person and its Subsidiaries on a consolidated basis are not
engaged in business or a transaction, and such Persons and its Subsidiaries on a
consolidated basis are not about to engage in business or a transaction, for
which the property of such Person and its Subsidiaries would constitute an
unreasonably small capital. The amount of Contingent Liabilities at any time
shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, can reasonably be expected to become an
actual or matured liability.
"Standby Purchase Agreements" means the Standby Purchase Agreements,
between the Parent and Gordon A. Cain, William A. McMinn, James Crane, Frank P.
Diassi, Frank J. Hevrdejs, Koch Capital Services, Inc., each dated as of
December 15, 1998.
"State" means the several states of the United States of America,
including the District of Columbia, and their political subdivisions.
"Stated Amount" means, on any date and with respect to a particular
Letter of Credit, the total amount then available to be drawn under such Letter
of Credit.
"Stated Expiry Date" is defined in Section 2.6.
"Stated Maturity Date" means with respect to all Loans, July 23, 2004.
"Sub Debt Documents" means, collectively, the Additional Senior
Subordinated Notes Indenture, the Additional Senior Subordinated Notes, the
Senior Subordinated Notes Indenture, the Senior Subordinated Notes, each other
document executed in connection therewith and any other loan agreements,
indentures, note purchase agreements, promissory notes, guarantees, and other
instruments and agreements evidencing the terms of Subordinated Debt, as
amended, supplemented, amended and restated or otherwise modified in accordance
with Section 7.2.12.
"Subordinated Debt" means the Indebtedness evidenced by the Additional
Senior Subordinated Notes, the Senior Subordinated Notes and any other
Indebtedness of any Borrower or any Foreign Restricted Subsidiaries subordinated
in right of payment to the Obligations pursuant to documentation containing
redemption and other prepayment events, maturities, amortization schedules,
covenants, events of default, remedies, acceleration rights, subordination
provisions and other material terms satisfactory to the Agents.
"Subsidiary" means, with respect to any Person, (a) any corporation,
limited liability company, partnership or other entity of which more than 50% of
the Voting Stock is at the time directly or indirectly owned or controlled by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person or (b) any partnership,
joint venture or other entity as to which such Person, such Person and one or
more of its Subsidiaries or one or more Subsidiaries of such Person owns more
than a 50% ownership, equity or similar interest or has power to direct or cause
the direction of management and
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policies (directly or indirectly), or the power to elect the managing partner
(or the equivalent), of such partnership, joint venture or other entity, as the
case may be. Unless the context otherwise specifically requires, the term
"Subsidiary" shall be a reference to a Subsidiary of the Company.
"Swing Line Lender" means the Administrative Agent (or another Lender
designated by the Administrative Agent with the consent of the Company (such
consent not to be unreasonably withheld), if such Lender agrees to be the Swing
Line Lender hereunder), in such Person's capacity as the maker of Swing Line
Loans.
"Swing Line Loans" is defined in clause (c) of Section 2.1.1.
"Swing Line Loan Commitment" is defined in clause (c) of Section 2.1.1.
"Swing Line Loan Commitment Amount" means, on any date, $10,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2.
"Swing Line Note" means a joint and several promissory note of each
Borrower payable to the Swing Line Lender, in the form of Exhibit A-3 hereto (as
such promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the joint and several aggregate Indebtedness of the Borrowers
to the Swing Line Lender resulting from outstanding Swing Line Loans, and also
means all other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"Syndication Agent" is defined in the preamble and includes each other
Person appointed as the successor Syndication Agent pursuant to Section 9.4.
"Synthetic Lease" means, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) (a) that is not a capital lease in accordance
with GAAP and (b) in respect of which the lessee retains or obtains ownership of
the property so leased for federal income tax purposes, other than any such
lease under which that Person is the lessor.
"Tax Benefit" is defined in clause (d) of Section 4.6.
"Tax Sharing Agreement" means the tax sharing agreement among Parent,
the Company and certain Subsidiaries of the Company delivered pursuant to the
terms of this Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with Section 7.2.12.
"Taxes" means any and all income, stamp or other taxes, duties, levies,
imposts, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, and all
interest, penalties or similar liabilities with respect thereto.
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"Telerate Screen LIBO Page" means the display designated as "Page 3750"
on the Telerate System Incorporated Service (or such other page as may replace
Page 3750 on the service or such other service as may be nominated by the
British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association interest settlement rates for Dollar
deposits).
"Termination Date" means the date on which all Obligations have been
paid in full in cash, all Letters of Credit have been terminated, expired or
Cash Collateralized, all Rate Protection Agreements have been terminated and all
Commitments have been permanently terminated.
"Toronto Office" means the corporate office building located at 2 Gibbs
Road, Toronto, Ontario, Canada.
"Trademark Security Agreement" means any Trademark Security Agreement
executed and delivered by any Obligor substantially in the form of Exhibit B to
any Security Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Transaction" is defined in the second recital.
"Transfer of the Fibers Business" means any Joint Venture Contribution
or any Sale of the Fibers Business or any combination thereof consummated in
accordance with the terms of this Agreement.
"Trustee" means Harris Trust Company of New York, as trustee under the
Senior Secured Note Indenture.
"type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"U.C.C." means the Uniform Commercial Code as may be amended and in
effect from time to time in the State of New York; provided, that, if, with
respect to any Filing Statement or by reason of any provision of law, the
perfection or the effect of perfection or non-perfection of the security
interests granted to the Administrative Agent pursuant to the applicable Loan
Document is governed by the Uniform Commercial Code as in effect in a
jurisdiction of the United States other than New York, U.C.C. means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions of each Loan Document and any Filing Statement
relating to such perfection or effect of perfection or non-perfection.
"United States" or "U.S." means the United States of America and all
States.
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"Unrestricted Subsidiary" means (a) any Subsidiary of the Company which
is listed on Item 1.2 of the Disclosure Schedule and (b) (i) any other
Subsidiary of the Company designated as an Unrestricted Subsidiary by the
Company, and (ii) any Subsidiary created or acquired by another Unrestricted
Subsidiary or designated as such pursuant to the terms of this Agreement;
provided, that, in each case, with respect to any designation under clause
(b)(i), at the time of such designation such Unrestricted Subsidiary (A) has not
acquired any property of the Borrowers or any of their Foreign Restricted
Subsidiaries in excess of $10,000 since the Effective Date, except as
specifically permitted by this Agreement, (B) has no Indebtedness which is
recourse to any of the Borrowers or any of the Foreign Restricted Subsidiaries
and (C) does not own any Capital Securities of the Borrowers or any Foreign
Restricted Subsidiary. Notice of any such designation shall be delivered to the
Administrative Agent by the Company by promptly filing with the Administrative
Agent a copy of the resolutions of the Board of Directors of the Company
approving such designation and a certificate of an Authorized Officer certifying
that such designation complies with the requirements of this definition. Such
designation shall become effective upon receipt by the Administrative Agent of
the foregoing. Each Unrestricted Subsidiary shall continue as such until the
Company delivers a copy of the resolutions of the Board of Directors of the
Company redesignating such Unrestricted Subsidiary as a Foreign Restricted
Subsidiary or a Borrower and the Company, such Borrower and/or such Subsidiary
shall comply with the requirements of Section 7.1.8; provided that at the time
of such redesignation no Default has occurred and is continuing or would result
therefrom.
"Vancouver Release Parcel" means the parcel described in Item 1.3 of
the Disclosure Schedule.
"Voting Stock" means, with respect to any Person, Capital Securities of
any class or kind ordinarily having the power to vote (directly or indirectly)
for the election of directors, managers, representatives or other voting members
of the governing body of such Person.
"Welfare Plan" means a "welfare plan", as such term is defined in
Section 3(1) of ERISA.
"Wholly-Owned Subsidiary" means any Subsidiary, all of the outstanding
Capital Securities of which (other than any director's qualifying shares or
investments by foreign nationals mandated by applicable laws) are owned directly
or indirectly by the Company, Parent or one or more other Wholly-Owned
Subsidiaries.
SECTION I.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in each other Loan Document and the
Disclosure Schedule.
SECTION I.3. Cross-References. Unless otherwise specified, references
in a Loan Document to any Article or Section are references to such Article or
Section of such Loan Document, and references in any Article, Section or
definition to any clause are references to such clause of such Article, Section
or definition.
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SECTION I.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used in each Loan Document shall be interpreted,
and all accounting determinations and computations hereunder or thereunder shall
be made, in accordance with GAAP. Unless otherwise expressly provided, all
financial covenants and defined financial terms shall be computed on a
consolidated basis for the Parent and its Subsidiaries, in each case without
duplication. All financial information provided on a consolidating basis shall
be prepared consistently with the financial information delivered pursuant to
Section 5.1.10.
ARTICLE II
COMMITMENTS, BORROWING AND ISSUANCE
PROCEDURES, NOTES AND LETTERS OF CREDIT
SECTION II.1. Commitments. On the terms and subject to the conditions
of this Agreement (including Article V), the Lenders and the Issuer severally
agree to make Credit Extensions as set forth below.
SECTION II.1.1. Loan Commitments. From time to time on any Business Day
occurring from and after the Effective Date but prior to the applicable
Commitment Termination Date,
(a each Lender that has a Current Assets Loan Commitment
(referred to as a "Current Assets Lender"), agrees that it will make
loans (relative to such Lender, its "Current Assets Loans") to each
Borrower requesting Current Assets Loans equal to such Lender's Current
Assets Loan Percentage of the aggregate amount of each Borrowing of
Current Assets Loans requested by such Borrower to be made on such day;
(b each Lender that has a Fixed Assets Loan Commitment
(referred to as a "Fixed Assets Lender") agrees that it will make loans
(relative to such Lender, its "Fixed Assets Loans") to each Borrower
requesting Fixed Assets Loans equal to such Lender's Fixed Assets Loan
Percentage of the aggregate amount of each Borrowing of Fixed Assets
Loans requested by such Borrower on such day; and
(c the Swing Line Lender agrees that it will make loans (its
"Swing Line Loans") to each Borrower requesting Swing Line Loans equal
to the principal amount of the Swing Line Loan requested by such
Borrower to be made on such day. The Commitment of the Swing Line
Lender described in this clause is herein referred to as its "Swing
Line Loan Commitment".
On the terms and subject to the conditions hereof, each Borrower may from time
to time borrow, repay and reborrow Loans.
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SECTION II.1.2. Letter of Credit Commitment. From time to time on any
Business Day occurring from and after the Effective Date but prior to the
Current Assets Loan Commitment Termination Date, the Issuer agrees that it will
(a issue one or more documentary or standby letters of credit
(a "Letter of Credit") for the account of any Borrower in the Stated
Amount requested by such Borrower on such day; or
(b extend the Stated Expiry Date of an existing standby Letter
of Credit previously issued hereunder.
No Stated Expiry Date shall extend beyond the earlier of (i) the Current Assets
Loan Commitment Termination Date and (ii) unless otherwise agreed to by the
Issuer in its sole discretion, one year from the date of such extension. The
Issuer shall not be permitted or required to issue any Letter of Credit if,
after giving effect thereto, (A) the aggregate amount of all Letter of Credit
Outstandings would exceed the Letter of Credit Commitment Amount or (B) the sum
of the aggregate amount of all Letter of Credit Outstandings plus the aggregate
principal amount of all Current Assets Loans and Swing Line Loans then
outstanding would exceed the lesser of (x) the then existing Borrowing Base
Amount less the Minimum Excess Availability and (y) the Current Assets Loan
Commitment Amount.
SECTION II.1.3. Lenders Not Permitted or Required to Make Loans.
(a No Current Assets Lender shall be required to, and no
Borrower shall request any Current Assets Lender to, make any Current
Assets Loan if, after giving effect thereto, the aggregate outstanding
principal amount of all the Current Assets Loans and Swing Line Loans
(i of all the Current Assets Lenders, together with
the aggregate amount of all Letter of Credit Outstandings,
would exceed the lesser of (A) the then existing Borrowing
Base Amount less the Minimum Excess Availability and (B) the
Current Assets Loan Commitment Amount; or
(ii of such Current Assets Lender, together with such
Current Assets Lender's Percentage of the aggregate amount of
all Swing Line Loans and Letter of Credit Outstandings, would
exceed such Current Assets Lender's Percentage of the lesser
of (A) the then existing Borrowing Base Amount less the
Minimum Excess Availability and (B) the Current Assets Loan
Commitment Amount.
(b The Swing Line Lender shall not be required to, and no
Borrower shall request the Swing Line Lender to, make any Swing Line
Loan if after giving effect thereto, (a) the aggregate outstanding
principal amount of all the Swing Line Loans would exceed the then
existing Swing Line Loan Commitment Amount or (b) the aggregate
outstanding principal amount of all the Current Assets Loans and Swing
Line Loans, together with the
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aggregate amount of all Letter of Credit Outstandings, would exceed the
lesser of (i) the then existing Borrowing Base Amount less the Minimum
Excess Availability and (ii) the Current Assets Loan Commitment Amount.
(c No Fixed Assets Lender shall be permitted or required to,
and no Borrower shall request any Fixed Assets Lender to, make any
Fixed Assets Loan if, after giving effect thereto, the aggregate
outstanding principal amount of all the Fixed Assets Loans
(i of all the Fixed Assets Lenders would exceed the
Fixed Assets Loan Commitment Amount; or
(ii of such Fixed Assets Lender would exceed such
Fixed Assets Lender's Percentage of the Fixed Assets Loan
Commitment Amount.
SECTION II.2. Reduction of the Commitment Amounts. The Commitment
Amounts are subject to reduction from time to time pursuant to this Section 2.2.
SECTION II.2.1. Optional. The Company may, from time to time on any
Business Day occurring after the Closing Date, voluntarily reduce the amount of
any Commitment Amount on the Business Day so specified by the Company, provided,
however, that all such reductions shall require at least one Business Day's
prior notice to the Administrative Agent and be permanent, and any partial
reduction of any Commitment Amount shall be in a minimum amount of $1,000,000
and in an integral multiple of $500,000. Any optional reduction of the Current
Assets Loan Commitment Amount pursuant to the terms of this Agreement which
reduces the Current Assets Loan Commitment Amount below the sum of (i) the Swing
Line Loan Commitment Amount and (ii) the Letter of Credit Commitment Amount
shall result in an automatic and corresponding reduction of the Swing Line Loan
Commitment Amount and/or Letter of Credit Commitment Amount (as directed by the
Company in a notice to the Administrative Agent delivered together with the
notice of such voluntary reduction in the Current Assets Loan Commitment Amount)
to an aggregate amount not in excess of the Current Assets Loan Commitment
Amount, as so reduced, without any further action on the part of the Swing Line
Lender or the Issuer.
SECTION II.2.2. Mandatory. The Commitment Amounts shall be reduced as
set forth below.
(a Upon the receipt of mandatory prepayments made pursuant to
clauses (d), (e) and (f) of Section 3.1.1, the Fixed Assets Loan
Commitment Amount will be reduced as specified in clauses (b) and (c)
of Section 3.1.2.
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(b Commencing on September 30, 2002, and on each subsequent
Quarterly Payment Date set forth below, the Fixed Assets Loan
Commitment Amount will be permanently reduced in an amount set forth
opposite such period (subject to adjustment for any commitment
reductions occurring subsequent to the Effective Date applied to
recurring quarterly payments on a pro rata basis):
<TABLE>
<CAPTION>
Period Amount of Reduction
------ -------------------
<S> <C>
September 30, 2002 $ 2,000,000
December 31, 2002 $ 4,000,000
March 31, 2003 $ 5,000,000
June 30, 2003 $10,000,000
September 30, 2003 $12,250,000
December 31, 2003 $12,250,000
March 31, 2004 $12,250,000
June 30, 2004 $12,250,000
</TABLE>
Each Commitment Amount shall, without any further action, automatically
and permanently be reduced on the applicable Commitment Termination Date so that
the applicable reduced Commitment Amount equals $0. Prior to the applicable
Commitment Termination Date, any mandatory reduction of the Current Assets Loan
Commitment Amount which reduces the Current Assets Loan Commitment Amount below
the sum of (i) the Letter of Credit Commitment Amount and (ii) the Swing Line
Loan Commitment Amount shall result in an automatic and corresponding reduction
of the Letter of Credit Commitment Amount and/or the Swing Line Loan Commitment
Amount (as specified by the Company) to an aggregate amount not in excess of the
Current Assets Loan Commitment Amount, as so reduced, without any further action
on the part of the Issuer or the Swing Line Lender.
SECTION II.3. Borrowing Procedures and Funding Maintenance. Current
Assets Loans and Fixed Assets Loans shall be made by the applicable Lenders in
accordance with Section 2.3.1, and Swing Line Loans shall be made by the Swing
Line Lender in accordance with Section 2.3.2.
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SECTION II.3.1. Current Assets Loans and Fixed Assets Loans. In the
case of Loans (other than Swing Line Loans), by delivering a Borrowing Request
to the Administrative Agent on or before 12:00 noon (and following such
Borrowing Request, the Administrative Agent shall promptly notify each
applicable Lender of such Borrowing Request), New York City time, on a Business
Day, any Borrower may from time to time irrevocably request, on the same
Business Day's notice (in the case of Base Rate Loans) or three Business Days'
notice (in the case of LIBO Rate Loans with an Interest Period of one, two,
three, six or nine months) nor more than five Business Days' notice (in the case
of any Loans (other than Swing Line Loans) and on five Business Day's notice (in
the case of LIBO Rate Loans with an Interest Period of twelve months subject to
the definition of "Interest Period"), that a Borrowing be made in an aggregate
amount of $500,000 or any larger integral multiple of $100,000 or in the unused
amount of the applicable Loan Commitment Amount; provided, that all initial
Loans on the Closing Date will be made as Base Rate Loans. No Borrowing Request
shall be required, and the minimum aggregate amounts specified under this
Section 2.3.1 shall not apply, in the case of Current Assets Loans deemed made
under Section 2.6.2 in respect of unreimbursed Disbursements or made under
clause (b) of Section 2.3.2 to refund Refunded Swing Line Loans. On the terms
and subject to the conditions of this Agreement, each Borrowing shall be
comprised of the type of Loans, and shall be made on the Business Day, specified
in such Borrowing Request. On or before 1:00 p.m., New York City time, on such
Business Day each Lender with a Commitment to lend the Loans requested shall
deposit with the Administrative Agent same day funds in an amount equal to such
Lender's Percentage of the requested Borrowing. Such deposit will be made to an
account which the Administrative Agent shall specify from time to time by notice
to the Lenders. To the extent funds are received from the Lenders, the
Administrative Agent shall promptly and in any event prior to 3:00 p.m., New
York City time, make such funds available to such Borrower by wire transfer to
the accounts such Borrower shall have specified in its Borrowing Request. In the
event that only one Lender fails to fund its Percentage of Loans as required
above prior to 3:00 p.m., New York City time, the Administrative Agent shall
advance such Loans required to be funded by such Lender and such Loan shall be
deemed to be a Swing Line Loan in the amount of such advance. No Lender's
obligation to make any Loan shall be affected by any other Lender's failure to
make any Loan.
SECTION 2.3.2. Swing Line Loans. (a) By telephonic notice, promptly
followed (within one Business Day) by the delivery of a confirming Borrowing
Request, to the Swing Line Lender and the Administrative Agent on or before
12:00 noon, New York City time, on the Business Day the proposed Swing Line Loan
is to be made, any Borrower may from time to time irrevocably request that a
Swing Line Loan be made by the Swing Line Lender in a minimum principal amount
of $100,000 or any larger integral multiple of $10,000. All Swing Line Loans
shall be made as Base Rate Loans and shall not be entitled to be converted into
LIBO Rate Loans. The proceeds of each Swing Line Loan shall be made available by
the Swing Line Lender, by 3:00 p.m., New York City time, on the Business Day
telephonic notice is received by it as provided in this clause (a), to such
Borrower by wire transfer to the account such Borrower shall have specified in
its notice therefor.
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(b If (i) any Swing Line Loan, (A) shall be outstanding for more than
four Business Days or (B) is or will be outstanding on a date when any Borrower
requests that a Current Assets Loan be made or (ii) any Default shall occur and
be continuing, each Current Assets Lender (other than the Swing Line Lender)
irrevocably agrees that it will, at the request of the Swing Line Lender (and at
the discretion of the Swing Line Lenders) and upon notice from the
Administrative Agent, make a Current Assets Loan (which shall initially be
funded as a Base Rate Loan) in an amount equal to such Current Assets Lender's
Percentage of the aggregate principal amount of all such Swing Line Loans then
outstanding (such outstanding Swing Line Loans hereinafter referred to as the
"Refunded Swing Line Loans"). On or before 12:00 noon, New York City time on the
first Business Day following receipt by each Current Assets Lender of a request
to make Current Assets Loans as provided in the preceding sentence, each such
Current Assets Lender shall deposit in an account specified by the Swing Line
Lender the amount so requested in same day funds and such funds shall be applied
by the Swing Line Lender to repay the Refunded Swing Line Loans. At the time the
Current Assets Lenders make the above referenced Current Assets Loans, the Swing
Line Lender shall be deemed to have made, in consideration of the making of the
Refunded Swing Line Loans, a Current Assets Loan in an amount equal to the Swing
Line Lender's Percentage of the aggregate principal amount of the Refunded Swing
Line Loans. Upon the making (or deemed making, in the case of the Swing Line
Lender) of any Current Assets Loans pursuant to this clause (b), the amount so
funded shall become outstanding under such Lender's Current Assets Loans and
shall no longer be owed under the Swing Line Lender's Swing Line Loans. All
interest payable with respect to any Current Assets Loans made (or deemed made,
in the case of the Swing Line Lender) pursuant to this clause (b) shall be
appropriately adjusted to reflect the period of time during which the Swing Line
Lender had outstanding Swing Line Loans in respect of which such Current Assets
Loans were made.
(c If, at any time prior to the making of Current Assets Loans to
replace any outstanding Swing Line Loans pursuant to clause (b) above, any
Default of the nature set forth in Section 8.1.9 shall have occurred, each
Current Assets Lender with a Current Assets Loan Commitment (other than the
Swing Line Lender) irrevocably agrees that it will, at the request of the Swing
Line Lender and upon notice from the Administrative Agent, purchase an undivided
participation interest in all such Swing Line Loans in an amount equal to its
Percentage of the aggregate outstanding amount of such Swing Line Loans and
transfer immediately to an account identified by the Swing Line Lender, in
immediately available funds, the amount of its participation. The Swing Line
Lender will deliver to each such Current Assets Lender, promptly following
receipt of such funds, a participation certificate, dated the date of receipt of
such funds and in the amount of such Current Assets Lender's participation if
requested to do so by such Current Assets Lender.
(d Each Borrower expressly agrees that, in respect of each Current
Assets Lender's funded participation interest in any Swing Line Loan, such
Current Assets Lender shall be deemed to be in privity of contract with each
Borrower and have the same rights and remedies
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against each Borrower under the Loan Documents as if such funded participation
interest in such Swing Line Loan were a Current Assets Loan.
(e Each Current Assets Lender's obligation to make Current Assets Loans
or purchase participation interests in Swing Line Loans, as contemplated by
clause (b) or (c) above, shall be absolute and unconditional and without
recourse to the Swing Line Lender and shall not be affected by any circumstance,
including (i) any set-off, counterclaim, recoupment, defense or other right
which such Current Assets Lender may have against the Swing Line Lender, each
Borrower or any other Person for any reason whatsoever, (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect,
(iii) the acceleration or maturity of any Loans or the termination of any
Commitment after the making of any Swing Line Loan, (iv) any breach of this
Agreement or any other Loan Document by any Person, or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
SECTION II.4. Continuation and Conversion Elections. By delivering a
Continuation/ Conversion Notice to the Administrative Agent on or before 12:00
noon, New York City time, on a Business Day, the Company may from time to time
irrevocably elect, on not less than one Business Day's notice (in the case of a
conversion of LIBO Rate Loans to Base Rate Loans) or three Business Days' notice
(in the case of a continuation of LIBO Rate Loans or a conversion of Base Rate
Loans into LIBO Rate Loans) nor more than five Business Days' notice (in the
case of any Loans) that all, or any portion in a minimum amount of $500,000 or
an integral multiple of $100,000, of any Loans be, in the case of Base Rate
Loans, converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, be
converted into Base Rate Loans or continued as LIBO Rate Loans (in the absence
of delivery of a Continuation/Conversion Notice with respect to any LIBO Rate
Loan at least three Business Days (but not more than five Business Days) before
the last day of the then current Interest Period with respect thereto, such LIBO
Rate Loan shall, on such last day, automatically be continued as a LIBO Rate
Loan having a one month Interest Period); provided, however, that (a) each such
conversion or continuation shall be pro rated among the applicable outstanding
Loans of all Current Assets Lenders or Fixed Assets Lenders, as applicable, and
(b) no portion of the outstanding principal amount of any Loans may be continued
as, or be converted into, LIBO Rate Loans when any Default has occurred and is
continuing.
SECTION II.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the joint and several obligation of the
Borrowers to repay such LIBO Rate Loan shall nevertheless be to such Lender for
the account of such foreign branch, Affiliate or international banking facility.
SECTION II.6. Issuance Procedures. By delivering to the Issuer (if
applicable) and the Administrative Agent an Issuance Request on or before 12:00
noon, New York City time, on a
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Business Day, any Borrower may, from time to time irrevocably request, on not
less than three nor more than ten Business Days' notice (or such shorter or
longer notice as may be acceptable to the Issuer), in the case of an initial
issuance of a Letter of Credit, and not less than three nor more than ten
Business Days' notice (unless a shorter or longer notice period is acceptable to
the Issuer) prior to the then existing Stated Expiry Date of a Letter of Credit,
in the case of a request for the extension of the Stated Expiry Date of a Letter
of Credit, that the Issuer issue, or extend the Stated Expiry Date of, as the
case may be, an irrevocable Letter of Credit on behalf of such Borrower in such
form as may be requested by such Borrower and approved by the Issuer; provided,
however, that no extension of the Stated Expiry Date of an outstanding Letter of
Credit may provide for a Stated Expiry Date subsequent to the earlier of (a) the
Current Assets Loan Commitment Termination Date and (b) one year from the date
of such extension. Notwithstanding anything to the contrary contained herein or
in any separate application for any Letter of Credit, each Borrower hereby
jointly and severally acknowledges and agrees that it shall be obligated to
reimburse the Issuer upon each Disbursement paid under a Letter of Credit, and
it shall be deemed to be the obligor for purposes of each such Letter of Credit
issued hereunder (whether the account party on such Letter of Credit is the
Company or any other Borrower). Upon receipt of an Issuance Request, the
Administrative Agent shall promptly notify the Issuer and each Lender thereof
and shall cause: (i) the Letter of Credit requested by the Issuance Request to
be issued and (ii) the Issuer to (A) comply with the terms and conditions of
this Agreement relating to the Letter of Credit and (B) to fulfill the duties
and obligations of the Issuer hereunder. Each Letter of Credit shall by its
terms be stated to expire on a date (its "Stated Expiry Date") no later than the
earlier to occur of (a) the Current Assets Loan Commitment Termination Date or
(b) one year from the date of its issuance.
SECTION II.6.1. Other Lenders' Participation. Upon the issuance of each
Letter of Credit issued by the Issuer pursuant hereto, and without further
action, each Lender (other than the Issuer) that has a Current Assets Loan
Commitment shall be deemed to have irrevocably purchased from the Issuer, to the
extent of its Current Assets Loan Percentage in respect of Current Assets Loans,
and the Issuer shall be deemed to have irrevocably granted and sold to such
Current Assets Lender a participation interest in such Letter of Credit
(including the Contingent Liability and any Reimbursement Obligation and all
rights with respect thereto), and such Current Assets Lender shall, to the
extent of its Current Assets Loan Percentage, be responsible for reimbursing
promptly (and in any event within one Business Day) the Issuer for Reimbursement
Obligations which have not been reimbursed by the Borrowers in accordance with
Section 2.6.3. In addition, such Lender shall, to the extent of its Current
Assets Loan Percentage, be entitled to promptly receive a ratable portion of the
Letter of Credit fees payable pursuant to Section 3.3.3 with respect to each
Letter of Credit and of interest payable pursuant to Section 3.2 with respect to
any Reimbursement Obligation. To the extent that any Current Assets Lender has
reimbursed the Issuer for a Disbursement as required by this Section, such
Lender shall be entitled to receive its ratable portion of any amounts
subsequently received (from the Borrowers or otherwise) in respect of such
Disbursement.
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SECTION II.6.2. Disbursements; Conversion to Current Assets Loans. The
Issuer will notify the Company and the Administrative Agent promptly (but in any
event on the same Business Day) of the presentment for payment of any drawing
under any Letter of Credit issued by the Issuer, together with notice of the
date (the "Disbursement Date") such payment shall be made (each such payment, a
"Disbursement"). Subject to the terms and provisions of such Letter of Credit
and this Agreement, the Issuer shall make such payment to the beneficiary (or
its designee) of such Letter of Credit. Prior to 12:00 noon, New York City time,
on the Business Day following the Disbursement Date (the "Disbursement Due
Date"), the Borrowers will jointly and severally reimburse the Administrative
Agent, for the account of the Issuer, for all amounts which the Issuer has
disbursed under such Letter of Credit, together with interest thereon at the
rate per annum otherwise applicable to Current Assets Loans (made as Base Rate
Loans) from and including the Disbursement Date to but excluding the
Disbursement Due Date and, thereafter (unless such Disbursement is converted
into a Base Rate Loan on the Disbursement Due Date), at a rate per annum equal
to the rate per annum then in effect with respect to overdue Current Assets
Loans (made as Base Rate Loans) pursuant to Section 3.2.2 for the period from
the Disbursement Due Date through but excluding the date of such reimbursement;
provided, however, that if no Default shall have then occurred and be continuing
and the Borrowers are able to represent and warrant to the Current Assets
Lenders that the statements set forth in Section 5.2.1 are true and correct,
unless such Borrower has notified the Administrative Agent no later than one
Business Day prior to the Disbursement Due Date that it will reimburse the
Issuer for the applicable Disbursement, then the amount of the Disbursement
shall be deemed to be a Borrowing of Current Assets Loans constituting Base Rate
Loans and following the giving of notice thereof by the Administrative Agent to
the Lenders, each Lender with a Current Assets Loan Commitment (other than the
Issuer) will deliver to the Issuer on the Disbursement Due Date immediately
available funds in an amount equal to such Lender's Current Assets Loan
Percentage of such Borrowing. Each conversion of Disbursement amounts into
Current Assets Loans shall constitute a representation and warranty by each
Borrower that on the date of the making of such Current Assets Loans all of the
statements set forth in Section 5.2.1 are true and correct.
SECTION II.6.3. Reimbursement. The joint and several obligation (a
"Reimbursement Obligation") of the Borrowers under Section 2.6.2 to reimburse
the Issuer with respect to each Disbursement (including interest thereon) not
converted into Current Assets Loans constituting a Base Rate Loan pursuant to
Section 2.6.2, and, upon such Borrower failing or electing not to reimburse the
Issuer and the giving of notice thereof by the Administrative Agent to the
Current Assets Lenders, each Current Assets Lender's obligation under Section
2.6.1 to reimburse the Issuer or fund its Percentage of any Disbursement
converted into a Base Rate Loan, shall be absolute and unconditional under any
and all circumstances and irrespective of any setoff, counterclaim or defense to
payment which any Borrower or such Current Assets Lender, as the case may be,
may have or have had against the Issuer or any such Current Assets Lender,
including any defense based upon the failure of any Disbursement to conform to
the terms of the applicable Letter of Credit (if, in the Issuer's good faith
opinion, such Disbursement is determined to be appropriate) or any
non-application or misapplication by the beneficiary of the
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proceeds of such Letter of Credit; provided, however, that after paying in full
its Reimbursement Obligation hereunder, nothing herein shall adversely affect
the right of any Borrower or such Current Assets Lender, as the case may be, to
commence any proceeding against the Issuer for any wrongful Disbursement made by
the Issuer under a Letter of Credit as a result of acts or omissions
constituting gross negligence or willful misconduct on the part of the Issuer.
SECTION II.6.4. Deemed Disbursements. Upon the occurrence and during
the continuation of any Event of Default of the type described in clauses (a)
through (d) of Section 8.1.9 or, with notice from the Administrative Agent
acting at the direction of the Current Assets Required Lenders pursuant to
Section 8.3, upon the occurrence and during the continuation of any other Event
of Default,
(a an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn
and available under all Letters of Credit issued and outstanding shall,
without demand upon or notice to any Borrower or any other Person, be
deemed to have been paid or disbursed by the Issuer under such Letters
of Credit (notwithstanding that such amount may not in fact have been
so paid or disbursed); and
(b each Borrower shall be immediately jointly and severally
obligated to reimburse the Issuer for the amount deemed to have been so
paid or disbursed by the Issuer.
Any amounts so payable by any Borrower pursuant to this Section shall be
deposited in cash with the Administrative Agent and held as collateral security
for the Reimbursement Obligations in connection with the Letters of Credit
issued by the Issuer. At such time as the Event of Default giving rise to the
deemed disbursements hereunder shall have been cured or waived, the
Administrative Agent shall return to the applicable Borrower all amounts then on
deposit with the Administrative Agent pursuant to this Section, together with
accrued interest at the Federal Funds Rate, which have not been applied to the
satisfaction of such Reimbursement Obligations.
SECTION II.6.5. Nature of Reimbursement Obligations. Each Borrower and,
to the extent set forth in Section 2.6.1, each Lender with a Current Assets Loan
Commitment, shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Issuer (except to the extent of
its own gross negligence or willful misconduct) shall not be responsible for (a)
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
Letter of Credit or any document submitted by any party in connection with the
application for and issuance of a Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged, (b) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits thereunder or the proceeds
thereof in whole or in part, which may prove to be invalid or ineffective for
any reason, (c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter
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of Credit, (d) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, facsimile or
otherwise, or (e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a Letter of
Credit. None of the foregoing shall affect, impair or prevent the vesting of any
of the rights or powers granted to the Issuer or any Current Assets Lender. In
furtherance and extension and not in limitation or derogation of any of the
foregoing, any action taken or omitted to be taken by the Issuer in good faith
(and not constituting gross negligence or willful misconduct) shall be binding
upon each Borrower and each such Current Assets Lender, and shall not put the
Issuer under any resulting liability to any Borrower or any such Current Assets
Lender, as the case may be.
SECTION II.7. Register, Reserves, Notes.
(a Each Lender may maintain in accordance with its usual practice an
account or accounts evidencing the Indebtedness of the Borrowers to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder. In the
case of a Lender that does not request, pursuant to clause (b)(ii) below,
execution and delivery of a Note evidencing the Loans made by such Lender to the
Borrowers, such account or accounts shall, to the extent not inconsistent with
the notations made by the Administrative Agent in the Register, be conclusive
and binding on each Borrower absent manifest error; provided, however, that the
failure of any Lender to maintain such account or accounts shall not limit or
otherwise affect any Obligations of any Borrower.
(b) (i) Each Borrower hereby designates the Administrative Agent to
serve as such Borrower's agent, solely for the purpose of this clause (b), to
maintain a register (the "Register") on which the Administrative Agent will
record each Lender's Commitment, the Loans made by each Lender and each
repayment in respect of the principal amount of the Loans of each Lender and
annexed to which the Administrative Agent shall retain a copy of each Lender
Assignment Agreement delivered to the Administrative Agent pursuant to Section
10.11.1. Failure to make any recordation, or any error in such recordation,
shall not affect any Borrower's obligation in respect of such Loans. The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Borrowers, the Administrative Agent and the Lenders shall treat each Person in
whose name a Loan (and as provided in clause (ii) the Note evidencing such Loan,
if any) is registered as the owner thereof for all purposes of this Agreement,
notwithstanding notice or any provision herein to the contrary. A Lender's
Commitment and the Loans made pursuant thereto may be assigned or otherwise
transferred in whole or in part only by registration of such assignment or
transfer in the Register. Any assignment or transfer of a Lender's Commitment or
the Loans made pursuant thereto shall be registered in the Register only upon
delivery to the Administrative Agent of a Lender Assignment Agreement duly
executed by the Assignor thereof. No assignment or transfer of a Lender's
Commitment or the Loans made pursuant thereto shall be effective unless such
assignment or transfer shall have been recorded in the Register by the
Administrative Agent as provided in this Section 2.7.
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(ii) Each Borrower agrees that, upon the written request to the
Administrative Agent by any Lender, each Borrower will execute and deliver to
such Lender, as applicable, a Note evidencing the Loans made by such Lender.
Each Borrower hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on the grid attached to such Lender's Notes (or on
any continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of, the outstanding principal amount of, and the interest rate
and Interest Period applicable to the Loans evidenced thereby. Such notations
shall, to the extent not inconsistent with the notations made by the
Administrative Agent in the Register, be conclusive and binding on the Borrowers
absent manifest error; provided, however, that the failure of any Lender to make
any such notations shall not limit or otherwise affect any Obligations of any
Borrower. The Loans evidenced by any such Note and interest thereon shall at all
times (including after assignment pursuant to Section 10.11.1) be payable to the
order of the payee named therein and its registered assigns. Subject to the
provisions of Section 10.11.1, a Note and the obligation evidenced thereby may
be assigned or otherwise transferred in whole or in part only by registration of
such assignment or transfer of such Note and the obligation evidenced thereby in
the Register (and each Note shall expressly so provide). Any assignment or
transfer of all or part of an obligation evidenced by a Note shall be registered
in the Register only upon surrender for registration of assignment or transfer
of the Note evidencing such obligation, accompanied by a Lender Assignment
Agreement duly executed by the assignor thereof and the compliance by the
parties thereto with the other requirements of Section 10.11.1, and thereupon,
if requested by the assignee, one or more new Notes shall be issued to the
designated assignee and the old Note shall be returned by the Administrative
Agent to the Company marked "exchanged". No assignment of a Note and the
obligation evidenced thereby shall be effective unless it shall have been
recorded in the Register by the Administrative Agent as provided in this
Section.
(c) In order to utilize the collective borrowing powers of the
Borrowers in the most efficient and economical manner, and in order to
facilitate the handling of the accounts of the Borrowers on the Administrative
Agent's books, the Borrowers have requested, and the Administrative Agent has
agreed to handle accounts of the Borrowers on the Administrative Agent's books
on a combined basis, all in accordance with the following provisions: (i) In
lieu of maintaining separate accounts on the Administrative Agent's books in the
name of each of the Borrowers, the Administrative Agent shall maintain (A) one
account under the name of the Company (the "Fixed Assets Obligations Account")
and (B) one other account under the name of the Company (the "Current Assets
Obligations Account", together with the Fixed Assets Obligations Account, the
"Obligation Accounts"). Credit Extensions made by the Lenders or the Issuer to
any of the Borrowers will be charged to the applicable Obligation Account, along
with any and all fees, charges, expenses, indemnities or any other monies due
under any Loan Document. The applicable Obligation Account will be credited with
all amounts received by the Administrative Agent from any of the Borrowers or
from others for their account, including all amounts received by the
Administrative Agent in payment of the applicable Obligations. (ii) Each month
the Administrative Agent will render to the Borrowers one extract of each
Obligation Account, which shall be deemed to be an account stated as to each of
the Borrowers and which will be deemed correct and accepted by all of the
Borrowers unless the Administrative
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Agent receives a written statement of exceptions from them within 30 days after
such extract has been rendered by the Administrative Agent. Each of the
Borrowers agrees that the Administrative Agent, and the Lenders as applicable,
shall have no obligation to account separately to any of the Borrowers. (iii)
Requests for Loans may be made by the Company as agent for the Borrowers and the
Administrative Agent is hereby authorized and directed to accept, honor and rely
on such instructions and requests, subject to the limitation and provisions set
forth in this Agreement. Each of the Borrowers agrees that the Administrative
Agent shall have no responsibility to inquire into the correctness of the
apportionment, allocation or disposition of (A) any Credit Extensions made to
any of the Borrowers or (B) any of the Administrative Agent's or Lender's
expenses and charges relating thereto. All Credit Extensions are made for the
applicable Obligation Account. (iv) It is understood that the handling of the
accounts of the Borrowers in a combined fashion is done solely as an
accommodation to the Borrowers and at their request, and that the Administrative
Agent shall incur no liability to the Borrowers as a result hereof. (v) The
foregoing request was made because the Borrowers are engaged in an integrated
operation that requires financing on a basis permitting the availability of
credit from time to time to each of the Borrowers as required for the continued
successful operation of each of the Borrowers. Each of the Borrowers expects to
derive benefit, directly or indirectly, from such availability since the
successful operation of each of the Borrowers is dependent on the continued
successful performance of the functions of the integrated group.
(d) Each of the Borrowers hereby authorizes the Administrative Agent to
charge the applicable Obligation Account with the amount of all payments due
hereunder as such payments become due. Each Borrower confirms that any charges
which the Administrative Agent may so make to such Obligation Account will be
made as an accommodation to the Borrowers and solely at the Administrative
Agent's discretion.
(e) Without limiting any other rights and remedies of the
Administrative Agent or any of the Secured Parties under any Loan Document, all
Current Assets Loans and Letters of Credit otherwise available to the Borrowers
shall be subject to the Administrative Agent's continuing right, in its
reasonable discretion, to establish an Availability Reserve.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION III.1. Repayments and Prepayments; Application. Each Borrower
agrees that the Loans shall be repaid and prepaid pursuant to the following
terms.
SECTION III.1.1. Repayments and Prepayments. The Borrowers shall
jointly and severally repay in full the unpaid principal amount of each Loan
upon the applicable Stated Maturity Date therefor. Prior thereto, payments and
prepayments of Loans shall or may be made as set forth below.
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(a) From time to time on any Business Day, any Borrower may
make a voluntary prepayment, in whole or in part, of the outstanding
principal amount of any
(i) Loans (other than Swing Line Loans); provided,
however, that (A) any such prepayment of the Loans shall be
made among Current Assets Loans and Fixed Assets Loans as
specified by such Borrower in the notice of voluntary
prepayment, and pro rata among Current Assets Loans and Fixed
Assets Loans of the same type and, if applicable, having the
same Interest Period of all Lenders that have made such
Current Assets Loans or Fixed Assets Loans; (B) all such
voluntary prepayments shall require at least one but no more
than five Business Days' prior written notice to the
Administrative Agent; and (C) all such voluntary partial
prepayments shall be, in the case of LIBO Rate Loans, in an
aggregate minimum amount of $500,000 and an integral multiple
of $100,000 and, in the case of Base Rate Loans, in an
aggregate minimum amount of $100,000 and an integral multiple
of $10,000; and
(ii) Swing Line Loans; provided, that (A) all such
voluntary prepayments shall require prior telephonic notice to
the Swing Line Lender on or before 1:00 p.m., New York City
time, on the day of such prepayment (such notice to be
confirmed in writing within 24 hours thereafter); and (B) all
such voluntary partial prepayments shall be in an aggregate
minimum amount of $100,000 and an integral multiple of
$10,000.
(b) On each date when the sum of (i) the aggregate outstanding
principal amount of all Current Assets Loans and Swing Line Loans and
(ii) the aggregate amount of all Letter of Credit Outstandings exceeds
the lesser of (A) the Current Assets Loan Commitment Amount (as it may
be reduced from time to time pursuant to this Agreement) and (B) the
then applicable Borrowing Base Amount less the Minimum Excess
Availability, the Borrowers shall make a mandatory prepayment of
Current Assets Loans or Swing Line Loans or, if necessary, Cash
Collateralize all Letter of Credit Outstandings, as specified by the
applicable Borrower, in an aggregate amount equal to such excess.
(c) On each date when the aggregate outstanding principal
amount of all Fixed Assets Loans exceeds the Fixed Assets Loan
Commitment Amount (as it may be reduced from time to time pursuant to
this Agreement), the Borrowers shall make a mandatory prepayment of
Fixed Assets Loans in an aggregate amount equal to such excess.
(d) Concurrently with the receipt of any Net Disposition
Proceeds by any Borrower or any Foreign Restricted Subsidiary, the
Company shall deliver to the Administrative Agent a calculation of the
amount of such Net Disposition Proceeds and make a mandatory prepayment
of the Loans in an amount equal to 100% of such Net Disposition
Proceeds, to be applied as set forth in Section 3.1.2; provided,
however, that
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solely with respect to Net Disposition Proceeds received in connection
with a Transfer of the Fibers Business no such mandatory prepayment of
the Loans shall be required under this clause to the extent that the
Company (i) notifies the Administrative Agent no later than three days
following the receipt of such Net Disposition Proceeds that it is the
Company's good faith intention to apply such Net Disposition Proceeds
toward the acquisition of other assets or property used in connection
with the business of any Borrower or any Foreign Restricted Subsidiary
or any business reasonably related thereto, (ii) places the proceeds
of such Disposition in an escrow account maintained by the
Administrative Agent pending such application (which proceeds shall be
invested in Cash Equivalent Investments at all times during which they
are deposited in such escrow account), (iii) the Company in fact so
uses such Net Disposition Proceeds within 365 days following the
receipt by such Person of Net Disposition Proceeds, with the amount of
Net Disposition Proceeds unused after such 365 day period being applied
to prepay the Fixed Assets Loans pursuant to this clause to be applied
as set forth in clause (b) of Section 3.1.2 and (iv) the Company (or,
if applicable, the Fibers Subsidiaries) shall legally and effectively
grant the Administrative Agent, on behalf of the Fixed Assets Lenders,
a first priority Lien in any non-cash proceeds received by the Company
(or the Fibers Subsidiaries) in such Transfer of the Fibers Business,
including any Capital Securities, as additional security for the
repayment of the Fixed Assets Obligations, and provided further that a
mandatory prepayment of the Loans shall not be required under this
clause in the case of the sale of the Toronto Office and the Vancouver
Release Parcel except for that portion (if any) of such Net Disposition
Proceeds that, in the aggregate, exceed $5,000,000.
(e) Concurrently with the receipt of any Net Debt Proceeds by
Parent, any Borrower or any Foreign Restricted Subsidiary, the Company
shall deliver to the Administrative Agent a calculation of the amount
of such Net Debt Proceeds and make a mandatory prepayment of the Loans
in an amount equal to 100% of such Net Debt Proceeds, to be applied as
set forth in clause (c) of Section 3.1.2.
(f) Concurrently with the receipt of any Net Equity Proceeds
by Parent, any Borrower or any Foreign Restricted Subsidiary, the
Company shall deliver to the Administrative Agent a calculation of the
amount of such Net Equity Proceeds (satisfactory to the Administrative
Agent) and Parent, such Borrower or such Foreign Restricted Subsidiary
shall make a mandatory prepayment of the Loans in an amount equal to
50% of such Net Equity Proceeds, to be applied as set forth in clause
(c) of Section 3.1.2, provided, however, that a mandatory prepayment of
the Loans shall not be required under this clause, in the case of (i)
any exercise of warrants or options outstanding prior to the Effective
Date, (ii) the issuance or exercise of any options granted pursuant to
any stock option, compensation or similar plan of Parent, any Borrower
or any Foreign Restricted Subsidiary, (iii) the sale or issuance of any
Capital Securities to any employee stock ownership plan of Parent, any
Borrower or any Foreign Restricted Subsidiary, (iv) the issuance of any
Capital Securities by way of dividend or
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other distribution, subdivision or split on or of any Capital
Securities of Parent, any Borrower or any Foreign Restricted Subsidiary
and (v) the issuance and sale by Parent of its Capital Securities to an
Unrestricted Subsidiary to the extent that the proceeds received from
such Unrestricted Subsidiary are used solely to pay interest that is
currently due and payable on the Senior Secured Discount Notes within
180 days of the receipt of such proceeds provided that to the extent
that any proceeds received from such Unrestricted Subsidiary are not so
applied, 50% of such unapplied proceeds shall be applied as set forth
in clause (c) of Section 3.1.2.
(g) Immediately upon any acceleration of the Stated Maturity
Date of any Loans pursuant to Section 8.2 or Section 8.3, the Borrowers
shall jointly and severally repay all the Loans, unless, pursuant to
Section 8.3, only a portion of all the Loans is so accelerated (in
which case the portion so accelerated shall be so repaid).
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4.
SECTION III.1.2. Application. Amounts prepaid pursuant to Section 3.1.1
shall be applied as set forth in this Section.
(a) Subject to clause (b), each prepayment or repayment of the
principal of the Loans shall be applied, to the extent of such
prepayment or repayment, first, to the principal amount thereof being
maintained as Base Rate Loans, and second, subject to the terms of
Section 4.4, to the principal amount thereof being maintained as LIBO
Rate Loans.
(b) Each prepayment of Loans pursuant to clause (d) of Section
3.1.1 shall be applied (i) in the case of a Disposition of assets that
are Fixed Assets to a mandatory prepayment of the outstanding Fixed
Assets Loans until all outstanding Fixed Assets Loans have been repaid
in full and immediately upon the Administrative Agent's receipt of such
Net Disposition Proceeds, the Fixed Assets Loan Commitment Amount shall
be reduced by the aggregate amount of (A) Net Disposition Proceeds used
to prepay the outstanding principal amount of such Fixed Assets Loans
plus (B) any additional amount of such Net Disposition Proceeds
remaining after the outstanding amount of Fixed Assets Loans have been
reduced to zero; provided that the first $2,500,000 of Net Disposition
Proceeds prepaid pursuant to a Disposition permitted under clause (d)
of Section 7.2.11 in any Fiscal Year shall not result in a reduction of
the Fixed Assets Loan Commitment Amount and (ii) in the case of a
Disposition of assets other than Fixed Assets, first, to a mandatory
prepayment of the outstanding Current Assets Loans until all
outstanding Current Assets Loans have been repaid in full and second,
to a mandatory prepayment of the outstanding Fixed Assets Loans until
all outstanding Fixed Assets Loans have been repaid in full provided
that any such prepayment pursuant to this clause (b) (ii) will not
automatically result in a reduction of the Fixed Assets Loan Commitment
Amount or the
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Current Assets Loan Commitment Amount. Upon any Disposition of assets
that are not Current Assets, an amount equal to the Net Disposition
Proceeds minus the aggregate amount required to repay all outstanding
Fixed Assets Obligations may be paid to the Trustee to hold in escrow
pending any offer to purchase the Senior Secured Notes required under
the Senior Secured Note Indenture in connection with such Disposition.
(c) Each prepayment of Loans made pursuant to clauses (e) and
(f) of Section 3.1.1 shall be applied (i) first, pro rata based on the
aggregate Commitment Amount to a mandatory prepayment of the
outstanding principal amount of all Current Assets Loans and all Fixed
Assets Loans until the outstanding principal amount of all Fixed Assets
Loans is equal to zero, (ii) second, if (A) the outstanding principal
amount of Fixed Assets Loans is equal to zero, then to a mandatory
prepayment of the outstanding principal amount of all Current Assets
Loans with a corresponding permanent reduction in the Fixed Assets Loan
Commitment Amount by the amount of such Net Equity Proceeds or Net Debt
Proceeds which would have otherwise been applied pro rata based on the
aggregate Commitment Amount to the outstanding principal amount of all
Fixed Assets Loans until the outstanding principal amount of all such
Current Assets Loans has been reduced to zero or (B) the outstanding
principal amount of Current Assets Loans has been reduced to zero, the
remaining amount of Net Equity Proceeds or Net Debt Proceeds shall be
applied to the prepayment of the outstanding principal amount of all
Fixed Assets Loans until the outstanding principal amount of all Fixed
Assets Loans is equal to zero and (iii) third, once the outstanding
principal amount of all Current Assets Loans has been reduced to zero,
the Fixed Assets Loan Commitment Amount shall be reduced by the amount
of such Net Equity Proceeds or Net Debt Proceeds prepaid pursuant to
clauses (i) and (ii) above and the amount of such Net Equity Proceeds
or Net Debt Proceeds remaining unapplied.
SECTION III.2. Interest Provisions. Interest on the outstanding
principal amount of Loans shall accrue and be payable in accordance with the
terms set forth below.
SECTION III.2.1. Rates. Subject to Section 2.3.2, pursuant to an
appropriately delivered Borrowing Request or Continuation/Conversion Notice, any
Borrower may elect that Loans comprising a Borrowing accrue interest at a rate
per annum:
(a) (i) on that portion (other than the Overadvance Amount)
maintained from time to time as a Base Rate Loan, equal to the sum of
the Alternate Base Rate from time to time in effect plus the Applicable
Margin, and (ii) on that portion that is the Overadvance Amount
maintained as a Base Rate Loan, equal to the sum of the Alternate Base
Rate from time to time in effect plus the Overadvance Rate; provided
that all Swing Line Loans shall always accrue interest at the then
effective Applicable Margin for Current Assets Loans maintained as Base
Rate Loans; and
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(b) (i) on that portion (other than the Overadvance Amount)
maintained as a LIBO Rate Loan, during each Interest Period applicable
thereto, equal to the sum of the LIBO Rate (Reserve Adjusted) for such
Interest Period plus the Applicable Margin, and (ii) on that portion
that is the Overadvance Amount maintained as a LIBO Rate Loan, during
each Interest Period applicable thereto, equal to the sum of the LIBO
Rate (Reserve Adjusted) for such Interest Period plus the Overadvance
Rate.
All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate applicable to such LIBO Rate Loan.
SECTION III.2.2. Post-Maturity Rates. After the date any principal
amount of any Loan or Reimbursement Obligation is due and payable (whether on
the Stated Maturity Date, upon acceleration or otherwise), or after any other
monetary Obligation of the Borrowers shall have become due and payable, the
Borrowers shall jointly and severally pay, but only to the extent permitted by
law, interest (after as well as before judgment) on such amounts at a rate per
annum equal to the Alternate Base Rate from time to time in effect plus the
Applicable Margin for Fixed Assets Revolving Loans plus, a margin of 2%.
SECTION III.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in
part, of principal outstanding on such Loan on the principal amount so
paid or prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring after the Closing Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, on the date occurring on each three-month interval
occurring after the first day of such Interest Period);
(e) with respect to any Base Rate Loans converted into LIBO
Rate Loans on a day when interest would not otherwise have been payable
pursuant to clause (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 8.2 or Section 8.3,
immediately upon such acceleration.
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Interest accrued on Loans or other monetary Obligations after the date such
amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.
SECTION III.3. Fees. Each Borrower agrees to pay the fees set forth
below. All such fees shall be non-refundable.
SECTION III.3.1. Commitment Fees. The Borrowers agree to pay, jointly
and severally, to the Administrative Agent for the account of each Lender, for
the period (including any portion thereof when any of its Commitments are
suspended by reason of the Borrowers' inability to satisfy any condition of
Article V) commencing on the Effective Date and continuing through the
applicable Commitment Termination Date, a commitment fee in an aggregate amount
equal to the Applicable Commitment Fee, in each case on such Lender's Percentage
of the sum of the average daily unused portion of the applicable Commitment
Amount (less Letter of Credit Outstandings, in the case of the Current Assets
Loan Commitment Amount). All commitment fees payable pursuant to this Section
shall be calculated on a year comprised of 360 days and payable by the Borrowers
in arrears on the Effective Date and thereafter on each Quarterly Payment Date,
commencing with the first Quarterly Payment Date following the Effective Date,
and (a) with respect to the Current Assets Loan Commitment, on the Current
Assets Loan Commitment Termination Date, and (b) with respect to the Fixed
Assets Loan Commitment, on the Fixed Assets Loan Commitment Termination Date.
The making of Swing Line Loans shall not constitute usage of the Current Assets
Loan Commitment with respect to the calculation of commitment fees to be paid by
the Borrowers to the Lenders.
SECTION III.3.2. The Agents' Fees and the Lead Arranger's Fees. The
Borrowers agree to pay, jointly and severally, to each of the Syndication Agent,
the Administrative Agent and the Lead Arranger, for each such Person's own
account, an aggregate amount equal to the fees set forth in the Fee Letter and
the Administrative Agent's Fee Letter, in each case in accordance with their
respective terms.
SECTION III.3.3. Letter of Credit Fees. The Borrowers agree to pay,
jointly and severally, to the Administrative Agent, for the pro rata account of
the Issuer and each Current Assets Loan Lender, an aggregate Letter of Credit
fee on the daily average Stated Amount of each Letter of Credit, in each case
for the period from and including the date of issuance of such Letter of Credit
to and excluding the date expiration or termination of such Letter of Credit
computed at a per annum rate for each day equal to the then effective Applicable
Margin for Current Assets Loans maintained as LIBO Rate Loans in effect on such
day, such fees being payable quarterly in arrears on each Quarterly Payment Date
and on the Current Assets Loan Commitment Termination Date. The Borrowers
further agree to pay, jointly and severally, to the Issuer quarterly in arrears
on each Quarterly Payment Date following the date of issuance of a Letter of
Credit until the earlier of the expiration of such Letter of Credit and the
Current Assets Loan Commitment Termination Date, an issuance fee as specified in
the Administrative Agent's Fee Letter or as otherwise agreed to by the Borrowers
and the Issuer.
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ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION IV.1. LIBO Rate Lending Unlawful. If any Lender shall
reasonably determine (which determination shall, in the absence of manifest
error and upon notice thereof to the Company and the Administrative Agent, be
conclusive and binding on each Borrower) that the introduction of or any change
in or in the interpretation of any law makes it unlawful, or any Governmental
Authority asserts that it is unlawful, for such Lender to make or continue any
Loan as, or to convert any Loan into, a LIBO Rate Loan, the obligations of such
Lender to make, continue or convert any such LIBO Rate Loan shall, upon such
determination, forthwith be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such suspension no longer
exist, and all outstanding LIBO Rate Loans payable to such Lender shall
automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
SECTION IV.2. Deposits Unavailable. If the Administrative Agent shall
have determined that
(a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to it in its relevant
market; or
(b) by reason of circumstances affecting it's relevant market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBO Rate Loans;
then, upon notice from the Administrative Agent to the Company and the Lenders,
the obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended until the Administrative Agent shall notify the Company
and the Lenders that the circumstances causing such suspension no longer exist;
provided that, in such case, the Lenders shall use their reasonable efforts to
obtain funding of the Loans at a rate comparable with the LIBO Rate (Reserve
Adjusted) in other Eurodollar markets.
SECTION IV.3. Increased LIBO Rate Loan Costs, etc. Each Borrower
agrees, jointly and severally, to reimburse each Lender and Issuer for any
increase in the cost to such Lender or Issuer of, or any reduction in the amount
of any sum receivable by such Secured Party in respect of, such Secured Party's
Commitments and the making of Credit Extensions hereunder (including the making,
continuing or maintaining (or of its obligation to make or continue) any Loans
as, or of converting (or of its obligation to convert) any Loans into, LIBO Rate
Loans) that arise in connection with any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in after the
date hereof of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any Governmental Authority, except
for such changes with respect to increased capital costs and
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Taxes which are governed by Sections 4.5 and 4.6, respectively. Each affected
Secured Party shall promptly notify the Administrative Agent and the Company in
writing of the occurrence of any such event, stating the reasons therefor and
the additional amount required fully to compensate such Secured Party for such
increased cost or reduced amount. Such additional amounts shall be payable by
the Borrowers directly to such Secured Party within five days of its receipt of
such notice, and such notice shall, in the absence of manifest error, be
conclusive and binding on the Borrowers.
SECTION IV.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make or continue any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a LIBO Rate Loan)
not recovered in connection with the redeployment of such funds (and excluding
any loss of anticipated profits) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loan on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to
Article III or otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance
with the Borrowing Request therefor (unless due to the responsibility
of the Lender or inability of the Lender to fund in accordance with the
terms hereof); or
(c) any Loans not being continued as, or converted into, LIBO
Rate Loans in accordance with the Continuation/Conversion Notice
therefor (unless due to the responsibility of the Lender or inability
of the Lender to fund in accordance with the terms hereof);
then, upon the written notice of such Lender to the Company (with a copy to the
Administrative Agent), the Borrowers shall, jointly and severally, within five
days of its receipt thereof, pay directly to such Lender such amount as will (in
the reasonable determination of such Lender) reimburse such Lender for such loss
or expense. Such written notice shall set forth the basis for requesting such
amounts and shall, in the absence of manifest error, be conclusive and binding
on each Borrower.
SECTION IV.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(having the force of law) of any Governmental Authority affects or would affect
the amount of capital required or expected to be maintained by any Secured Party
or any Person controlling such Secured Party, and such Secured Party determines
(in good faith but in its sole and absolute discretion) that the rate of return
on its or such controlling Person's capital as a consequence of the Commitments
or the Credit Extensions made, or the Letters of Credit participated in, by such
Secured Party is reduced to a level below that which such Secured Party or such
controlling Person could have achieved but for the occurrence of any such
circumstance, then upon notice from time to time by such Secured Party to the
Company, the Borrowers shall, within five days following receipt of such notice
(which notice shall be sent to the Company promptly (but in no event later than
180 days) after obtaining actual knowledge by such Lender of any such amounts
owed by the Borrowers and the amount shall be conclusively determined by such
Lender), jointly and severally, pay directly to such Secured Party additional
amounts sufficient to compensate such Secured
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Party or such controlling Person for such reduction in rate of return to the
extent allocable to such Lender's Commitments or the Credit Extensions made, or
the Letters of Credit participated in by such Lender. A statement of such
Secured Party as to any such additional amount or amounts shall, in the absence
of manifest error, be conclusive and binding on each Borrower. In determining
such amount, such Secured Party may use any method of averaging and attribution
that it (in its sole and absolute discretion) shall deem applicable, provided
that the determination of such amount is made in good faith and in a manner
generally consistent with such Secured Party's standard practice therefor.
SECTION IV.6. Taxes. Each Borrower covenants and agrees as follows with
respect to Taxes.
(a) Any and all payments by the Borrowers under each Loan
Document shall be made without setoff, counterclaim or other defense,
and free and clear of, and without deduction or withholding for or on
account of, any Taxes. In the event that any Taxes are required by law
to be deducted or withheld from any payment required to be made by the
Borrowers to or on behalf of any Secured Party under any Loan Document,
then:
(i) subject to clause (f), if such Taxes are
Non-Excluded Taxes, the amount of such payment shall be
increased as may be necessary such that such payment is made,
after withholding or deduction for or on account of such
Taxes, in an amount that is not less than the amount provided
for in such Loan Document; and
(ii) the Borrowers shall withhold the full amount of
such Taxes from such payment (as increased pursuant to clause
(a) (i)) and shall pay such amount to the Governmental
Authority imposing such Taxes in accordance with applicable
law.
(b) In addition, the Borrowers shall pay any and all Other
Taxes imposed to the relevant Governmental Authority imposing such
Other Taxes in accordance with applicable law.
(c) As promptly as practicable after the payment of any Taxes
or Other Taxes, and in any event within 45 days of any such payment
being due, the Borrowers shall furnish to the Administrative Agent a
copy of an official receipt (or a certified copy thereof) evidencing
the payment of such Taxes or Other Taxes. The Administrative Agent
shall make copies thereof available to any Lender upon request
therefor.
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(d) Subject to clause (f), each Borrower, on a joint and
several basis, shall indemnify each Secured Party for any Non-Excluded
Taxes and Other Taxes levied, imposed or assessed on (and whether or
not paid directly by) such Secured Party. Promptly upon having
knowledge that any such Non-Excluded Taxes or Other Taxes have been
levied, imposed or assessed, and promptly upon notice thereof by any
Secured Party, the Borrowers shall pay such Non-Excluded Taxes or Other
Taxes directly to the relevant Governmental Authority. If a Secured
Party receives a refund in respect of any Non-Excluded Taxes or Other
Taxes with respect to which any Borrower has paid additional amounts
pursuant to this Section 4.6, it shall within 30 days from the date of
such receipt pay over to the Borrowers (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrowers
under this Section 4.6 with respect to the Non-Excluded Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of
such Secured Party and without interest (other than interest paid by
the relevant jurisdiction or taxing authority with respect to such
refund) the portion of such refund which, in the good faith judgment of
such Secured Party, is attributable to the payment of such additional
amounts by the Borrowers and in an amount as will leave such Secured
Party in no better or worse position than it would have been in if the
payment of such additional amounts had not been required; provided,
however, that the Borrowers, upon the request of such Secured Party,
agree to repay the amount paid over to the Borrowers (plus penalties,
interest or other charges payable to the relevant jurisdiction or
taxing authority) to such Secured Party in the event such Secured Party
is required to repay such refund to such jurisdiction or taxing
authority. In addition, each Borrower, on a joint and several basis,
shall indemnify each Secured Party for any incremental Taxes that may
become payable by such Secured Party as a result of any failure of the
Borrowers to pay any Taxes when due to the appropriate Governmental
Authority or to deliver to the Administrative Agent, pursuant to clause
(c), documentation evidencing the payment of Taxes or Other Taxes. With
respect to indemnification for Non-Excluded Taxes and Other Taxes
actually paid by any Secured Party or the indemnification provided in
the immediately preceding sentence, such indemnification shall be made
within 30 days after the date such Secured Party makes written demand
therefor. Each Borrower acknowledges that any payment made to any
Secured Party or to any Governmental Authority in respect of the
indemnification obligations of the Borrowers provided in this clause
shall constitute a payment in respect of which the provisions of clause
(a) and this clause shall apply.
(e) As of the date on which any Lender becomes a party hereto,
such Lender represents that it is either (i) a corporation organized
under the laws of the United States or any State or is otherwise a
"United States-person" within the meaning of Section 7701(a)(30) of the
Code, (ii) entitled to complete exemption from United States
withholding tax imposed on or with respect to any payments, including
fees, to be made to it pursuant to this Agreement or (iii) entitled to
complete exemption from United States withholding tax on interest
imposed on or with respect to any payments of interest to be
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made pursuant to this Agreement (A) under an applicable provision of a
tax convention to which the United States of America is a party (B)
because such payments to be received by it hereunder is effectively
connected with a trade or business in the United States or (C) because
it is a recipient of portfolio interest within the meaning of Section
871(h) or 881(c) of the Code. Each Non-U.S. Lender, on or prior to the
date on which such non-U.S. Lender becomes a Lender hereunder shall
deliver to the Company and the Administrative Agent either:
(i) two duly completed copies of either (x) Internal
Revenue Service Form W-8BEN or (B) Internal Revenue Service
Form W-8ECI, or in either case an applicable successor form;
or
(ii) in the case of a Non-U.S. Lender that is not
legally entitled to deliver either form listed in clause
(e)(i), (x) a certificate of a duly authorized officer of such
Non-U.S. Lender in substantially the form of Exhibit N
attached hereto to the effect that such Non-U.S. Lender is not
(A) a "bank" within the meaning of Section 881(c)(3)(A) of the
Code, (B) a "10 percent shareholder" of any Borrower within
the meaning of Section 881(c)(3)(B) of the Code, or (C) a
controlled foreign corporation receiving interest from a
related person within the meaning of Section 881(c)(3)(C) of
the Code (such certificate, an "Exemption Certificate") and
(y) two duly completed copies of Internal Revenue Service Form
W-8BEN or applicable successor form.
In addition, each Non-U.S. Lender shall redeliver to the Company and
the Administrative Agent the forms prescribed by this clause (e) from time to
time thereafter upon the request of the Company or the Administrative Agent or
as required by applicable law or regulation and prior to the date of expiration
of the most recently delivered form, but only for so long as such Non-U.S.
Lender is legally entitled to do so.
(f) The Borrowers shall not be obligated to gross up any
payments to any Lender pursuant to clause (a)(i), or to indemnify any
Lender pursuant to clause (d), in respect of United States federal
withholding taxes to the extent imposed as a result of (i) the failure
of such Lender to deliver to the Company the form or forms and/or an
Exemption Certificate, as applicable to such Lender, pursuant to clause
(e), (ii) such form or forms and/or Exemption Certificate not
establishing a complete exemption from U.S. federal withholding tax or
the information or certifications made therein by the Lender being
untrue or inaccurate on the date delivered in any material respect, or
(iii) the Lender designating a successor lending office at which it
maintains its Loans which has the effect of causing such Lender to
become obligated for tax payments in excess of those in effect
immediately prior to such designation; provided, however, that the
Borrowers shall be jointly and severally obligated to gross up any
payments to any such Lender pursuant to clause (a)(i), and to indemnify
any such Lender pursuant to clause (d), in respect of United States
federal withholding taxes if (i) any such failure to deliver a form or
forms
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or an Exemption Certificate or the failure of such form or forms or
Exemption Certificate to establish a complete exemption from U.S.
federal withholding tax or inaccuracy or untruth contained therein
resulted from a change in any applicable statute, treaty, regulation or
other applicable law or any interpretation of any of the foregoing
occurring after the date hereof, which change rendered such Lender no
longer legally entitled to deliver such form or forms or Exemption
Certificate or otherwise ineligible for a complete exemption from U.S.
federal withholding tax, or rendered the information or certifications
made in such form or forms or Exemption Certificate untrue or
inaccurate in a material respect, (ii) the redesignation of the
Lender's lending office was made at the request of the Borrowers or
(iii) the obligation to gross up payments to any such Lender pursuant
to clause (a)(i) or to indemnify any such Lender pursuant to clause (d)
is with respect to an Assignee Lender that becomes an Assignee Lender
as a result of an assignment made at the request of the Borrowers.
(g) Each Lender also agrees at the reasonable request of the
Borrowers to deliver to the Borrowers and the Administrative Agent such
other or supplemental forms as may at any time be required as a result
of changes in applicable law or regulation in order to confirm or
maintain in effect its entitlement to exemption from United States
withholding tax on any payments hereunder; provided that the
circumstances of the Lender at the relevant time and applicable laws
make it legally entitled to do so. Each Person that shall become a
Lender or a Participant pursuant to Section 10.11.1 or Section 10.11.2
shall, upon the effectiveness of the related transfer, be required to
provide all of the forms, certifications and statements required
pursuant to this Section; provided that in the case of a Participant,
such Participant shall furnish all such required forms, certifications
and statements to the Lender from which the related participation shall
have been purchased.
(h) Each Lender agrees that it will use reasonable efforts to
designate an alternate lending office with respect to its LIBO Rate
Loans affected by any of the matters or circumstances described in this
Section 4.6 to reduce the obligation of the Borrowers to gross up any
payments to any Lenders pursuant to clause(a)(i), or to indemnify any
Lenders pursuant to clause (d), so long as such designation is not
disadvantageous to such Lender as determined by such Lender in its sole
discretion; provided that such Lender shall have no obligation to so
designate an alternate lending office located in the United States. Any
Lender claiming any additional amounts payable pursuant to this Section
4.6 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to deliver to the Borrowers or the Administrative Agent
any certificate or document reasonably requested by any Borrower or the
Administrative Agent if the delivery of such certificate or document
would avoid the need for or reduce the amount of any such additional
amounts that may thereafter accrue and would not, in the sole
determination of such Lender, be otherwise disadvantageous to such
Lender.
(i) If any Lender that does not make a LIBO Rate Loan pursuant
to Section 4.1 or Section 4.2, is subject to increased costs pursuant
to Section 4.3, or is owed or reasonably
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anticipates being owed additional amounts pursuant to this Section 4.6
and fails to take action required under clause (h) of this Section 4.6,
any Borrower shall have the right, if no Default then exists, to
replace such Lender with another bank or financial institution with the
written consent of the Administrative Agent, which consent shall not be
unreasonably withheld, provided that (i) the obligations of any
Borrower owing to the Lender being replaced (including such increased
costs) that are not being assigned to the replacement Lender shall be
paid in full to the Lender being replaced concurrently with such
replacement, (ii) the replacement lender shall execute a Lender
Assignment Agreement and Acceptance pursuant to which it shall become a
party hereto as provided in Section 10.11.1, and (iii) upon compliance
with the provisions for assignment provided in Section 10.11.1 and the
payment of amounts referred to in clause (i), the replacement lender
shall constitute a "Lender" hereunder and the Lender being so replaced
shall no longer constitute a "Lender" hereunder.
SECTION IV.7. Payments, Computations, etc. Unless otherwise expressly
provided in a Loan Document, all payments by the Borrowers pursuant to each Loan
Document shall be made by such Borrower to the Administrative Agent for the pro
rata account of the Secured Parties entitled to receive such payment. All
payments shall be made without setoff, deduction or counterclaim not later than
12:00 noon New York City time on the date due in same day or immediately
available funds to such account as the Administrative Agent shall specify from
time to time by notice to the Company. Funds received after that time shall be
deemed to have been received by the Administrative Agent on the next succeeding
Business Day. The Administrative Agent shall promptly remit in same day funds to
each Secured Party its share, if any, of such payments received by the
Administrative Agent for the account of such Secured Party. All interest
(including interest on LIBO Rate Loans) and fees shall be computed on the basis
of the actual number of days (including the first day but excluding the last
day) occurring during the period for which such interest or fee is payable over
a year comprised of 360 days (or, in the case of interest on a Base Rate Loan
(calculated at other than the Federal Funds Rate), 365 days or, if appropriate,
366 days). Payments due on other than a Business Day shall (except as otherwise
required by clause (c) of the definition of the term "Interest Period") be made
on the next succeeding Business Day and such extension of time shall be included
in computing interest and fees in connection with that payment.
SECTION IV.8. Sharing of Payments. If any Secured Party shall obtain
any payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Credit Extension or Reimbursement
Obligation (other than pursuant to the terms of Sections 4.3, 4.4, 4.5 or 4.6)
in excess of its pro rata share of payments obtained by all Secured Parties
entitled to receive such payment, such Secured Party shall purchase from the
other Secured Parties such participations in Credit Extensions made by them as
shall be necessary to cause such purchasing Secured Party to share the excess
payment or other recovery ratably (to the extent such other Secured Parties were
entitled to receive a portion of such payment or recovery) with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Secured Party, the
purchase shall
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be rescinded and each Secured Party which has sold a participation to the
purchasing Secured Party shall repay to the purchasing Secured Party the
purchase price to the ratable extent of such recovery together with an amount
equal to such selling Secured Party's ratable share (according to the proportion
of (a) the amount of such selling Secured Party's required repayment to the
purchasing Secured Party to (b) total amount so recovered from the purchasing
Secured Party) of any interest or other amount paid or payable by the purchasing
Secured Party in respect of the total amount so recovered. The Borrowers agree
that any Secured Party purchasing a participation from another Secured Party
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment (including pursuant to Section 4.9) with respect to
such participation as fully as if such Secured Party were the direct creditor of
the Borrowers in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law any Secured Party receives a secured
claim in lieu of a setoff to which this Section applies, such Secured Party
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Secured Parties entitled
under this Section to share in the benefits of any recovery on such secured
claim.
SECTION IV.9. Setoff. Each Secured Party shall, upon the occurrence and
during the continuance of any Default described in clauses (a) through (d) of
Section 8.1.9 or, with the consent of the Required Lenders, upon the occurrence
and during the continuance of any other Event of Default, have the right to
appropriate and apply to the payment of the Obligations owing to it (whether or
not then due), and (as security for such Obligations) each Borrower hereby
grants to each Secured Party a continuing security interest in, any and all
balances, credits, deposits, accounts or moneys of such Borrower then or
thereafter maintained with such Secured Party; provided, however, that any such
appropriation and application shall be subject to the provisions of Section 4.8.
Each Secured Party agrees promptly to notify such Borrower and the
Administrative Agent after any such setoff and application made by such Secured
Party; provided, however, that the failure to give such notice shall not affect
the validity of such setoff and application. The rights of each Secured Party
under this Section are in addition to other rights and remedies (including other
rights of setoff under applicable law or otherwise) which such Secured Party may
have.
SECTION IV.10. Guaranty Provisions. Each Borrower acknowledges and
agrees that, whether or not specifically indicated as such in a Loan Document,
all Obligations shall be joint and several Obligations of each individual
Borrower, and in furtherance of such joint and several Obligations, each
Borrower hereby irrevocably guarantees the payment of all Obligations of each
other Borrower as set forth below.
SECTION IV.10.1. Guaranty. Each Borrower hereby jointly and severally,
absolutely, unconditionally and irrevocably guarantees the full and punctual
payment when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, of all Obligations; provided,
however, that each Borrower shall only be liable under this Agreement for the
maximum amount of such liability that can be hereby incurred without rendering
this Agreement, as it relates to such Borrower, voidable under applicable law
relating to fraudulent
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conveyance or fraudulent transfer, and not for any greater amount. This guaranty
constitutes a guaranty of payment when due and not of collection, and each
Borrower specifically agrees that it shall not be necessary or required that any
Secured Party exercise any right, assert any claim or demand or enforce any
remedy whatsoever against any Obligor or any other Person before or as a
condition to the obligations of such Borrower hereunder.
SECTION IV.10.2. Guaranty Absolute, etc. The guaranty agreed to above
shall in all respects be a continuing, absolute, unconditional and irrevocable
guaranty of payment, and shall remain in full force and effect until the
Termination Date. Each Borrower jointly and severally guarantees that the
Obligations will be paid strictly in accordance with the terms of each Loan
Document under which such Obligations arise, regardless of any law, regulation
or order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of any Secured Party with respect thereto. The liability of
each Borrower under this Agreement shall be joint and several, absolute,
unconditional and irrevocable irrespective of (a) any lack of validity, legality
or enforceability of any Loan Document; (b) the failure of any Secured Party (i)
to assert any claim or demand or to enforce any right or remedy against any
Obligor or any other Person (including any other guarantor) under the provisions
of any Loan Document or otherwise, or (ii) to exercise any right or remedy
against any other guarantor (including any Obligor) of, or collateral securing,
any Obligations; (c) any change in the time, manner or place of payment of, or
in any other term of, all or any part of the Obligations, or any other
extension, compromise or renewal of any Obligation; (d) any reduction,
limitation, impairment or termination of any Obligations for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and each Borrower hereby waives any right to or claim
of) any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, any Obligations or otherwise;
(e) any amendment to, rescission, waiver, or other modification of, or any
consent to or departure from, any of the terms of any Loan Document; (f) any
addition, exchange, release, surrender or non-perfection of any collateral, or
any amendment to or waiver or release or addition of, or consent to or departure
from, any other guaranty held by any Secured Party securing any of the
Obligations; or (g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any Obligor, any
surety or any guarantor.
SECTION IV.10.3. Reinstatement, etc. Each Borrower agrees that its
guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Secured Party, upon the
insolvency, bankruptcy or reorganization of any other Borrower, any other
Obligor or otherwise, all as though such payment had not been made.
SECTION IV.10.4. Waiver, etc. Each Borrower hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and this Agreement and any requirement that any Secured Party
protect, secure, perfect or insure any Lien, or any property subject thereto, or
exhaust any right or take any action against any other
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Obligor or any other Person (including any other guarantor) or entity or any
collateral securing the Obligations, as the case may be.
SECTION IV.10.5. Postponement of Subrogation, etc. Each Borrower agrees
that it will not exercise any rights which it may acquire by way of rights of
subrogation under any Loan Document to which it is a party, nor shall any
Borrower seek or be entitled to seek any contribution or reimbursement from any
Obligor, in respect of any payment made hereunder, under any other Loan Document
or otherwise, until following the Termination Date. Any amount paid to any
Borrower on account of any such subrogation rights prior to the Termination Date
shall be held in trust for the benefit of the Secured Parties and shall
immediately be paid and turned over to the Administrative Agent for the benefit
of the Secured Parties in the exact form received by such Borrower (duly
endorsed in favor of the Administrative Agent, if required), to be credited and
applied against the Obligations, whether matured or unmatured, in accordance
with Section 4.8; provided, however, that if (a) any Borrower has made payment
to the Secured Parties of all or any part of the Obligations; and (b) the
Termination Date has occurred; then at such Borrower's request, the
Administrative Agent, (on behalf of the Secured Parties) will, at the expense of
such Borrower, execute and deliver to such Borrower appropriate documents
(without recourse and without representation or warranty) necessary to evidence
the transfer by subrogation to such Borrower of an interest in the Obligations
resulting from such payment. In furtherance of the foregoing, at all times prior
to the Termination Date, each Borrower shall refrain from taking any action or
commencing any proceeding against any Obligor (or its successors or assigns,
whether in connection with a bankruptcy proceeding or otherwise) to recover any
amounts in the respect of payments made under any Loan Document to any Secured
Party.
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION V.1. Initial Credit Extension. The obligations of the Lenders
and, if applicable, the Issuer to fund the initial Credit Extension shall be
subject to the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 5.1 to the satisfaction of the Agents.
SECTION V.1.1. Resolutions, etc. The Agents shall have received from
Parent and each Borrower, as applicable, (i) a copy of a good standing
certificate, dated a date reasonably close to the Effective Date, for each such
Person and (ii) a certificate, dated the Closing Date and with counterparts for
each Lender, duly executed and delivered by such Person's secretary or assistant
secretary as to
(a) resolutions of each such Person's Board of Directors then
in full force and effect authorizing, to the extent relevant, all
aspects of the transactions contemplated hereby applicable to such
Person and the execution, delivery and performance of each
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Loan Document to be executed by such Person and the transactions
contemplated hereby and thereby;
(b) the incumbency and signatures of those of its officers
authorized to act with respect to each Loan Document to be executed by
such Person (each an "Authorized Officer"); and
(c) the full force and validity of each Organic Document of
such Person and copies thereof;
upon which certificates each Secured Party may conclusively rely until it shall
have received a further certificate of the secretary or assistant secretary of
any such Person canceling or amending the prior certificate of such Person.
SECTION V.1.2. Senior Secured Notes. The Agents shall have received
fully executed copies of the Senior Secured Note Documents and all certificates,
opinions and other documents delivered thereunder, certified to be true and
complete copies thereof by an Authorized Officer of the Company.
SECTION V.1.3. Issuance of Senior Secured Notes, etc. The Company shall
have received $295,000,000 in gross proceeds from the issuance of the Senior
Secured Notes pursuant to the Senior Secured Note Indenture to the purchasers of
the Senior Secured Notes which shall have been duly executed by each of the
respective parties thereto, and which Senior Secured Note Indenture shall be in
form and substance reasonably satisfactory to the Agents.
SECTION V.1.4. Consummation of Transaction, etc. The Agents shall have
received evidence satisfactory to each of them that all actions necessary to
consummate the transactions contemplated hereby shall have been taken in
accordance with all applicable law and in accordance with the terms of each
applicable transaction document. The Agents shall be satisfied with (i) the
final structure of the Transaction, (ii) the sources and uses of the proceeds
used to consummate the Transaction, and (iii) the terms and conditions of the
Transaction Documents. There shall exist at and as of the Closing Date (after
giving effect to the Transaction and the initial Credit Extensions hereunder) no
conditions that would constitute a default or an event of default under any of
the Senior Secured Note Documents, the Senior Secured Discount Notes, the Sub
Debt Documents or any other material document or material agreement.
SECTION V.1.5. Intercreditor Agreements. The Agents shall have received
executed counterparts of each of the Revolver Intercreditor Agreement and the
Senior Debt Intercreditor Agreement, dated as of the Closing Date, in each case,
duly executed and delivered by all parties thereto and in form and substance
reasonably satisfactory to the Agents.
SECTION V.1.6. Closing Date Certificate. The Agents shall have
received, with counterparts for each Lender, the Closing Date Certificate, dated
the Closing Date and duly
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executed and delivered by an Authorized Officer of each Borrower, in which
certificate each Borrower shall agree and acknowledge that the statements made
therein shall be deemed to be representations and warranties of such Borrower as
of such date, and, at the time the certificate is delivered, such statements
shall in fact be true and correct in all material respects. All documents and
agreements required to be appended to the Closing Date Certificate shall be in
form and substance satisfactory to the Agents.
SECTION V.1.7. Delivery of Notes. The Agents shall have received, for
the account of each Lender that has requested a Note, such Lender's Notes duly
executed and delivered by an Authorized Officer of each Borrower.
SECTION V.1.8. Payment of Outstanding Indebtedness, etc. All
Indebtedness identified in Item 7.2.2(b) of the Disclosure Schedule, together
with all interest, all prepayment premiums and other amounts due and payable
with respect thereto, shall have been paid in full from the proceeds of the
initial Credit Extension and the proceeds of the Senior Secured Notes and the
commitments in respect of such Indebtedness shall have been terminated, and all
Liens securing payment of any such Indebtedness have been released and the
Agents shall have received all Uniform Commercial Code Form UCC-3 termination
statements or other instruments as may be suitable or appropriate in connection
therewith.
SECTION V.1.9. Closing Fees, Expenses, etc. The Agents shall have
received for their own account, or for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to Sections 3.3
and 10.3, if then invoiced.
SECTION V.1.10. Financial Information, etc. The Agents shall have
received, with counterparts for each Lender, (a) audited consolidated financial
statements of Parent, the Company and its Subsidiaries as at September 30, 1993,
September 30, 1994, September 30, 1995, September 30, 1996, September 30, 1997
and September 30, 1998; (b) unaudited monthly and quarterly consolidated
financial statements of Parent, the Company and its Subsidiaries for each fiscal
month and Fiscal Quarter ending after September 30, 1998 (including June 30,
1999, if available) and prior to the Closing Date; and (c) a pro forma
consolidated balance sheet of Parent, the Company and its Subsidiaries (other
than Unrestricted Subsidiaries), as of the Closing Date certified by the chief
financial or accounting Authorized Officer of the Company or the Treasurer or
any Assistant Treasurer of the Company, giving effect to the consummation of the
Transaction and all the transactions contemplated by this Agreement and
reflecting the proposed capital structure of Parent, the Company and its
Subsidiaries.
SECTION V.1.11. Borrowing Base Certificate. The Agents shall have
received, with copies for each Lender, an initial Borrowing Base Certificate,
dated the Closing Date, in respect of the Borrowers' Eligible Accounts and
Eligible Inventory as of a recent date satisfactory to the Agents, duly executed
by the chief financial or accounting Authorized Officer, or the Treasurer or
Assistant Treasurer of the Company (and showing that the Borrowing Base Amount
on the
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Closing Date will exceed the initial Current Assets Loans by no less than the
Minimum Excess Availability).
SECTION V.1.12. Opinions of Counsel. The Agents shall have received
opinions, dated the Closing Date and addressed to the Agents and all Lenders,
from
(a) Andrews & Kurth, New York and Texas counsel to Parent and
the Borrowers, in form and substance reasonably satisfactory to the
Agents;
(b) David Elkins, general counsel to Parent and the Company,
in form and substance reasonably satisfactory to the Agents; and
(c) local counsel to the Borrowers, in the following
jurisdictions, in form and substance, and from counsel, reasonably
satisfactory to the Agents:
(i) Florida; and
(ii) Georgia.
SECTION V.1.13. Filing Agent, etc. All Uniform Commercial Code
financing statements or other similar financing statements (Form UCC-1) and
Uniform Commercial Code (Form UCC-3) termination statements required pursuant to
the Loan Documents (collectively, the "Filing Statements") shall have been
delivered to CT Corporation System or another similar filing service company
reasonably acceptable to the Agents (the "Filing Agent"). The Filing Agent shall
have acknowledged in a writing reasonably satisfactory to the Agents and its
counsel (a) the Filing Agent's receipt of all Filing Statements, (b) that the
Filing Statements have either been submitted for filing in the appropriate
filing offices or will be submitted for filing in the appropriate offices within
ten days following the Effective Date and (c) that the Filing Agent will notify
the Agents and its counsel of the results of such submissions within 30 days
following the Effective Date.
SECTION V.1.14. Intercreditor Amendment. The Agents shall have received
(a) an executed copy of the Amendment to the Parent Intercreditor Agreement (the
"Intercreditor Amendment"), dated as of July 22, 1999, among the trustee of the
Senior Secured Discount Notes Indenture, the agent under the Existing Loan
Agreement and the Company, in form and substance reasonably satisfactory to the
Agents and (b) an opinion of counsel from Vinson & Elkins, required under the
Senior Secured Discount Notes Indenture addressed to the trustee of such Senior
Secured Discount Notes and the Agents and the Lenders, in form and substance
satisfactory to the Agents.
SECTION V.1.15. Appraisals and Audit Analyses; Environmental Audit
Report. The Administrative Agent shall have received
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(a) an audit by PriceWaterhouseCoopers LLC of the accounts
receivable and inventory of the Borrowers, the results of which shall
be reasonably satisfactory to the Lead Arranger and the Agents;
(b) an appraisal by Chem Systems of the Company's Texas City,
Texas and Valdosta, Georgia manufacturing facilities (the "Chem Systems
Appraisal") which shall indicate that such facilities have an aggregate
orderly liquidation value in use of no less than $300,000,000 and which
shall be reasonably satisfactory to the Lead Arranger and the Agents;
and
(c) an environmental audit report (or an update of a recently
completed environment audit report) and any necessary phase I
environmental assessment reports prepared in accordance with ASTM
Standards of the real property of the Borrowers (or an update of an
existing appraisal and audit analysis thereof) and a preliminary review
of the environmental condition of the real property on which any
Foreign Subsidiary conducts manufacturing operations, in each case,
completed by Pilko & Associates, the results of which audit report
shall be reasonably satisfactory to the Lead Arranger and the Agents.
SECTION V.1.16. Pledge Agreements. The Agents shall have received, with
counterparts for each Lender
(a) the Parent Pledge Agreement, dated as of the date hereof,
duly executed and delivered by an Authorized Officer of Parent,
together with certificates evidencing all of the issued and outstanding
Capital Securities of the Company, which certificates in each case
shall be accompanied by undated instruments of transfer duly executed
in blank; and
(b) the Obligor Pledge Agreement, dated as of the date hereof,
duly executed and delivered by an Authorized Officer of each Borrower
party thereto, together with certificates evidencing all of the issued
and outstanding Capital Securities owned by (i) the Company in each
other Borrower and (ii) each other Borrower in any other Borrower,
which certificates, in each case, shall be accompanied by undated
instruments of transfer duly executed in blank; and
(c) the Agents and their counsel shall be satisfied that (i)
the Lien granted to the Administrative Agent, for the benefit of the
Secured Parties in the collateral described above is a first priority
(or local equivalent thereof) security interest; and (ii) no Lien
exists on any of the collateral described above other than (A) the Lien
created in favor of the Administrative Agent, for the benefit of the
Secured Parties, pursuant to a Loan Document, (B) the second priority
Lien on the Capital Securities of the Company in favor of the trustee
under the Senior Secured Discount Notes Indentures to secure the
obligations of Parent related to the Senior Secured Discount Notes and
(C) the second priority Lien on the Capital Securities of each other
Borrower in favor of the Trustee
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under the Senior Secured Notes Indenture to secure the obligations of
the Company related to the Senior Secured Notes; and
(d) certified copies of searches conducted with respect to all
patents, trademarks and copyrights of the Borrowers at the applicable
United States filing office.
SECTION V.1.17. Security Agreements Filings, Lockboxes, etc. The Agents
shall have received, with counterparts for each Lender, executed counterparts of
each Security Agreement and each Lockbox Agreement, each dated as of the date
hereof, duly executed by each Borrower, together with
(a) executed copies of proper Uniform Commercial Code Form
UCC-1 or similar instruments naming the applicable Borrower as a debtor
and the Administrative Agent as the secured party, or other similar
instruments or documents to be filed under the Uniform Commercial Code
of all jurisdictions as may be necessary or, in the opinion of the
Agents, desirable to perfect the security interests of the
Administrative Agent pursuant to such Security Agreement and each
Lockbox Agreement;
(b) executed copies of proper Uniform Commercial Code Form
UCC-3 assignment or termination statements, if any, necessary to
release or assign all Liens and other rights of any Person in any
collateral described in any Security Agreement securing any of the
Indebtedness identified in Item 7.2.2(b) of the Disclosure Schedule,
together with such other Uniform Commercial Code Form UCC-3 termination
statements as the Agents may reasonably request from such Obligors;
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party reasonably acceptable to the Agents, dated a date
reasonably near to the Closing Date, listing all effective financing
statements which name each Borrower (under its present name and any
previous names) as the debtor and which are filed in the jurisdictions
in which filings were made pursuant to clause (a) above, together with
copies of such financing statements reflecting no prior Liens on any of
the collateral described in any Loan Document other than Permitted
Liens; and
(d) all Pledged Notes (as defined in each Security Agreement),
if any, evidencing Indebtedness payable to the Company by any Foreign
Restricted Subsidiary duly endorsed to the order of the Administrative
Agent, together with Filing Statements (or similar instruments) in
respect of such Pledged Notes executed by the Company to be filed in
such jurisdictions as the Agents may reasonably request.
SECTION V.1.18. Intellectual Property Security Agreements. The Agents
shall have received the Patent Security Agreement and the Trademark Security
Agreement, as applicable,
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each dated as of the Closing Date, duly executed and delivered by each Borrower
that owns such Collateral.
SECTION V.1.19. Insurance. The Agents shall have received, with copies
for each Lender, certificates of the insurance policies, evidencing coverage
required to be maintained pursuant to each Loan Document.
SECTION V.1.20. Mortgages. The Agents shall have received counterparts
of each Mortgage, dated as of the date hereof, duly executed by the applicable
Borrower, together with
(a) evidence of the completion (or satisfactory arrangements
for the completion) of all recordings and filings of each Mortgage as
may be necessary or, in the reasonable opinion of the Agents, desirable
to effectively create a valid, perfected first priority Lien against
the properties purported to be covered thereby subject however, to any
Permitted Liens;
(b) mortgagee's title insurance policies in favor of the
Administrative Agent for the benefit of the Secured Parties in amounts
and in form and substance and issued by insurers, reasonably
satisfactory to the Agents, with respect to the property purported to
be covered by each Mortgage, insuring that title to such property is
good and indefeasible and that the interests created by each Mortgage
constitute valid first Liens thereon free and clear of all defects and
encumbrances other than Permitted Liens and such other defects and
encumbrances as approved by the Agents, and such policies shall also
include, if required by the Agents and if available, revolving credit
endorsement, comprehensive endorsement, variable rate endorsement,
access and utilities endorsements, mechanic's lien endorsement and such
other endorsements as the Agents shall reasonably request and shall be
accompanied by evidence of the payment in full of all premiums thereon;
and
(c) such other approvals, opinions or documents as the Agents
may request including consents and estoppel agreements from landlords,
a survey of each property purported to be covered by a Mortgage in form
and substance satisfactory to the Agents and the title insurer for each
such property.
SECTION V.1.21. Cash Management Accounts. The Agents shall have
received evidence satisfactory to each of them that each Borrower shall have
provided full cash dominion over its cash management accounts as specified by
the Administrative Agent (the "Cash Management Accounts") to the Administrative
Agent, all on terms and conditions and pursuant to documentation reasonably
satisfactory to the Agents.
SECTION V.1.22. Perfection Certificate. The Agents shall have received
the Perfection Certificate, dated as of the Closing Date, duly executed and
delivered by an Authorized Officer of each Borrower.
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SECTION V.1.23. Solvency, etc. The Agents shall have received, with
counterparts for each Lender, a certificate duly executed and delivered by the
chief financial or accounting Authorized Officer of Parent and the Company,
dated as of the Closing Date, in the form of Exhibit E attached hereto.
SECTION V.1.24. Required Consents and Approvals. All required consents
and approvals shall have been obtained and be in full force and effect with
respect to the Transaction contemplated hereby from (a) all relevant
Governmental Authorities and (b) any other Person whose consent or approval the
Agents reasonably deem necessary or appropriate to effect the transactions
contemplated hereby.
SECTION V.1.25. Statement of Sources and Uses. The Agents shall have
received from the Company, a detailed statement of sources and uses giving
effect to the consummation of the Transaction contemplated by this Agreement as
of the Effective Date, reasonably satisfactory to the Agents.
SECTION V.2. All Credit Extensions. The obligation of each Lender and
the Issuer to make any Credit Extension (including the initial Credit Extension)
shall be subject to and the satisfaction of each of the conditions precedent set
forth below.
SECTION V.2.1. Compliance With Warranties, No Default, etc. Both before
and after giving effect to any Credit Extension (but, if any Default of the
nature referred to in Section 8.1.5 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds thereof) the following statements shall be true and
correct:
(a) the representations and warranties set forth in this
Agreement and each other Loan Document shall, in each case, be true and
correct in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date);
(b) the sum of the aggregate outstanding principal amount of
all Current Assets Loans and Swing Line Loans, together with the
aggregate amount of all Letter of Credit Outstandings, does not exceed
the lesser of (i) the then existing Borrowing Base Amount less the
Minimum Excess Availability and (ii) the Current Assets Loan Commitment
Amount; and
(c) no Default shall have then occurred and be continuing.
SECTION V.2.2. Credit Extension Request, etc. Subject to Section 2.3.2,
the Administrative Agent shall have received a Borrowing Request if Loans are
being requested, or an Issuance Request if a Letter of Credit is being requested
or extended. Each of the delivery of
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a Borrowing Request or Issuance Request and the acceptance by any Borrower of
the proceeds of such Credit Extension shall constitute a representation and
warranty by each Borrower that on the date of such Credit Extension (both
immediately before and after giving effect to such Credit Extension and the
application of the proceeds thereof) the statements made in Section 5.2.1 are
true and correct in all material respects.
SECTION V.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of any Obligor shall be reasonably
satisfactory in form and substance to the Agents and its counsel and the Agents
and its counsel shall have received all information, approvals, opinions,
documents or instruments as the Agents or its counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Secured Parties to enter into this Agreement and
to make Credit Extensions hereunder, each Borrower represents and warrants to
each Secured Party as set forth in this Article.
SECTION VI.1. Organization, etc. Each of the Borrowers and each of
their respective Foreign Restricted Subsidiaries is validly organized and
existing and in good standing under the laws of the state or jurisdiction of its
incorporation or organization, is duly qualified to do business and is in good
standing as a foreign entity in each jurisdiction where the nature of its
business requires such qualification (except where the failure to be so
qualified and in good standing could not reasonably be expected to have a
Material Adverse Effect), and has full power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into and
perform its Obligations under each Loan Document to which it is a party (except
for failures to hold such governmental licenses, permits and other approvals
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect) and to own and hold under lease its material
property and to conduct its business substantially as currently conducted by it.
SECTION VI.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by each Borrower of this Agreement and each Borrower
and Parent of each other Loan Document executed or to be executed by it, each
Borrower's and Parent's participation in the consummation of all aspects of the
Transaction and the execution, delivery and performance by any Borrower or
Parent of the agreements executed and delivered in connection with the
Transaction are in each case within each such Person's powers, have been duly
authorized by all necessary corporate (or other equivalent) action, and do not
(a) contravene any (i) Obligor's Organic Documents, (ii)
material contract or indenture binding on or affecting any Obligor,
(iii) court decree or order binding on or
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affecting any Obligor or (iv) law or governmental regulation binding on
or affecting any Obligor; or
(b) result in, or require the creation or imposition of, any
Lien on any Obligor's properties (except as contemplated by the
Transaction or any of the Loan Documents or as otherwise permitted by
this Agreement).
SECTION VI.3. Government Approval, Regulation, etc. No material
authorization or material approval or other action by, and no material notice to
or material filing with, any Governmental Authority or regulatory body or other
Person (other than those that have been, or on the Effective Date will be, duly
obtained or made and which are, or on the Effective Date will be, in full force
and effect) is required for the consummation of the Transaction or the due
execution, delivery or performance by any Obligor of any Loan Document to which
it is a party, or for the due execution, delivery and/or performance of the
Senior Secured Note Documents, in each case by the parties thereto or the
consummation of the Transaction other than in connection with the registration
of the Exchange Notes (as defined in the Senior Secured Note Indenture). No
Obligor nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION VI.4. Validity, etc. This Agreement and the Notes have been
duly executed and delivered by the Borrowers. The Senior Secured Note Indenture
has been duly executed and delivered by the Borrowers. Each Loan Document and
the Senior Secured Note Documents executed by any Obligor will, on the due
execution and delivery thereof, constitute, assuming the due authorization,
execution and delivery of each Loan Document by the parties thereto other than
the Obligors, the legal, valid and binding obligations of such Obligor,
enforceable against such Obligor in accordance with their respective terms
(except, in any case, as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and by principles of equity).
SECTION VI.5. Financial Information. The financial statements of
Parent, the Company and its Subsidiaries furnished to the Administrative Agent
and each Lender pursuant to Section 5.1.10 have been prepared in accordance with
GAAP consistently applied (except as may be indicated in the notes thereto), and
present fairly subject, in the case of unqualified financial statements and
other unaudited financial information, to normal recurring audit adjustments,
the consolidated financial condition of the Persons covered thereby as at the
dates thereof and the results of their operations for the periods then ended.
All balance sheets, all statements of operations, shareholders' equity and cash
flow and all other financial information of each of Parent, the Company and its
Subsidiaries furnished pursuant to Section 7.1.1 have been and will for periods
following the Effective Date be prepared in accordance with GAAP consistently
applied (except as may be indicated in the notes thereto), and do or will
present fairly subject, in
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the case of unqualified financial statements and other unaudited financial
information, to normal recurring audit adjustments, the consolidated financial
condition of the Persons covered thereby as at the dates thereof and the results
of their operations for the periods then ended.
SECTION VI.6. No Material Adverse Change. There has been no material
adverse change in the financial condition, results of operations, assets,
business, properties or prospects of the Company or the Borrowers and their
Subsidiaries, taken as a whole, since May 31, 1999.
SECTION VI.7. Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Borrowers or their Subsidiaries, threatened
litigation, action, proceeding or labor controversy
(a) except as disclosed in Item 6.7 of the Disclosure
Schedule, affecting any Obligor, or any of their respective properties,
businesses, assets or revenues, which could reasonably be expected to
have a Material Adverse Effect, and no adverse development has occurred
in any labor controversy, litigation, arbitration or governmental
investigation or proceeding disclosed in Item 6.7 which could
reasonably be expected to have a Material Adverse Effect; or
(b) which purports to affect the legality, validity or
enforceability of any Loan Document, the Senior Secured Note Documents
or the Transaction.
SECTION VI.8. Subsidiaries. Parent has no Subsidiaries except those
Subsidiaries (a) which are identified in Item 6.8 of the Disclosure Schedule or
(b) which are permitted to have been organized or acquired in accordance with
Sections 7.1.8 or 7.2.5.
SECTION VI.9. Ownership of Properties. The Borrowers and each of their
Foreign Restricted Subsidiaries owns (a) in the case of owned real property,
good and indefeasible fee title to, and (b) in the case of owned personal
property, good and valid title to, or, in the case of leased real or personal
property, valid and enforceable leasehold interests (as the case may be) in, all
of its properties and assets, real and personal, tangible and intangible, of any
nature whatsoever, free and clear in each case of all Liens or claims, except
for Permitted Liens.
SECTION VI.10. Taxes. The Borrowers and each of their Subsidiaries have
filed all tax returns and reports required by U.S., Canadian or Barbados law to
have been filed by it and has paid all Taxes and governmental charges thereby
shown to be due and owing, except any such Taxes or charges which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its books
or which the failure to file or pay, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
SECTION VI.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of
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any Credit Extension hereunder, no steps have been taken to terminate any
Pension Plan other than a standard termination under Section 4041(b) of ERISA,
and no contribution failure has occurred with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA. No condition
exists or event or transaction has occurred with respect to any Pension Plan
which could reasonably be expected to result in the incurrence by the Borrowers
or any member of the Controlled Group of any liability, fine or penalty which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Each Foreign Employee Benefit Plan maintained or
contributed to by the Borrowers, any Foreign Restricted Subsidiaries or any
ERISA Affiliate is in compliance with all laws, regulations and rules applicable
thereto and the respective requirements of the governing documents for such Plan
except for such failures which, individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. The aggregate of the
liabilities to provide all of the accrued benefits under any Foreign Pension
Plan maintained or contributed to by the Borrowers, any Foreign Restricted
Subsidiaries or any ERISA Affiliate does not exceed the current fair market
value of the assets held in the trust or other funding vehicle for such Plan in
a manner that could reasonably be expected to have a Material Adverse Effect.
With respect to any Foreign Employee Benefit Plan maintained by the Borrowers,
any Foreign Restricted Subsidiaries or any ERISA Affiliate (other than a Foreign
Pension Plan), reasonable reserves have been established in accordance with
prudent business practice or where required by ordinary accounting practices in
the jurisdiction in which such Plan is maintained. The aggregate unfunded
liabilities, after giving effect to any reserves for such liabilities, with
respect to such Plans are not reasonably expected to have a Material Adverse
Effect. There are no actions, suits or claims (other than routine claims for
benefits) pending or threatened against the Borrowers, any Foreign Restricted
Subsidiaries or any ERISA Affiliate with respect to any Foreign Employee Benefit
Plan.
SECTION VI.12. Environmental Warranties. Except as set forth in Item
6.12 of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrowers or any of the Foreign
Restricted Subsidiaries have been, and continue to be, owned or leased
by the Borrowers and their Foreign Restricted Subsidiaries in
compliance with all Environmental Laws except where the failure to do
so could not reasonably be expected to have a Material Adverse Effect;
(b) there have been no past, and there are no pending or
threatened (i) claims, complaints, notices or requests for information
received by any Borrower or any of their Foreign Restricted
Subsidiaries with respect to any alleged violation of any Environmental
Law, or (ii) complaints, notices or inquiries to the Borrowers or any
of their Foreign Restricted Subsidiaries regarding potential liability
under any Environmental Law which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect;
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(c) there have been no Releases of Hazardous Materials at, on
or under any property now or previously owned or leased by the
Borrowers or any of their Foreign Restricted Subsidiaries that have
had, or could reasonably be expected to have, a Material Adverse
Effect;
(d) the Borrowers and their Foreign Restricted Subsidiaries
have been issued and are in compliance with all permits, certificates,
approvals, licenses and other authorizations relating to environmental
matters except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect;
(e) no property now or previously owned or leased by the
Borrowers or any of their Foreign Restricted Subsidiaries is listed or
proposed for listing (with respect to owned property only) on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar State list of sites requiring investigation or clean-up which,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect;
(f) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrowers or any of their
Foreign Restricted Subsidiaries that, singly or in the aggregate, have
had, or could reasonably be expected to have, a Material Adverse
Effect;
(g) neither the Borrowers nor any Foreign Restricted
Subsidiaries has directly transported or directly arranged for the
transportation of any Hazardous Material to any location which is
listed or proposed for listing on the National Priorities List pursuant
to CERCLA, on the CERCLIS or on any similar State list or which is the
subject of federal, State or local enforcement actions or other
investigations which may lead to material claims against the Borrowers
or such Foreign Restricted Subsidiaries for any remedial work, damage
to natural resources or personal injury, including claims under CERCLA
which individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by the
Borrowers or any Foreign Restricted Subsidiary that, singly or in the
aggregate, have had, or could reasonably be expected to have, a
Material Adverse Effect; and
(i) no conditions exist at, on or under any property now or
previously owned or leased by the Borrowers or any Foreign Restricted
Subsidiary which, with the passage of time, or the giving of notice or
both, would give rise to material or contingent liability under any
Environmental Law which individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
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SECTION VI.13. Accuracy of Information.
(a) None of the factual information heretofore or contemporaneously
furnished in writing to any Secured Party by or on behalf of any Obligor in
connection with any Loan Document or any transaction contemplated hereby
(including the Transaction) contains any untrue statement of a material fact, or
omits to state any material fact necessary to make any information not
misleading, and no other factual information hereafter furnished in connection
with any Loan Document by or on behalf of any Obligor to any Secured Party will
contain any untrue statement of a material fact or will omit to state any
material fact necessary to make any information not misleading on the date as of
which such information is dated or certified.
(b) All written information prepared by any consultant or professional
advisor on behalf of any Borrower or any of its Foreign Restricted Subsidiaries
which was furnished to the Agents or any Lender in connection with the
preparation, execution and delivery of this Agreement has been reviewed by the
Borrowers, and nothing has come to the attention of the Borrowers in the context
of such review which would lead them to believe that such information (or the
assumptions on which such information is based) is not, taken as a whole, true
and correct in all material respects or that such information, taken as a whole,
omits to state any material fact necessary to make such information not
misleading in any material respect.
(c) Insofar as any of the information described above includes
assumptions, estimates, projections or opinions, the Borrowers have reviewed
such matters and nothing has come to the attention of the Borrowers in the
context of such review which would lead them to believe that such assumptions,
estimates, projections or opinions, omit to state any material fact necessary to
make such assumptions, estimates, projections or opinions not reasonable or not
misleading in any material respect. All projections and estimates have been
prepared in good faith on the basis of reasonable assumptions.
SECTION VI.14. Regulations U and X. No Obligor is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Credit Extensions will be used to purchase or
carry margin stock or otherwise for a purpose which violates, or would be
inconsistent with, F.R.S. Board Regulation U or Regulation X. Terms for which
meanings are provided in F.R.S. Board Regulation U or Regulation X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section with such meanings.
SECTION VI.15. Year 2000. Each Borrower has reviewed the areas within
its business and operations which could be adversely affected by, and has
developed or is developing a program to address on a timely basis, the "Year
2000 Problem" (that is, the risk that computer applications used by such Obligor
may be unable to recognize and properly perform date-sensitive functions
involving certain dates prior to and any date after December 31, 1999). Based on
such review and program, each Borrower believes that the Year 2000 Problem could
not reasonably be expected to have a Material Adverse Effect. It is acknowledged
and agreed by
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each Secured Party that the foregoing representation does not include any
representation or warranty with respect to any Year 2000 Problem or Material
Adverse Effect caused by or resulting from any matter which is beyond the
Borrowers' reasonable control, including a Year 2000 Problem which (a) is caused
by, results from or is experienced by any non-affiliated Person or a Year 2000
Problem at any non-affiliated Person, any Secured Party or any Governmental
Authority (or any Year 2000 Problem of or at any such Person) or (b) is caused
by or results from the failure of any consultants of the Borrowers to properly
identify deficient systems, to propose or select remedial action that adequately
addresses any deficiencies or to complete the remediation in a timely manner.
SECTION VI.16. Issuance of Subordinated Debt; Status of Obligations as
Senior Debt, etc. (a) The Company had the power and authority to incur the
Subordinated Debt as provided for under the Sub Debt Documents applicable
thereto and had duly authorized, executed and delivered the Sub Debt Documents
applicable to such Subordinated Debt. The Company had issued, pursuant to due
authorization, the Subordinated Debt under the applicable Sub Debt Documents,
and such Sub Debt Documents constitute the legal, valid and binding obligations
of the Company enforceable against the Company in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
and by principles of equity). The subordination provisions of the Subordinated
Debt contained in the Sub Debt Documents are enforceable against the holders of
the Subordinated Debt by the holder of any "Senior Debt" (as defined in the Sub
Debt Documents) or similar term referring to the Obligations. All Obligations,
including those to pay principal of and interest (including post-petition
interest, whether or not allowed as a claim under bankruptcy or similar laws) on
the Loans and Reimbursement Obligations, and fees and expenses in connection
therewith, constitute "Senior Debt" (as defined in the Sub Debt Documents) or
similar term relating to the Obligations and all such Obligations are entitled
to the benefits of the subordination created by the Sub Debt Documents. Each
Borrower acknowledges that the Administrative Agent, each Lender and the Issuer
is entering into this Agreement and is extending its Commitments in reliance
upon the subordination provisions of the Sub Debt Documents.
(b) the Senior Secured Notes have been issued and sold to the initial
purchasers thereof on or prior to the Closing Date in accordance with and
pursuant to the terms of the Senior Secured Notes Indenture and in compliance
with all laws, including Rule 144A of the Securities Act of 1933, as amended,
and all other applicable federal and State securities laws.
SECTION VI.17. Solvency. The Transaction (including the incurrence of
the initial Credit Extension hereunder and the application of the proceeds of
the Credit Extensions), will not involve or result in any fraudulent transfer or
fraudulent conveyance under the provisions of Section 548 of the Bankruptcy Code
(11 U.S.C. Section 101 et seq., as from time to time hereafter amended, and any
successor or similar statute) or any applicable State law respecting fraudulent
transfers or fraudulent conveyances. On the Closing Date, prior to and after
giving effect to the Transaction and the making of each Credit Extension made on
the Closing Date and after giving
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effect to the application of the proceeds of such Credit Extensions, each of the
Borrowers and each of their Subsidiaries is Solvent. The Borrowers and their
Subsidiaries are Solvent.
SECTION VI.18. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral owned by the Borrowers, the loss, impairment or
infringement of which might have a material adverse effect on the financial
condition, operations, assets, business, properties, revenues or prospects of
the Borrowers and their Subsidiaries taken as whole, except as set forth in Item
6.18 of the Disclosure Schedule:
(a) such Intellectual Property Collateral is subsisting and
has not been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and
enforceable;
(c) the Borrowers have made all necessary filings and
recordations to protect their respective interests in such Intellectual
Property Collateral, including (if permissible) recordations of all
such interests in the Intellectual Property Collateral in the United
States Patent and Trademark Office and/or the United States Copyright
Office;
(d) the Borrowers are the exclusive owners of the entire and
unencumbered right, title and interest in and to such Intellectual
Property Collateral (except for (i) Liens created under the Loan
Documents, (ii) the second priority Lien on such Intellectual Property
Collateral in favor of the Trustee to secure the obligations of the
Borrowers related to the Senior Secured Notes (if any) and (iii)
Permitted Liens and except for rights of licensees under licenses of
such Intellectual Property Collateral in the ordinary course of
business) and no claim has been made that the use of such Intellectual
Property Collateral does or may violate the asserted rights of any
third party except for claims that could not reasonably be expected to
have a material adverse effect on the financial condition, operations,
assets, business, properties, revenues or prospects of the Borrowers,
taken as a whole; and
(e) the Borrowers have performed and will continue to perform
all acts and have paid and will continue to pay all required fees and
taxes relating to registrations are current.
SECTION VI.19. Ownership of Stock. Parent owns free and clear of all
Liens (other than the first priority Liens pursuant to the Parent Pledge
Agreement and the second priority Lien pursuant to the Discount Notes Pledge
Agreement), 100% of the outstanding shares of common stock (whether voting or
non-voting) of the Company on a fully diluted basis. The Company owns (directly
or indirectly) free and clear of all Liens (other than pursuant to the Obligor
Pledge Agreement and the second priority Lien on such Collateral in favor of the
Trustee to secure the obligations of the Company related to the Senior Secured
Notes) 100% of the outstanding Capital Securities (whether voting or non-voting)
of each other Borrower on a fully diluted basis.
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There are no outstanding options, warrants or convertible securities with
respect to the Capital Securities of any Borrower.
ARTICLE VII
COVENANTS
SECTION VII.1. Affirmative Covenants. Each Borrower agrees with each
Lender, the Issuer and the Administrative Agent that until the Termination Date
has occurred, each Borrower will, and will cause its Foreign Restricted
Subsidiaries to, perform or cause to be performed the obligations set forth
below.
SECTION VII.1.1. Financial Information, Reports, Notices, etc. The
Company will furnish or cause to be furnished to the Administrative Agent and
each Lender copies of the following financial statements, reports, notices and
information:
(a) (i) as soon as available and in any event within 50 days
after the end of each of the first three Fiscal Quarters of each Fiscal
Year, an unaudited consolidated and consolidating balance sheet of the
Borrowers and their Foreign Restricted Subsidiaries as of the end of
such Fiscal Quarter and consolidated and consolidating statements of
income and cash flow of the Borrowers and their Foreign Restricted
Subsidiaries for such Fiscal Quarter and for the period commencing at
the end of the previous Fiscal Year and ending with the end of such
Fiscal Quarter, and including (in each case), in comparative form the
figures for the corresponding Fiscal Quarter in, and year to date
portion of, the immediately preceding Fiscal Year, certified as
complete and correct by the chief financial or accounting Authorized
Officer of the Company or the Treasurer or any Assistant Treasurer of
the Company and (ii) as soon as available and in any event within 30
days after the end of each month, a copy of the consolidated and
consolidating balance sheet of the Borrowers and their Foreign
Restricted Subsidiaries as of the end of such month, and the related
consolidated and consolidating statements of income and cash flow of
the Borrowers and their Foreign Restricted Subsidiaries for such month
and for the period commencing at the end of the previous Fiscal Year
and ending with the end of such month, and, in each case, setting forth
in comparative form the figures for the same monthly accounting periods
ending in the immediately preceding Fiscal Year (to the extent
available) and certified by the chief financial or chief accounting
Authorized Officer of the Company or the Treasurer or any Assistant
Treasurer of the Company;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year, a copy of the consolidated and unaudited
consolidating balance sheet of the Borrowers and their Foreign
Restricted Subsidiaries, and the related consolidated and consolidating
statements of income and cash flow of the Borrowers and their Foreign
Restricted Subsidiaries for such Fiscal Year, setting forth in
comparative form the figures for the immediately preceding Fiscal Year,
audited (without any Impermissible
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Qualification) by independent public accountants of recognized national
standing and stating that such consolidated financial statements
present fairly the consolidated financial condition as of the end of
such Fiscal Year, and the consolidated results of operations and cash
flows for such Fiscal Year, of the Borrowers and their Foreign
Restricted Subsidiaries in accordance with GAAP, applied on a
consistent basis; provided, however that any consolidating statements
delivered pursuant to this clause shall be unaudited;
(c) as soon as available and in any event within 20 days after
the end of each calendar month, a Borrowing Base Certificate dated and
reflecting amounts as of the close of business on the last day of the
preceding calendar month;
(d) as soon as possible and in any event within three Business
Days after the Borrowers obtains knowledge of the occurrence of a
Default, a statement of an Authorized Officer of the Company setting
forth details of such Default and the action which the Company or such
Borrower has taken and proposes to take with respect thereto;
(e) as soon as possible and in any event within three Business
Days after the Borrowers obtains knowledge of (i) the occurrence of any
material adverse development with respect to any litigation, action,
proceeding or labor controversy described in Item 6.7 of the Disclosure
Schedule or (ii) the commencement of any litigation, action, proceeding
or labor controversy of the type and materiality described in Section
6.7, notice thereof and, to the extent the Administrative Agent
requests, copies of all documentation relating thereto;
(f) promptly after the sending or filing thereof, copies of
all reports, notices, prospectuses and registration statements which
any Obligor files with the SEC or any national securities exchange;
(g) immediately upon becoming aware of (i) the institution of
any steps by any Person to terminate any Pension Plan other than a
standard termination under 4041(b) of ERISA, (ii) the failure to make a
required contribution to any Pension Plan if such failure is sufficient
to give rise to a Lien under Section 302(f) of ERISA, (iii) the taking
of any action with respect to a Pension Plan which could result in the
requirement that any Obligor furnish a bond or other security to the
PBGC or such Pension Plan, or (iv) the occurrence of any event with
respect to any Pension Plan which could result in the incurrence by any
Obligor of any material liability, fine or penalty, notice thereof and
copies of all documentation relating thereto;
(h) promptly upon receipt thereof, copies of all "management
letters" submitted to the Borrowers or any other Obligor by the
independent public accountants referred to in clause (b) in connection
with each audit made by such accountants;
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(i) promptly following the mailing or receipt of any notice or
report delivered under the terms of any Subordinated Debt, the Senior
Secured Discount Notes Indenture or the Senior Secured Note Documents,
copies of such notice or report;
(j) at the cost of the Borrowers, a report or reports of an
independent (or an employee of the Administrative Agent) collateral
field examiner approved (i) by the Company, whose approval shall not be
unreasonably withheld, and (ii) by the Administrative Agent (and which
collateral field examiner may be the Administrative Agent or an
affiliate thereof) with respect to the Eligible Accounts and Eligible
Inventory components included in the Borrowing Base. The Administrative
Agent may (and, at the direction of the Current Assets Required
Lenders, shall) request such reports or additional reports as it (or
the Current Assets Required Lenders) shall reasonably deem necessary;
(k) each calendar year (on or about June 30) a desktop update
of the Chem System Appraisal which shall confirm that the Company's
Texas City, Texas and Valdosta, Georgia manufacturing facilities have
an aggregate orderly liquidation value in use of no less than
$300,000,000, such update to be reasonably satisfactory in all other
material respects to the Agents;
(l) such other financial and other information as any Lender
or the Issuer through the Administrative Agent may from time to time
reasonably request; and
(m) any amendment or modification to the Standby Purchase
Agreements.
SECTION VII.1.2. Maintenance of Existence; Compliance With Laws, etc.
The Borrowers' will, and will cause each of their Foreign Restricted
Subsidiaries to,
(a) except as otherwise permitted by Section 7.2.10, preserve
and maintain its legal existence; and
(b) comply in all material respects with all applicable laws,
rules, regulations and orders, including the payment (before the same
become delinquent), of all Taxes, assessments and governmental charges
imposed upon the Borrowers or their Foreign Restricted Subsidiaries or
upon their property except to the extent being diligently contested in
good faith by appropriate proceedings and for which adequate reserves
in accordance with GAAP have been set aside on the books of the
Borrowers or their Foreign Restricted Subsidiaries, as applicable.
SECTION VII.1.3. Maintenance of Properties. The Borrowers will, and
will cause each of their Foreign Restricted Subsidiaries to, maintain, preserve,
protect and keep its and their respective properties in good repair, working
order and condition (ordinary wear and tear excepted), and make necessary
repairs, renewals and replacements so that the business carried on
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by the Borrowers and their Foreign Restricted Subsidiaries may be properly
conducted at all times, unless the Borrowers or any such Foreign Restricted
Subsidiary determines in good faith that the continued maintenance of such
property is no longer economically desirable (provided that any such
determination with respect to any property material to the operations of the
Borrowers or its Foreign Restricted Subsidiaries shall be made only after
consultation with the Administrative Agent).
SECTION VII.1.4. Insurance. The Borrowers will, and will cause each of
their Foreign Restricted Subsidiaries to:
(a) maintain insurance on its property with financially sound
and reputable insurance companies against loss and damage in at least
the amounts (and with only those deductibles) customarily maintained,
and against such risks as are typically insured against in the same
general area, by Persons of comparable size engaged in the same or
similar business as the Borrowers and their Foreign Restricted
Subsidiaries; and
(b) all worker's compensation, employer's liability insurance
or similar insurance as may be required under the laws of any state or
jurisdiction in which it may be engaged in business.
Without limiting the foregoing, all insurance policies required pursuant to this
Section for each Borrower shall (i) list the Administrative Agent on behalf of
the applicable Secured Parties as mortgagee (in the case of property insurance)
or additional insured (in the case of liability insurance), as applicable, and
provide that no cancellation or modification of the policies will be made
without 30 days' prior written notice to the Administrative Agent and (ii) be in
addition to any requirements to maintain specific types of insurance contained
in the other Loan Documents.
SECTION VII.1.5. Books and Records. The Borrowers will, and will cause
each of their Foreign Restricted Subsidiaries to, keep books and records in
accordance with GAAP which accurately reflect all of its business affairs and
transactions and permit each Secured Party or any of their respective
representatives, at reasonable times and intervals upon reasonable notice to the
Company, to visit each Borrower's offices, to discuss such Borrower's financial
matters with its officers and employees, and its independent public accountants
(and each Borrower hereby authorizes such independent public accountant to
discuss the Borrowers' and each Obligor's financial matters with each Secured
Party or their representatives whether or not any representative of the Company
or such Borrower is present) and to examine (and photocopy extracts from) any of
its books and records. The Borrowers shall jointly and severally pay any fees of
such independent public accountant incurred in connection with the
Administrative Agent's exercise of its rights pursuant to this Section at any
time and any other Secured Party's exercise of their rights pursuant to this
Section if a Default has occurred and is continuing.
SECTION VII.1.6. Foreign Employee Benefit Plan Compliance. The
Borrowers shall cause each of its Foreign Restricted Subsidiaries and ERISA
Affiliates to establish, maintain and
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operate all Foreign Employee Benefit Plans (other than government-sponsored
plans) in compliance in all material respects with all laws, regulations and
rules applicable thereto and the respective requirements of the governing
documents for such plans.
SECTION VII.1.7. Use of Proceeds. Each Borrower will apply the proceeds
of the Credit Extensions as follows:
(a) for the purposes described in the third recital;
(b) for working capital and general corporate purposes of the
Borrowers; and
(c) for issuing Letters of Credit for the account of each
Borrower.
SECTION VII.1.8. Future Borrowers, Security, etc. The Borrowers will,
and will cause each Subsidiary that is not a Foreign Restricted Subsidiary or an
Unrestricted Subsidiary to execute any documents, Filing Statements, agreements
and instruments, and take all further action (including filing Mortgages) that
may be required under applicable law, or that the Administrative Agent may
reasonably request, in order to effectuate the transactions contemplated by the
Loan Documents and in order to grant, preserve, protect and perfect the validity
and first priority of the security interests created or intended to be created
by the Loan Documents. The Borrowers will cause any subsequently acquired or
organized Subsidiary that is not a Foreign Restricted Subsidiary or an
Unrestricted Subsidiary to execute a Joinder Agreement and each applicable Loan
Document (including a supplement to the applicable Security Agreements) in favor
of the Secured Parties. In addition, from time to time, the Borrowers will, at
their cost and expense, promptly secure the appropriate Obligations by pledging
or creating, or causing to be pledged or created, perfected security interests
with respect to such of its assets and properties as the Administrative Agent or
the Required Lenders shall designate, it being understood that it is the intent
of the parties that the Obligations shall be secured by, among other things,
substantially all the assets of the Borrowers and each Subsidiary that is not a
Foreign Restricted Subsidiary or Unrestricted Subsidiary (including real and
other properties acquired subsequent to the Effective Date but excluding the
Capital Securities of any Foreign Restricted Subsidiary or Unrestricted
Subsidiary owned by such Borrower or Subsidiary). Such security interests and
Liens will be created under the Loan Documents in form and substance
satisfactory to the Administrative Agent, and each Borrower shall deliver or
cause to be delivered to the Lenders all such instruments and documents
(including legal opinions, title insurance policies and lien searches) as the
Administrative Agent shall reasonably request to evidence compliance with this
Section.
SECTION VII.1.9. Cash Management Accounts. The applicable Borrower
shall provide instructions to the appropriate Person as often as necessary to
ensure that any and all amounts deposited in the Cash Management Accounts are
transferred, either directly or indirectly, to the Administrative Agent, to be
applied against any outstanding Loans as specified by the applicable Borrower so
long as no Default is occurring and no Borrower shall close or transfer any such
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account, or open any new deposit account, in any case without the prior written
consent of the Administrative Agent and such new deposit account shall be
subject to a cash management account agreement similar to those controlling the
Cash Management Accounts.
SECTION VII.1.10. Environmental Covenant. The Borrowers will, and will
cause each of its Foreign Restricted Subsidiaries to,
(a) use and operate all of its facilities and properties in
compliance in all material respects with all Environmental Laws, keep
(and, when applicable, obtain in a timely manner) all necessary
material permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain
in compliance in all material respects therewith, and handle all
Hazardous Materials (including the disposition and storing thereof) in
compliance with all applicable Environmental Laws which in the good
faith judgment of the Company are of a material nature, except in each
case where the failure to do so could not reasonably be expected to
have a Material Adverse Effect;
(b) promptly notify the Administrative Agent and provide
copies upon receipt of all written claims, complaints, notices or
inquiries from third parties relating to Releases of Hazardous
Materials from its facilities and properties or compliance with
Environmental Laws which in the good faith judgment of the Company are
of a material nature and which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to
evidence compliance with this Section.
SECTION VII.1.11. As to Intellectual Property Collateral. (a) The
Borrowers shall not, except in the exercise of their reasonable business
judgment, do any act, or omit to do any act, whereby any item of material
Intellectual Property Collateral may lapse or become abandoned or dedicated to
the public or unenforceable other than upon the natural expiration of protective
periods under applicable law.
(b) The Borrowers shall notify the Administrative Agent as
soon as practicable if it knows, or has reason to know, that any
application or registration relating to any material item of the
Intellectual Property Collateral may become abandoned or dedicated to
the public or placed in the public domain or invalid or unenforceable
other than upon the natural expiration of protective periods under
applicable law, or of any adverse determination or development
(including the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark Office or
the United States Copyright Office) regarding the ownership by the
Borrowers of any material item of the Intellectual Property Collateral
or the Borrowers' right to register the same or to keep and maintain
and enforce the same.
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(c) In no event shall the Borrowers, or any of their
respective agents, employees, designees or licensees, file an
application for the registration of any Intellectual Property
Collateral with the United States Patent and Trademark Office or the
United States Copyright Office, unless it promptly informs the
Administrative Agent, and upon request of the Administrative Agent,
executes and delivers any and all agreements, instruments, documents
and papers as the Administrative Agent may reasonably request to
evidence the Administrative Agent's security interest in such
Intellectual Property Collateral and the goodwill and general
intangibles of the Borrowers relating thereto or represented thereby.
(d) Unless the Borrowers shall otherwise determine in the
exercise of its reasonable business judgment, the Borrowers shall take
all necessary steps, including in any proceeding before the United
States Patent and Trademark Office or the United States Copyright
Office, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, any material item of the Intellectual Property
Collateral, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and
taxes (except to the extent that dedication, abandonment or
invalidation is permitted under the foregoing clauses (a), (b) and
(c)).
SECTION VII.1.12. Future Real Estate Properties. Within 30 days after
the acquisition by the Borrowers of any real property owned in fee with a value
in excess of $150,000, the Borrowers shall take all steps necessary, at their
own cost and expense, to (a) grant the Administrative Agent a first priority
mortgage Lien on such real property, fixtures and buildings and improvements
thereon and (b) obtain title insurance coverage on such property in an amount,
containing such terms and exceptions and issued by an insurance company,
acceptable to the Administrative Agent in the Administrative Agent's reasonable
discretion (together with such favorable legal opinions with respect thereto as
the Administrative Agent may reasonably request).
SECTION VII.1.13. Non-Consolidation of Unrestricted Subsidiaries. The
Borrowers will be, and shall cause each of their Foreign Restricted Subsidiaries
to be, operated at all times in such a manner that its assets and liabilities
may not be substantively consolidated with those of any Unrestricted Subsidiary
in the event of the bankruptcy or insolvency of such Unrestricted Subsidiary. In
this regard, the Borrowers shall, and shall cause each of its Foreign Restricted
Subsidiaries to:
(a) not (i) consolidate or merge with or into any Unrestricted
Subsidiary or (ii) sell, lease or otherwise transfer, directly or
indirectly, all or substantially all of its assets to any Unrestricted
Subsidiary;
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(b) maintain separate financial statements to the extent done
in the ordinary course of business, corporate records and books of
account separate from each Unrestricted Subsidiary;
(c) maintain its assets separately from the assets of any
Unrestricted Subsidiary (including through maintenance of a separate
bank account);
(d) not guarantee the obligations of any Unrestricted
Subsidiary, or advance funds for the payment of expenses or otherwise,
to any Unrestricted Subsidiary (excluding overhead items, tax sharing
and similar items);
(e) conduct all of its business correspondence and other
communications in its own name and on its own stationery;
(f) maintain a board of directors that is separate from the
boards of directors of all Unrestricted Subsidiaries;
(g) maintain the requisite legal formalities in order that the
Borrowers and their Foreign Restricted Subsidiaries may each be treated
as a legally separate entity from any Unrestricted Subsidiary; and
(h) cause each Unrestricted Subsidiary, at the time of its
creation or acquisition, to be adequately capitalized.
SECTION 7.1.15. ANEXCO Receivables. Receivables owing by ANEXCO to the
Company shall not be counted in the definition of Eligible Receivables unless
the Company (i) causes all amounts received by ANEXCO by the applicable account
debtors to be transferred to the Company at the times required by the ANEXCO LLC
Agreement, (ii) causes all amounts received by the Company from ANEXCO to be
immediately transferred to the Company's depositary account maintained with the
Administrative Agent as soon as such amounts are paid to the Company by ANEXCO,
(iii) promptly remits notice to the Administrative Agent with respect to any
legal action commenced against ANEXCO or any Lien that is imposed on the assets
of ANEXCO, in either case, of which the Company becomes aware, (iv) to the
extent that audited financial statements are prepared for ANEXCO, promptly
provides the Administrative Agent with a copy of such financial statements
(subject to the execution by the Administrative Agent of an appropriate
confidentiality agreement in form and substance reasonably satisfactory to the
Administrative Agent, the Company and BP), (v) provides notice to the
Administrative Agent with respect to the occurrence of any event with respect to
ANEXCO that could reasonably be expected to have a Material Adverse Effect with
respect to ANEXCO and (vi) provides a detailed list of all account obligors with
respect to the ANEXCO account receivables and provides such other information
regularly provided by the Borrowers to the Administrative Agent with respect to
all other accounts receivable included in "Eligible Accounts." In addition,
unless the Administrative Agent otherwise consents in writing, in the event that
the Company (i)
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consents to the granting of any Lien by ANEXCO on any of its accounts
receivable, (ii) transfers any of its rights or obligations under the ANEXCO,
LLC Agreement or the BP Joint Venture Agreement, including any membership
interest in ANEXCO, in a manner which will result in the Board of Managers of
ANEXCO being able to authorize the granting of any Lien on the accounts
receivable of ANEXCO without the consent of the Company or (iii) amends the
ANEXCO LLC Agreement or the BP Joint Venture Agreement in any manner which
extends the period of time during which ANEXCO must make any payment to the
Company on account of sales of acrylonitrile to or through ANEXCO or permits the
granting of any Lien on the accounts receivable of ANEXCO without the consent of
the Company, then all receivables owing to the Company by ANEXCO shall
immediately cease to be Eligible Receivables.
SECTION VII.2. Negative Covenants. Each Borrower covenants and agrees
with each Lender, the Issuer and the Administrative Agent that until the
Termination Date has occurred each Borrower will, and will cause its Foreign
Restricted Subsidiaries to, perform or cause to be performed the obligations set
forth below.
SECTION VII.2.1. Business Activities. No Borrower will, nor will any
Borrower permit any of its Foreign Restricted Subsidiaries to, engage in any
business activity except those business activities engaged in on the date of
this Agreement and business activities reasonably related or incidental thereto.
SECTION VII.2.2. Indebtedness. The Borrowers will not, and will not
permit any of their Foreign Restricted Subsidiaries to, create, incur, assume or
permit to exist any Indebtedness, other than (without duplication):
(a) Indebtedness in respect of the Obligations and refinancing
of such Indebtedness;
(b) until the Closing Date, Indebtedness that is to be repaid
in full as further identified in Item 7.2.2(b) of the Disclosure
Schedule;
(c) Indebtedness existing as of the Effective Date which is
identified in Item 7.2.2(c) of the Disclosure Schedule, and refinancing
of such Indebtedness on No Less Favorable Terms and Conditions;
(d) unsecured Indebtedness (i) incurred in the ordinary course
of business of the Borrowers and their Foreign Restricted Subsidiaries
(including open accounts extended by suppliers on normal trade terms in
connection with purchases of goods and services which are not overdue
for a period of more than 90 days or, if overdue for more than 90 days,
as to which a dispute exists and adequate reserves in conformity with
GAAP have been established on the books of such Borrower or such
Foreign Restricted Subsidiary) and (ii) in respect of performance,
surety or appeal bonds provided in the ordinary course
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of business, but excluding (in each case), Indebtedness incurred
through the borrowing of money or Contingent Liabilities in respect
thereof;
(e) Indebtedness (and refinancings of such Indebtedness on No
Less Favorable Terms and Conditions) (i) in respect of industrial
revenue bonds or other similar governmental or municipal bonds, and
(ii) Capitalized Lease Liabilities; provided, that the aggregate amount
of all Indebtedness outstanding pursuant to this clause (e) shall not
at any time exceed $2,000,000 in the aggregate in any Fiscal Year;
(f) unsecured Indebtedness owing by (i) any Borrower to a
Canadian Subsidiary not to exceed $5,000,000 in the aggregate at any
one time outstanding, (ii) a Canadian Subsidiary to any Borrower not to
exceed $2,000,000 in the aggregate at any one time outstanding, (iii)
any Canadian Subsidiary to any other Canadian Subsidiary; and (iv) any
Borrower to another Borrower; which Indebtedness shall, if payable by a
Canadian Subsidiary to the Borrowers be evidenced by one or more
promissory notes in form and substance reasonably satisfactory to the
Administrative Agent, duly executed and delivered in pledge to the
Administrative Agent pursuant to a Loan Document, and shall not be
forgiven or otherwise discharged for any consideration other than
payment in full or in part in cash (provided, that only the amount
repaid in part shall be discharged) ;
(g) obligations for current taxes, assessments and other
governmental charges and taxes, assessments and other governmental
charges which are not yet due or are being contested in good faith by
appropriate action or proceeding promptly initiated and diligently
conducted, if such reserve as shall be required by GAAP shall have been
made therefore so long as no Lien is filed by such Person with respect
to such Indebtedness;
(h) Indebtedness of the Company evidenced by the Senior
Secured Notes, and Indebtedness of any other Borrower in respect of its
guaranty of such Senior Secured Notes and refinancings of such
Indebtedness on No Less Favorable Terms and Conditions;
(i) unsecured Subordinated Debt of the Company incurred
pursuant to the terms of the Sub Debt Documents in a principal amount
not to exceed $425,000,000 (minus any repayments, redemptions or
repurchases in respect thereof) and refinancings of such Subordinated
Debt which continue to satisfy the terms of the definition of
"Subordinated Debt" and are on No Less Favorable Terms and Conditions;
(j) other unsecured Indebtedness of the Borrowers and their
Foreign Restricted Subsidiaries (other than Indebtedness of Foreign
Restricted Subsidiaries owing to the Borrowers) in an aggregate amount
at any time outstanding not to exceed $5,000,000;
(k) Indebtedness in respect of Hedging Obligations entered
into in the ordinary course of business;
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(l) non-recourse Indebtedness of an Unrestricted Subsidiary;
(m) Indebtedness evidencing the deferred purchase price of
newly acquired property or incurred to finance the acquisition of
equipment or construction by the Borrowers and their Foreign Restricted
Subsidiaries (pursuant to purchase money mortgages or otherwise,
whether owed to the seller or a third party) used in the ordinary
course of business of the Borrowers and their Foreign Restricted
Subsidiaries (provided, that such Indebtedness is incurred within 60
days of the acquisition or construction of such property) in an amount
not to exceed $2,000,000 in any Fiscal Year; and
(n) Indebtedness under the Canadian Facility;
provided, however, that no Indebtedness otherwise permitted by clauses (e),
(f)(ii), (j), (k), (m) or (n) shall be assumed or otherwise incurred if a
Default has occurred and is then continuing or would result therefrom.
SECTION VII.2.3. Liens. No Borrower will, nor will any Borrower permit
any of its Foreign Restricted Subsidiaries to, create, incur, assume or permit
to exist any Lien upon any of its property (including Capital Securities of any
Person), revenues or assets, whether now owned or hereafter acquired, except the
following (collectively, "Permitted Liens"):
(a) Liens securing payment of the Obligations;
(b) until the Closing Date, Liens securing payment of
Indebtedness of the type described in clause (b) of Section 7.2.2;
(c) Liens existing as of the Effective Date and disclosed in
Item 7.2.3(c) of the Disclosure Schedule, which Item 7.2.3(c) shall
include all Liens securing Indebtedness described in clause (c) of
Section 7.2.2, and extensions thereof and refinancings of such
Indebtedness; provided, that no such Lien that secures Indebtedness
shall encumber any additional property and the amount of Indebtedness
secured by such Lien is not increased from that existing on the
Effective Date (as such Indebtedness may have been permanently reduced
subsequent to the Effective Date);
(d) Liens securing Indebtedness of the type permitted under
clauses (e) and (m) of Section 7.2.2; provided, that (i) such Lien is
granted within 60 days after such Indebtedness is incurred, (ii) the
Indebtedness secured thereby does not exceed 80% of the lesser of the
cost or the fair market value of the applicable property, improvements
or equipment at the time of such lease, acquisition or construction and
(iii) such Lien secures only the assets that are the subject of the
Indebtedness referred to in such clause;
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(e) a second priority and subordinated Lien on both the
Capital Securities of the Borrowers (other than the Company) and the
Fixed Assets of the Borrowers and a first priority Lien on the Capital
Securities of the Canadian Subsidiaries of the Company, in each case,
securing the Senior Secured Notes or any refinancing of the Senior
Secured Notes on No Less Favorable Terms and Conditions and a second
priority Lien on the stock of the Company to secure the Indebtedness of
Parent under the Senior Secured Discount Notes or any refinancing of
such Indebtedness on No Less Favorable Terms and Conditions;
(f) Liens in favor of carriers, warehousemen, mechanics,
repairmen, workmen, crews, materialmen and landlords, maritime Liens
and other Liens imposed by law granted or imposed in the ordinary
course of business for amounts not overdue more than 60 days (other
than any such Liens securing amounts overdue for any period that can,
with the filing of any document or any other action, "prime" any Liens
securing the Obligations) or being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on the Borrowers' books;
(g) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment
insurance or other forms of governmental insurance or benefits, or to
secure performance of tenders, statutory obligations, surety and appeal
bonds, government contracts, performance bonds, bids, leases or other
similar obligations (other than for borrowed money) entered into in the
ordinary course of business or to secure obligations on surety and
appeal bonds or performance bonds;
(h) judgment Liens in existence for less than 45 days after
the entry thereof or with respect to which execution has been stayed or
the payment of which is covered in full (subject to a customary
deductible) by insurance maintained with responsible insurance
companies and which do not otherwise result in an Event of Default
under Section 8.1.6;
(i) Permitted Real Estate Liens;
(j) Liens for Taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on the Borrowers' books;
(k) Liens securing a Canadian Facility on collateral
comprising similar assets to the Current Assets Collateral owned by the
applicable Canadian Subsidiary; and
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(l) Ordinary course of business Liens not described above or
in the definition of Permitted Real Estate Liens that do not secure any
Indebtedness and could not, in any event, be prior to any Liens granted
under the Loan Documents in an amount not to exceed $2,000,000 in the
aggregate.
SECTION VII.2.4. Excess Availability. The Borrowers will not permit
Excess Availability at any time to be less than the Minimum Excess Availability,
provided, however, that from time to time the Administrative Agent may decrease
the Minimum Excess Availability by the amount of the Overadvance Amount, when in
the reasonable judgment of the Administrative Agent such adjustment, is deemed
necessary.
SECTION VII.2.5. Investments. The Borrowers will not, and will not
permit any of their Foreign Restricted Subsidiaries to, purchase, make, incur,
assume or permit to exist any Investment in any other Person, other than the
following (collectively, "Permitted Investments"):
(a) Investments existing on the Effective Date and identified
in Item 7.2.5(a) of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business;
(d) Investments permitted as Capital Expenditures pursuant to
Section 7.2.7;
(e) Investments by way of contributions to capital or
purchases of Capital Securities (i) by any Borrower in any other
Borrower, (ii) by any Borrower in any Foreign Restricted Subsidiary
pursuant to clause (f)(ii) of Section 7.2.2 and (iii) by any Borrower
in any Canadian Subsidiary in order to keep such Canadian Subsidiary's
debt to equity ratio in compliance with applicable Canadian Tax law so
that such Canadian Subsidiary can receive Canadian tax deductions for
its interest payments on Indebtedness (the "Net Canadian Capital
Contribution"); provided, that (A) the amount of such Net Canadian
Contribution made by such Borrower to such Canadian Subsidiary less any
dividends or distributions received by such Borrower from such Canadian
Subsidiary in connection with such capital contribution and (B) such
Net Canadian Capital Contribution be no greater than the amount
required by such Canadian Subsidiary to keep its debt to equity ratio
in compliance with such law, and in any event, not in excess of
$2,000,000 in any Fiscal Year.
(f) Investments constituting (i) accounts receivable arising,
(ii) trade debt granted, or (iii) deposits made in connection with the
purchase price of goods or services, in each case, in the ordinary
course of business;
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(g) Investments made by Parent, any Borrower or any Foreign
Restricted Subsidiary solely in the form of Capital Securities of
Parent issued to (but not sold to) or contributed to the capital of an
Unrestricted Subsidiary with an aggregate market value of such Capital
Securities of Parent not to exceed (i) prior to the Fixed Assets Loan
Commitment Termination Date, $50,000,000 and (ii) on or subsequent to
the Fixed Assets Loan Commitment Termination Date, $100,000,000;
provided, however, that such Capital Securities are used to make an
acquisition by such Unrestricted Subsidiary of another Person or all or
substantially all of the assets of such Person (or any business or
division of such other Person), provided, further, however, that (a) at
the time of such acquisition, the business activities of such Person or
assets acquired complies with the limitations on business activities
set forth in Section 7.2.1. and (b) immediately before and after giving
effect to such acquisition no Default shall have occurred and be
continuing or would result therefrom;
(h) Investments consisting of routine loans or advances to
employees (including payroll, travel and related expenses) in the
ordinary course of business not to exceed $25,000 at any time
outstanding to any one employee and $500,000 in the aggregate;
(i) Investments consisting of loans to finance the purchase of
homes by employees who have been relocated by any Borrower or any
Foreign Restricted Subsidiary in an aggregate principal amount
outstanding at any one time not to exceed $500,000;
(j) Investments consisting of loans or advances by any
Borrower or any Foreign Restricted Subsidiary to any employee stock
ownership plan of Parent, any Borrower or any Foreign Restricted
Subsidiary; provided that (i) the aggregate amount of any such loan or
advance does not exceed 5% of the cash received by the Borrowers or any
Foreign Restricted Subsidiary (either directly or through a capital
contribution from Parent) after the date hereof from any
contemporaneous issuance or sale of any Capital Securities of Parent
made in connection with or to provide part of the consideration for a
direct or indirect acquisition by any Borrower or any Foreign
Restricted Subsidiary of the Capital Securities of a third party that
is not an Affiliate of the Borrower or the all or substantially all of
the assets of a third party or any business or division of a third
party that is not an Affiliate of the Borrower, (ii) immediately after
giving effect to such acquisition, the entity whose Capital Securities
are acquired is a Borrower or a Foreign Restricted Subsidiary or the
assets acquired are held by a Borrower or a Foreign Restricted
Subsidiary, as applicable, and (iii) any individuals that become
employees of a Borrower or a Foreign Restricted Subsidiary in
connection with such acquisition, to the extent eligible, are permitted
to participate in the ESOP;
(k) Investments resulting from purchases of shares of the
Capital Securities of Parent pursuant to put options arising under any
employee stock ownership plan of
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Parent, any Borrower or any Foreign Restricted Subsidiary, but only to
the extent such purchases are expressly required by (i) the provisions
of such employee stock ownership plan as in effect on the date hereof;
or (ii) Section 409(h)(1)(B) of the Code and the regulations
thereunder;
(l) Investments consisting of any deferred portion of the
sales price or any non-cash portion of the consideration received by
any Borrower in connection with any Disposition permitted under Section
7.2.11;
(m) investments in any Person resulting from a Transfer of the
Fibers Business, consummated in accordance with Section 7.2.16; and
(n) other Investments in an amount not to exceed $5,000,000 at
any one time outstanding;
provided, however, that
(o) any Investment which when made complies with the
requirements of clauses (a), (b) or (c) of the definition of the term
"Cash Equivalent Investment" may continue to be held notwithstanding
that such Investment if made thereafter would not comply with such
requirements; and
(p) no Investment otherwise permitted by clauses (d), (e)(i),
(g), (h), (i), (j), (k), (l), (m) or (n) shall be permitted to be made
if any Default has occurred and is continuing or would result
therefrom.
SECTION VII.2.6. Restricted Payments, etc. The Borrowers will not, and
will not permit any of their Foreign Restricted Subsidiaries to, declare or make
a Restricted Payment, or make any deposit for any Restricted Payment, other than
Restricted Payments made by Subsidiaries to the Borrowers, except that (a) the
Company may declare and deliver dividends payable solely in shares of its
Capital Securities or in options, warrants or rights to purchase shares of its
Capital Securities, (b) the Company may make contributions to any employee stock
ownership plan of Parent, the Company or any other Borrower on behalf of the
employees of the Borrowers and their Subsidiaries in the aggregate amount in any
Fiscal Year not to exceed 8% of payroll expense during such Fiscal Year
attributable to employees of the Borrowers and their Subsidiaries who are
eligible to participate in such employee stock ownership plan, (c) any
Subsidiary of the Borrowers other than any U.S. Subsidiary of a Canadian
Subsidiary may declare and deliver dividends to any Borrower or any Wholly Owned
Subsidiary, and any Canadian Subsidiary or any Unrestricted Subsidiary may
redeem shares of its own Capital Securities, and (d) the Company may declare and
pay in any Fiscal Year Permitted Parent Dividends so long as, at the time of
payment of such dividend (both before and after giving effect to the payment
thereof), the Company satisfies the conditions precedent for the making of Loans
set forth in Section 5.2.
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SECTION VII.2.7. Capital Expenditures, etc. Subject (in the case of
Capitalized Lease Liabilities), to clause (e) of Section 7.2.2, the Borrowers
will not, and will not permit any of their Foreign Restricted Subsidiaries to,
make or commit to make Capital Expenditures in any period below which aggregate
in excess of the amount set forth below opposite such Fiscal Year (the "Maximum
Capital Expenditure Amount"):
<TABLE>
<CAPTION>
Maximum Capital
Period Expenditure Amount
------ ------------------
<S> <C>
Closing Date - September 30, 1999 $ 8,000,000
October 1, 1999 - September 30, 2000 $ 40,000,000
October 1, 2000 - September 30, 2001 $ 35,000,000
October 1, 2001 - September 30, 2002 $ 40,000,000
October 1, 2002 - September 30, 2003 $ 33,000,000
October 1, 2003 - June 30, 2004 $ 30,000,000;
and thereafter
</TABLE>
provided, however, that
(a) to the extent Capital Expenditures are made in any Fiscal
Year in an amount less than the Maximum Capital Expenditure Amount, the
Capital Expenditures the Borrowers or the Foreign Restricted
Subsidiaries may make in the next following Fiscal Year (the
"Carry-Forward Year") shall be increased by 50% of the amount of the
permitted Capital Expenditures not so made or accrued in the
immediately preceding Fiscal Year (the "Carry-Forward Amount");
(b) no Carry-Forward Amount may be carried forward beyond the
Carry-Forward Year;
(c) any Carry-Forward Amount shall be used in the
Carry-Forward Year before any amount of the Capital Expenditures
permitted to be made or committed to be made in such Fiscal Year are
used; and
(d) Capital Expenditures made for the restoration, repair or
replacement of any fixed or capital asset that was destroyed or
damaged, in whole in part, shall not be included in the calculation of
the amount of Capital Expenditures made in any Fiscal Year to the
extent that such Capital Expenditures are made with insurance proceeds
received in connection with such destruction or damage.
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SECTION VII.2.8. No Prepayment of Subordinated Debt or the Senior
Secured Notes. The Borrowers will not, and will not permit any of their Foreign
Restricted Subsidiaries to:
(a) make any payment or prepayment of principal of, or premium
or interest on, any Subordinated Debt, the Senior Secured Discount
Notes or the Senior Secured Notes (i) other than, so long as no Event
of Default has occurred and is continuing, on the stated, scheduled
date for payment of interest or other mandatory payments expressly set
forth in the applicable Sub Debt Documents, the Senior Secured Discount
Notes, the Senior Discount Notes Indenture or the Senior Secured Note
Documents, or (ii) which would violate the terms of this Agreement, the
applicable Sub Debt Documents, the Senior Secured Discount Notes or the
Senior Secured Note Documents;
(b) redeem, retire, purchase, defease or otherwise acquire any
Subordinated Debt, the Senior Secured Discount Notes or the Senior
Secured Notes unless expressly required to redeem or purchase such
Indebtedness under the Sub Debt Documents, the Senior Secured Discount
Notes Indenture, the Senior Secured Discount Notes or the Senior
Secured Note Documents following compliance with Section 3.1.1; or
(c) make any deposit (including the payment of amounts into a
sinking fund or other similar fund) for any of the foregoing purposes.
Furthermore, neither the Borrowers nor any Foreign Restricted Subsidiary will
designate any Indebtedness other than the Obligations and the obligations under
the Senior Secured Note Documents as "Senior Debt" (or any analogous term) in
any Sub Debt Document.
SECTION VII.2.9. Capital Securities of Subsidiaries. Except (in the
case of the Fibers Subsidiaries) for a Transfer of the Fibers Business, the
Borrowers will not, and will not permit any of their Foreign Restricted
Subsidiaries to, (a) issue any Capital Securities (whether for value or
otherwise) to any Person other than (in the case of Subsidiaries) the Borrowers
or another Wholly-Owned Subsidiary or (b) become liable in respect of any
obligation (contingent or otherwise) to purchase, redeem, retire, acquire or
make any other payment in respect of any Capital Securities of the Borrowers or
any Subsidiary or any option, warrant or other right to acquire any such Capital
Securities.
SECTION VII.2.10. Consolidation, Merger, etc. Other than in connection
with a Transfer of the Fibers Business, the Borrowers will not, and will not
permit any of their Foreign Restricted Subsidiaries to, liquidate or dissolve,
consolidate with, or merge into or with (collectively, to "Merge") any other
Person, or purchase or otherwise acquire all or substantially all of the assets
of any Person (or any division thereof other than through an Unrestricted
Subsidiary), except any Borrower may Merge with and into another Borrower, and
the assets or Capital Securities of any Borrower may be purchased or otherwise
acquired by any other Borrower; provided, that in no event shall any Borrower or
Pledged Subsidiary Merge with and into any Subsidiary other than another
Borrower or a Pledged Subsidiary unless after giving
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effect thereto, the Administrative Agent shall have a perfected pledge of, and
security interest in and to, at least the same percentage of the issued and
outstanding interests of Capital Securities (on a fully diluted basis) of the
surviving Person as the Administrative Agent had immediately prior to such
Merger in form and substance reasonably satisfactory to the Administrative Agent
and its counsel, pursuant to such documentation and opinions as shall be
necessary in the opinion of the Administrative Agent to create, perfect or
maintain the collateral position of the Secured Parties therein.
SECTION VII.2.11. Permitted Dispositions. The Borrowers will not, and
will not permit any of their Foreign Restricted Subsidiaries to, Dispose of any
of the Borrowers' or such Foreign Restricted Subsidiaries' assets (including
accounts receivable, inventory and Capital Securities) to any Person in one
transaction or series of transactions unless such Disposition is either (a) a
Permitted Disposition, (b) the Transfer of the Fibers Business, (c) is permitted
by Section 7.2.10 or (d) Dispositions of other property (real, mixed or
personal) in an aggregate amount not to exceed $5,500,000 in the aggregate in
any Fiscal Year and so long as no Default has occurred and is continuing. Upon
the consummation of the Transfer of the Fibers Business, the Company or the
Fibers Subsidiaries shall Cash Collateralize all Letters of Credit issued for
the account of any Fibers Subsidiary. Each Borrower, the Agents, each Lender and
the Issuer acknowledges that after the Transfer of the Fibers Business, the
Fibers Subsidiaries shall no longer be considered to be Borrowers hereunder.
SECTION VII.2.12. Modification of Certain Agreements. Except in
connection with a Transfer of the Fibers Business the Borrowers will not, and
will not permit any of their Foreign Restricted Subsidiaries to, consent to any
amendment, supplement, waiver or other modification of, or enter into any
forbearance from exercising any rights with respect to the terms or provisions
contained in,
(a) the Sub Debt Documents, the Senior Note Documents, the
Senior Secured Discount Notes or the Senior Secured Discount Notes
Indenture, other than any amendment, supplement, waiver or modification
for which no fee is payable to the holders of the relevant Indebtedness
and which (i) extends the date or reduces the amount of any required
repayment, prepayment or redemption of the principal of such
Indebtedness, (ii) reduces the rate or extends the date for payment of
the interest, premium (if any) or fees payable on such Indebtedness or
(iii) makes the covenants, events of default or remedies therein less
restrictive on the Company, (iv) cures any ambiguity, omission, defect
or inconsistency therein, and could not in any way adversely affect the
Lenders, (v) provides for the assumption of the issuer of such
Indebtedness's obligations to the holders of such Indebtedness in the
case of a Merger permitted hereunder, (vi) provides for uncertificated
notes, or (vii) complies with requirements of an SEC order to effect or
maintain the qualification of the indenture for such Indebtedness under
the Trust Indenture Act of 1939, as amended, in each case, after
written notice to the Administrative Agent; or
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(b) the Tax Sharing Agreement or the terms of any preferred
stock, if any, in any manner that is adverse to the Lenders.
SECTION VII.2.13. Transactions With Affiliates. The Borrowers will not,
and will not permit any of their Foreign Restricted Subsidiaries to, enter into
or cause or permit to exist any arrangement, transaction or contract (including
for the purchase, lease or exchange of property or the rendering of services)
with any of its other Affiliates (other than between Borrowers) unless such
arrangement, transaction or contract (a) is on fair and reasonable terms no less
favorable to the Borrowers or such Foreign Restricted Subsidiary than they could
obtain in an arm's-length transaction with a Person that is not an Affiliate and
(b) is of the kind which would be entered into by a prudent Person in the
position of the Borrowers or such Foreign Restricted Subsidiary with a Person
that is not one of their Affiliates.
SECTION VII.2.14. Restrictive Agreements, etc. Except as otherwise
expressly provided for in the Senior Secured Note Documents as in effect on the
date hereof, the Borrowers will not, and will not permit any of their Foreign
Restricted Subsidiaries to, enter into any agreement prohibiting
(a) the creation or assumption of any Lien upon their
properties, revenues or assets, whether now owned or hereafter
acquired;
(b) the ability of any Obligor to amend or otherwise modify
any Loan Document; or
(c) the ability of any Foreign Restricted Subsidiary to make
any payments, directly or indirectly, to the Borrowers, or the ability
of the Borrowers to make any payments, directly or indirectly, to other
Borrowers, including by way of dividends, advances, repayments of
loans, reimbursements of management and other intercompany charges,
expenses and accruals or other returns on investments.
The foregoing prohibitions shall not apply to restrictions contained (i) in any
Loan Document, (ii) in the case of clause (a), any agreement governing any
Indebtedness permitted by clause (e) of Section 7.2.2 as to the assets financed
with the proceeds of such Indebtedness or (iii) in the case of clauses (a) and
(c) above, in a Canadian Facility entered into by a Foreign Restricted
Subsidiary in accordance with Section 7.2.17. The Administrative Agent is hereby
authorized to release any Foreign Restricted Subsidiary from its obligations
under this Section in connection with a transaction permitted under Section
7.2.17.
SECTION VII.2.15. Sale and Leaseback. The Borrowers will not, and will
not permit any of their Foreign Restricted Subsidiaries to, directly or
indirectly enter into any agreement or arrangement providing for the sale or
transfer by it of any property (now owned or hereafter acquired) to a Person and
the subsequent lease or rental of such property or other similar property from
such Person in an aggregate amount not in excess of (a) $2,000,000 in the case
of the
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Borrowers and (b) $10,000,000 in the case of Foreign Restricted Subsidiaries;
provided that this Section 7.2.15 shall not apply to the lease of the laboratory
facilities currently located at the Toronto Office after the sale of the Toronto
Office.
SECTION VII.2.16. Transfer of the Fibers Business. (a) The Borrowers
can in a single transaction or series of related transactions make a Transfer of
the Fibers Business if each of the following conditions is satisfied:
(i) no Default or Event of Default shall have occurred
and be continuing or would result therefrom;
(ii) the Transfer of the Fibers Business shall be in the
best interests of the Borrowers and the consideration received by the
Borrowers from such Transfer of the Fibers Business shall be at least
equal to the fair market value of such transaction, in each case, as
determined by a written resolution adopted in good faith by the Board
of Directors of the Company;
(iii) if less than 85% of the consideration received in a
Transfer of the Fibers Business is in the form of cash or Permitted
Consideration, the Company must deliver an opinion to the
Administrative Agent, in form and substance reasonably satisfactory to
the Administrative Agent, as to the fairness of the transaction to the
Company from a financial point of view, issued by an Independent
Financial Advisor;
(iv) in the case of any Joint Venture Contribution,
immediately after giving effect to such transaction, the Company will
be the beneficial owner of 60% or less of the Capital Securities of the
entity to which such Joint Venture Contribution is made;
(v) in the case of any Sale of the Fibers Business, the
transferee in such Transfer of the Fibers Business shall be a Person
other than an Affiliate of the Company;
(vi) the Company (or, if applicable, the Fibers
Subsidiaries) shall legally and effectively grant the Administrative
Agent for the benefit of the Fixed Assets Secured Parties a first
priority security interest in any non-cash proceeds received by the
Company (or the Fibers Subsidiaries) in such Transfer of the Fibers
Business, including any Capital Securities, as additional security for
the repayment of the Fixed Assets Loans and deliver an opinion of
counsel as to the validity of the creation and the perfection of such
security interest in form and substance satisfactory to the
Administrative Agent;
(vii) the Fibers Subsidiaries shall have repaid all Credit
Extensions for which they submitted the applicable Borrowing Request
and are outstanding; and
(viii) all Net Disposition Proceeds received in such
Transfer of the Fibers Business shall be applied as provided in clause
(d) of Section 3.1.1.
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(b) Upon any Transfer of the Fibers Business, (i) any Lien created
under any Loan Document with respect to the Fibers Subsidiaries and (ii) if more
than 50% of the Capital Securities of the Fibers Subsidiaries is transferred by
the Company in connection with such Transfer of the Fibers Business, any Lien in
such Capital Securities and the Obligations as a "Borrower" under any Loan
Documents made by the Fibers Subsidiaries shall immediately cease and terminate.
Upon the receipt of written notice from the Company of a proposed Transfer of
the Fibers Business, the Administrative Agent is authorized and directed to
execute and deliver to the Company, concurrently with the closing of such
Transfer of the Fibers Business, at the Company's expense, such documents as the
Company shall reasonably request to evidence such release of Liens and, if
applicable, the termination of the Obligations as a "Borrower" hereunder made by
the Fibers Subsidiaries; and
(c) Unless a Default or an Event of Default shall have occurred and be
continuing, the Company (or, if applicable, the Fibers Subsidiaries) shall be
entitled to (i) receive cash interest payments on any deferred payment of
principal under any promissory note, installment receivable or other arrangement
received in connection with any Transfer of the Fibers Business and use such
payments for general corporate purposes, (ii) receive and use all distributions
in respect of any Capital Security for general corporate purposes, (iii) vote
any Capital Security and (iv) give consents, approvals, waivers and
ratifications in respect of any Capital Security; provided, however, that (A)
the Company shall legally and effectively grant the Administrative Agent a first
priority security interest for the benefit of the Fixed Assets Lenders in any
distributions paid or payable other than in cash in respect of, and instruments
and other property received, receivable or otherwise distributed in respect of,
or in exchange for, any Capital Securities as additional security for the Fixed
Assets Loans and deliver to the Administrative Agent an opinion of counsel as to
the validity of the creation and perfection of such security interest in form
and substance and from counsel reasonably satisfactory to the Administrative
Agent, (B) no vote shall be cast or consent, approval, waiver or ratification
given or action taken which would have a Material Adverse Effect on the value of
any Capital Securities or be inconsistent with or violate the provisions of this
Agreement and (C) the Company shall apply the proceeds of any distribution
received as a Return of Capital as Net Disposition Proceeds.
SECTION VII.2.17. Canadian Facility. The Borrowers will not permit any
Foreign Restricted Subsidiary to enter into a Canadian Facility unless such
Foreign Restricted Subsidiary first proposes a term sheet to the Agents on
commercially reasonable terms and conditions which the Agents will negotiate in
good faith toward a goal of providing a Canadian Facility on substantially the
terms and conditions of this Agreement. If the Agents do not provide a
commitment to enter into a Canadian Facility based on such terms and conditions
presented by the Borrowers within 60 days of receiving such proposed terms and
conditions, such Foreign Restricted Subsidiaries may obtain a Canadian Facility
on similar commercially reasonable terms and conditions from other financial
institutions (with the consent of the Agents, such consent not to be
unreasonably withheld or delayed). Upon entering into the Canadian Facility, the
applicable Foreign Restricted Subsidiaries will automatically be released from
their Obligations solely with respect to clauses (a) and (c) of Section 7.2.14.
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SECTION VII.2.18. Attornment. To the extent expressly required under
the leases set forth in Item 7.2.18 of the Disclosure Schedule, the Agents and
each Lender hereby acknowledge and agree that the Liens granted pursuant to the
Loan Documents are subject to the rights of certain lessees under the leases
disclosed in Item 7.2.3(c) of the Disclosure Schedule and will be subject to the
rights of lessees under any leases entered into by any Borrower or any Foreign
Restricted Subsidiary after the date hereof which are permitted pursuant to this
Agreement (collectively, the "Leases") subject to the express rights contained
in the applicable Lease. The rights of the tenants under the Leases to the
leased premises shall not be adversely affected by the exercise by any Agent or
any Lender of any of their rights under any Loan Document, nor shall any such
tenant be in any other way deprived of its rights under the applicable Lease
except in accordance with the terms of such Lease. In the event that any Agent
or any Lender succeeds to the interest of any Borrower or any Foreign Restricted
Subsidiary under a Lease, such Lease shall not be terminated or affected thereby
except as set forth therein, and any sale of the applicable leased premises by
any Agent or any Lender or pursuant to the judgment of any court in an action to
enforce the remedies provided for in the Loan Documents shall be made subject to
such Lease and the rights of such tenant expressly set forth thereunder. If any
Agent or any Lender succeeds to the interests of any Borrower or any Foreign
Restricted Subsidiary in and to the applicable leased premises or under such
Lease or enters into possession of such leased premises, such Agent and Lenders,
and such tenants, shall be bound to each other under all of the express terms,
covenants and conditions of such Lease, as if such Agent or Lender were
originally the applicable Borrower or Foreign Restricted Subsidiary as lessor
thereunder.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION VIII.1. Listing of Events of Default. Each of the following
events or occurrences described in this Article shall constitute an "Event of
Default".
SECTION VIII.1.1. Non-Payment of Obligations. The Borrowers shall
default in the payment or prepayment when due of
(a) any payment or prepayment when due of any principal on any
Loan or any Reimbursement Obligation or any deposit of cash for
collateral purposes pursuant to Section 2.6.4;
(b) any interest on any Loan or any Reimbursement Obligation
and such default shall remain unremedied for a period of 3 days after
such amount was due; or
(c) any fee described in Article III or any other monetary
Obligation, and such default shall continue unremedied for a period of
five days after such amount was due.
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SECTION VIII.1.2. Breach of Warranty. Any representation or warranty of
any Obligor made or deemed to be made in any Loan Document (including any
certificates delivered pursuant to Article V) is or shall be incorrect when made
or deemed to have been made in any material respect.
SECTION VIII.1.3. Non-Performance of Certain Covenants and Obligations.
Any Borrower shall default in the due performance or observance of any of its
obligations under clause (d) of Section 7.1.1, Section 7.1.7, Section 7.1.10,
Section 7.1.12, Section 7.1.13 or Section 7.2 or any Obligor shall default in
the due performance or observance of its obligations in respect of such Sections
as such Sections are incorporated by reference or otherwise in any Loan Document
to which such Obligor is a party. Any Borrower shall default in the due
performance or observance of any of its obligations under clauses (c), (e) or
(g) of Section 7.1.1 or Section 7.1.6, and such default shall continue
unremedied for a period of five Business Days.
SECTION VIII.1.4. Non-Performance of Other Covenants and Obligations.
Any Obligor shall default in the due performance and observance of any other
agreement contained in any Loan Document executed by it, and such default shall
continue unremedied for a period of 30 days after written notice thereof shall
have been given to the Company by the Administrative Agent or any Lender.
SECTION VIII.1.5. Default on Other Indebtedness. A default shall occur
in the payment of any amount when due (subject to any applicable grace period),
whether by acceleration or otherwise, of any Indebtedness (other than
Indebtedness described in Section 8.1.1) of Parent, the Company or any of its
Subsidiaries or any other Obligor having a principal amount, individually or in
the aggregate, in excess of $5,000,000, or a default shall occur in the
performance or observance of any obligation or condition with respect to such
Indebtedness if the effect of such default is to accelerate the maturity of any
such Indebtedness or such default shall continue unremedied for any applicable
period of time sufficient to permit the holder or holders of such Indebtedness,
or any trustee or agent for such holders, to cause or declare such Indebtedness
to become due and payable or to require such Indebtedness to be prepaid,
redeemed, purchased or defeased, or require an offer to purchase or defease such
Indebtedness to be made, prior to its expressed maturity or which such default
shall continue unremedied for at least 30 days.
SECTION VIII.1.6. Judgments. Any judgment or order for the payment of
money individually or in the aggregate in excess of $2,000,000, exclusive of (a)
any amounts covered by insurance (less any applicable deductible) and as to
which the insurer has acknowledged its responsibility to cover such judgment or
order, and (b) any amounts covered by an indemnitor (with a long-term senior
unsecured debt rating greater than BBB and Baa2 by S&P and Moody's) where such
indemnitor has acknowledged, in writing, in form and substance reasonably
satisfactory to the Administrative Agent, that it will indemnify such judgment
or order, shall be rendered against one or more Borrowers or any of their
Subsidiaries or any other Obligor and such judgment shall not have been vacated
or discharged or stayed or bonded pending appeal within 30 days after the entry
thereof or enforcement proceedings shall have been commenced by any creditor
upon such judgment or order.
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SECTION VIII.1.7. Pension Plans. Any of the following events shall
occur with respect to any Pension Plan
(a) the institution of any steps by any Borrower, any member
of its Controlled Group or any other Person to terminate a Pension Plan
other than a standard termination under Section 4041(b) of ERISA if, as
a result of such termination, any such Borrower or any such member
could be required to make a contribution to such Pension Plan, or could
reasonably expect to incur a liability or obligation to such Pension
Plan, in excess of $1,000,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION VIII.1.8. Change in Control. Any Change in Control shall occur.
SECTION VIII.1.9. Bankruptcy, Insolvency, etc. Any Obligor shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness generally to pay, debts as they
become due;
(b) apply for, consent to, or acquiesce in the appointment of
a trustee, receiver, sequestrator or other custodian for any
substantial part of the property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence in or permit or suffer to exist the appointment of a
trustee, receiver, sequestrator or other custodian for a substantial
part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within 60 days;
provided, that each Borrower hereby expressly authorizes each Secured
Party to appear in any court conducting any relevant proceeding during
such 60-day period to preserve, protect and defend their rights under
the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law or any dissolution,
winding up or liquidation proceeding, in respect thereof, and, if any
such case or proceeding is not commenced by any Obligor, such case or
proceeding shall be consented to or acquiesced in by such Obligor, as
the case may be, or shall result in the entry of an order for relief
which case, proceeding or order shall continue undischarged, unstayed
or undismissed for 60 days; provided, that each Borrower hereby
expressly authorizes each Secured Party to appear in any court
conducting any such case or proceeding during such 60-day period to
preserve, protect and defend their rights under the Loan Documents; or
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(e) take any action authorizing, or in furtherance of, any of
the foregoing.
SECTION VIII.1.10. Impairment of Security, etc. Any Loan Document or
any Lien granted thereunder shall (except in accordance with its terms), in
whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of any Obligor party thereto; any
Obligor or any other party shall, directly or indirectly, contest in any manner
such effectiveness, validity, binding nature or enforceability; or, except as
permitted under any Loan Document, any Lien (i) securing any Fixed Assets
Obligation shall, in whole or in part, cease to be a perfected (A) first
registered priority Lien in the case of Fixed Assets or the Capital Securities
of any Borrower (except in the case of a Transfer of the Fibers Business) and
(B) second registered priority Lien in the case of Current Assets or (ii)
securing any Current Assets Obligation shall, in whole or in part, cease to be a
perfected first registered priority Lien in the case of Current Assets, in each
case, subject to Permitted Liens.
SECTION VIII.1.11. Failure of Subordination. Unless otherwise waived or
consented to by the Administrative Agent, the Lenders and the Issuer in writing,
the subordination provisions relating to any Subordinated Debt (the
"Subordination Provisions") shall fail to be enforceable by the Administrative
Agent, the Lenders and the Issuer in accordance with the terms thereof, or the
monetary Obligations shall fail to constitute "Senior Debt" (or similar term)
referring to such Obligations; or the Company or any of its Subsidiaries shall,
directly or indirectly, disavow or contest in any manner (a) the effectiveness,
validity or enforceability of any of the Subordination Provisions, (b) that the
Subordination Provisions exist for the benefit of the Administrative Agent, the
Lenders and the Issuer or (c) that all payments of principal of or premium and
interest on the Subordinated Debt, or realized from the liquidation of any
property of any Obligor, shall be subject to any of such Subordination
Provisions.
SECTION VIII.1.12. Default Under Senior Secured Discount Notes. Parent
shall fail to observe or perform any covenant or agreement contained in the
Senior Secured Discount Notes or the Senior Secured Discount Notes Indenture
within any applicable grace period, if the effect of such failure or other event
is to accelerate, or to permit the holders of the Senior Secured Discount Notes
or any other Person to accelerate, the maturity thereof.
SECTION VIII.2. Action if Bankruptcy. If any Event of Default described
in clauses (a) through (d) of Section 8.1.9 with respect to any Borrower shall
occur, the Commitments (if not theretofore terminated) shall automatically
terminate and the outstanding principal amount of all outstanding Loans and all
other Obligations (including Reimbursement Obligations) shall automatically be
and become immediately due and payable, without notice or demand to any Person
and each Borrower shall automatically and immediately be obligated to Cash
Collateralize all Letter of Credit Outstandings.
SECTION VIII.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clauses (a) through (d) of
Section 8.1.9 with respect to any
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Borrower) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by notice to the Company declare all or any portion of the
outstanding principal amount of the Loans and other Obligations (including
Reimbursement Obligations) to be due and payable and/or the Commitments (if not
theretofore terminated) to be terminated, whereupon the full unpaid amount of
such Loans and other Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand
or presentment, and/or, as the case may be, the Commitments shall terminate and
the Borrowers shall automatically and immediately be obligated to Cash
Collateralize all Letter of Credit Outstandings.
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION IX.1. Actions. Each Lender hereby appoints DLJ as its
Syndication Agent and CIT as its Administrative Agent under and for purposes of
this Agreement and each other Loan Document. Each Lender authorizes the Agents
to act on behalf of such Lender under this Agreement and each other Loan
Document and, in the absence of other written instructions from the Required
Lenders received from time to time by the Agents (with respect to which each of
the Agents agrees that it will comply, except as otherwise provided in this
Section or as otherwise advised by counsel), to exercise such powers hereunder
and thereunder as are specifically delegated to or required of the Agents by the
terms hereof and thereof, together with such powers as may be reasonably
incidental thereto. The Agents may execute any of their respective duties under
this Agreement and each other Loan Document by or through their respective
employees, agents and attorneys-in-fact. Each Lender hereby indemnifies (which
indemnity shall survive any termination of this Agreement) the Agents, pro rata
according to such Lender's percentage of each existing Loan Commitment Amount,
from and against any and all liabilities, obligations, losses, damages, claims,
costs or expenses of any kind or nature whatsoever which may at any time be
imposed on, incurred by, or asserted against, either of the Agents in any way
relating to or arising out of this Agreement and any other Loan Document,
including reasonable attorneys' fees, and as to which any Agent is not
reimbursed by any Obligor (and without limiting the obligation of any Obligor to
do so); provided, however, that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, claims, costs or
expenses which are determined by a court of competent jurisdiction in a final
proceeding to have resulted from such Agent's gross negligence or wilful
misconduct. No Agent shall be required to take any action hereunder or under any
other Loan Document, or to prosecute or defend any suit in respect of this
Agreement or any other Loan Document, unless it is indemnified hereunder to such
Agent's satisfaction. If any indemnity in favor of either of the Agents shall be
or become, in such Agent's determination, inadequate, such Agent may call for
additional indemnification from the Lenders and cease to do the acts indemnified
against hereunder until such additional indemnity is given.
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SECTION IX.2. Funding Reliance, etc. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
3:00 p.m., New York City time, on the day prior to a Borrowing or Disbursement
with respect to a Letter of Credit pursuant to Section 2.6.2 that such Lender
will not make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, make available to the applicable Borrower a
corresponding amount. If and to the extent that such Lender shall not have made
such amount available to the Administrative Agent, such Lender and such Borrower
severally agree to repay the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Administrative Agent made such amount available to such Borrower to the date
such amount is repaid to the Administrative Agent, at the interest rate
applicable at the time to Loans comprising such Borrowing.
SECTION IX.3. Exculpation. None of the Agents or the Lead Arranger nor
any of their respective directors, officers, employees or agents shall be liable
to any Lender for any action taken or omitted to be taken by it under this
Agreement or any other Loan Document, or in connection herewith or therewith,
except for its own willful misconduct or gross negligence, nor responsible for
any recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of this Agreement or any other Loan
Document, nor for the creation, perfection or priority of any Liens purported to
be created by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, value or sufficiency of any collateral security, nor
to make any inquiry respecting the performance by each Borrower or any other
Obligor of its obligations hereunder or under any other Loan Document. None of
the Agents, the Documentation Agent or the Lead Arranger nor any of their
respective directors, officers, employees or agents shall be responsible for or
have any duty to ascertain, inquire into or verify (a) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder (other than a statement, warranty or representation made by the Agent
in writing), (b) the performance or observance of any of the covenants or
agreements of any Obligor under any Loan Document, including, without
limitation, any agreement by an Obligor to furnish information directly to each
Lender, (c) the satisfaction of any condition specified in Article V, expect
receipt of items required to be delivered solely to the Agents, (d) the
existence or possible existence of any Default or Event of Default, or (e) the
financial condition of any Obligor. Any such inquiry which may be made by an
Agent or the Issuer shall not obligate it to make any further inquiry or to take
any action. The Agents and the Issuer shall be entitled to rely upon advice of
counsel concerning legal matters and upon any notice, consent, certificate,
statement or writing which the Agents or the Issuer, as applicable, believe to
be genuine and to have been presented by a proper Person.
SECTION IX.4. Successor. The Syndication Agent and the Documentation
Agent may resign as such upon one Business Day's notice to the Company and the
Administrative Agent. The Administrative Agent may resign as such at any time
upon at least 30 days' prior notice to the Company and all Lenders. The
Administrative Agent may be removed at any time with or
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without cause by written notice received by the Administrative Agent from the
Required Lenders, such removal to be effective on the date specified in such
notice. If the Administrative Agent at any time shall resign or be removed, the
Required Lenders may, with the prior consent of the Company (which consent shall
not be unreasonably withheld or delayed and which shall not be required if an
Event of Default has occurred and is continuing) appoint another Lender as a
successor Administrative Agent which shall thereupon become the Administrative
Agent hereunder. If no successor Administrative Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving notice of
resignation or receiving notice of removal, then the retiring Administrative
Agent may, on behalf of the Lenders, with the consent of the Company, which
consent shall not be unreasonably withheld and which shall not be required if an
Event of Default has occurred and is continuing, appoint a successor
Administrative Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall be entitled to receive from the
retiring Agent such documents of transfer and assignment as the successor
Administrative Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation or removal hereunder as such, the provisions
of (a) this Article IX shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Administrative Agent under this
Agreement, and (b) Section 10.3 and Section 10.4 shall continue to inure to its
benefit. Notwithstanding anything else to the contrary in this Section 9.4, the
Administrative Agent may at any time, without the consent of the Company, any
Obligor or any Lender, appoint an Affiliate which is a commercial banking
institution as a successor Administrative Agent.
SECTION IX.5. Credit Extensions by Each Agent and Issuer. Each Agent
and the Issuer shall have the same rights and powers with respect to (a) in the
case of the Agents, the Credit Extensions made by it or any of its Affiliates
and (b) in the case of the Issuer, the Loans made by it or any of its
Affiliates, as any other Lender and may exercise the same as if it were not an
Agent or the Issuer. Each Agent, the Issuer and each of their respective
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Company or any Subsidiary or Affiliate of the Company
as if such Agent or Issuer were not an Agent or Issuer hereunder.
SECTION IX.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agents, the Lead Arranger, the Documentation Agent, the
Issuer and each other Lender, and based on such Lender's review of the financial
information of each Borrower, this Agreement, the other Loan Documents (the
terms and provisions of which being satisfactory to such Lender) and such other
documents, information and investigations as such Lender has deemed appropriate,
made its own credit decision to extend its Commitments. Each Lender also
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acknowledges that it will, independently of the Agents, the Documentation Agent,
the Lead Arranger, the Issuer and each other Lender, and based on such other
documents, information and investigations as it shall deem appropriate at any
time, continue to make its own credit decisions as to exercising or not
exercising from time to time any rights and privileges available to it under the
Loan Documents.
SECTION IX.7. Copies, etc. The Administrative Agent shall give prompt
notice to each Lender of each material notice or material request required or
permitted to be given to the Administrative Agent by the Borrowers pursuant to
the terms of the Loan Documents (unless concurrently delivered to the Lenders by
the Borrowers). The Administrative Agent will distribute to each Lender each
document or instrument received for its account and copies of all other
communications received by the Administrative Agent from the Borrowers for
distribution to the Lenders by the Administrative Agent in accordance with the
terms of the Loan Documents. The Agents shall have no duty to disclose to the
Lenders information that is not required to be furnished by the Borrowers to the
Agents, but that may be voluntarily furnished by the Borrowers to the Agents
(either in their capacity as Agent or in their individual capacity).
SECTION IX.8. Reliance by Agents. The Agents shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone or telecopy) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Agents. As to any matters not expressly provided for by the Loan
Documents, the Agents shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with instructions
given by the Required Lenders or all of the Lenders as is required in such
circumstance, and such instructions of such Lenders and any action taken or
failure to act pursuant thereto shall be binding on all Secured Parties. For
purposes of applying amounts in accordance with this Section, the Agents shall
be entitled to rely upon any Secured Party that has entered into a Rate
Protection Agreement with any Obligor for a determination (which such Secured
Party agrees to provide or cause to be provided upon request of the Agents) of
the outstanding Obligations owed to such Secured Party under any Rate Protection
Agreement. Unless it has actual knowledge evidenced by way of written notice
from any such Secured Party and any Borrower to the contrary, the Agents, in
acting in such capacity under the Loan Documents, shall be entitled to assume
that no Rate Protection Agreements or Obligations in respect thereof are in
existence or outstanding between any Secured Party and any Obligor.
SECTION IX.9. Defaults. The Agents shall not be deemed to have
knowledge or notice of the occurrence of a Default unless the Agents have
received a written notice from a Lender or a Borrower specifying such Default
and stating that such notice is a "Notice of Default". In the event that the
Agents receive such a notice of the occurrence of a Default, the Agents shall
give prompt notice thereof to the Lenders. The Agents shall (subject to Section
10.1) take such action with respect to such Default as shall be directed by the
Required Lenders; provided, that unless and until the Agents shall have received
such directions, the Agents may (but shall not be
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obligated to) take such action, or refrain from taking such action, with respect
to such Default as they shall deem advisable in the best interest of the Lenders
except to the extent that this Agreement expressly requires that such action be
taken, or not be taken, only with the consent or upon the authorization of the
Required Lenders or all Lenders.
SECTION IX.10. The Documentation Agent. Notwithstanding anything else
to the contrary contained in this Agreement or any other Loan Document, the
Documentation Agent, in such capacity, shall have no duties or responsibilities
under this Agreement or any other Loan Document nor any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Documentation Agent, in such capacity except as are explicitly set
forth herein or in the other Loan Documents.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION X.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
in writing by each Borrower and each Obligor party thereto and the Required
Lenders; provided, however, that no such amendment, modification or waiver shall
be effective which would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Required Lenders unless
consented to in writing by each Lender;
(b) (i) modify this Section 10.1, or clause (a) of Section
10.10, (ii) change the definition of "Required Lenders", (iii) reduce
any fees described in Article III, (iv) release Parent from its
obligations under the Parent Pledge Agreement, (v) release all or
substantially all of the collateral security (except in each case as
otherwise specifically provided in this Agreement, the Revolver
Intercreditor Agreement, a Pledge Agreement or a Security Agreement)
without the written consent of each Lender adversely affected thereby
(it being understood and agreed that with respect to the release of any
such collateral security securing or guaranteeing the Current Assets
Obligations or the Fixed Assets Obligations, as the case may be, the
approval of the Current Assets Required Lenders or the Fixed Assets
Required Lenders, as applicable, shall be required), (vi) amend, modify
or waive the provisions of Section 3.1.1 or Section 3.1.2 or clause (b)
of Section 2.2.2 or (vii) extend any Loan Commitment Termination Date,
in each case, without the written consent of each Lender adversely
affected thereby;
(c) increase the Fixed Assets Loan Commitment Amount or the
Percentage of any Fixed Assets Lender without the consent of each Fixed
Assets Lender adversely affected thereby;
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(d) increase the Current Assets Loan Commitment Amount or the
Percentage of any Current Assets Lender or the Letter of Credit
Commitment Amount without the consent of each Current Assets Lender
adversely affected thereby;
(e) (i) extend the final Stated Maturity Date for any Lender's
Loan, (ii) reduce the principal amount of or rate of interest on any
Lender's Loan or reduce any fee payable to any Lender or (iii) extend
the date on which any principal payment, interest or fees are payable
on any Lender's Loans, in each case without the written consent of such
Lender (it being understood and agreed, however, that any vote to
rescind any acceleration made pursuant to Section 8.2 and Section 8.3
of amounts owing with respect to the Loans and other Obligations shall
only require the vote of the Required Lenders);
(f) increase the Stated Amount of any Letter of Credit unless
consented to by the Issuer of such Letter of Credit;
(g) affect adversely the interests, rights or obligations of
any Agent, the Issuer, the Swing Line Lender, or the Lead Arranger (in
its capacity as Agent, Issuer, the Swing Line Lender, or Lead
Arranger), unless consented to in writing by such Agent, the Issuer,
the Swing Line Lender or the Lead Arranger, as the case may be;
(h) change the definition of "Borrowing Base Amount",
"Eligible Account", "Eligible Inventory" or "Overadvance Amount", in
each case if the effect of such change would be to require a Current
Assets Lender to make or participate in a Credit Extension in an amount
that is greater than such Current Assets Lender would have had to make
or participate in immediately prior to such amendment, modification or
waiver without the written consent of each Current Assets Lender;
provided, however, nothing contained in this clause shall limit the
Administrative Agent's ability to adjust the Borrowing Base Amount, the
amount of Eligible Accounts, the amount of Eligible Inventory or the
Overadvance Amount to the extent otherwise permitted by this Agreement;
(i) have the effect (either immediately or at some later time)
of enabling the Borrowers to satisfy a condition precedent set forth in
Section 5.2 to the making of a Loan or the issuance of a Letter of
Credit without the written consent of applicable Lenders holding at
least 51% of the applicable Loan Commitments; or
(j) amend (i) the Fixed Assets Security Documents without the
consent of the Fixed Assets Required Lenders or (ii) amend the Current
Assets Security Agreement, the Revolving Intercreditor Agreement or
Section 7.1.15 without the consent of the Current Assets Required
Lenders.
Notwithstanding anything to the contrary contained in this Section 10.1, the
Agents may, without the consent of any Lender, execute amendments or
modifications of any Loan Document to cure
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any ambiguity, omission, defect or inconsistency therein or which otherwise are
immaterial or would otherwise not have any adverse affect the rights or
interests of any Lender hereunder. No failure or delay on the part of any Agent,
the Issuer, any Lender in exercising any power or right under this Agreement or
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on any Obligor in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by any Agent, the Issuer,
any Lender under this Agreement or any other Loan Document shall, except as may
be otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
For purposes of this Section 10.1, the Syndication Agent, in
coordination with the Administrative Agent, shall have primary responsibility,
together with the Company, in the negotiation, preparation and documentation
relating to any amendment, modification or waiver of this Agreement, any other
Loan Document or any other agreement or document related hereto or thereto
contemplated pursuant to this Section.
SECTION X.2. Notices; Time. All notices, requests and other
communications provided to any party hereto under this Agreement or any other
Loan Document shall be in writing and addressed, delivered or transmitted to
such party at its address or facsimile number set forth on Schedule II hereto
or, in the case of a Lender which becomes a party hereto after the date hereof,
as set forth in the Lender Assignment Agreement pursuant to which such Lender
becomes a Lender hereunder or at such other address or facsimile number as may
be designated by such party in a notice to the other parties. Any notice, (a) if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when has been received
or (b) if transmitted by facsimile, shall be deemed given when transmitted (and
telephonic confirmation of receipt thereof has been received). Unless otherwise
indicated, all references to the time of a day in a Loan Document shall refer to
New York City time.
SECTION X.3. Payment of Costs and Expenses. Each Borrower, jointly and
severally, agrees to pay on demand all reasonable expenses of each Agent
(including the reasonable fees and out-of-pocket expenses of Mayer, Brown &
Platt, counsel to the Agents and of local or foreign counsel, if any, who may be
retained by counsel to the Agents) in connection with
(a) the syndication by the Syndication Agent and the Lead
Arranger of the Loans, the negotiation, preparation, execution and
delivery of this Agreement and of each other Loan Document, including
schedules, opinions and exhibits, and any amendments, waivers,
consents, supplements or other modifications to this Agreement or any
other Loan Document as may from time to time hereafter be required,
whether or not the transactions contemplated hereby are consummated;
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(b) the filing, recording or refiling or rerecording of any
Loan Document and/or any Filing Statements relating thereto and all
amendments, supplements and modifications to any thereof and any and
all other documents or instruments of further assurance required to be
filed or recorded or refiled or rerecorded by the terms of any Loan
Document;
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document; and
(d) post-closing U.C.C.-11 searches (within 120 days of the
Effective Date) to confirm that the Liens granted to the Administrative
Agent for the benefit of the Secured Parties have been perfected.
Each Borrower further jointly and severally agrees to pay, and to save the
Agents and the Lenders harmless from all liability for, any stamp or other
similar Taxes which may be payable in connection with the execution or delivery
of this Agreement, the Borrowings hereunder, the issuance of the Notes, the
issuance of the Letters of Credit or any other Loan Documents. Each Borrower
also agrees to jointly and severally reimburse each Agent and each Lender upon
demand for all reasonable out-of-pocket expenses (including attorneys' fees and
legal expenses) incurred by such Agent or such Lender in connection with (i) the
negotiation of any restructuring or "work-out", whether or not consummated, of
any Obligations and (ii) the enforcement of any Obligations. In addition, the
Borrowers jointly and severally also agree, subject to the terms of this
Agreement, to reimburse the Administrative Agent on demand for all reasonable
third party administration, audit and monitoring expenses incurred in connection
with the Borrowing Base and determinations in respect thereof.
SECTION X.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitment,
each Borrower jointly and severally indemnifies, exonerates and holds each
Agent, the Lead Arranger, the Issuer and each Lender and each of their
respective partners, trustees, officers, directors, attorneys, employees and
agents (collectively, the "Indemnified Parties") free and harmless from and
against any and all actions, causes of action, suits, losses, costs, liabilities
and damages, and expenses incurred in connection therewith (irrespective of
whether any such Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable attorneys' fees and
disbursements, whether incurred in connection with actions between or among the
parties hereto or the parties hereto and third parties (collectively, the
"Indemnified Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Credit
Extension, including all Indemnified Liabilities arising in connection
with the Transaction;
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(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties (including
any action brought by or on behalf of any Borrower as the result of any
determination by the Required Lenders pursuant to Article V not to make
any Credit Extension hereunder but excluding any such action in which a
court of competent jurisdiction in a final non-appealable judgment
determined that such Lenders breached their obligations hereunder in
respect of such Credit Extension);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by any Obligor or any Subsidiary
thereof of all or any portion of the Capital Securities or assets of
any Person, whether or not an Indemnified Party is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the Release by any Obligor or any
Subsidiary thereof of any Hazardous Material;
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by any Obligor or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, such Obligor or Subsidiary; or,
(f) each Lender's Environmental Liability (the indemnification
herein shall survive repayment of the Obligations and any transfer of
the property of any Obligor or its Subsidiaries by foreclosure or by a
deed in lieu of foreclosure for any Lender's Environmental Liability,
regardless of whether caused by, or within the control of, such Obligor
or such Subsidiary);
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct. Each Borrower and its permitted successors and
assigns hereby waive, release and agree not to make any claim, or bring any cost
recovery action against, any Indemnified Party under CERCLA or any state
equivalent, or any similar law now existing or hereafter enacted. It is
expressly understood and agreed that to the extent that any Indemnified Party is
strictly liable under any Environmental Laws, such Borrower's obligation to such
Indemnified Party under this indemnity shall likewise be without regard to fault
on the part of such Borrower, to the extent permitted under applicable law, with
respect to the violation or condition which results in liability of an
Indemnified Party. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, such Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
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SECTION X.5. Survival. The obligations of each Borrower under Sections
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 and the obligations of the Lenders under
Section 9.1, shall in each case survive any termination of this Agreement
(including in the event of any release of any Borrower pursuant to the terms of
this Agreement other than in connection with a Transfer of the Fibers Business),
the payment in full in cash of all Obligations, the termination of all
Commitments and any assignment from one Lender to another (in the case of
Sections 10.3 and 10.4) and the occurrence of the Termination Date. The
representations and warranties made by each Obligor in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION X.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION X.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION X.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original (whether such counterpart is originally
executed or an electronic copy of an original and each party hereto other than
the Agents and the Company expressly waives its rights to receive originally
executed documents other than with respect to any Notes) and all of which shall
constitute together but one and the same agreement. This Agreement shall become
effective as of the date first above written when counterparts hereof executed
on behalf of each Borrower, the Agents and each Lender (or notice thereof
satisfactory to the Agents) shall have been received by the Syndication Agent.
SECTION X.9. Governing Law; Entire Agreement. THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCLUDING THE LAW OF
CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. EACH
LETTER OF CREDIT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO LAWS OR RULES ARE
DESIGNATED, THE INTERNATIONAL STANDBY PRACTICES (ISP98--INTERNATIONAL CHAMBER OF
COMMERCE PUBLICATION NUMBER 590 (THE "ISP98 RULES")) AND, AS TO MATTERS NOT
GOVERNED BY THE ISP98 RULES, THE INTERNAL LAWS OF THE STATE OF NEW YORK. This
Agreement and the other Loan Documents constitute the entire
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understanding among the parties hereto with respect to the subject matter hereof
and thereof and supersede any prior agreements, written or oral, with respect
thereto.
SECTION X.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) no Borrower may assign or transfer its rights or
obligations hereunder without the prior written consent of the
Administrative Agent and all Lenders other than pursuant to Section
7.2.10; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 10.11.
SECTION X.11. Sale and Transfer of Loans; Participations in Loans and
Notes. Each Lender may assign, or sell participations in, its Loans and
Commitments to one or more other Persons in accordance with this Section 10.11.
SECTION X.11.1. Assignments. Any Lender (an "Assignor Lender"), may
(a) with notice to the Administrative Agent and with the
written consents (whether by originally executed counterpart or
electronic copy thereof) of the Company and the Syndication Agent, (i)
which consents shall not be unreasonably delayed or withheld, (ii)
which consents shall not be required in the case of assignments made
(A) to the Agents or any of their Affiliates, (B) by the Agents, the
Documentation Agent or any of their Affiliates, to any commercial bank,
fund which is regularly engaged in making, purchasing or investing in
loans or securities or any other financial institution or commercial
finance company (an "Eligible Assignee") during the initial syndication
(which shall be within thirty days of the Closing Date, such period the
"Initial Syndication") and (C) which consent of the Company shall not
be required at any time when an Event of Default shall have occurred
and be continuing; and
(b) with notice to the Company and the Agents, but without the
consent of the Company, the Agents or the Issuer, may assign and
delegate to any of its Affiliates or to any other Lender or to a
Related Fund of any Lender
(each such Person described in either of the foregoing clauses as being the
Person to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), at any time assign and delegate to one or
more Eligible Assignees all or any fraction of such Lender's total Loans,
participations in each Letter of Credit and Letter of Credit Outstandings with
respect thereto and Commitments in a minimum aggregate amount equal to the
lesser of (i) $5,000,000 or (ii) the then remaining amount of such Lender's
Loans and Commitments; provided, however, that any such Assignee Lender will
comply, if applicable, with the provisions
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contained in Section 4.6 and each Obligor and the Agents shall be entitled to
continue to deal solely and directly with such Lender in connection with the
interests so assigned and delegated to an Assignee Lender until (A) written
notice of such assignment and delegation, together with payment instructions,
addresses and related information with respect to such Assignee Lender, shall
have been given to each Borrower and the Agents by such Lender and such Assignee
Lender, (B) the Assignor Lender and such Assignee Lender shall have executed and
delivered to each Borrower and the Agents a Lender Assignment Agreement,
accepted by the Agents, and (C) the processing fees described below shall have
been paid.
From and after the date that the Agents accept such Lender Assignment Agreement,
(i) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (ii) the Assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within ten Business Days after its receipt of notice that the Administrative
Agent has received an executed Lender Assignment Agreement, if the Assignor
Lender or Assignee Lender so requests, the Borrowers shall execute and deliver
to the Administrative Agent (for delivery to the relevant Assignee Lender), new
Notes evidencing such Assignee Lender's assigned Loans and Commitments and, if
the Assignor Lender has retained Loans and Commitments hereunder, replacement
Notes in the principal amount of the Loans and Commitments retained by the
Assignor Lender hereunder (such Notes to be in exchange for, but not in payment
of, those Notes then held by such Assignor Lender). Each such Note shall be
dated the date of the predecessor Notes. The Assignor Lender shall mark the
predecessor Notes "exchanged" and deliver them to the Company. Accrued interest
and accrued fees on the Loans prior to assignment shall be paid to the assignee
Lender and following assignment shall be paid to the Assignor Lender at the same
time or times provided in this Agreement. Such Assignor Lender or such Assignee
Lender must also pay a processing fee to the Administrative Agent upon delivery
of any Lender Assignment Agreement in the amount of $2,500, unless such
assignment and delegation is by a Lender to its Affiliate or to a Related Fund,
if such assignment and delegation is by a Lender to a Federal Reserve Bank (or,
if such Lender is an investment fund, to the trustee under the indenture to
which such fund is a party in support of its obligations to such trustee), as
provided below, is otherwise consented to by the Administrative Agent or if such
assignment is by the Agents or the Documentation Agent during the Initial
Syndication. Any attempted assignment and delegation not made in accordance with
this Section 10.11.1 shall be null and void. Nothing contained in this Section
10.11.1 shall prevent or prohibit any Lender from pledging its rights (but not
its obligations to make Loans or participate in Letters of Credit of Letter of
Credit Outstandings) under this Agreement and/or its Loans hereunder (i) to a
Federal Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank or (ii) in the case of a Lender that is an investment fund,
to the trustee under the indenture to which such fund is a party in support of
its obligations to such trustee; provided, that any such assignment to a trustee
shall be subject to the provisions of
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clause (a) of this Section 10.11.1. In the event that S&P, Moody's or Thompson's
BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are
insurance companies (or Best's Insurance Reports, if such insurance company is
not rated by Insurance Watch Ratings Service)) shall, after the date that any
Lender with a Commitment to make Revolving Loans or participate in Letters of
Credit becomes a Lender, downgrade the long-term certificate of deposit rating
or long-term senior unsecured debt rating of such Lender, and the resulting
rating shall be below BBB-, Baa3 or C (or BB, in the case of Lender that is an
insurance company (or B, in the case of an insurance company not rated by
InsuranceWatch Ratings Service)) respectively, then the Borrowers (with the
consent of the Administrative Agent such consent not to be unreasonably
withheld) shall have the right, but not the obligation, upon notice to such
Lender and the Agents, to replace such Lender with an Assignee Lender in
accordance with and subject to the restrictions contained in this Section, and
such Lender hereby agrees to transfer and assign without recourse (in accordance
with and subject to the restrictions contained in this Section) all its
interests, rights and obligations in respect of its Revolving Loan Commitment
under this Agreement to such Assignee Lender; provided, however, that (i) no
such assignment shall conflict with any law, rule and regulation or order of any
Governmental Authority and (ii) such Assignee Lender shall pay to such Lender in
immediately available funds on the date of such assignment the principal of and
interest and fees (if any) accrued to the date of payment on the Loans made, and
Letters of Credit participated in, by such Lender hereunder and all other
amounts accrued for such Lender's account or owed to it hereunder.
SECTION X.11.2. Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons (each such commercial bank and other
Person being herein called a "Participant") participating interests in any of
the Loans, Commitments, participations in each Letter of Credit and Letters of
Credit Outstandings or other interests of such Lender hereunder; provided,
however, that
(a) no participation contemplated in this Section shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations and such
Participant shall not become a Lender hereunder unless such Lender and
such Participant comply with the provisions set forth in this Section
10.11;
(c) each Obligor and the Agents shall continue to deal solely
and directly with such Lender in connection with such Lender's rights
and obligations under this Agreement and each of the other Loan
Documents;
(d) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, agree
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to any reduction in the interest rate or amount of fees that such
Participant is otherwise entitled to, a decrease in the principal
amount, or an extension of the final Stated Maturity Date, of any Loan
in which such Participant has purchased a participating interest or a
release of all or substantially all of the collateral security under
the Loan Documents or any Subsidiary under the Subsidiary Guaranty, in
each case except as otherwise specifically provided in a Loan Document;
and
(e) the Borrowers shall not be required to pay any amount
under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 that is greater than
the amount which it would have been required to pay had no
participating interest been sold.
Each Borrower acknowledges and agrees, subject to clause (e) above, that, to the
fullest extent permitted under applicable law, each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a
Lender.
SECTION X.12. Confidentiality. The Lenders shall hold all non-public
information obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices and in
any event may make disclosure to any of their examiners, Affiliates, outside
auditors, counsel and other professional advisors in connection with this
Agreement or as reasonably required by any bona fide transferee, participant or
assignee or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided, however, that
(a) unless specifically prohibited by applicable law or court
order, each Lender shall notify the Company of any request by any
governmental agency or representative thereof (other than any such
request in connection with an examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information;
(b) prior to any such disclosure pursuant to this Section
10.12, each Lender shall require any such bona fide transferee,
participant and assignee receiving a disclosure of non-public
information to agree
(i) to be bound by this Section 10.12; and
(ii) to require such Person to require any other
Person to whom such Person discloses such non-public
information to be similarly bound by this Section 10.12; and
(c) except as may be required by an order of a court of
competent jurisdiction and to the extent set forth therein, no Lender
shall be obligated or required to return any materials furnished by any
Borrower or any Subsidiary.
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SECTION X.13. Other Transactions. Nothing contained herein shall
preclude the Secured Parties from engaging in any transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with any
Borrower or any of its Affiliates in which such Borrower or such Affiliate is
not restricted hereby from engaging with any other Person.
SECTION X.14. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE
LENDERS OR THE BORROWERS THAT IS BROUGHT IN THE STATE OF NEW YORK SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK
LOCATED IN NEW YORK COUNTY OF THE STATE OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWERS HEREBY
EXPRESSLY AND IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE BORROWERS FURTHER IRREVOCABLY CONSENT TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AND EXPRESSLY AND IRREVOCABLY
APPOINTS CT CORPORATION SYSTEM AS ITS DOMICILE AND ADDRESS FOR SERVICE OF
PROCESS FOR PURPOSES OF ANY ACTION AS TO WHICH IT HAS SUBMITTED TO JURISDICTION
AS SET FORTH IN THIS SECTION, AND AGREES THAT SERVICE UPON SUCH AUTHORIZED AGENT
SHALL BE DEEMED IN EVERY RESPECT SERVICE OF PROCESS UPON ANY BORROWER OR ITS
SUCCESSORS AND ASSIGNS, AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, SHALL BE
TAKEN AND HELD TO BE VALID PERSONAL SERVICE UPON IT. EACH BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS
SECTION SHALL
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AFFECT THE RIGHT OF ANY AGENT, ANY LENDER OR THE ISSUER TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY SUCH PERSON TO
BRING ANY ACTION OR PROCEEDING AGAINST SUCH BORROWER OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION. TO THE EXTENT THAT ANY BORROWER HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, EACH BORROWER HEREBY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION X.15. Waiver of Jury Trial. THE AGENTS, THE LENDERS, THE ISSUER
AND THE BORROWERS HEREBY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION (WHETHER SOUNDING IN TORT, CONTRACT
OR OTHERWISE) BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE
LENDERS, THE ISSUER OR THE BORROWERS. EACH BORROWER ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH
OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS, THE LENDERS AND THE
ISSUER ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
SECTION X.16. Certain Collateral Matters. The Administrative Agent is
authorized on behalf of all the Lenders, without the necessity of any notice to
or further consent from the Lenders, from time to time to take any action with
respect to any Collateral or the Loan Documents which may be necessary to
perfect and maintain perfected the security interest in and Liens upon the
Collateral granted pursuant to the Loan Documents. The Lenders irrevocably
authorize the Administrative Agent, at its option and in its discretion, to
release or modify any security interest or Lien granted to or held by the
Administrative Agent (a) on any Collateral subject to the Fixed Assets Security
Documents on the Fixed Assets Termination Date; (b) on any Collateral subject to
the Current Assets Security Documents on the Current Assets Termination Date;
(c) on any property Disposed of as part or in connection with any Permitted
Disposition; (d) on any property in which the Borrowers owned no interest at the
time the security interest and/or Lien was granted or at any time thereafter
owns no interest; (e) on property leased to the Borrowers under a lease which
has expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is
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not intended by the Borrowers to be, renewed or extended; (f) on an instrument
evidencing Indebtedness or other debt instrument, if the Indebtedness evidenced
thereby has been paid in full; (g) to effectuate the Transfer of the Fibers
Business and release the Fibers Subsidiaries from their Obligations hereunder in
connection therewith in accordance with the terms hereof; or (h) if approved,
authorized or ratified in writing by the applicable Required Lenders or each
Lender required by Section 10.1. Upon request by the Administrative Agent at any
time, the Lenders will confirm in writing the Administrative Agent's authority
to release or modify particular types or items of collateral pursuant to this
Section. Additionally, the Lenders hereby irrevocably authorize the
Administrative Agent to enter into the Revolver Intercreditor Agreement and the
Senior Debt Intercreditor Agreement and agree to be bound by all of the terms
and conditions contained therein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
STERLING CHEMICALS, INC.,
as a Borrower
By:
-------------------------------
Title:
STERLING CANADA, INC.,
as a Borrower
By:
-------------------------------
Title:
STERLING PULP CHEMICALS US, INC.,
as a Borrower
By:
-------------------------------
Title:
STERLING PULP CHEMICALS, INC.,
as a Borrower
By:
-------------------------------
Title:
STERLING FIBERS, INC.,
as a Borrower
By:
-------------------------------
Title:
<PAGE> 139
STERLING CHEMICALS ENERGY, INC.,
as a Borrower.
By:
-------------------------------
Title:
STERLING CHEMICALS INTERNATIONAL,
INC.,
as a Borrower
By:
-------------------------------
Title:
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent and
as a Lender
By:
-------------------------------
Title:
CREDIT SUISSE FIRST BOSTON
as the Documentation Agent and
as a Lender
By:
-------------------------------
Title:
By:
-------------------------------
Title:
<PAGE> 140
THE CIT GROUP/BUSINESS CREDIT, INC.,
as the Administrative Agent
and as a Lender
By:
-------------------------------
Title:
<PAGE> 141
LENDERS:
IBJ WHITEHALL BUSINESS CREDIT
CORPORATION
By:
-------------------------------
Title:
<PAGE> 142
FLEET CAPITAL CORPORATION
By:
-------------------------------
Title:
<PAGE> 143
COAST BUSINESS CREDIT A DIVISION OF
SOUTHERN PACIFIC BANK
By:
-------------------------------
Title:
<PAGE> 144
FINOVA CAPITAL CORPORATION
By:
-------------------------------
Title:
<PAGE> 145
TEXTRON FINANCIAL CORP.
By:
-------------------------------
Title:
<PAGE> 146
GREEN TREE FINANCIAL SERVICING
CORPORATION
By:
-------------------------------
Title:
<PAGE> 147
GMAC BUSINESS CREDIT, LLC
By:
-------------------------------
Title:
<PAGE> 148
THE PROVIDENT BANK
By:
-------------------------------
Title:
<PAGE> 149
GPSF SECURITIES, INC.
By:
-------------------------------
Title:
<PAGE> 150
FOOTHILL CAPITAL CORPORATION
By:
-------------------------------
Title:
<PAGE> 151
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By:
-------------------------------
Title:
<PAGE> 152
COMERICA BANK
By:
-------------------------------
Title:
<PAGE> 153
SCHEDULE I
DISCLOSURE SCHEDULE TO REVOLVING CREDIT AGREEMENT
ITEM 1.1. Designated Shareholders
ITEM 1.2 Unrestricted Subsidiaries
ITEM 1.3 Legal Description of Vancouver Release Parcel
ITEM 1.4 Foreign Restricted Subsidiaries
ITEM 6.7. Litigation
ITEM 6.8. Existing Subsidiaries
ITEM 6.12. Environmental Matters
ITEM 6.16. Intellectual Property
ITEM 7.2.2(b) Indebtedness to be Paid
CREDITOR OUTSTANDING PRINCIPAL AMOUNT
ITEM 7.2.2(c) Ongoing Indebtedness
ITEM 7.2.3(c) Ongoing Liens
ITEM 7.2.5(a) Ongoing Investments
ITEM 7.2.18 Existing Leases
ITEM 7.2.18 Attornment Leases
-1-
<PAGE> 154
SCHEDULE II
PERCENTAGES;
LIBO OFFICE;
DOMESTIC OFFICE
<TABLE>
<CAPTION>
PERCENTAGES
---------------------------------------
CURRENT ASSETS
NAME AND NOTICE DOMESTIC LOAN FIXED ASSETS LOAN
ADDRESS OF LENDER LIBO OFFICE OFFICE COMMITMENT COMMITMENT
------------------ ----------- -------- -------------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
-2-
<PAGE> 155
SCHEDULE III
ACCOUNT OBLIGOR SCHEDULE
ITEM A: 60 DAYS PAYMENT ACCOUNT OBLIGORS
BP Amoco PLC
E.I. du Pont de Nemours & Co.
The Goodyear Tire and Rubber Co.
Monsanto Company
Solutia Inc.
ITEM B: ACCEPTABLE ACCOUNTS
BASF Group
(including Polioles S.A. de C.V.)
Bayer AG
BP Amoco PLC
Mitsubishi International Corporation
ITEM C: 25% DESIGNATED ACCOUNT OBLIGORS
BASF Group
Bayer AG
BP Amoco PLC
Dow Chemical Company
E.I. du Pont de Nemours & Co.
Monsanto Company
Nissho Iwai
Phillips Petroleum Co.
Solutia Inc.
-3-
<PAGE> 1
EXHIBIT 4.2
STERLING CHEMICALS, INC.,
Trustor,
to
LINDA H. EARLE,
Trustee
and
THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative and Collateral Agent,
Beneficiary
---------------------------------------------------
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
---------------------------------------------------
Dated as of July 23, 1999
This instrument affects certain real and personal property
located in Galveston County,
State of Texas.
______________________________________________________________
Record and return to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
This instrument was prepared by the above-named attorney.
Notice: This instrument contains inter alia obligations which may provide for:
(a) a variable rate of interest and/or
(b) future and/or revolving credit advances or
readvances, which when made, shall have the same
priority as advances or readvances made on the date
hereof whether or not (i) any advances or readvances
were made on the date hereof and (ii) any
indebtedness is outstanding at the time any advance
or re-advance is made.
Notwithstanding anything to the contrary contained herein, the
maximum principal indebtedness secured under any contingency
by this instrument shall in no event exceed $70,000,000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
ARTICLE I
COVENANTS AND AGREEMENTS OF THE TRUSTOR
1.1. Payment of Secured Obligations..................................................-6-
1.2. Title to Trust Premises, etc....................................................-6-
1.3. Title Insurance.................................................................-7-
1.3.1. Title Insurance Policy..........................................................-7-
1.3.2. Title Insurance Proceeds........................................................-7-
1.4. Recordation.....................................................................-7-
1.5. Payment of Impositions, etc.....................................................-8-
1.6. Insurance and Legal Requirements................................................-8-
1.7. Security Interests, etc.........................................................-8-
1.8. Permitted Contests..............................................................-9-
1.9. Leases..........................................................................-9-
1.10. Compliance with Instruments....................................................-10-
1.11. Maintenance and Repair, etc....................................................-10-
1.12. Alterations, Additions, etc....................................................-10-
1.13. Acquired Property Subject to Lien..............................................-10-
1.14. Assignment of Rents, Proceeds, etc.............................................-11-
1.15. No Claims Against the Trustee or the Beneficiary...............................-12-
1.16. Indemnification................................................................-12-
1.17. No Credit for Payment of Taxes.................................................-13-
1.18. Intentionally Omitted..........................................................-13-
1.19. No Transfer of the Property....................................................-13-
1.20. Security Agreement.............................................................-14-
1.21. Representations and Warranties.................................................-15-
1.22. Trustor's Covenants............................................................-15-
1.23. Attornment.....................................................................-15-
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
2.1. Insurance......................................................................-15-
2.1.1. Risks to be Insured............................................................-16-
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
2.1.2. Policy Provisions..............................................................-16-
2.1.3. Delivery of Certificates, etc..................................................-17-
2.1.4. Separate Insurance.............................................................-17-
2.2. Damage, Destruction or Taking; Trustor to Give Notice;
Assignment of Awards.......................................................-17-
2.3. Application of Proceeds and Awards.............................................-18-
2.4 Total Taking and Total Destruction.............................................-20-
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
3.1. Events of Default; Acceleration................................................-21-
3.2. Legal Proceedings; Judicial Foreclosure........................................-21-
3.3. Power of Sale..................................................................-21-
3.4. Uniform Commercial Code Remedies...............................................-23-
3.5. Trustee and Beneficiary Authorized to Execute Deeds, etc.......................-23-
3.6. Purchase of Trust Premises by Beneficiary......................................-23-
3.7. Receipt a Sufficient Discharge to Purchaser....................................-24-
3.8. Waiver of Appraisement, Valuation, etc.........................................-24-
3.9. Sale a Bar Against Trustor.....................................................-24-
3.10. Secured Obligations to Become Due on Sale......................................-24-
3.11. Application of Proceeds of Sale and Other Moneys...............................-24-
3.12. Appointment of Receiver........................................................-25-
3.13. Possession, Management and Income..............................................-25-
3.14. Right of Trustee and the Beneficiary to Perform Trustor's Covenants, etc.......-26-
3.15. Subrogation....................................................................-26-
3.16. Remedies, etc., Cumulative.....................................................-26-
3.17. Provisions Subject to Applicable Law...........................................-27-
3.18. No Waiver, etc.................................................................-27-
3.19. Compromise of Actions, etc.....................................................-27-
ARTICLE IV
DEFINITIONS
4.1. Terms Defined in this Deed of Trust............................................-27-
4.2. Use of Defined Terms...........................................................-29-
4.3. Credit Agreement Definitions...................................................-29-
ARTICLE V
MISCELLANEOUS
5.1. Further Assurances; Financing Statements.......................................-30-
5.1.1. Further Assurances.............................................................-30-
5.1.2. Financing Statements...........................................................-30-
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
5.2. Additional Security............................................................-30-
5.3. Defeasance, Partial Release, etc...............................................-31-
5.3.1. Defeasance.....................................................................-31-
5.3.2. Partial Release, etc...........................................................-31-
5.4. Notices, etc...................................................................-31-
5.5. Waivers, Amendments, etc.......................................................-31-
5.6. Cross-References...............................................................-31-
5.7. Headings.......................................................................-31-
5.8. Currency.......................................................................-32-
5.9. Governing Law..................................................................-32-
5.10. Successors and Assigns, etc....................................................-32-
5.11. Concerning the Trustee.........................................................-32-
5.11.1. Acceptance of Trusts; Certain Terms of the Trusts..............................-32-
5.11.2. Duties and Responsibility of Trustee; In Case of Default; Prior to Default;
When Acting Under Direction of Beneficiary.................................-33-
5.11.3. Notice of Default..............................................................-34-
5.11.4. Resignation and Removal; Appointment of Successor Trustee......................-34-
5.12. Waiver of Jury Trial; Submission to Jurisdiction...............................-34-
5.13. Severability; Conflicts........................................................-35-
5.14. Loan Document..................................................................-36-
5.15. Usury Savings Clause...........................................................-36-
5.16. Future Advances................................................................-36-
5.17. Entire Agreement...............................................................-37-
</TABLE>
Acknowledgments
Schedule 1 Description of the Land
Schedule 2 Permitted Encumbrances
-iii-
<PAGE> 5
DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING dated as of July 23, 1999 (this "Deed of Trust") made by STERLING
CHEMICALS, INC., a Delaware corporation (the "Trustor"), having an address at
1200 Smith St., Suite 1900, Houston, Harris County, Texas 77002-4312 to LINDA H.
EARLE, having an address of c/o Mayer, Brown & Platt, 700 Louisiana, Suite 3600,
Houston, Harris County, Texas 77002, as trustee (the "Trustee") for the benefit
of THE CIT GROUP/BUSINESS CREDIT, INC., a corporation, having an address at 1211
Avenue of the Americas, 22nd Floor, New York, New York 10036, as the
Administrative Agent and Collateral Agent under the Credit Agreement referred to
below, as beneficiary (together with its successors and assigns from time to
time acting as Administrative Agent and Collateral Agent under such Credit
Agreement, the "Beneficiary").
WITNESSETH THAT:
WHEREAS, the Trustor is on the date of delivery hereof the owner of fee
title (or easement or leasehold title if otherwise indicated on Schedule 1
hereto) to the parcels of land described in Schedule 1 hereto (the "Land") and
of the Improvements (such term and other capitalized terms used in this Deed of
Trust having the respective meanings specified or referred to in Article IV);
WHEREAS, pursuant to the terms, conditions and provisions of the
Revolving Credit Agreement, dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Trustor, Sterling Canada, Inc., Sterling Pulp Chemicals U.S., Inc.,
Sterling Pulp Chemicals, Inc., Sterling Fibers, Inc., Sterling Chemicals Energy,
Inc. and Sterling Chemicals International, Inc., as Borrowers (collectively, the
"Borrowers"), various financial institutions, as the Lenders, DLJ Capital
Funding, Inc., as the Syndication Agent, The CIT Group/Business Credit, Inc. as
the Administrative Agent and Collateral Agent, and Credit Suisse First Boston,
as the Documentation Agent, the Lenders and the Issuer have agreed to make Loans
to, and to issue Letters of Credit for the account of, the Borrowers in the
maximum original principal amount of One Hundred Fifty Five Million Dollars
($155,000,000)(such Loans and Letters of Credit are hereinafter referred to
collectively as the "Credit Extensions").
WHEREAS, the Credit Extensions consist of, inter alia, Fixed Assets
Loans in a maximum principal amount not to exceed Seventy Million Dollars
($70,000,000) having a Stated Maturity Date of July 23, 2004; and
WHEREAS, the Trustor has duly authorized the execution, delivery and
performance of this Deed of Trust.
-2-
<PAGE> 6
GRANT:
NOW, THEREFORE, for and in consideration of the premises, and of the
mutual covenants herein contained, and in order to induce the Fixed Assets
Lenders to make the Fixed Assets Loans pursuant to the Credit Agreement, and in
order to secure the full, timely and proper payment and performance of and
compliance with each and every one of the Secured Obligations (as hereinafter
defined), the Trustor hereby irrevocably grants, bargains, sells, mortgages,
warrants, aliens, demises, releases, hypothecates, pledges, assigns, transfers
and conveys to the Trustee, the successors, successors in trust and assigns of
Trustee, IN TRUST, WITH POWER OF SALE, for the benefit of the Beneficiary and
its successors and assigns, forever, all of the following (the "Trust
Premises"):
(a) Real Estate. All of Trustor's right, title and interest in
and to all of the Land and all additional lands and estates therein now
owned or hereafter acquired by the Trustor for use or development with
the Land or any portion thereof, together with all and singular the
tenements, rights, easements, hereditaments, rights of way, privileges,
liberties, appendages and appurtenances now or hereafter belonging or
in any way pertaining to the Land and such additional lands and estates
therein (including, without limitation, all rights relating to storm
and sanitary sewer, water, gas, electric, railway and telephone
services); all development rights, air rights, riparian rights, water,
water rights, water stock, all rights in, to and with respect to any
and all oil, gas, coal, minerals and other substances of any kind or
character underlying or relating to the Land and such additional lands
and estates therein and any interest therein; all estate, claim,
demand, right, title or interest of the Trustor in and to any street,
road, highway or alley, vacated or other, adjoining the Land or any
part thereof and such additional lands and estates therein; all strips
and gores belonging, adjacent or pertaining to the Land or such
additional lands and estates; and any after-acquired property (herein
collectively referred to as the "Real Estate");
(b) Improvements. All of Trustor's right, title and interest
in and to all buildings, structures and other improvements and any
additions and alterations thereto or replacements thereof, now or
hereafter built, constructed or located upon the Real Estate; and, to
the extent that any of the following items of property constitutes
fixtures under applicable laws, all furnishings, fixtures, fittings,
appliances, apparatus, equipment, machinery, building and construction
materials and other articles of every kind and nature whatsoever and
all replacements thereof, now or hereafter affixed or attached to,
placed upon or used in any way in connection with the complete and
comfortable use, enjoyment, occupation, operation, development and/or
maintenance of the Real Estate or such buildings, structures and other
improvements, including, but not limited to, partitions, furnaces,
boilers, oil burners, radiators and piping, plumbing and bathroom
fixtures, refrigeration, heating, ventilating, air conditioning and
sprinkler systems, other fire prevention and extinguishing apparatus
and materials, vacuum cleaning systems, gas and electric fixtures,
incinerators, compactors, elevators, engines, motors, generators and
-3-
<PAGE> 7
all other articles of property which are considered fixtures under
applicable law (such buildings, structures and other improvements and
such other property are herein collectively referred to as the
"Improvements"; the Real Estate and the Improvements are herein
collectively referred to as the "Property");
(c) Goods. All of Trustor's right, title and interest in and
to all building materials, construction materials, appliances
(including, without limitation, stoves, ranges, ovens, disposals,
refrigerators, water fountains and coolers, fans, heaters, dishwashers,
clothes washers and dryers, water heaters, hood and fan combinations,
kitchen equipment, laundry equipment, kitchen cabinets and other
similar equipment), stocks, supplies, blinds, window shades, drapes,
carpets, floor coverings, manufacturing equipment and machinery, office
equipment, growing plants and shrubberies, control devices, equipment
(including window cleaning, building cleaning, swimming pool,
recreational, monitoring, garbage, pest control and other equipment),
motor vehicles, tools, furnishings, furniture, lighting, non-structural
additions to the Real Estate and Improvements and all other tangible
property of any kind or character, together with all replacements
thereof, now or hereafter located on or in or used or useful in
connection with the complete and comfortable use, enjoyment,
occupation, operation, development and/or maintenance of the Property,
regardless of whether or not located on or in the Property or located
elsewhere for purposes of storage, fabrication or otherwise (herein
collectively referred to as the "Goods");
(d) [INTENTIONALLY OMITTED]
(e) Leases. All rights of the Trustor in, to and under all
leases, licenses, occupancy agreements, concessions and other
arrangements, oral or written, now existing or hereafter entered into,
whereby any Person agrees to pay money or any other consideration for
the use, possession or occupancy of, or any estate in, the Property or
any portion thereof or interest therein (herein collectively referred
to as the "Leases"), and the right, subject to applicable law, upon the
occurrence of any Event of Default hereunder, to receive and collect
the Rents (as hereinafter defined) paid or payable thereunder;
(f) Plans. All rights of the Trustor in and to all plans and
specifications, designs, drawings and other information, materials and
matters heretofore or hereafter prepared relating to the Improvements
or any construction on the Real Estate (herein collectively referred to
as the "Plans");
(g) Permits. All rights of the Trustor, to the extent
assignable, in, to and under all permits, franchises, licenses,
approvals and other authorizations respecting the use, occupation and
operation of the Property and every part thereof and respecting any
business or other activity conducted on or from the Property, and any
product or proceed thereof or therefrom, including, without limitation,
all building permits, certificates of
-4-
<PAGE> 8
occupancy and other licenses, permits and approvals issued by
governmental authorities having jurisdiction (herein collectively
referred to as the "Permits");
(h) Contracts. All right, title and interest of the Trustor,
to the extent assignable, in and to all certificates, warranties,
appraisals, engineering, environmental, soils, insurance and other
reports and studies, books, records, correspondence, files and
advertising materials, and other documents, now or hereafter obtained
or entered into, as the case may be, pertaining to the construction,
use, occupancy, possession, operation, management, leasing, maintenance
and/or ownership of the Property and all right, title and interest of
the Trustor therein (herein collectively referred to as the
"Contracts");
(i) Leases of Furniture, Furnishings and Equipment. All right,
title and interest of the Trustor as lessee in, to and under any leases
of furniture, furnishings, equipment and any other Goods now or
hereafter installed in or at any time used in connection with the
Property;
(j) Rents. All rents, issues, profits, royalties, avails,
income and other benefits derived or owned, directly or indirectly, by
the Trustor from the Property, including, without limitation, all rents
and other consideration payable by tenants, claims against guarantors,
and any cash or other securities deposited to secure performance by
tenants under the Leases (herein collectively referred to as "Rents");
(k) Proceeds. All proceeds of the conversion, voluntary or
involuntary of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards (herein collectively referred to as "Proceeds"); and
(l) Other Property. All other property and rights of the
Trustor of every kind and character relating to the Property, and all
proceeds and products of any of the foregoing; provided however, the
Trust Premises shall not include any general intangibles or other
rights arising under any contracts, instruments, licenses, or other
documents as to which the grant of a lien and/or security interest
would constitute a violation of a valid and enforceable restriction in
favor of a third party on such grant, unless and until any required
consents shall have been obtained.
AND, without limiting any of the other provisions of this Deed of Trust
the Trustor expressly grants to the Beneficiary, as secured party, a security
interest in all of those portions of the Trust Premises which are or may be
subject to the State Uniform Commercial Code provisions applicable to secured
transactions subject, however, to the Permitted Encumbrances;
TO HAVE AND TO HOLD the Trust Premises unto the Trustee and the
successors, successors-in-trust and assigns of the Trustee for the benefit of
the Beneficiary, its successors and assigns, forever subject, however, to the
Permitted Encumbrances.
-5-
<PAGE> 9
FURTHER to secure the full, timely and proper payment and performance
of the Secured Obligations, the Trustor hereby covenants and agrees with and
warrants to the Trustee and the Beneficiary as follows:
ARTICLE I
COVENANTS AND AGREEMENTS OF THE TRUSTOR
SECTION 1.1. Payment of Secured Obligations. (i) The Trustor agrees
that:
(a) it will duly and punctually pay and perform or cause to be
paid and performed each of the Secured Obligations at the time and in
accordance with the terms of the Loan Documents pertaining to the Fixed
Assets Loans, and
(b) when and as due and payable from time to time in
accordance with the terms hereof or of any other Loan Documents
pertaining to the Fixed Assets Loans, pay and perform, or cause to be
paid and performed, all other Secured Obligations.
SECTION 1.2. Title to Trust Premises, etc. The Trustor represents and
warrants to and covenants with the Trustee and the Beneficiary that:
(a) except as otherwise permitted by the terms of the Credit
Agreement, as of the date hereof and at all times hereafter while this
Deed of Trust is outstanding, the Trustor (1) is and shall be the
absolute owner of the legal and beneficial title to the applicable
interest in the Property and to all other property included in the
Trust Premises, and (2) has and shall have good and indefeasible title
in fee simple absolute, or good and sufficient easement or leasehold
title, as currently represented in the granting clause as of the date
hereof, to the Property; provided, however, that the portion of the
Land described on Part III of Schedule 1 is hereby excluded from this
covenant, subject in each case only to this Deed of Trust, the liens
expressly permitted pursuant to the terms of the Credit Agreement and
the encumbrances set forth in Schedule 2 hereto (collectively, the
"Permitted Encumbrances");
(b) the Trustor has good and lawful right, power and authority
to execute this Deed of Trust and to convey, transfer, assign, mortgage
and grant a security interest in the Trust Premises, all as provided
herein;
(c) this Deed of Trust has been duly executed, acknowledged
and delivered on behalf of the Trustor, all consents and other actions
required to be taken by the officers, directors, shareholders and
partners, as the case may be, of the Trustor have been duly and fully
given and performed and this Deed of Trust constitutes the legal, valid
and binding obligation of the Trustor, enforceable against the Trustor
in accordance with its terms; and
-6-
<PAGE> 10
(d) the Trustor, at its expense, will warrant and defend the
Trustee and the Beneficiary and any purchaser under the power of sale
herein or at any foreclosure sale Trustor's title to the Trust Premises
and the first deed of trust lien and first priority perfected security
interest of this Deed of Trust thereon and therein against all claims
and demands and will maintain, preserve and protect such lien and
security interest and will keep this Deed of Trust a valid, direct
first deed of trust lien of record on the Property and a first priority
perfected security interest in the Trust Premises other than the
Property, subject only to the Permitted Encumbrances.
SECTION 1.3. Title Insurance.
SECTION 1.3.1. Title Insurance Policy. Concurrently with the execution
and delivery of this Deed of Trust, the Trustor, at its expense, has obtained
and delivered to the Beneficiary a loan policy or policies of title insurance in
an amount, and in form and substance, reasonably satisfactory to the Beneficiary
naming the Beneficiary as the insured, insuring the title to and the first deed
of trust lien of this Deed of Trust on the portion of the Land described on Part
I of Schedule 1 with endorsements reasonably requested by the Beneficiary. The
Trustor has duly paid in full all premiums and other charges due in connection
with the issuance of such policy or policies of title insurance.
SECTION 1.3.2. Title Insurance Proceeds. All proceeds received by and
payable to the Beneficiary for any loss under the loan policy or policies of
title insurance delivered to the Beneficiary pursuant to Section 1.3.1, or under
any policy or policies of title insurance delivered to the Beneficiary in
substitution therefor or replacement thereof, shall be the property of the
Beneficiary and shall be applied by the Beneficiary in accordance with the
provisions of Section 2.3.
SECTION 1.4. Recordation. The Trustor, at its expense, will at all
times cause this Deed of Trust and any instruments amendatory hereof or
supplemental hereto and any instruments of assignment hereof or thereof (and any
appropriate financing statements or other instruments and continuations
thereof), and each other instrument delivered in connection with the Fixed
Assets Loans or any other Loan Document pertaining to the Fixed Assets Loans and
intended thereunder to be recorded, registered and filed, to be kept recorded,
registered and filed, in such manner and in such places, and will pay all such
recording, registration, filing fees, taxes and other charges, and will comply
with all such statutes and regulations as may be required by law in order to
establish, preserve, perfect and protect the lien and security interest of this
Deed of Trust as a valid, direct first deed of trust lien on the Property and
first priority perfected security interest in the Trust Premises other than the
Property, subject only to the Permitted Encumbrances. The Trustor will pay or
cause to be paid, and will indemnify the Trustee and the Beneficiary in respect
of, all taxes (including interest and penalties) at any time payable in
connection with the filing and recording of this Deed of Trust and any and all
supplements and amendments hereto.
-7-
<PAGE> 11
SECTION 1.5. Payment of Impositions, etc. Subject to Section 1.8
(relating to permitted contests), the Trustor will pay or cause to be paid
before the same would become delinquent and before any fine, penalty, interest
or cost may be added for non-payment, all taxes, assessments, water and sewer
rates, charges, license fees, inspection fees and other governmental levies or
payments, of every kind and nature whatsoever, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, which at any time may be
assessed, levied, confirmed, imposed or which may become a lien upon the Trust
Premises, or any portion thereof, or which are payable with respect thereto, or
upon the rents, issues, income or profits thereof, or on the occupancy,
operation, use, possession or activities thereof, whether any or all of the same
be levied directly or indirectly or as excise taxes or as income taxes, and all
taxes, assessments or charges which may be levied on the Secured Obligations, or
the interest thereon (collectively, the "Impositions"). The Trustor will deliver
to the Trustee and the Beneficiary, upon request, copies of official receipts or
other satisfactory proof evidencing such payments.
SECTION 1.6. Insurance and Legal Requirements. Subject to Section 1.8
(relating to permitted contests), the Trustor, at its expense, will comply in
all material respects, or cause compliance in all material respects with
(a) all provisions of any insurance policy covering or
applicable to the Trust Premises or any part thereof, all requirements
of the issuer of any such policy, and all orders, rules, regulations
and other requirements of the National Board of Fire Underwriters (or
any other body exercising similar functions) applicable to or affecting
the Trust Premises or any part thereof or any use or condition of the
Trust Premises or any part thereof (collectively, the "Insurance
Requirements"); and
(b) all laws, including Environmental Laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements of all governments, departments, commissions, boards,
courts, authorities, agencies, officials and officers, foreseen or
unforeseen, ordinary or extraordinary, which now or at any time
hereafter may be applicable to the Trust Premises or any part thereof,
or any of the adjoining sidewalks, curbs, vaults and vault space, if
any, streets or ways, or any use or condition of the Trust Premises or
any part thereof (collectively, the "Legal Requirements");
noncompliance of which could reasonably be expected to cause a Material Adverse
Effect whether or not compliance therewith shall require structural changes in
or interference with the use and enjoyment of the Trust Premises or any part
thereof.
SECTION 1.7. Security Interests, etc. The Trustor will not directly or
indirectly create or permit or suffer to be created or to remain, and will
promptly discharge or cause to be discharged, any deed of trust, mortgage,
encumbrance or charge on, pledge of, security interest in
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or conditional sale or other title retention agreement with respect to or any
other lien on or in the Trust Premises or any part thereof or the interest of
the Trustor, the Trustee, or the Beneficiary therein, or any Proceeds thereof or
Rents or other sums arising therefrom, other than: (a) the Permitted
Encumbrances; and (b) liens of mechanics, materialmen, suppliers or vendors or
rights thereto incurred in the ordinary course of the business of the Trustor
for sums not yet due or any such liens or rights thereto which are at the time
being contested as permitted by Section 1.8. The Trustor will not postpone the
payment of any sums for which liens of mechanics, materialmen, suppliers or
vendors or rights thereto have been incurred (unless such liens or rights
thereto are at the time being contested as permitted by Section 1.8), for more
than 60 days after the completion of the action giving rise to such liens or
rights thereto.
SECTION 1.8. Permitted Contests. The Trustor at its expense may
contest, or cause to be contested, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount or validity or application, in
whole or in part, of any Imposition, Legal Requirement or Insurance Requirement
or lien of a mechanic, materialman, supplier or vendor, provided that, (a) in
the case of an unpaid Imposition, lien, encumbrance or charge, such proceedings
shall suspend the collection thereof from the Trustor, the Trustee, the
Beneficiary, and the Trust Premises (including any rent or other income
therefrom) and shall not materially interfere with the payment of any such rent
or income, (b) neither the Trust Premises nor any rent or other income therefrom
nor any part thereof or interest therein would be in any material danger of
being sold, forfeited, lost, impaired or interfered with, (c) in the case of a
Legal Requirement, neither the Trustor, the Trustee nor the Beneficiary would be
in material danger of any civil or criminal liability for failure to comply
therewith, (d) the Trustor shall have furnished such security, if any, as may be
required in the proceedings or as may be reasonably requested by the
Beneficiary, (e) the non-payment of the whole or any part of any Imposition will
not result in the delivery of a tax deed to the Trust Premises or any part
thereof because of such non-payment, (f) the payment of any sums required to be
paid with respect to any of the Fixed Asset Notes or under this Deed of Trust
(other than any unpaid Imposition, lien, encumbrance or charge at the time being
contested in accordance with this Section 1.8) shall not be interfered with or
otherwise affected, (g) in the case of any Insurance Requirement, the failure of
the Trustor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Trustor under Section 2.1, and (h) that
adequate reserves, determined in accordance with GAAP, shall have been set aside
on the Trustor's books.
SECTION 1.9. Leases. The Trustor represents and warrants to the Trustee
and the Beneficiary that, as of the date hereof, there are no written or oral
leases or other agreements of any kind or nature relating to the occupancy of
any portion of the Property by any Person other than the Trustor other than the
Permitted Encumbrances. Except as permitted by the Credit Agreement, the Trustor
will not enter into any such written or oral lease or other agreement with
respect to any portion of the Property without first obtaining the written
consent of the Beneficiary.
SECTION 1.10. Compliance with Instruments. The Trustor at its expense
will
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promptly comply in all material respects with all rights of way or use,
privileges, franchises, servitudes, licenses, easements, tenements,
hereditaments and appurtenances forming a part of the Property and all
instruments creating or evidencing the same, in each case, to the extent
compliance therewith is required of the Trustor under the terms thereof. Except
as is permitted by the Credit Agreement, the Trustor will not take any action
which may result in a forfeiture or termination of the rights afforded to the
Trustor under any such instruments and will not, without the prior written
consent of the Beneficiary, amend any of such instruments in any manner adverse
to the Fixed Assets Lenders in any material respect.
SECTION 1.11. Maintenance and Repair, etc. Subject to the provisions of
Section 1.12, the Trustor will keep or cause to be kept all presently and
subsequently erected or acquired Improvements and the sidewalks, curbs, vaults
and vault space, if any, located on or adjoining the same, and the streets and
the ways adjoining the same, in good and substantial order and repair and in
such a fashion that neither the value nor utility of the Trust Premises will be
diminished, and, at its sole cost and expense, will promptly make or cause to be
made all necessary and appropriate repairs, replacements and renewals thereof,
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen, so that its business carried on in
connection therewith may be properly conducted at all times. The Trustor at its
expense will do or cause to be done all shoring of foundations and walls of any
building or other Improvements on the Property and (to the extent permitted by
law) of the ground adjacent thereto, and every other act necessary or
appropriate for the preservation and safety of the Property by reason of or in
connection with any excavation or other building operation upon the Property and
upon any adjoining property, whether or not the Trustor shall, by any Legal
Requirement, be required to take such action or be liable for failure to do so.
SECTION 1.12. Alterations, Additions, etc. So long as no Event of
Default shall have occurred and be continuing, the Trustor shall have the right
at any time and from time to time to make or cause to be made reasonable
alterations of and additions to the Property or any part thereof, provided that
any alteration or addition: (a) shall not change the general character or the
use of the Property or reduce the fair market value thereof below its value
immediately before such alteration or addition, or impair the usefulness of the
Property; (b) is effected with due diligence, in a good and workmanlike manner
and in compliance in all material respects with all Legal Requirements and
Insurance Requirements; (c) subject to Section 1.8 is promptly and fully paid
for, or caused to be paid for, by the Trustor; and (d) is made, in case the
estimated cost of such alteration or addition exceeds U.S. $1,000,000, under the
supervision of a qualified architect or engineer or another professional.
SECTION 1.13. Acquired Property Subject to Lien. Subject to the
Permitted Encumbrances and except as otherwise permitted by the Credit
Agreement, all property at any time acquired by the Trustor and provided or
required by this Deed of Trust to be or become subject to the lien and security
interest hereof, whether such property is acquired by exchange, purchase,
construction or otherwise, shall forthwith become subject to the lien and
security interest of this Deed of Trust without further action on the part of
the Trustor, the Trustee or the
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Beneficiary. The Trustor, at its expense, will execute and deliver to the
Trustee and Beneficiary (and will record and file as provided in Section 1.4) an
instrument supplemental to this Deed of Trust reasonably satisfactory in
substance and form to the Beneficiary, whenever such an instrument is necessary
under applicable law to subject to the lien and security interest of this Deed
of Trust all right, title and interest of the Trustor in and to all property
provided or required by this Deed of Trust to be subject to the lien and
security interest hereof.
SECTION 1.14. Assignment of Rents, Proceeds, etc. The assignment, grant
and conveyance of the Leases, Rents, Proceeds and other rents, income, proceeds
and benefits of the Trust Premises contained in the Granting Clause of this Deed
of Trust shall constitute an absolute, present and irrevocable assignment, grant
and conveyance, provided, however, that permission is hereby given to the
Trustor, so long as no Event of Default has occurred and be continuing
hereunder, to collect, receive and apply such Rents, Proceeds and other rents,
income, proceeds and benefits as they become due and payable, but not further in
advance thereof than is customary, and in accordance with all of the other
terms, conditions and provisions hereof, of the Loan Documents, and of the
Leases, contracts, agreements and other instruments with respect to which such
payments are made or such other benefits are conferred. Upon the occurrence and
continuance of an Event of Default, such permission shall terminate immediately
and automatically, without notice to the Trustor or any other Person except as
required by law, and shall not be reinstated upon a cure of such Event of
Default without the express written consent of the Beneficiary. Such assignment
shall be fully effective without any further action on the part of the Trustor,
the Trustee, or the Beneficiary, and the Beneficiary shall be entitled, at its
option, upon the occurrence and continuance of an Event of Default hereunder, to
collect, receive and apply all Rents, Proceeds and all other rents, income,
proceeds and benefits from the Trust Premises, including all right, title and
interest of the Trustor in any escrowed sums or deposits or any portion thereof
or interest therein, whether or not the Trustee or the Beneficiary takes
possession of the Trust Premises or any part thereof. The Trustor further grants
to the Beneficiary the right, at the Beneficiary's option, upon the occurrence
and continuance of an Event of Default hereunder, to:
(a) enter upon and take possession of the Property for the
purpose of collecting Rents, Proceeds and said rents, income, proceeds
and other benefits;
(b) dispossess by the customary summary proceedings any
tenant, purchaser or other Person defaulting in the payment of any
amount when and as due and payable, or in the performance of any other
obligation, under any Lease, contract or other instrument to which said
Rents, Proceeds or other rents, income, proceeds or benefits relate;
(c) let or convey the Trust Premises or any portion thereof or
any interest therein; and
(d) apply Rents, Proceeds and such rents, income, proceeds and
other benefits, after the payment of all necessary fees, charges and
expenses, on account of the Secured Obligations in accordance with
Section 3.11.
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SECTION 1.15. No Claims Against the Trustee or the Beneficiary. Nothing
contained in this Deed of Trust shall constitute any consent or request by the
Trustee or the Beneficiary, express or implied, for the performance of any labor
or the furnishing of any materials or other property in respect of the Property
or any part thereof, or be construed to permit the making of any claim against
the Trustee or the Beneficiary in respect of labor or services or the furnishing
of any materials or other property or any claim that any lien based on the
performance of such labor or the furnishing of any such materials or other
property is prior to the lien and security interest of this Deed of Trust. ALL
CONTRACTORS, SUBCONTRACTORS, VENDORS AND OTHER PERSONS DEALING WITH THE
PROPERTY, OR WITH ANY PERSONS INTERESTED THEREIN, ARE HEREBY ADVISED TO TAKE
NOTICE OF THE PROVISIONS OF THIS SECTION.
SECTION 1.16. Indemnification. The Trustor will protect, indemnify,
save harmless and defend the Trustee, the Beneficiary, the Fixed Assets Lenders,
and each of their respective officers, directors, shareholders, employees,
representatives and agents (collectively, the "Indemnified Parties" and
individually, an "Indemnified Party"), from and against any and all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) imposed
upon or incurred by or asserted against any Indemnified Party by reason of (a)
ownership of an interest in this Deed of Trust, any other Loan Document
pertaining to the Fixed Assets Loans or the Property, (b) any accident, injury
to or death of persons or loss of or damage to or loss of the use of property
occurring on or about the Property or any part thereof or the adjoining
sidewalks, curbs, vaults and vault spaces, if any, streets, alleys or ways, (c)
any use, non-use or condition of the Property or any part thereof or the
adjoining sidewalks, curbs, vaults and vault spaces, if any, streets, alleys or
ways, (d) any failure on the part of the Trustor to perform or comply with any
of the terms of this Deed of Trust or any Loan Document pertaining to the Fixed
Assets Loans, (e) performance of any labor or services or the furnishing of any
materials or other property in respect of the Trust Premises or any part thereof
made or suffered to be made by or on behalf of the Trustor, (f) any negligence
or tortious act on the part of the Trustor or any of its agents, contractors,
lessees, licensees or invitees, (g) any work in connection with any alterations,
changes, new construction or demolition of or additions to the Property, or (h)
(i) any Hazardous Material on, in, under or affecting all or any portion of the
Property, the groundwater, or any surrounding areas, (ii) any misrepresentation,
inaccuracy or breach of any warranty, covenant or agreement contained or
referred to in Sections 1.21 and 1.22, (iii) any violation or claim of violation
by the Trustor of any Environmental Laws, or (iv) the imposition of any lien for
damages caused by or the recovery of any costs for the cleanup, release or
threatened release of any Hazardous Material, except to the extent that any of
the matters described in subsections (a)-(h) arise out of the gross negligence,
unlawful acts or willful misconduct of any Indemnified Party. THE TRUSTEE SHALL
NOT BE LIABLE FOR ANY ACT OR OMISSION OR ERROR OF JUDGMENT IN CONNECTION WITH
THIS DEED OF TRUST, IT BEING THE INTENT OF THE PARTIES HERETO THAT THE TRUSTEE
SHALL NOT BE LIABLE FOR THE TRUSTEE'S SOLE OR CONTRIBUTORY NEGLIGENCE. TRUSTOR
SHALL AND
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DOES INDEMNIFY THE TRUSTEE AGAINST ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS,
CAUSES OF ACTION, JUDGMENTS, COURT COSTS, ATTORNEYS' FEES AND EXPENSES THAT THE
TRUSTEE MAY INCUR IN THE PERFORMANCE OF THE TRUSTEE'S DUTIES HEREUNDER OR
OTHERWISE IN CONNECTION WITH THIS DEED OF TRUST WHETHER OR NOT SAME RESULT FROM
THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE TRUSTEE. THE FOREGOING SHALL ALSO
APPLY TO ANY SUBSTITUTE TRUSTEE HEREUNDER. If any action or proceeding be
commenced, to which action or proceeding any Indemnified Party is made a party
by reason of the execution of this Deed of Trust or any other Loan Document
pertaining to the Fixed Assets Loans, or in which it becomes necessary to defend
or uphold the lien of this Deed of Trust, all sums paid by the Indemnified
Parties, for the expense of any litigation to prosecute or defend the rights and
lien created hereby or otherwise, shall be paid by the Trustor to such
Indemnified Parties, as the case may be, as hereinafter provided. The Trustor
will pay and save the Indemnified Parties harmless against any and all liability
with respect to any intangible personal property tax or similar imposition of
the State or any subdivision or authority thereof now or hereafter in effect, to
the extent that the same may be payable by the Indemnified Parties in respect of
this Deed of Trust, any Loan Document pertaining to the Fixed Assets Loans or
any Secured Obligation. All amounts payable to the Indemnified Parties under
this Section 1.16 shall be deemed indebtedness secured by this Deed of Trust and
any such amounts which are not paid within ten (10) days after written demand
therefor by any Indemnified Party shall bear interest at the rate provided for
in Section 3.2.2 of the Credit Agreement from the date of such demand. In case
any action, suit or proceeding is brought against any Indemnified Party by
reason of any such occurrence, the Trustor, upon request of such Indemnified
Party, will, at the Trustor's expense, resist and defend such action, suit or
proceeding or cause the same to be resisted or defended by counsel designated by
the Trustor and approved by such Indemnified Party. The obligations of the
Trustor under this Section 1.16 shall survive any discharge or reconveyance of
this Deed of Trust and payment in full of the Secured Obligations.
SECTION 1.17. No Credit for Payment of Taxes. The Trustor shall not be
entitled to any credit against the Secured Obligations by reason of the payment
of any tax on the Property or any part thereof or by reason of the payment of
any other Imposition, and shall not apply for or claim any deduction from the
taxable value of the Property or any part thereof by reason of this Deed of
Trust.
SECTION 1.18. Intentionally Omitted.
SECTION 1.19. No Transfer of the Property. Except as is provided in the
Credit Agreement, and except for the Permitted Encumbrances, the Trustor shall
not, without the prior written consent of the Beneficiary, which consent may be
granted or withheld in the sole and absolute discretion of the Beneficiary, (i)
sell, convey, assign or otherwise transfer the Property or any portion of the
Trustor's interest therein or (ii) further encumber the Property or permit the
Property to become encumbered by any lien, claim, security interest or other
indebtedness of any kind or nature other than the Permitted Encumbrances.
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SECTION 1.20. Security Agreement. With respect to the items of personal
property and fixtures referred to and described in the Granting Clause of this
Deed of Trust and included as part of the Trust Premises, this Deed of Trust is
hereby made and declared to be a security agreement encumbering each and every
item of personal property and fixtures now or hereafter owned by Trustor and
included herein as a part of the Trust Premises, in compliance with the
provisions of the Uniform Commercial Code as enacted in the State. In this
respect (and notwithstanding the conveyance to the Trustee rather than directly
to the Beneficiary as provided in this Deed of Trust), Trustor, as "Debtor",
expressly grants to Beneficiary, as "Secured Party", a security interest in and
to all of the property now or hereafter owned by Trustor which constitutes the
personal property and fixtures hereinabove referred to and described in this
Deed of Trust, including all extensions, accessions, additions, improvements,
betterments, renewals, replacements and substitutions thereof or thereto, and
all proceeds from the sale or other disposition thereof. Trustor agrees that
Beneficiary may file this Deed of Trust, or a reproduction thereof, in the real
estate records or other appropriate index, as, and this Deed of Trust shall be
deemed to be, a financing statement filed as a fixture filing in accordance with
the laws of the State. Any reproduction of this Deed of Trust or of any other
security agreement or financing statement executed by Trustor shall be
sufficient as a financing statement. In addition, Trustor agrees to execute and
deliver to Beneficiary, upon Beneficiary's request, any other security agreement
and financing statements, as well as extensions, renewals, and amendments
thereof, and reproductions of this Deed of Trust, in such form as Beneficiary
may reasonably require to perfect a security interest with respect to said
items. Trustor shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all
reasonable costs and expenses of any record searches for financing statements
Beneficiary may reasonably require. Except as is provided in the Credit
Agreement, and except for the Permitted Encumbrances, without the prior written
consent of Beneficiary, Trustor shall not create or suffer to be created
pursuant to the Uniform Commercial Code any other security interest in the
above-described personal property and fixtures, including any replacements and
additions thereto. Upon the occurrence and continuance of an Event of Default
under this Deed of Trust, the Beneficiary shall have and shall be entitled to
exercise any and all of the rights and remedies (i) as prescribed in this Deed
of Trust, or (ii) as prescribed by general law, or (iii) as prescribed by the
specific statutory provisions now or hereafter enacted and specified in said
Uniform Commercial Code, all at Beneficiary's sole election. Trustor and
Beneficiary agree that the filing of any financing statements in the records
normally having to do with personal property shall not in any way affect the
agreement of Trustor and Beneficiary that everything located in, on or about, or
used or intended to be used with or in connection with the use, operation or
enjoyment of, the Trust Premises, which is described or reflected as a fixture
in this Deed of Trust, is, and at all times and for all purposes and in all
proceedings, both legal and equitable, shall be, regarded as part of the Real
Estate conveyed hereby. Trustor warrants that Trustor's name, identity and
address are as set forth herein. The mailing address of the Beneficiary from
which information may be obtained concerning the security interest created
herein is also set forth herein. This information hereof is provided in order
that this Deed of Trust shall comply with the requirements of the Uniform
Commercial Code as enacted in the State for instruments to
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be filed as financing statements. In accordance with the laws of the State, this
Deed of Trust shall remain effective as a fixture filing until this Deed of
Trust is released or satisfied of record or its effectiveness otherwise
terminates as to the Trust Premises.
SECTION 1.21. Representations and Warranties. In order to induce the
Beneficiary to enter into this Deed of Trust, the Credit Agreement and the other
Loan Documents pertaining to the Fixed Assets Loans, the Trustor agrees that all
of the representations and warranties of Trustor set forth in the Credit
Agreement are incorporated into this Deed of Trust by reference as if fully set
forth herein.
SECTION 1.22. Trustor's Covenants. In order to induce the Beneficiary
to enter into this Deed of Trust, the Credit Agreement and the other Loan
Documents pertaining to the Fixed Assets Loans, the Trustor agrees that all of
the covenants of Trustor set forth in the Credit Agreement are incorporated into
this Deed of Trust by reference as if fully set forth herein.
SECTION 1.23. Attornment. Beneficiary hereby acknowledges and agrees
that the liens granted herein are subject to the rights of certain lessees under
the Leases as disclosed in the Credit Agreement and will be subject to the
rights of lessees under any Leases entered into by Trustor after the date hereof
which are permitted as Permitted Real Estate Liens pursuant to the Credit
Agreement, subject to the express rights contained in the applicable Lease. The
rights of the tenants under the Leases to the leased premises shall not be
adversely affected by the exercise by Beneficiary of any of its rights
hereunder, nor shall any such tenant be in any other way deprived of its rights
under the applicable Lease except in accordance with the terms of such Lease. In
the event that Beneficiary succeeds to the interest of Trustor under a Lease,
such Lease shall not be terminated or affected thereby except as set forth
therein, and any sale of the applicable leased premises by Beneficiary or
pursuant to the judgment of any court in an action to enforce the remedies
provided for in this Deed of Trust shall be made subject to such Lease and the
rights of such tenant expressly set forth thereunder. If Beneficiary succeeds to
the interests of Trustor in and to the applicable leased premises or under such
Lease or enters into possession of such leased premises, the Beneficiary, and
such tenants, shall be bound to each other under all of the express terms,
covenants and conditions of such Lease, as if the Beneficiary was originally the
Trustor as lessor thereunder.
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
SECTION 2.1. Insurance.
SECTION 2.1.1. Risks to be Insured. The Trustor will, at its expense,
maintain or cause to be maintained with insurance carriers approved by the
Beneficiary: (a) insurance with
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respect to the Improvements against loss or damage by fire, lightning and such
other risks as are included in standard "all-risk" policies, in amounts
sufficient to prevent the Trustor, the Trustee and the Beneficiary from becoming
a co-insurer of any partial loss under the applicable policies, but in any event
in amounts not less than the then full insurable value (actual replacement
value) of the Improvements, as determined by the Trustor in accordance with
generally accepted insurance practice and approved by the Beneficiary or, at the
request of the Beneficiary, as determined at the Trustor's expense by the
insurer or insurers or by an expert approved by the Beneficiary, (b)
comprehensive public liability, including bodily injury and product liability
and property damage, insurance, with personal injury endorsements, applicable to
the Property in such amounts as are customarily carried by Persons operating
similar properties in the same general locality, but in any event with a
combined single limit of not less than Twenty Million Dollars ($20,000,000) per
occurrence, (c) explosion insurance in respect of any steam and pressure boilers
and similar apparatus located in the Property in such amounts as are usually
carried by persons operating similar properties in the same general locality,
but in any event in an amount not less than Twenty Million Dollars
($20,000,000), (d) business interruption insurance (including added expense
coverage) against all insurable perils for a period of not fewer than twelve
(12) months (subject to a reasonable aggregate deductible not exceeding ten (10)
days per any occurrence), (e) worker's compensation insurance to the full extent
required by applicable law for all employees of the Trustor engaged in any work
on or about the Property and employer's liability insurance with a limit of not
less than Ten Million Dollars ($10,000,000) for each occurrence, (f) all-risk,
builders' risk insurance with respect to the Property during any period during
which there is any construction work being performed, against loss or damage by
fire or other risks, including vandalism, malicious mischief and sprinkler
leakage, as are included in so-called "extended coverage" clauses at the time
available, and (g) such other insurance with respect to the Property in such
amounts and against such insurable hazards as the Beneficiary from time to time
may reasonably require by written notice to the Trustor.
SECTION 2.1.2. Policy Provisions. All insurance maintained by the
Trustor pursuant to Section 2.1.1 shall (a) (except for worker's compensation
insurance) list the Trustor and the Beneficiary, as additional insureds as their
respective interests may appear, (b) (except for worker's compensation and
public liability insurance) provide that the proceeds for any losses shall be
adjusted by the Trustor subject to the approval of the Beneficiary in the event
the proceeds shall exceed $1,000,000, and shall be payable to the Beneficiary,
to be held and applied as provided in Section 2.3, (c) include effective waivers
by the insurer of all rights of subrogation against any named insured, the
indebtedness secured by this Deed of Trust and the Property and all claims for
insurance premiums against the Trustee and the Beneficiary, (d) (except for
worker's compensation and public liability insurance) provide that any losses
shall be payable notwithstanding (i) any act, failure to act or negligence of or
violation of warranties, declarations or conditions contained in such policy by
any named insured, (ii) the occupation or use of the Property for purposes more
hazardous than permitted by the terms thereof, (iii) any foreclosure or other
action or proceeding taken by the Beneficiary pursuant to any provision of this
Deed of Trust, or (iv) any change in title or ownership of the Property, (e)
provide that no cancellation, reduction in amount or material change in coverage
thereof or any portion thereof shall be
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effective until at least thirty (30) days after receipt by the Beneficiary of
written notice thereof, (f) provide that any notice under such policies shall be
simultaneously delivered to the Beneficiary, and (g) be satisfactory in all
other reasonable respects to the Beneficiary. Any insurance maintained pursuant
to this Section 2.1 may be evidenced by blanket insurance policies covering the
Property and other properties or assets of the Trustor, provided that any such
policy shall specify the portion, if less than all, of the total coverage of
such policy that is allocated to the Property and shall in all other respects
comply with the requirements of this Section 2.1.
SECTION 2.1.3. Delivery of Certificates, etc. The Trustor will deliver
to the Beneficiary, promptly upon request, (a) certificates of all policies
evidencing all insurance required to be maintained under Section 2.1.1 (or, in
the case of blanket policies, certificates thereof by the insurers together with
a counterpart of each blanket policy), and (b) evidence as to the payment of all
premiums due thereon (with respect to public liability insurance policies, all
installments for the current year due thereon to such date), provided that the
Beneficiary shall not be deemed by reason of its custody of such certificates to
have knowledge of the contents thereof or of the applicable policies. The
Trustor will also deliver to the Beneficiary prior to the expiration of any
policy a binder or certificate of the insurer evidencing the replacement thereof
and when the new policy is issued a certificate of the new policy (or, in the
case of a replacement blanket policy, a certificate thereof of the insurer
together with a counterpart of the blanket policy). In the event the Trustor
shall fail to effect or maintain any insurance required to be effected or
maintained pursuant to the provisions of this Section 2.1, the Trustor will
indemnify the Trustee and the Beneficiary against damage, loss or liability
resulting from all risks for which such insurance should have been effected or
maintained.
SECTION 2.1.4. Separate Insurance. The Trustor will not take out
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained pursuant to this Section 2.1.
SECTION 2.2. Damage, Destruction or Taking; Trustor to Give Notice;
Assignment of Awards. In case of
(a) any material damage to or destruction of the Trust
Premises or any material part thereof, or
(b) any taking, whether for permanent or temporary use, of all
or any material part of the Trust Premises or any material interest
therein or material right accruing thereto, as the result of the
exercise of the right of condemnation or eminent domain, or a change of
grade affecting the Trust Premises or any portion thereof (a "Taking"),
or the commencement of any proceedings or negotiations which may result
in a Taking,
the Trustor will promptly give written notice thereof to the Trustee and the
Beneficiary, generally describing the nature and extent of such damage or
destruction and the Trustor's best estimate of the cost of restoring the Trust
Premises, or the nature of such proceedings or negotiations and the
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nature and extent of the Taking which might result therefrom, as the case may
be. The Beneficiary shall be entitled to all insurance proceeds payable on
account of such damage or destruction and to all awards or payments allocable to
the Trust Premises on account of such Taking up to the amount of the Secured
Obligations, and the Trustor hereby irrevocably assigns, transfers and sets over
to the Beneficiary all rights of the Trustor to any such proceeds, awards or
payments up to the amount of the Secured Obligations and irrevocably authorizes
and empowers the Beneficiary, at its option, in the name of the Trustor or
otherwise, to file and prosecute what would otherwise be the Trustor's claim for
any such proceeds, award or payment and to collect, receipt for and retain the
same for disposition in accordance with Section 2.3. The Trustor will pay all
reasonable costs and expenses incurred by the Trustee or the Beneficiary in
connection with any such damage, destruction or Taking and seeking and obtaining
any insurance proceeds, awards or payments in respect thereof.
SECTION 2.3. Application of Proceeds and Awards. The Beneficiary may,
at its option, apply all amounts recovered under any insurance policy required
to be maintained by the Trustor hereunder and all awards received by it on
account of any Taking in any one or more of the following ways:
(a) to the payment of the reasonable costs and expenses
incurred by the Trustee, or the Beneficiary, in obtaining any such
insurance proceeds or awards, including the fees and expenses of
attorneys and insurance and other experts and consultants, the costs of
litigation, arbitration, mediation, investigations and other judicial,
administrative or other proceedings and all other out-of-pocket
expenses;
(b) to the payment of the principal of the Fixed Asset Loans
and any interest (including post-petition interest payable in any
proceedings for bankruptcy under applicable law ("Post Petition
Interest") to the extent such interest is a Secured Obligation) accrued
and unpaid thereon, without regard to whether any portion or all of
such amounts shall be matured or unmatured; and, in case such amount
shall be insufficient to pay in full all such amounts, then such amount
shall be applied, first, to the payment of all amounts of interest
(including Post-Petition Interest to the extent such interest is a
Secured Obligation) accrued on the Fixed Asset Loans and unpaid,
second, to the payment of all amounts of principal at the time
outstanding;
(c) to the payment of, or the application to, any Secured
Obligation (other than as provided in clause (b) above);
(d) to fulfill any of the other covenants contained herein, in
the Credit Agreement pertaining to the Fixed Assets Loans, or in any
other Loan Document pertaining to the Fixed Assets Loans, as the
Beneficiary may determine in its sole discretion;
(e) to the Trustor for application to the cost of restoring
the Trust Premises and the replacement of Goods destroyed, damaged or
taken; or
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(f) to the Trustor.
Notwithstanding the foregoing provisions of this Section 2.3 to the
contrary (but subject to the provisions of Section 2.4), and if each of the
following conditions is satisfied, the Beneficiary, upon request of the Trustor,
shall apply insurance proceeds or condemnation awards received by it to the
restoration or replacement of the Trust Premises, to the extent necessary for
the restoration or replacement thereof:
(i) there shall then exist no uncured Event of
Default;
(ii) the Trustor shall furnish to the Beneficiary a
certificate of an architect or engineer reasonably acceptable
to the Beneficiary stating (x) that the Trust Premises is
capable of being restored, prior to the maturity of the Credit
Agreement, to substantially the same condition as existed
prior to the casualty or Taking, (y) the aggregate estimated
direct and indirect costs of such restoration and (z) as to
any Taking, that the property taken in such Taking, or sold
under threat thereof, is not necessary to the Trustor's
customary use or occupancy of the Property or Trustor
otherwise provides Mortgagee adequate assurance that the Trust
Premises can be restored or is not necessary to Trustor's
customary use or occupancy of the Property; and
(iii) in the event that the estimated cost of
restoration set forth in the certificate of such architect or
engineer (and such revisions to such estimate as are from time
to time made) exceeds the net insurance proceeds or
condemnation awards actually received from time to time, the
Trustor shall deposit the amount of such excess with the
Beneficiary.
In the event that such insurance proceeds or condemnation awards are to
be utilized in the restoration of the Trust Premises, the Beneficiary shall
disburse such Proceeds and the additional amounts deposited by the Trustor for
such restoration after receipt of a written request for disbursement, on not
fewer than five (5) nor more than twelve (12) Business Days notice and, to the
extent applicable, in accordance with the Beneficiary's customary construction
loan procedures and conditions. In the event that such insurance or condemnation
awards are to be utilized to replace the Trust Premises so destroyed or taken,
the Beneficiary shall disburse such Proceeds after receipt of a written request
for disbursement, on not fewer than five (5) Business Days nor more than twelve
(12) Business Days notice simultaneously with the acquisition of such
replacement property by the Trustor. In the event that, after the restoration or
replacement of the Trust Premises, any insurance or condemnation awards shall
remain, such amount shall be paid to the Trustor. Insurance proceeds and
condemnation awards shall be invested in the manner reasonably requested by the
Trustor and approved by the Beneficiary, and all interest earned thereon shall
be applied as provided in this Section 2.3. If, prior to the receipt by the
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Beneficiary of such insurance proceeds or condemnation awards, the Trust
Premises shall have been sold on foreclosure, the Beneficiary shall have the
right to receive said insurance proceeds or condemnation awards to the extent of
any deficiency found to be due upon such sale, with legal interest thereon,
whether or not a deficiency judgment shall have been sought or recovered or
denied, and the reasonable attorneys' fees, costs and disbursements incurred by
the Beneficiary in connection with the collection of such award or payment.
SECTION 2.4. Total Taking and Total Destruction. In the event of a
Total Destruction or a Total Taking, the Beneficiary shall apply all amounts
recovered under any insurance policy referred to in Section 2.1.1 and all awards
received by it on account of any such Taking as follows:
(a) first, to the payment of the reasonable costs and expenses
incurred by the Beneficiary in obtaining any such insurance proceeds or
awards, including the fees and expenses of attorneys and insurance and
other experts and consultants, the costs of litigation, arbitration,
mediation, investigations and other judicial, administrative or other
proceedings and all other out-of-pocket expenses;
(b) second, to the payment of the principal of the Fixed
Assets Loans and any interest (including Post-Petition Interest to the
extent such interest is a Secured Obligation) accrued and unpaid
thereon, without regard to whether any portion or all of such amounts
shall be matured or unmatured; and, in case such amount shall be
insufficient to pay in full all such amounts, then such amount shall be
applied, first, to the payment of all amounts of interest (including
Post-Petition Interest to the extent such interest is a Secured
Obligation) accrued on the Fixed Assets Loans and unpaid, and second,
to the payment of all amounts of principal at the time outstanding;
(c) third, to the payment of, or the application to, any
Secured Obligation (other than as provided in clause (b) above);
(d) fourth, to fulfill any of the other covenants contained
herein as the Beneficiary may determine; and
(e) fifth, the balance, if any, to the Trustor.
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration. If an "Event of Default"
(pursuant to and as defined in the Credit Agreement) shall have occurred and be
continuing, then and in any such event the Beneficiary may at any time
thereafter (unless all Events of Default shall
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theretofore have been remedied and all costs and expenses, including, without
limitation, attorneys' fees and expenses incurred by or on behalf of the
Beneficiary, shall have been paid in full by the Trustor) declare, by written
notice to the Trustor, the Fixed Assets Loans and all other Secured Obligations
to be due and payable immediately or on a date specified in such notice
(provided that, upon the occurrence of any Event of Default described in Section
8.1.9 of the Credit Agreement, the Fixed Assets Loans and all other Secured
Obligations shall automatically become due and payable), and on such date the
same shall be and become due and payable, together with interest accrued
thereon, without presentment, demand, protest or notice, all of which the
Trustor hereby waives. The Trustor will pay on demand all costs and expenses,
including without limitation, attorneys' fees and expenses, incurred by or on
behalf of the Beneficiary in enforcing this Deed of Trust, or any other Loan
Document evidencing or securing the Fixed Assets Loans, or occasioned by any
default hereunder or thereunder.
SECTION 3.2. Legal Proceedings; Judicial Foreclosure. If an Event of
Default shall have occurred and be continuing, the Trustee at any time may, at
its election, proceed at law or in equity or otherwise to enforce the payment
and performance of the Secured Obligations in accordance with the terms hereof
and thereof and to foreclose the lien of this Deed of Trust as against all or
any part of the Trust Premises and to have the same sold under the judgment or
decree of a court of competent jurisdiction. The Beneficiary shall be entitled
to recover in such proceedings all costs incident thereto, including the
Trustee's fees and attorneys' fees and expenses in such amounts as may be fixed
by the court.
SECTION 3.3. Power of Sale. If an Event of Default shall have
occurred and be continuing, the Beneficiary may sell or offer for sale the Trust
Premises in such portions, order and parcels as the Beneficiary may determine,
with or without having first taken possession of the same, to the highest bidder
for cash at public auction. Such sale shall be made at the courthouse of the
county wherein the Land (or any of that portion thereof to be sold) is situated
(whether the parts or parcels thereof, if any, in different counties are
contiguous or not, and without the necessity of having any personal property
hereby mortgaged present at such sale) on the first Tuesday of any month between
the hours of 10:00 a.m. and 4:00 p.m. after posting a written or printed notice
or notices of the place, the earliest time at which the sale will begin and
terms of the sale of the Trust Premises for twenty-one (21) days prior to the
date of the sale at the courthouse door of the county in which the sale is to be
made and at the courthouse door of any other county in which a portion of the
Trust Premises may be situated and filing a copy of such notice(s) in the office
of the county clerk in each of such counties, and by serving written notice of
the proposed sale at least twenty-one (21) days preceding the date of sale by
certified mail on each debtor obligated to pay the Secured Obligations according
to the records of the Beneficiary. Service of such notice shall be completed
upon deposit of the notice, enclosed in a postpaid wrapper, properly stamped and
addressed to such debtor at the most recent address as shown by the records of
the Beneficiary, in a post office or official depository under the care and
custody of the United States. It is agreed that the posting and transmittal of
notices may be performed by the Trustee, Beneficiary, or by any person acting
for them. In lieu of the foregoing, the sale may be accomplished by following
the procedures permitted or required by Section 51.002 of the
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Texas Property Code, as same may be amended from time to time, relating to the
sale of real estate and/or by the Texas Uniform Commercial Code-Secured
Transactions (same being Chapter 9 of the Texas Business and Commerce Code)
relating to the sale of personal property collateral after default by a debtor
(as said Section and Chapter may now exist or may hereafter be amended or
succeeded), or by any other present or subsequent articles or enactments
relating to the same. Nothing contained in this Section shall be construed to
limit in any way the Trustee's rights to sell the Trust Premises by private sale
if, and to the extent, that such private sale is permitted under the laws of the
State or by public or private sale after entry of judgment by any court of
competent jurisdiction ordering the same. At any such sale (i) whether made
under power herein contained, Section 51.002 of the Texas Property Code, the
Texas Uniform Commercial Code-Secured Transactions, any other legal requirement
or by virtue of any judicial procedure or any other legal right, remedy or
recourse, it shall not be necessary for the Trustee to have physically present,
or to have constructive possession of, the Trust Premises (Trustor hereby
covenanting and agreeing to deliver to the Trustee any portion of the Trust
Premises not actually or constructively possessed by the Trustee immediately
upon demand by the Trustee), and the title to and right of possession of any
such property shall pass to the purchaser thereof as completely as if the same
had been actually present and delivered to purchaser at such sale, (ii) each
instrument of conveyance executed by the Trustee shall contain a special
warranty of title, binding upon Trustor, (iii) each and every recital contained
in any instrument of conveyance made by the Trustee shall conclusively establish
the truth and accuracy of the matters recited therein, including, without
limitation, nonpayment of the Secured Obligations, advertisement and conduct of
such sale in the manner provided herein and otherwise by law and appointment of
any successor to the Trustee hereunder, (iv) any and all prerequisites to the
validity thereof shall be conclusively presumed to have been performed, (v) the
receipt of the Trustee or of such other party or officer making the sale shall
be a sufficient discharge to the purchaser or purchasers for his or their
purchase money and no such purchaser or purchasers, or his or their assigns or
personal representatives, shall thereafter be obligated to see to the
application of such purchase money or be in any way answerable for any loss,
misapplication or nonapplication thereof, (vi) to the fullest extent permitted
by law, Trustor shall be completely and irrevocably divested of all of its
right, title, interest, claim and demand whatsoever, either at law or in equity,
in and to the property sold and such sale shall be a perpetual bar, both at law
and in equity, against Trustor, and against any and all other persons claiming
or to claim the property sold or any part thereof, by, through or under Trustor,
and (vii) to the extent and under such circumstances as are permitted by law,
Beneficiary may be a purchaser at any such sale. The Trust Premises may be sold
in one or more parcels and in such manner and order as Trustee, in its sole
discretion, may elect, it being expressly understood and agreed that the right
of sale arising out of any Event of Default shall not be exhausted by any one or
more sales but other and successive sales may be made until all of the Trust
Premises have been sold or until the Secured Obligations has been fully
satisfied. In case Beneficiary shall have proceeded to invoke any right, remedy
or recourse permitted under this Deed of Trust and shall thereafter elect to
discontinue or abandon the same for any reason, Beneficiary shall have the
unqualified right so to do and, in such event, Trustor and Beneficiary shall be
restored to their former positions with respect to the Secured Obligations, the
Trust Premises and otherwise, and the rights, remedies, recourses and powers of
Beneficiary shall continue as if same had never been invoked.
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SECTION 3.4. Uniform Commercial Code Remedies. If an Event of Default
shall have occurred and be continuing, the Beneficiary may exercise from time to
time and at any time any rights and remedies available to it under applicable
law upon default in the payment of indebtedness, including, without limitation,
any right or remedy available to it as a secured party under the Uniform
Commercial Code of the State. The Trustor shall, promptly upon request by the
Trustee or the Beneficiary, assemble the Trust Premises, or any portion thereof
generally described in such request, and make it available to the Trustee or the
Beneficiary, at such place or places designated by the Trustee or the
Beneficiary, and reasonably convenient to the Trustee or the Beneficiary. If the
Beneficiary elects to proceed under the Uniform Commercial Code of the State to
dispose of portions of the Trust Premises, the Trustee or the Beneficiary, at
their respective option, may give the Trustor notice of the time and place of
any public sale of any such property, or of the date after which any private
sale or other disposition thereof is to be made, by sending notice by registered
or certified first class mail, postage prepaid, to the Trustor at least ten (10)
days before the time of the sale or other disposition. If any notice of any
proposed sale, assignment or transfer by the Beneficiary of any portion of the
Trust Premises or any interest therein is required by law, the Trustor
conclusively agrees that ten (10) days notice to the Trustor of the date, time
and place (and, in the case of a private sale, the terms) thereof is reasonable.
SECTION 3.5. Trustee and Beneficiary Authorized to Execute Deeds, etc.
The Trustor irrevocably appoints the Trustee and the Beneficiary (which
appointment is coupled with an interest) the true and lawful attorney of the
Trustor, in its name and stead and on its behalf, for the purpose of
effectuating any sale, assignment, transfer or delivery for the enforcement
hereof, whether pursuant to power of sale, foreclosure or otherwise, to execute
and deliver all such deeds, bills of sale, assignments, releases and other
instruments as may be designated in any such request.
SECTION III.6. Purchase of Trust Premises by Beneficiary. The
Beneficiary may be a purchaser of the Trust Premises or of any part thereof or
of any interest therein at any sale thereof, whether pursuant to power of sale,
foreclosure or otherwise, and the Beneficiary may apply upon the purchase price
thereof the indebtedness secured hereby owing to the Beneficiary. Such purchaser
shall, upon any such purchase, acquire good title to the properties so
purchased, free of the security interest and lien of this Deed of Trust and free
of all rights of redemption in the Trustor.
SECTION 3.7. Receipt a Sufficient Discharge to Purchaser. Upon any sale
of the Trust Premises or any part thereof or any interest therein, whether
pursuant to power of sale, foreclosure or otherwise, the receipt of the Trustee
or the officer making the sale under judicial proceedings shall be a sufficient
discharge to the purchaser for the purchase money, and such purchaser shall not
be obliged to see to the application thereof.
SECTION 3.8. Waiver of Appraisement, Valuation, etc. The Trustor hereby
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waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter in
force and all rights of marshaling in the event of any sale of the Trust
Premises or any part thereof or any interest therein.
SECTION 3.9. Sale a Bar Against Trustor. Any sale of the Trust Premises
or any part thereof or any interest therein under or by virtue of this Deed of
Trust, whether pursuant to power of sale, foreclosure or otherwise, shall
forever be a bar, against the Trustor.
SECTION 3.10. Secured Obligations to Become Due on Sale. Except as
otherwise provided in the Credit Agreement, upon any sale of the Trust Premises
or any portion thereof or interest therein by virtue of the exercise of any
remedy by the Trustee or the Beneficiary under or by virtue of this Deed of
Trust, whether pursuant to power of sale, foreclosure or otherwise in accordance
with this Deed of Trust or by virtue of any other remedy available at law or in
equity or by statute or otherwise, at the option of the Trustee or the
Beneficiary any sums or monies due and payable pursuant to the Credit Agreement
pertaining to the Fixed Assets Loans, the Loan Documents pertaining to the Fixed
Assets Loans and in connection with the Fixed Assets Loans and/or the Secured
Obligations, shall, if not previously declared due and payable, immediately
become due and payable, together with interest accrued thereon, and all other
indebtedness which this Deed of Trust by its terms secures.
SECTION 3.11. Application of Proceeds of Sale and Other Moneys. Except
as otherwise provided in the Credit Agreement or in this Deed of Trust, the
proceeds of any sale of the Trust Premises or any part thereof or any interest
therein under or by virtue of this Deed of Trust, whether pursuant to power of
sale, foreclosure or otherwise, and all other moneys at any time held by the
Trustee or the Beneficiary as part of the Trust Premises, shall be applied in
such order of priority as the Beneficiary shall determine in its sole and
absolute discretion including, without limitation, as follows:
(a) first, to the payment of the reasonable costs and expenses
of such sale (including, without limitation, the cost of evidence of
title and the costs and expenses, if any, of taking possession of,
retaining custody over, repairing, managing, operating, maintaining and
preserving the Trust Premises or any part thereof prior to such sale),
all reasonable costs and expenses incurred by the Trustee, the
Beneficiary, or any other Person in obtaining or collecting any
insurance proceeds, condemnation awards or other amounts received by
the Beneficiary, all reasonable costs and expenses of any receiver of
the Trust Premises or any part thereof, and any Impositions or other
charges or expenses prior to the security interest or lien of this Deed
of Trust, which the Trustee or the Beneficiary may consider it
necessary or desirable to pay;
(b) second, to the payment of any Secured Obligation (other
than those set forth in Section 3.11(c) below);
(c) third, to the payment of all amounts of principal of and
interest (including
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Post-Petition Interest to the extent such interest is a Secured
Obligation) at the time due and payable under the Credit Agreement
pertaining to the Fixed Assets Loans at the time outstanding (whether
due by reason of maturity or by reason of any prepayment requirement
or by declaration or acceleration or otherwise), including interest at
the rate provided for in the Credit Agreement on any overdue principal
and (to the extent permitted under applicable law) on any overdue
interest; and, in case such moneys shall be insufficient to pay in
full such principal and interest, then, first, to the payment of all
amounts of interest (including Post-Petition Interest to the extent
such interest is a Secured Obligation) at the time due and payable
and, second, to the payment of all amounts of principal at the time
due and payable under the Fixed Assets Loans; and
(d) fourth, the balance, if any, held by the Trustee or the
Beneficiary after payment in full of all amounts referred to in
subdivisions Sections 3.11 (a), (b) and (c) above, shall, unless a
court of competent jurisdiction may otherwise direct by final order not
subject to appeal, be paid to or upon the direction of the Trustor.
SECTION 3.12. Appointment of Receiver. If an Event of Default shall
have occurred and be continuing, the Beneficiary shall, as a matter of right,
without notice, and without regard to the adequacy of any security for the
indebtedness secured hereby or the solvency of the Trustor, be entitled to the
appointment of a receiver for all or any part of the Trust Premises, whether
such receivership be incidental to a proposed sale of the Trust Premises or
otherwise, and the Trustor hereby consents to the appointment of such a receiver
and will not oppose any such appointment.
SECTION 3.13. Possession, Management and Income. If an Event of Default
shall have occurred and be continuing, in addition to, and not in limitation of,
the rights and remedies provided in Section 1.14, the Trustee or the Beneficiary
upon five (5) days written notice to the Trustor, may enter upon and take
possession of the Trust Premises or any part thereof by force, summary
proceeding, ejectment or otherwise and may remove the Trustor and all other
Persons and any and all property therefrom and may hold, operate, maintain,
repair, preserve and manage the same and receive all earnings, income, Rents,
issues and Proceeds accruing with respect thereto or any part thereof. The
Trustee and the Beneficiary shall be under no liability for or by reason of any
such taking of possession, entry, removal or holding, operation or management,
except that any amounts so received by the Trustee or the Beneficiary shall be
applied to pay all costs and expenses of so entering upon, taking possession of,
holding, operating, maintaining, repairing, preserving and managing the Trust
Premises or any part thereof, and any Impositions or other charges prior to the
lien and security interest of this Deed of Trust which the Trustee or the
Beneficiary may consider it necessary or desirable to pay, and any balance of
such amounts shall be applied as provided in Section 3.11.
SECTION 3.14. Right of Trustee and the Beneficiary to Perform Trustor's
Covenants, etc. If the Trustor shall fail to make any payment or perform any act
required to be made or performed hereunder or under the Credit Agreement
pertaining to the Fixed Assets
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Loans or any other Loan Document pertaining to the Fixed Assets Loans, the
Beneficiary, without notice to or demand upon the Trustor and without waiving or
releasing any obligation or Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account and at the expense of the Trustor, and may enter upon the Trust
Premises for such purpose and take all such action thereon as, in either the
Trustee's or the Beneficiary's opinion, may be necessary or appropriate
therefor. No such entry and no such action shall be deemed an eviction of any
lessee of the Property or any part thereof. All sums so paid by the Trustee or
the Beneficiary, and all costs and expenses (including, without limitation,
attorneys' fees and expenses) so incurred, together with interest thereon at the
rate provided for in Section 3.2.2 of the Credit Agreement from the date of
payment or incurring, shall constitute additional indebtedness under the Credit
Agreement secured by this Deed of Trust and shall be paid by the Trustor to the
Trustee or the Beneficiary, as the case may be, on demand.
SECTION 3.15. Subrogation. To the extent that either of the Trustee or
the Beneficiary, on or after the date hereof, pays any sum due under any
provision of any Legal Requirement or any instrument creating any lien prior or
superior to the lien of this Deed of Trust, or the Trustor or any other Person
pays any such sum with the proceeds of the Fixed Assets Loans, the Trustee
and/or the Beneficiary shall have and be entitled to a lien on the Trust
Premises equal in priority to the lien discharged, and the Trustee and/or the
Beneficiary shall be subrogated to, and receive and enjoy all rights and liens
possessed, held or enjoyed by, the holder of such lien, which shall remain in
existence and benefit the Beneficiary in securing the Secured Obligations.
SECTION 3.16. Remedies, etc., Cumulative. Each right, power and remedy
of the Trustee and/or the Beneficiary provided for in this Deed of Trust, the
Credit Agreement pertaining to the Fixed Assets Loans, or any other Loan
Document pertaining to the Fixed Assets Loans, or now or hereafter existing at
law or in equity or by statute or otherwise shall be cumulative and concurrent
and shall be in addition to every other right, power or remedy provided for in
this Deed of Trust, the Credit Agreement or any other Loan Document pertaining
to the Fixed Assets Loans, or now or hereafter existing at law or in equity or
by statute or otherwise, and the exercise or beginning of the exercise by the
Trustee or the Beneficiary of any one or more of the rights, powers or remedies
provided for in this Deed of Trust, the Credit Agreement, or any other Loan
Document pertaining to the Fixed Assets Loans, or now or hereafter existing at
law or in equity or by statute or otherwise shall not preclude the simultaneous
or later exercise by the Trustee or the Beneficiary of any or all such other
rights, powers or remedies.
SECTION 3.17. Provisions Subject to Applicable Law. All rights, powers
and remedies provided in this Deed of Trust may be exercised only to the extent
that the exercise thereof does not violate any applicable provisions of law and
are intended to be limited to the extent necessary so that they will not render
this Deed of Trust invalid, unenforceable or not entitled to be recorded,
registered or filed under the provisions of any applicable law. If any term
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of this Deed of Trust or any application thereof shall be invalid or
unenforceable, the remainder of this Deed of Trust and any other application of
such term shall not be affected thereby.
SECTION 3.18. No Waiver, etc. No failure by the Trustee or the
Beneficiary to insist upon the strict performance of any term hereof or of the
Credit Agreement, or of any other Loan Document, or to exercise any right, power
or remedy consequent upon a breach hereof or thereof, shall constitute a waiver
of any such term or of any such breach. No waiver of any breach shall affect or
alter this Deed of Trust, which shall continue in full force and effect with
respect to any other then existing or subsequent breach. By accepting payment or
performance of any amount or other Secured Obligations secured hereby before or
after its due date, neither the Trustee nor the Beneficiary shall be deemed to
have waived its right either to require prompt payment or performance when due
of all other amounts and Secured Obligations payable hereunder or to declare a
default for failure to effect such prompt payment.
SECTION 3.19. Compromise of Actions, etc. Any action, suit or
proceeding brought by the Trustee or the Beneficiary pursuant to any of the
terms of this Deed of Trust, the Credit Agreement pertaining to the Fixed Assets
Loans, any other Loan Document pertaining to the Fixed Assets Loans, or
otherwise, and any claim made by the Trustee or the Beneficiary hereunder or
thereunder, may be compromised, withdrawn or otherwise dealt with by the Trustee
or the Beneficiary without any notice to or approval of the Trustor.
ARTICLE IV
DEFINITIONS
SECTION 4.1. Terms Defined in this Deed of Trust. When used herein the
following terms have the following meanings:
"Beneficiary" shall have the meaning set forth in the preamble.
"Borrowers" shall have the meaning set forth in the second recital.
"Contracts" shall have the meaning set forth in clause (h) of the
granting clause.
"Credit Agreement" shall have the meaning set forth in the second
recital.
"Credit Extensions" shall have the meaning set forth in the the second
recital.
"Deed of Trust" shall have the meaning set forth in the preamble.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time, or both, would constitute an Event of Default.
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"Goods" shall have the meaning set forth in clause (c) of the granting
clause.
"herein", "hereof", "hereto", and "hereunder" and similar terms refer
to this Deed of Trust and not to any particular Section, paragraph or provision
of this Deed of Trust.
"Highest Lawful Rate" shall have the meaning set forth in Section 5.15.
"Impositions" shall have the meaning set forth in Section 1.5.
"Improvements" shall have the meaning set forth in clause (b) of the
granting clause.
"Indemnified Parties" shall have the meaning set forth in Section 1.16.
"Insurance Requirements" shall have the meaning set forth in paragraph
(a) of Section 1.6.
"Land" shall have the meaning set forth in the first recital.
"Leases" shall have the meaning set forth in clause (e) of the granting
clause.
"Legal Requirements" shall have the meaning set forth in paragraph (b)
of Section 1.6.
"Permits" shall have the meaning set forth in clause (g) of the
granting clause.
"Permitted Encumbrances" shall have the meaning set forth in Section
1.2.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency or officer.
"Plans" shall have the meaning set forth in clause (f) of the granting
clause.
"Post-Petition Interest" shall have the meaning set forth in Section
2.3.
"Proceeds" shall have the meaning set forth in clause (k) of the
granting clause.
"Property" shall have the meaning set forth in clause (b) of the
granting clause.
"Real Estate" shall have the meaning set forth in clause (a) of the
granting clause.
"Rents" shall have the meaning set forth in clause (j) of the granting
clause.
"Secured Obligations" means the Fixed Assets Obligations and all
Obligations with respect to the Fixed Assets Loans now or hereafter existing
under the Credit Agreement or any
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Loan Document pertaining to the Fixed Assets Loans, and all obligations
(monetary or otherwise) arising under or in connection with the Fixed Assets
Notes or the Fixed Assets Loans, whether for principal, interest, costs, fees,
expenses or otherwise, and all other Fixed Assets Obligations.
"State" means the State of Texas.
"Total Destruction" means any damage to or destruction of the
Improvements or any part thereof which, in the reasonable estimation of the
Beneficiary shall require the expenditure of an amount in excess of Forty
Million Dollars ($40,000,000) to restore the Improvements to substantially the
same condition of the Improvements immediately prior to such damage or
destruction.
"Total Taking" means a Taking, whether permanent or for temporary use,
which, in the reasonable judgment of the Beneficiary, shall substantially
interfere with and adversely affect the normal operation of the Property by the
Trustor to such an extent as would reasonably be anticipated to cause a Material
Adverse Effect.
"Trustee" shall have the meaning set forth in the preamble.
"Trustor" shall have the meaning set forth in the preamble.
"Trust Premises" shall have the meaning set forth in the granting
clause.
SECTION 4.2. Use of Defined Terms. Terms for which meanings are
provided in this Deed of Trust shall, unless otherwise defined or the context
otherwise requires, have such meanings when used in any certificate and any
opinion, notice or other communication delivered from time to time in connection
with this Deed of Trust or pursuant hereto.
SECTION 4.3. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Deed of Trust,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements.
SECTION 5.1.1. Further Assurances. The Trustor, at its expense, will
execute, acknowledge and deliver all such instruments and take all such other
action as the Trustee or the Beneficiary from time to time may reasonably
request:
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(a) better to subject to the lien and security interest of
this Deed of Trust all or any portion of the Trust Premises,
(b) to perfect, publish notice or protect the validity of the
lien and security interest of this Deed of Trust,
(c) to preserve and defend the title to the Trust Premises and
the rights of the Trustee or the Beneficiary therein against the claims
of all Persons as long as this Deed of Trust shall remain undischarged,
(d) to better subject to the lien and security interest of
this Deed of Trust or to maintain or preserve the lien and security
interest of this Deed of Trust with respect to any replacement or
substitution for any Trust Premises or any other after-acquired
property except as provided in the Credit Agreement, or
(e) in order to further effectuate the purposes of this Deed
of Trust and to carry out the terms hereof and to better assure and
confirm to the Trustee and the Beneficiary their rights, powers and
remedies hereunder.
SECTION 5.1.2. Financing Statements. Notwithstanding any other
provision of this Deed of Trust, the Trustor hereby agrees that, without notice
to or the consent of the Trustor, the Beneficiary may file with the appropriate
public officials such financing statements, continuation statements, amendments
and similar documents as are or may become necessary to perfect, preserve or
protect the security interest granted by this Deed of Trust.
SECTION 5.2. Additional Security. Without notice to or consent of the
Trustor, and without impairment of the security interest and lien and rights
created by this Deed of Trust, the Trustee or the Beneficiary and the Lenders
may accept from the Trustor or any other Person additional security for the
Secured Obligations. Neither the giving of this Deed of Trust nor the acceptance
of any such additional security shall prevent the Trustee or the Beneficiary
from resorting first to such additional security, or, first, to the security
created by this Deed of Trust, or concurrently to both, in any case without
affecting the Trustee's or the Beneficiary's lien and rights under this Deed of
Trust.
SECTION 5.3. Defeasance, Partial Release, etc.
SECTION 5.3.1. Defeasance. If the Fixed Assets Loans and all other
amounts owing pursuant to the Credit Agreement pertaining to the Fixed Assets
Loans and the other Loan Documents pertaining to the Fixed Assets Loans shall be
repaid in full in accordance with the terms thereof, and if the Trustor shall
pay, in full, the principal of and premium, if any, and interest on the Secured
Obligations in accordance with the terms thereof and hereof and all other sums
payable hereunder by the Trustor and shall comply with all the terms, conditions
and requirements hereof and of the Secured Obligations, or otherwise as may be
provided in the
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Credit Agreement, then on such date, the Beneficiary shall, upon the request of
the Trustor and at the Trustor's sole cost and expense, execute and deliver such
instruments, in form and substance reasonably satisfactory to the Beneficiary,
as may be necessary to effectively reconvey, release and discharge this Deed of
Trust
SECTION 5.3.2. Partial Release, etc. The Trustee may, at the direction
of the Beneficiary, at any time and from time to time, without liability
therefor, and without prior notice to the Trustor, release or reconvey any part
of the Trust Premises, consent to the making of any map or plat of the Property,
join in granting any easement thereon or join in any extension agreement or
agreement subordinating the lien of this Deed of Trust.
SECTION 5.4. Notices, etc. All notices and other communications
provided to any of the parties hereto shall be in writing and addressed,
delivered or transmitted to such party as set forth in the Credit Agreement.
SECTION 5.5. Waivers, Amendments, etc. The provisions of this Deed of
Trust may be amended, discharged or terminated and the observance or performance
of any provision of this Deed of Trust may be waived, either generally or in a
particular instance and either retroactively or prospectively, only by an
instrument in writing executed by the Trustor and the Beneficiary.
SECTION 5.6. Cross-References. References in this Deed of Trust and in
each instrument executed pursuant hereto to any Section or Article are, unless
otherwise specified, to such Section or Article of this Deed of Trust or such
instrument, as the case may be, and references in any Section, Article or
definition to any clause are, unless otherwise specified, to such clause of such
Section, Article or definition.
SECTION 5.7. Headings. The various headings of this Deed of Trust and
of each instrument executed pursuant hereto are inserted for convenience only
and shall not affect the meaning or interpretation of this Deed of Trust or such
instrument or any provisions hereof or thereof.
SECTION 5.8. Currency. Unless otherwise expressly stated, all
references to any currency or money, or any dollar amount, or amounts
denominated in "Dollars" herein will be deemed to refer to the lawful currency
of the United States.
SECTION 5.9. Governing Law. THIS DEED OF TRUST SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE.
SECTION 5.10. Successors and Assigns, etc. This Deed of Trust shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
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<PAGE> 35
SECTION 5.11. Concerning the Trustee.
SECTION 5.11.1. Acceptance of Trusts; Certain Terms of the Trusts. The
Trustee, for itself and its successors, hereby accepts the trusts of this Deed
of Trust, but only upon the terms herein set forth, including the following:
(a) The recitals in this Deed of Trust and in any supplement
hereto which may hereafter be executed by the Trustor and the Trustee
shall be taken as the statements of the Trustor and shall not be
considered as made by, or imposing any obligation or liability upon,
the Trustee.
(b) The Trustee may execute any of the trusts or powers hereof
and perform any duty hereunder either directly or through its agents or
attorneys, and the Trustee shall not be responsible for the acts of any
agent or attorney appointed by it in good faith and without negligence.
(c) The Trustee may, at the expense of the Trustor, consult
with legal counsel to be selected by it, and the Trustee shall not be
liable for any action taken, suffered or omitted to be taken by it in
good faith in accordance with the advice of counsel.
(d) The Trustor will pay to the Trustee from time to time, on
demand, compensation for all services rendered hereunder (which shall
not be limited to the compensation of trustees of any express trust as
provided by law) and also all reasonable expenses, charges, counsel
fees and other disbursements and those of its agents and attorneys,
made or incurred in the administration of the trusts hereby created and
any other duties hereby imposed. The Trustor agrees to indemnify and
save harmless the Trustee against and from any liability or damages
which it may incur or sustain, in good faith, in the exercise and
performance of any of its powers and duties hereunder.
(e) The Trustee shall not be liable, in case of taking
possession of the Trust Premises, for debts contracted or liability or
damages incurred in the management or operation of the Trust Premises,
for the salaries of employees of the Trustor or for nonfulfillment of
contracts by the Trustor.
(f) The Trustee shall be protected in acting upon any notice,
resolution, request, consent, order, certificate, report, opinion,
statement, obligation, appraisal or other document believed by it to be
genuine and to have been signed by the proper party or parties or by a
person or persons authorized to act on his or their behalf.
(g) The Trustee shall not be responsible for the validity or
genuineness of any securities, personal property, notes or deeds of
trust at any time pledged and deposited hereunder.
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<PAGE> 36
SECTION 5.11.2. Duties and Responsibility of Trustee; In Case of
Default; Prior to Default; When Acting Under Direction of Beneficiary. If an
Event of Default shall have occurred and shall be continuing to the actual
knowledge of the Trustee, or if the Trustee shall have received notice thereof
from the Beneficiary, the Trustee, only if so directed by the Beneficiary, shall
exercise such of the rights and powers vested in it by this Deed of Trust, and
in so doing shall use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. None of the provisions of this Deed of Trust shall be construed as
relieving the Trustee from liability for its own negligent action, own negligent
failure to act, or own willful misconduct, except that,
(a) so long as no Event of Default shall have occurred and be
continuing,
(1) the Trustee shall not be liable except for the
performance of such duties as are specifically set forth in
this Deed of Trust, and no implied covenants or obligations
shall be read into this Deed of Trust against the Trustee,
whose duties and obligations shall be determined solely by the
express provisions of this Deed of Trust, and
(2) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of opinions expressed
therein, upon certificates or opinions conforming to the
requirements of this Deed of Trust;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by an officer or officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
provisions of applicable law and the direction of the Beneficiary,
relating to the time, method, and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or
power conferred upon the Trustee under this Deed of Trust;
(d) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Deed of Trust;
(e) if an Event of Default shall have occurred and shall be
continuing, the Trustee shall not exercise any of the powers granted to
it hereunder unless and until specifically requested to do so by the
Beneficiary; and
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<PAGE> 37
(f) none of the provisions contained in this Deed of Trust
shall require the Trustee to advance or use its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers.
SECTION 5.11.3. Notice of Default. The Trustee shall, within ten days
after it has actual knowledge thereof, give to the Beneficiary notice of any
Default.
SECTION 5.11.4. Resignation and Removal; Appointment of Successor
Trustee.
(a) The Trustee may resign and be discharged from the trusts
hereby created by giving written notice thereof to the Trustor and to
the Beneficiary. Such resignation shall become effective upon the
appointment of its successor and such successor's acceptance of such
appointment, provided that, if a successor Trustee has not been so
appointed, or, if so appointed, has not accepted the appointment within
thirty (30) days after the date of such written notice of resignation,
the Trustee may apply to any court of competent jurisdiction for the
appointment of a successor Trustee.
(b) The Trustee may be removed at any time by an instrument or
instruments signed by the Beneficiary and filed with the Trustor and
the Trustee.
(c) The Beneficiary may appoint a successor Trustee at any
time by filing for record in the office of the Register of Deeds of the
County in which the Property is located a substitution of Trustee. From
the time the substitution is filed for record, the successor Trustee
shall succeed to all of the powers, duties, authority and title of the
Trustee without the necessity of any conveyance from the Trustee
originally herein named or any successor. Each such substitution shall
be executed and acknowledged, and notice thereof shall be given and
proof thereof made in accordance with applicable law. The Trustor
agrees to accept and confirm any such successor Trustee hereunder by
executing and delivering a supplemental Deed of Trust and security
agreement or any other appropriate agreement.....
SECTION 5.12. Waiver of Jury Trial; Submission to Jurisdiction.
(a) EACH OF THE TRUSTOR, THE TRUSTEE AND THE BENEFICIARY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS DEED OF TRUST, THE
CREDIT AGREEMENT, ANY LOAN DOCUMENT PERTAINING TO THE FIXED ASSETS
LOANS OR ANY OTHER RELATED INSTRUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE
TRUSTOR, THE TRUSTEE, OR THE BENEFICIARY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE TRUSTEE AND THE BENEFICIARY AND THE FIXED ASSETS
LENDERS TO ENTER INTO THE TRANSACTIONS PROVIDED FOR IN THE CREDIT
AGREEMENT AND TO MAKE THE FIXED ASSETS LOANS.
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(b) FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INVOLVING THIS
DEED OF TRUST, THE CREDIT AGREEMENT AS PERTAINS TO THE FIXED ASSETS
LOANS OR ANY OTHER LOAN DOCUMENT AS PERTAINS TO THE FIXED ASSETS LOANS,
THE TRUSTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ALL FEDERAL AND STATE COURTS LOCATED IN
THE STATE AND CONSENTS THAT IT MAY BE SERVED WITH ANY PROCESS OR PAPER
BY REGISTERED MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE
IN ACCORDANCE WITH APPLICABLE LAW, PROVIDED A REASONABLE TIME FOR
APPEARANCE IS ALLOWED. THE TRUSTOR AND THE BENEFICIARY EACH EXPRESSLY
WAIVES, TO THE EXTENT IT MAY LAWFULLY DO SO, ANY OBJECTION, CLAIM OR
DEFENSE WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY
ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS DEED OF TRUST, THE
CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT PERTAINING TO THE FIXED
ASSETS LOANS IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY WAIVES THE
RIGHT TO OBJECT, WITH RESPECT TO ANY SUCH CLAIM, SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE
JURISDICTION OVER THE PERSON OF THE TRUSTOR. NOTHING CONTAINED HEREIN
WILL BE DEEMED TO PRECLUDE EITHER OF THE TRUSTEE OR THE BENEFICIARY
FROM BRINGING AN ACTION AGAINST THE TRUSTOR IN ANY OTHER JURISDICTION.
SECTION 5.13. Severability; Conflicts. Any provision of this Deed of
Trust, the Credit Agreement or any other Loan Document pertaining to the Fixed
Assets Loans which is prohibited or unenforceable in any jurisdiction shall as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Deed of Trust, the Credit Agreement or such Loan Document pertaining to the
Fixed Assets Loans or affecting the validity or enforceability of such provision
in any other jurisdiction. In the event of any conflict between the terms of
this Deed of Trust and the terms of the Credit Agreement, the terms of the
Credit Agreement shall control.
SECTION 5.14. Loan Document. This Deed of Trust is a Loan Document
executed pursuant to the Credit Agreement and, unless otherwise expressly
indicated herein, shall be construed, administered and applied in accordance
with the terms and provisions thereof.
SECTION 5.15. Usury Savings Clause. In no event shall any provision of
this instrument, the Fixed Assets Notes, or any other instrument evidencing or
securing the Secured Obligations ever obligate Trustor to pay or allow
Beneficiary to collect interest on the Fixed
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<PAGE> 39
Assets Notes or any other Secured Obligations secured hereby at a rate greater
than the maximum non-usurious rate permitted by applicable law (herein referred
to as the "Highest Lawful Rate"), or obligate Trustor to pay any amounts that
would be held or deemed to constitute interest under applicable law which, when
added to the interest payable on the Fixed Assets Notes, would be held to
constitute the payment by Trustor of interest at a rate greater than the Highest
Lawful Rate; and this provision shall control over any provision to the
contrary. To the extent the Highest Lawful Rate is determined by reference to
the laws of the State of Texas, same shall be determined by reference to the
indicated rate ceiling (as defined and described in Chapter 303 of the Texas
Finance Code, as amended) at the applicable time in effect.
Without limiting the generality of the foregoing, in the event
the maturity of all or any part of the principal amount of the Secured
Obligations shall be accelerated for any reason, then such principal amount so
accelerated shall be credited with any interest theretofore paid thereon in
advance and remaining unearned at the time of such acceleration. If, pursuant to
the terms of this Deed of Trust or the Fixed Assets Notes, any funds are applied
to the payment of any part of the principal amount of the Secured Obligations
prior to the maturity thereof, then (a) any interest which would otherwise
thereafter accrue on the principal amount so paid by such application shall be
canceled, and (b) the Secured Obligations remaining unpaid after such
application shall be credited with the amount of all interest, if any,
theretofore collected on the principal amount so paid by such application and
remaining unearned at the date of said application; and if the funds so applied
shall be sufficient to pay in full all the Secured Obligations, then Beneficiary
shall refund to Trustor all interest theretofore paid thereon in advance and
remaining unearned at the time of such acceleration. Regardless of any other
provision in this instrument, or in any of the written evidences of the Secured
Obligations, Trustor shall never be required to pay any unearned interest on the
Secured Obligations or any portion thereof, and shall never be required to pay
interest thereon at a rate in excess of the Highest Lawful Rate construed by
courts having competent jurisdiction thereof.
SECTION 5.16. Future Advances. This Deed of Trust is a "Future Advance
Deed of Trust" under the laws of the State. Any and all future advances under
this Deed of Trust and the Loan Documents pertaining to the Fixed Assets Loans
shall have the same priority as if the future advance was made on the date that
this Deed of Trust was recorded. This Deed of Trust shall secure the Secured
Obligations, whenever incurred, such Secured Obligations to be due at the times
provided in the Loan Documents pertaining to the Fixed Assets Loans. Notice is
hereby given that the Secured Obligations may increase as a result of any
defaults hereunder by Trustor due to, for example, and without limitation,
unpaid interest or late charges, unpaid taxes or insurance premiums which the
Beneficiary elects to advance, defaults under leases that the Beneficiary elects
to cure, attorney fees or costs incurred in enforcing the Loan Documents
pertaining to the Fixed Assets Loans or other expenses incurred by the
Beneficiary in protecting the Trust Premises, the security of this Deed of Trust
or the Beneficiary's rights and interests.
SECTION 5.17. Entire Agreement. THIS WRITTEN LOAN AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
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<PAGE> 40
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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<PAGE> 41
IN WITNESS WHEREOF, the undersigned, by its duly elected
officers and pursuant to proper authority of its board of directors has duly
executed, acknowledged and delivered this instrument as of the day and year
first above written.
STERLING CHEMICALS, INC., a Delaware corporation
By: /S/ FRANK P. DIASSI
--------------------------------------------
Name: Frank P. Diassi
------------------------------------------
Title: Chairman
-----------------------------------------
DRAFTED BY:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
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<PAGE> 42
[CORPORATION NOTARY PAGE]
MULTI-STATE CORPORATE ACKNOWLEDGMENT
State of New York
County of New York
On this 22nd day of July, 1999, before me, the undersigned officer, personally
appeared:
(a) Frank P. Diassi, with a residence at 1200 Smith Street, Suite 1900
Houston, Texas 77002.
(b) __________________________________, with a residence at
____________________________.
personally known and acknowledged himself/herself/themselves to me (or proved to
me on the basis of satisfactory evidence) to be the
(a) Chairman
(b) ________ Secretary
respectively of Sterling Chemicals, Inc., (hereinafter, the "Corporation")
and that as such officer(s), being duly authorized to do so pursuant to its
bylaws or a resolution of its board of directors, executed, subscribed and
acknowledged the foregoing instrument for the purposes therein contained, by
signing the name of the Corporation by himself/herself/themselves in their
authorized capacities as such officer(s) as his/her/their free and voluntary act
and deed and the free and voluntary act and deed of said Corporation.
In Witness Whereof, I hereunto set my hand and official seal.
/s/ DAWN M. SCHOENIG
------------------------------------
Notary Public
Notarial Seal My Commission Expires: 8/3/99
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<PAGE> 43
SCHEDULE 1
Legal Description of the Land
[ ]
<PAGE> 44
Plant Site/Mortgage
SCHEDULE I
PART I
PROPERTY DESCRIPTION
TRACT 1:
Lots Nos. One (1) to Sixteen (16), inclusive, in Block Eighty (80), all in
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the office of the County
Clerk of Galveston County, Texas.
TRACT 2:
Lots Thirteen (13) and Fourteen (14), in Block Eight (8), of Texas City First
Division, a subdivision in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the office of the County
Clerk of Galveston County, Texas.
TRACT 3:
Lots Three (3) and Four (4), in Block Eighty-one (81) of Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the office of the County Clerk of Galveston
County, Texas.
TRACT 4:
Lots 3 and 4, in Block 79 of Texas City 1st Division in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 5:
Lots Thirteen (13) and Fourteen (14), in Block Forty-one (41) of Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the office of the County Clerk of
Galveston County, Texas.
TRACT 6:
Lots 15 and 16, in Block 41 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of
<PAGE> 45
Galveston County, Texas.
TRACT 7:
Lots Six (6) and Seven (7), in Block 42 of Texas City First Division, a
subdivision in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the office of the County Clerk of Galveston
County, Texas.
TRACT 8:
Lot Eight (8), in Block Forty-two (42) of Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the office of the County Clerk of Galveston County,
Texas.
TRACT 9:
Parcel 1:
The South 62-1/2 feet of Lots 1 and 2, in Block 36 of Texas City First
Division, in Galveston County, Texas, according to the map of said Texas City
First Division recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
Parcel 2:
The North 1/2 of Lots 1 and 2, in Block 36 of Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the office of the County Clerk of Galveston County,
Texas.
TRACT 10:
Lots 3 and 4, in Block 36 of Texas City First Division, in Galveston County,
Texas, according to the map of said Texas City First Division of record in
Volume 113, Page 26, of the Deed Records in the office of the County Clerk of
Galveston County, Texas.
TRACT 11:
Lot 5, in Block 36 of Texas City First Division, in Galveston County, Texas,
according to the map of said Texas City First Division, recorded in Volume 113,
Page 26, of the records in the office of the County Clerk of Galveston County,
Texas.
TRACT 12:
<PAGE> 46
Lot 6, in Block 36 of Texas City First Division, in Galveston County, Texas,
according to the map of said Texas City First Division recorded in Volume 113,
Page 26, of the records in the office of the County Clerk of Galveston County,
Texas.
TRACT 13:
Lots 7 and 8, in Block 36 of Texas City First Division, in Galveston County,
Texas, according to the map of said Texas City First Division recorded in
Volume 113, Page 26, of the records in the office of the County Clerk of
Galveston County, Texas.
TRACT 14:
Lots 9, 10 and 11, in Block 36 of Texas City First Division according to the
map of said Texas City First Division recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 15:
An undivided 111/280 interest in Lot 12, Block 36 of Texas City First
Division, in Galveston County, Texas, according to the map thereof recorded in
Volume 113, Page 26, in the office of the County Clerk of Galveston County,
Texas; being the same interest acquired in deed dated November 26, 1962, from
Lillie Mae Rice Jameson et al., to Monsanto Chemical Company.
TRACT 16:
Lots 13 and 14, in Block 36, of Texas City First Division, in Galveston County,
Texas, according to the map of said Texas City First Division recorded in
Volume 113, Page 26, in the office of the County Clerk of Galveston County,
Texas.
TRACT 17:
Lots 15 and 16, in Block 36 of Texas City First Division, in Galveston County,
Texas, according to the map of said Texas City First Division of record in
Volume 113, Page 26, of the records in the office of the County Clerk of
Galveston County, Texas.
TRACT 18:
Lot 11, in Block 11 of Texas City First Division, in Galveston County, Texas,
according to the map of said division of record in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 19:
<PAGE> 47
Lots 13 and 14, in Block 35 of Texas City First Division, in Galveston County,
Texas, according to the map thereof recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 20:
Lots 11 and 12, in Block 35 of Texas City First Division, in Galveston County,
Texas, according to the map thereof recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 21:
Lots 8, 9 and 10, in Block 35 of Texas City First Division, in Galveston
County, Texas, according to the map thereof recorded in Volume 113, Page 26, in
the office of the County Clerk of Galveston County, Texas.
TRACT 22:
Lots 3 and 4, in Block 35 of Texas City First Division, in Galveston County,
Texas, according to map of Texas City First Division, recorded in Volume 113,
Page 26, in the office of the County Clerk of Galveston County, Texas.
TRACT 23:
Lots 5, 6 and 7, in Block 35 of Texas City First Division, in Galveston County,
Texas, according to the map thereof recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 24:
Lots Nine (9) and Ten (10) in Block Thirty-four (34) and Lots Seven (7) and
Eight (8), in Block Forty-one (41) of Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the office of the County Clerk of Galveston County, Texas.
TRACT 25:
Lots Three (3), Four (4) and Five (5), in Block Thirty-four (34) of Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the office of the County Clerk of
Galveston County, Texas.
TRACT 26:
<PAGE> 48
Lots One (1) and Two (2), in Block Thirty-four (34) of Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the office of the County Clerk of Galveston
County, Texas.
TRACT 27:
Lots Thirteen (13) and Fourteen (14), in Block Seventeen (17) of Texas City
First Division, a subdivision in Galveston County, Texas, according to the map
or plat thereof, recorded in Volume 113, Page 26, in the office of the County
Clerk of Galveston County, Texas.
TRACT 28:
Lot 12, Block 10 of Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 29:
Lot Eleven (11), in Block Seventeen (17), and Lots Thirteen (13), Fourteen
(14), Fifteen (15) and Sixteen (16), in Block Thirty-two (32) of Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the office of the County Clerk of
Galveston County, Texas,
TRACT 30:
Lots Fifteen (15) and Sixteen (16), in Block 16, of Texas City First Division,
an addition in Galveston County, Texas, according to the map or plat thereof,
recorded in, Volume 113, Page 26, in the office of the County Clerk of
Galveston County, Texas.
TRACT 31:
Lot Fourteen (14), in Block Sixteen (16) of Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the office of the County Clerk of Galveston County,
Texas.
TRACT 32:
Lot Eleven (11), in Block Sixteen (16) of Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the office of the County Clerk of Galveston County,
Texas.
TRACT 33:
<PAGE> 49
Lots Six (6) and Seven (7), in Block 15, Texas City First Division, Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the office of the County Clerk of Galveston County, Texas.
TRACT 34:
Lots One (1), Two (2) and Three (3), in Block Fifteen (15) of Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the office of the County Clerk of Galveston
County, Texas.
TRACT 35:
Lots 15 and 16, in Block 14, of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 36:
Lots 13 and 14, in Block 14, of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 37:
Lots 11 and 12, in Block 14 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 38:
Lot 10, in Block 14 of Texas City First Division in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 39:
Lots 7, 8 and 9, in Block 14 of Texas City First Division in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 40:
Lots 5 and 6, in Block 14 of Texas City First Division, in Galveston County,
Texas, according to
<PAGE> 50
the map or plat thereof, recorded in Volume 113, Page 26, in the office of the
County Clerk of Galveston County, Texas.
TRACT 41:
The South 62 feet of Lots 1 and 2, in Block 14 of Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the office of the County Clerk of Galveston County,
Texas.
TRACT 42:
Lots 15 and 16, in Block 13 of Texas City First Division in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 43:
Lot 14, in Block 13 of Texas City First Division in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 44:
Lot 13, Block 13 of Texas City First Division in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 45:
Lot 12, in Block 13 of Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 46:
Lot 11, in Block 13 of Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 47:
Lots 8, 9 and 10, in Block 13 of Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the office of the
<PAGE> 51
County Clerk of Galveston County, Texas.
TRACT 48:
Lots 3, 4, 5, 6 and 7, in Block 13 of Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the office of the County Clerk of Galveston County, Texas.
TRACT 49:
Lots 1 and 2, in Block 13 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas
TRACT 50:
Lots 14, 15, and 16, in Block 12 of Texas City First Division in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the office of the County Clerk of Galveston County, Texas, being
the same property heretofore conveyed by Augusta Annie Thompson to John
Mitchell by deed dated February 27, 1940, and recorded in Volume 599, Page 569,
of the Deed Records of Galveston County, Texas.
TRACT 51:
Lots 10 and 11, in Block 12 of Texas City First Division in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 52:
Lots 6 and 7, in Block 12 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 53:
Lots 8 and 9, in Block 12 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 54:
Lots 3, 4 and 5, in BLOCK 12 of Texas City First Division, in Galveston County,
Texas, according
<PAGE> 52
to the map or plat thereof, recorded in Volume 113, Page 26, in the office of
the County Clerk of Galveston County, Texas.
TRACT 55:
Lot 14, in Block 11 of Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 56:
Lots 12 and 13, in Block 11 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 57:
Lots 9 and 10 in Block 1l of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 58:
Lots 7 and 8, in Block 11 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 59:
Lots 5 and 6, in Block 11 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 60:
Lot 4, in Block 11 of Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 61:
Lot 3, in Block 11 of Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of
<PAGE> 53
Galveston County, Texas.
TRACT 62:
Lots 1 and 2, in Block 11 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 63:
Lots Nos. 13, 14, 15 and 16, in Block 10, and all of Lots 15 and 16, Block 11,
of Texas City First Division, in Galveston County, Texas, according to the map
or plat thereof, recorded in Volume 113, Page 26, in the office of the County
Clerk of Galveston County, Texas.
TRACT 64:
Lot 11, in Block 10 of Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 65:
Lots 9 and 10 in Block 10 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 66:
Lots 7 and 8, in Block 10 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 67:
Lots 5 and 6, in Block 10 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
TRACT 68:
Lots 1 and 2, in Block 10 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the office of the County Clerk of Galveston County, Texas.
<PAGE> 54
TRACT 69:
All that certain 2.388 acres of land out of the H.B. Wells Survey, A-205 and
the Norman Hurd Survey, A-77, Galveston County, Texas, said tract subject to
that certain easement dated November 30, 1932, from Texas City Terminal Railway
Company to the City of Texas City, Texas, filed at Volume 485, Page 180,
Galveston County Deed Records;
BEGINNING at a set 5/8 inch iron rod located in the East right-of-way line of
Bay Street (100' wide) at its intersection with the extended South right-of-way
line of Third Avenue North (100' wide);
THENCE S 89 deg. 33 min. 10 sec. W, 59.00 feet, along the extended South line
of said Third Avenue North to a point for corner;
THENCE S 00 deg. 26 min. 50 sec. E, 1,762.63 feet, along a line Easterly of,
parallel with and 41 feet perpendicular distance from the West line of Bay
Street according to the plat of Texas City First Addition according to the plat
thereof filed at Volume 254A, Page 28, Galveston County Deed Records, to a
point for corner;
THENCE N 89 DEG. 36 min. 40 SEC. E, 59.00 feet along the South line of said
Texas City First Addition, to a set 5/8 inch iron rod for corner;
THENCE N 00 deg. 26 min. 50 sec. W, 1,762.69 feet, to the POINT OF BEGINNING
and containing 2.388 acres of land more or less.
TRACT 70:
Lots 3 and 4, Block 10 of Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26 in
the office of the County Clerk of Galveston County, Texas.
TRACT 71:
Lots 1 and 2, Block 12 of Texas City First Division, in Galveston County, Texas
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
office of the County Clerk of Galveston County, Texas.
TRACT 72:
Lots 11, 12, 13, 14, 15 and 16, Block 34, all in Texas City First Division,
Galveston County, Texas, according to the map or plat thereof recorded in
Volume 113, Page 26, in the office of the County Clerk of Galveston County,
Texas.
<PAGE> 55
TRACT 73:
Lots 3, 4, 5, 11 and 12, Block 41, of Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the office of the County Clerk of Galveston County, Texas.
TRACT 74 (Easement):
Coastal public lands and the Easement No. CE-82-051, being shown on the
drawing labeled "Plan of Docks and Channels" attached to instrument dated
January 17, 1983, filed for record in the office of the County Clerk of
Galveston County, Texas, under County Clerk's File No. 8302396 and as assigned
to Sterling Chemicals, Inc. pursuant to that certain Assignment of Lease and
Easement from Monsanto Company dated August 1, 1986 and recorded under Clerk's
File No. 8628664 in the Official Public Records of Real Property of Galveston
County, Texas.
TRACT 75 (Leasehold):
Lease dated September 1, 1974, by and between Texas City Terminal Railway
Company, as lessor, and Monsanto Company, a Corporation, as lessee, as assigned
to Sterling Chemicals, Inc. pursuant to that certain Assignment of Lease and
Easement from Monsanto Company dated August 1, 1986 and recorded under Clerk's
File No. 8628664 in the Official Public Records of Real Property of Galveston
County, Texas covering the land described as follows:
All that certain 3.3175 acres for ground lease out of the John Grant Survey,
A-72, Galveston County, Texas, and being more particularly described as
follows:
COMMENCING at a set 5/8 inch iron rod marking the Southeast corner of that
certain 22.71 acres of land described in a deed dated August 19, 1969, from
Texas City Terminal Railway Company to Monsanto Company filed at Volume 2051,
Page 654, Galveston County Deed Records;
THENCE S 89 deg. 05 min. 40 sec. W, 117.91 feet to the POINT OF BEGINNING of
the herein-described lease site;
THENCE along the South and West line of said 22.71 acre tract the following
five (5) courses and distances:
S 89 deg. 05 min. 40 sec. W, 507.11 feet to a set 5/8 inch iron rod for corner;
N 00 deg. 45 min. 50 sec. W, 250.18 feet to a 5/8 inch iron rod for angle point;
N 32 deg. 28 min. 30 sec. W, 25.00 feet to a set 5/8 inch iron rod for corner;
<PAGE> 56
S 57 deg. 31 min. 30 sec. W, 125.64 feet to a set 5/8 inch iron rod being a
point on a curve having a central angle of 13 deg. 53 min. 35 sec., a radius of
591.30 feet, the center of said curve being located on a radial line bearing N
32 deg. 28 min. 30 sec. w, from said point;
Southwesterly from an arc distance of 143.38 feet to a point for corner;
THENCE S 00 deg. 45 min. 50 sec. E, 276.11 feet to a point for corner;
THENCE N 89 deg. 05 min. 40 sec. E, 610.00 feet to an angle point;
THENCE N 63 deg. 09 min. 44 sec. E, 163.71 feet to a point for corner;
THENCE N 00 deg. 48 min. 10 sec. W, 58.40 feet to the POINT OF BEGINNING and
containing 3.3175 acres for ground lease, more or less, SAVE AND EXCEPT that
certain tract containing 0.0871 acres described in Tract 87 herein.
TRACT 76 (Easement):
Parcel 1:
The location of the easement herein is described by metes and bounds as
follows:
A tract of land situated in the Norman Hurd and Sylvester Bowen Surveys more
particularly described as follows:
BEGINNING in the West line 34 feet North of the Southwest corner of that
certain tract of land of 27.99 acres lying within the Norman Hurd and Sylvester
Bowen Surveys in Galveston County, Texas, and described in that certain deed
from the Atlantic Pipeline Company to Republic Oil Refining Company dated
January 1, 1950, recorded in Volume 833, Page 686, of the Deed Records of
Galveston County, Texas, and that certain deed from Republic Oil Refining
Company to Plymouth Oil Company, dated April 1, 1957, recorded in Volume 1201,
Pages 638-643, inclusive of the Deed Records of Galveston County, Texas, to
which deeds reference is made, the South line of which is 748.5 feet North of
the South line of the Sylvester Bowen Survey and lying between the land now
owned by the Gillock Chemicals Company, a wholly owned subsidiary of Amoco
Chemicals Corporation on the South and the right-of-way for Fourth Avenue South
in the City of Texas City on the north, said point being 50 feet east of the
centerline of the railroad tracts of Texas City Terminal Railway Company
parallel to Tenth Street South in the City of Texas City;
THENCE N. 22 deg. 05 min. E, a distance of 37 feet;
THENCE N 0 deg. 25 min. W, a distance of 482 feet;
<PAGE> 57
THENCE N 89 deg. 35 min. E, a distance of 506 feet;
THENCE N 57 deg. 00 min. E, a distance of 170 feet;
THENCE N 89 deg. 35 min. E, a distance of 1199 feet to intersect the westerly
line of the right-of-way of Sixth Street South of the City of Texas City which
is also designated as State Highway Number 146.
Parcel 2:
A certain tract or parcel of land situated in the John Grant and Sylvester
Bowen Surveys in the City of Texas City, Galveston County, Texas, described as
follows:
BEGINNING in the west line of 73.5 feet north of the southwest corner of that
certain tract of land 100 feet in width (north and south) described by
reference in Paragraph Numbered 10 of that certain deed from Mainland Company
to Terminal Industrial Land Company dated September 22, 1926, recorded in Book
391, Pages 527 to 538, of the Deed Records of Galveston County to which deed
reference is made, the north line of which is the projection westerly of the
south line of Kohfeldt's First Addition to Texas City, Texas, in accordance
with the recorded map of said addition and lying between the land now owned by
American Oil Company on the south and E. M. Stone on the north respectively,
said point being 17.5 feet south of the center line of existing railroad tract
of Texas City Terminal Railway Company;
THENCE from said beginning point N 89 deg. 55 min. E, a distance of 2 feet;
THENCE S 71 deg. 28 min. E, a distance of 152 feet, said point being 67 feet
south of the aforementioned tract;
THENCE N 89 deg. 49 min. E, a distance of 569 feet to the west line of that
certain 100 foot wide strip of land lying between land now owned by Terminal
Industrial Land Company on the north and land owned by American Oil Company on
the south side thereof, a length of 723 feet or 43.82 rods in the John Grant
Survey;
ALSO BEGINNING in the east line of a 60 foot road known as Tenth Street, with
east line of Tenth Street being common with the west line of a tract of land
owned by Terminal Industrial Land Company, at a point which is 114 feet north of
the south line of said Terminal Industrial Land Company tract of land;
THENCE N 89 deg. 37 min. E, a distance of 110 feet to intersect the west line
of the 100.1 foot wide strip of land owned by Texas City Terminal Railway
Company, being 110 feet or 6.67 rods in Sylvester Bowen Survey.
TRACT 77 (Easement):
<PAGE> 58
Parcel 1
A certain tract of land in the John Grant Survey and Sylvester Bowen Survey in
Galveston County, Texas, respectively. The one 18 inch water line herein
referred to is to be situated as shown on Monsanto Chemical Company Drawing No.
D-139-30, dated July 11, 1951, consisting of 2 sheets, entering Republic's
North Tank Farm at a point on the east line of Tenth Street approximately 155
feet south of the northwest corner of the portion of Republic Oil Refining
Company's property which fronts on the east line of Tenth Street, and
proceeding in an easterly direction approximately 110 feet to the west line of
the Texas City Terminal Railway Company right-of-way, where said line leaves
the property of Republic Oil Refining Company;
THENCE reentering Republic Oil Refining Company property known as Atlantic
Tract at approximately 50 feet north of the southwest corner of said property as
shown on Monsanto Chemical Company Map No. D-193-30 dated July 11, 1951;
THENCE proceeding north parallel to and 4 feet from the west property line for
a distance of 500 feet;
THENCE proceeding east 541 feet;
THENCE North 67 deg. 30 min. East 100 feet;
THENCE east 30 feet south of the east portion of the north line of said tract
1255 feet to the east line of said tract, leaving said tract at a point 30 feet
south of the northeast corner of said Atlantic Pipe Line Company Tract; known as
line No. 11.
Parcel 2:
A tract of land situated in the John Grant and Sylvester Bowen Surveys in
Galveston County, Texas, said route being more particularly described as
follows:
BEGINNING at a point in that certain 100 foot wide tract of land lying between
property of Terminal Industrial Land Company and Kohfeldt's First Addition to
Texas City, Texas, on the north and Republic Oil Refining Company on the south,
said point being approximately 18 feet west and 78 feet south of the southwest
corner of Kohfeldt's First Addition to Texas City, Texas;
THENCE east a distance of approximately 1572 feet to the west line of a 60 foot
north and south country road;
THENCE continuing east across said country road and property owned by Republic
Oil Refining Company to the west right-of-way property of Texas City Terminal
Railway Company;
<PAGE> 59
THENCE east on said Texas City Terminal Railway Company right-of-way a distance
of 80 feet;
THENCE northerly on said right-of-way a distance of 722 feet;
THENCE northeasterly with angle of 22 deg. 30 min. right a distance of 50 feet
to intersection in the east right-of-way line of aforesaid right of way, all
being in the John Grant and Sylvester Bowen Surveys in Galveston County, Texas
and known as Line No. 11.
TRACT 78 (Easement):
That certain tract or parcel of land, lying and being situated in the John
Grant Survey in Galveston County, Texas, as more specifically identified and
described below:
BEGINNING at a point in the West line of that certain 100-foot-wide tract of
land owned by Texas City Terminal Railway Company being in the John Grant
Survey and lying between the properties of Terminal Industrial Land Company and
Stone on the North and Pan American Refining Corporation and Republic Oil
Refining Company on the South, which point is approximately 56 feet South of
the Northwest corner of said tract and 32 feet South of the centerline of the
railway spur tract as now located upon and over said tract of land;
THENCE Easterly, parallel to and 32 feet perpendicularly distance southerly
from the centerline of said spur track a distance of 3117 feet;
THENCE right on angle of 12 deg. 04 min., a distance of 119 feet;
THENCE left on. angle of 12 deg. 04 min., a distance of 136 feet to junction
with an 8-inch pipe line, for transportation of water only, bearing South to
Sid Richardson Refining Company and a proposed 18-inch pipe line, for
transportation of water only, bearing Easterly to Monsanto Chemical Company,
all being in the John Grant Survey known as Line No. 19.
TRACT 79 (Easement):
A four inch (4") pipeline and a six inch (6") pipeline described in Exhibits A,
B, C, D and E, attached to instrument dated January 28, 1982 to Monsanto
Company filed for record in the office of the County Clerk of Galveston County,
Texas, under County Clerk's File No. 8211566, known as Line Nos. 20 and 21.
TRACT 80 (Easement):
All that certain tract of land situated in the John Grant Survey, A-72, more
particularly described as follows:
BEGINNING at a point in the Southerly line of a 15.91 acre tract of land
conveyed by Texas
<PAGE> 60
City Terminal Railway Company to Monsanto Chemical Company by deed dated
October 2, 1951, said point being North 60 deg. 53 min. 20 sec. East, a
distance of 128.78 feet from an iron rod marking a point described in said deed
as being located such that Monsanto Tank bears North 61 deg. 38 min. 10 sec.
East, and Terminal Tank bears South 61 deg. 07 min. 50 sec. East;
THENCE South 28 deg. 58 min. 40 sec. East, a distance of 120.5 feet to an
angle point at pipeline Station 1 + 20.5;
THENCE South 51 deg. 43 min. 40 sec. East, a distance of approximately 65 feet
to a point for curve;
THENCE with the arc of a curve to the right, the radius of which is
approximately 75 feet, the central angle is 45 deg. 25 min., a distance of 58
feet to a point of tangency;
THENCE South 06 deg. 18 min. 40 sec. East, a distance of 138 feet to an angle
point at pipeline Station 3 + 81.3;
THENCE South 34 deg. 16 min. 20 sec. West, a distance of 128.3 feet to an angle
point at pipeline Station 5 + 09.6, said point being 15 feet Southerly of,
measured perpendicular to, the centerline of Tract ICC#32 (Old Shop Lead), 31.2
feet North of the face of Terminal's General Office Building, and 35 feet West
of the Northeast corner of said office building;
THENCE Westerly generally parallel to Tract ICC No. 32, a distance of 458.6
feet to pipeline Station 9 + 68.2;
THENCE Southerly a distance of 56.6 feet to pipeline Station 10 + 24.8;
THENCE Easterly a distance of 14.9 feet to pipeline Station 10 + 39.7 and the
end of this easement, known as Line Nos. 24 and 26.
TRACT 82 (Easement):
All that certain tract of land situated in the George Preacher Survey in
Galveston County, Texas, described as follows:
COMMENCING at the northwest corner of a 15.91 acre tract purchased by the
Monsanto Company on the 2nd day of October, 1951;
THENCE South 00 deg. 23 min. 20 sec. East, along the West line of said 15.91
acre tract a distance of 219 feet to a point of curvature of a curve to the
left, said curve having a radius of 308 feet;
THENCE along the arc of said curve a distance of 161.92 feet to a point in the
Southwesterly
<PAGE> 61
line of said 15.91 acre tract and being the POINT OF BEGINNING;
THENCE South 19 deg. 3 5 min. 20 sec. West, a distance of 14 feet to a point
for corner;
THENCE South 48 deg. 14 min. 20 sec. West, a distance of 555 feet to a point
for corner;
THENCE South 43 deg. 49 min. 20 sec. West, a distance of 104 feet to a point
for corner;
THENCE South 00 deg. 00 min. 40 sec. East, a distance of 207 feet to a point
for corner
THENCE South 56 deg. 59 min. 20 sec. West, a distance of 250 feet to a point
for corner;
THENCE South 52 deg. 44 min. 20 sec. West, a distance of 90 feet to a point for
corner;
THENCE South 57 deg. 07 min. 20 sec. West, a distance of 286 feet to a point
for corner;
THENCE South 52 deg. 52 min. 20 sec. West, a distance of 44 feet to a point for
corner;
THENCE South 16 deg. 37 min. 40 sec. East, a distance of 98 feet to the point
of terminus for this easement, said point of terminus being the intersection
point with an existing 4-inch line, known as Line No. 28.
TRACT 83 (Easement):
A tract in the Norman Hurd Survey, A-77, and the Sylvester Bowen Survey A-24,
Galveston County, Texas, a centerline course described as follows:
BEGINNING at the West flange of a 6-inch valve located at Station 36 + 62.3 as
shown on the drawing dated June 29, 1976, marked "The American Oil Company
Drawing B - Sketch - 76-170", duplicate copies of which have been initiated, by
the signatory officers of the parties hereof, hereinafter called "Sketch
76-170";
THENCE on a course N 89 deg. 36 min. 40 sec. E, for a distance of
1315.30 feet to a point;
THENCE left 90 deg. for a distance of 548.4 feet to a point;
THENCE right 90 deg. for a distance of 1161.95 feet to a point;
THENCE left 90 deg. for a distance of 70.6 feet to a point;
THENCE onto the public street known as Second Avenue on a course North 00 deg.
23 min. 20 sec. West, for a distance of 3 feet to a point;
THENCE right 90 deg. along Second Avenue South for a distance of 178.75 feet to
the centerline
<PAGE> 62
of Bay Street and Monsanto Company property line;
THENCE N 89 deg. 36 min. 40 sec. E, for a distance of 56 feet to a point;
THENCE right 45 deg. for a distance of 41.01 feet to a point;
THENCE left 45 deg. for a distance of 192.34 feet to a point;
THENCE left 18 deg. for a distance of 40.13 feet to a point;
THENCE right 18 deg. for a distance of 42.75 feet to a point;
THENCE left 90 deg. for a distance of 13.43 feet to a point;
THENCE left 90 deg. for a distance of 4.5 feet to a point where it connects
with a pipeline owned by Magnolia Pipeline Company, known as Line No. 29.
TRACT 85:
Lots One (1) and Two (2), Block Eighty-one (81) of Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the office of the County Clerk of Galveston County,
Texas.
TRACT 86:
Abandoned portion of certain streets and alleys in Texas City, the following
portions of streets and alleys described as follows:
(A) North-south alley bordered on the West by Block 12, on the South and
East by Monsanto plant property lines, and on the North by the
right-of-way of Second Avenue;
(B) First Street bordered on the West by Block 13, on the South by Monsanto
Plant property line, on the East by BLOCK 12, and on the North by the
right-of-way of Second Avenue South;
(C) Second Street bordered on the West by Block 36, on the South by Monsanto
Plant property line, on the East by Block 13, on the North by the
right-of-way of Second Avenue South;
(D) East-west alley bordered on the South by Block 37, on the East by
Monsanto plant property line, on the North by Block 36, and on the West
by the right-of-way of Third Street;
<PAGE> 63
(E) Bay Street bordered on the West by Block 12, on the South by the
Easterly extension or prolongation of the South boundary line of Block
12, on the East by Monsanto Plant property line, and on the North by
the South right-of-way of Second Avenue South.
TRACT 86A:
All that certain 237.0539 acres out of the Norman Hurd Survey, A-77, Sylvester
Bowen Survey, A-24, John Grant Survey, A-72, and the James B. Wells Survey,
A-205, Texas City, Galveston County, Texas;
BEGINNING at a set 5/8 inch iron rod located in the East right-of-way line of
Bay Street (100' wide), at its intersection with the extended South
right-of-way line of Third Avenue North (100' wide);
THENCE N 89 deg. 33 min. 10 sec. E, 1,967.90 feet, to a set 5/8 inch iron rod
for corner;
THENCE S 16 deg. 5 9 min. 23 sec. W, 2,541.25 feet along the U.S. Harbor line
to an "X" set in riprap for existing Texas City Hurricane Flood Wall;
THENCE S 00 deg. 13 min. 03 sec. E. 921.80 feet, continuing along said U.S.
Harbor line to a point for corner;
THENCE S 89 deg. 46 min. 57 sec. W, 859.00 feet to a point for corner;
THENCE N 00 deg. 13 min. 03 sec. W, 49.00 feet to a point for corner;
THENCE S 89 deg. 46 min. 57 sec. W, 609.87 feet along the Easterly South line
of that certain 22.71 acres of land described in a deed dated August 19, 1969,
from Texas City Terminal Railway Company to Monsanto Company filed at Volume
2051, Page 654, Galveston County Deed Records, to a set 5/8 inch iron rod for
corner;
THENCE S 00 deg. 50 min. 20 sec. W, 215.45 feet along the East line of said
22.71 acre tract being Easterly of, parallel with and 25 feet perpendicular
distance from the centerline of said flood wall, to a set 5/8 inch iron rod for
angle point; THENCE S 20 deg. 52 min. 05 sec. E, 82.13 feet along the East line
of said 22.71 acre tract continuing along a line Easterly of, parallel with and
25 feet perpendicular distance from the centerline of said flood wall, to a set
5/8 inch iron rod for corner;
THENCE S 89 deg. 46 min. 57 sec. W, 80.15 feet along an interior South line of
said 22.71 acre tract, to a set 5/8 inch iron rod for corner;
THENCE S 20 deg. 52 min. 05 sec. E, 209.65 feet, continuing along the East
line of said 22.71 acre tract, to a set 5/8 inch iron rod for angle point;
<PAGE> 64
THENCE S 00 deg. 51 min. 00 sec. E, 389.07 feet along the East line of said
22.71 acre tract being Westerly of, parallel with and 50 feet perpendicular
distance from the centerline of said flood wall, to a set 5/8 inch iron rod set
for the Southerly Southeast corner of said 22.71 acre tract;
THENCE along the South and West lines of said 22.71 acre tract the following 7
courses and distances:
S 89 deg. 05 min. 40 sec. W, 625.02 feet, to a set 5/8 inch iron rod for
corner;
N 00 deg. 45 min. 50 sec. W, 250.18 feet to a set 5/8 inch iron rod for angle
point;
N 32 deg. 28 min. 30 sec. W, 25.00 feet to a set 5/8 inch iron rod for corner;
S 57 deg. 31 min. 30 sec. W, 125.64 feet to a set 5/8 inch iron rod being a
point on a curve having a central angle 23 deg. 58 min. 00 sec., a radius of
591.30 feet the center of said curve being located on a radial line bearing N
32 deg. 28 min. 30 sec. W, from said point;
Southwesterly for an arc distance of 247.34 feet to a set 5/8 inch iron rod for
corner;
S 81 deg. 29 min. 30 sec. W. 247.16 feet to a set 5/8 inch iron rod for corner,
N 05 deg. 19 min. 30 sec. W, 432.98 feet to a set 5/8 inch iron rod for corner;
THENCE S 60 deg. 53 min. 20 sec. W, 337.40 feet along the South line of that
certain 15.91 acres of land described in a deed dated October 2, 1951, from
Texas City Terminal Railroad Company to Monsanto Chemical Company filed at
Volume 913, Page 467, Galveston County Deed Records, to a found 1 inch iron rod
for angle point;
THENCE S 81 deg. 22 min. 40 sec. W, 755.00 feet continuing along the South line
of said 15.91 acre tract, to a found 1 inch iron rod being a point of a curve
having a central angle of 98 deg. 10 min. 48 sec., a radius of 308.00 feet the
center of said curve being located on a radial line bearing N 08 deg. 40 min.
49 sec. W, from said point;
THENCE in a Northwesterly direction for an arc length of 527.78 feet to a found
3/4 inch iron pipe;
THENCE N 00 deg. 23 min. 20 sec. W, 1,143.15 feet along the East right-of-way
line of Sixth Street (100' wide) to a set 5/8 inch iron rod for corner;
THENCE N 89 deg. 36 min. 40 sec. E, 472.66 feet along the South right-of-way
line of Fourth Avenue South (70' wide) to a set 5/8 inch iron rod for corner;
<PAGE> 65
THENCE N 00 deg. 23 min. 20 sec. W, passing at 70.00 feet the Southwest corner
of Block 82, Texas City First Addition according to the plat thereof filed at
Volume 254A, Page 28, Galveston County Deed Records, and continuing along the
East right-of-way line of Fifth Street (75' wide) for a total distance of
195.00 feet to a 5/8 inch iron rod set for the Northwest corner of said Block
82;
THENCE N 89 deg. 36 min. 40 sec. E, 290.00 feet along the North line of said
Block 82, to a 5/8 inch iron rod set for the Northwest corner of Lot 12 of said
Block 82;
THENCE N 00 deg. 23 min. 20 sec. W, 145.00 feet to a 5/8 inch iron rod set for
the Northwest corner of Lot 16, Block 81 of said Texas City First Addition;
THENCE N 89 deg. 36 min. 40 sec. E, along the South right-of-way line of Third
Avenue South (70' wide), passing at 110.00 feet the Northeast corner of said
Block 81, and continuing for a total distance of 210.00 feet to a 5/8 inch iron
rod set for the Northwest corner of Block 83 of said Texas City First Addition;
THENCE N 00 deg. 23 min. 20 sec. W, passing at 70.00 feet the Southwest corner
of Block 40, of said Texas City First Addition and continuing along the East
right-of-way line of Fourth Street (100' wide) for a total distance of 195.00
feet to a 5/8 inch iron rod set for the Northwest corner of said Block 40.
THENCE N 89 deg. 36 min. 40 sec. E, 400.00 feet along the North line of said
Block 40 to a 5/8 inch iron rod set for the Northeast corner of said Block 40;
THENCE N 00 deg. 23 min. 20 sec. W, 5.00 feet to a set 5/8 inch iron rod for
corner;
THENCE N 89 deg. 36 min. 40 sec. E, 70.00 feet along the North line of that
portion of Third Street abandoned by Ordinance dated December 21, 1977;
THENCE S 00 deg. 23 min. 20 sec. E, 5.00 feet to a set 5/8 inch iron rod;
THENCE N 89 deg. 36 min. 40 sec. E, 50.80 feet to a point marking the Northeast
corner of said Block 37;
THENCE N 00 deg. 23 min. 20 sec. W, 78.40 feet along the Southerly East line of
said Texas City First Addition, to a set 5/8 inch iron rod for corner,
THENCE N 89 deg. 36 min. 40 sec. E, 1,405.01 feet along the South line of
Blocks 36, 13 and 12, of said Texas City First Addition, to a set 5/8 inch iron
rod for corner,
THENCE N 00 deg. 26 min. 50 sec. W, 1,867.69 feet along the East right-of-way
line of Bay
<PAGE> 66
Street (100' wide) to the POINT OF BEGINNING and containing 237.0539 acres of
land, more or less.
TRACT 87:
A survey of a 0.0871 acre tract of land out of the John Grant Survey A-72,
Texas City, Galveston County, Texas and being more particularly described by
metes and bounds as follows:
COMMENCING at a point on the centerline of Texas Avenue, in the City of Texas
City, said point being 41.00 feet East of the West line of Bay Street;
THENCE South 00 deg. 23 min. 20 sec. East, a distance of 2,851.30 feet to a
point for corner;
THENCE South 35 deg. 20 min. 20 sec. West, a distance of 315.35 feet to a point
for corner, said corner being the Southeast corner of Sterling Chemicals
(formerly Monsanto Company);
THENCE South 89 deg. 05 min. 40 sec. West, along the South line of said
Sterling Chemicals, same being a common line of a 0.0804 acre tract (for a Corp
of Engineer's Easement) and a common line of a 3.3175 acre tract (Tract "A",
Monsanto Company) a distance of 627.11 feet to a Brass Disc set for corner and
the POINT OF BEGINNING for the herein described tract;
THENCE South 54 deg. 14 min. 10 sec. West, at a distance of 25.60 feet pass a
5/8 inch iron rod set for reference, in all a distance of 75.60 feet to a P.K.
nail set for corner;
THENCE North 35 deg. 45 min. 50 sec. West, a distance of 50.00 feet to a P.K.
nail set for Corner;
THENCE North 54 deg. 14 min. 10 sec. East, a distance of 50.00 feet to a 5/8
inch iron rod set for corner;
THENCE North 89 deg. 05 min. 40 sec. East, a distance of 49.65 feet to Brass
Disc set for corner on the property line of said Sterling Chemicals, same being
a common line with said 3.3175 acre tract;
THENCE South 00 deg. 45 min. 50 sec. East, a distance of 26.40 feet to the
PLACE OF BEGINNING.
<PAGE> 67
Sterling Greenbelt Lots/Mortgage
SCHEDULE 1
PART II
PROPERTY DESCRIPTION
TRACT 1
Lots One (1) and (2), both in Block Five (5), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 2
Lots Three (3) and Four (4), both in Block Five (5), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 3
Lots Five (5) and Six (6), both in Block Five (5), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 4
Lot Seven (7), Block Five (5), Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the Office of the County Clerk of Galveston County, Texas.
TRACT 5
Lots Eight (8) and Nine (9), both in Block Five (5), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
<PAGE> 68
TRACT 6
Lot Ten (10), Block Five (5), Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the Office of the County Clerk of Galveston County, Texas.
TRACT 7
Lots Twelve (12), Thirteen (13) and Fourteen (14), all in Block Five (5), Texas
City First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 8
Lots Fifteen (15) and Sixteen (16), both in Block Five (5), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 9
Lots One (1) and Two (2), both in Block Six (6), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 10
Lots Three (3) and Four (4), both in Block Six (6), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 11
Lots Five (5) and Six (6), both in Block Six (6), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 12
Lots Ten (10) and Eleven (11), both in Block Six (6), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the
<PAGE> 69
Office of the County Clerk of Galveston County, Texas.
TRACT 13
Lots One (1), Two (2) and Three (3), all in Block Seven (7), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 14
Lots Five (5) and Six (6), both in Block Seven (7), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 15
Lots Seven (7) and Eight (8), both in Block Seven (7), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 16
Lots Nine (9) and Ten (10), both in Block Seven (7), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 17
Lot Eleven (11), Block Seven (7), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 18
Lots Twelve (12) and Thirteen (13), both in Block Seven (7), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 19
Lot Fourteen (14), Block Seven (7), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
<PAGE> 70
TRACT 20
Lots Three (3) and Four (4), both in Block Eight (8), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 21
Lots Five (5) and Six (6), both in Block Eight (8), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 22
Lots Seven (7) and Eight (8), both in Block Eight (8), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 23
Lots Nine (9) and Ten (10), both in Block Eight (8), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 24
Lots Eleven (11) and Twelve (12), both in Block Eight (8), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 25
Lot Fifteen (15), Block Eight (8), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 26
Lot Sixteen (16), Block Eight (8), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
<PAGE> 71
TRACT 27
Lots One (1) and Two (2), both in Block Nine (9), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 28
Lots Five (5) and Six (6), both in Block Nine (9), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 29
Lots Fifteen (15) and Sixteen (16), both in Block Nine (9), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 30
The North one-half (1/2) of Lots One (1) and Two (2), and all of Lots Three (3)
and Four (4), all in Block Fourteen (14), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 31
Lots Four (4) and Five (5) in Block Fifteen (15), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 32
Lots Eight (8), Nine (9) and Ten (10), all in Block Fifteen (15), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 33
Lot Eleven (11), Block Fifteen (15), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
PAGE 26, in the Office of the County Clerk of Galveston County, Texas.
<PAGE> 72
TRACT 34
Lot Twelve (12), Block Fifteen (15), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 35
Lots Thirteen (13) and Fourteen (14), both in Block Fifteen (15), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 36
Lots Fifteen (15) and Sixteen (16), both in Block Fifteen (15), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 37
Lots Four (4) and Five (5), both in Block Sixteen (16), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 38
Lot Seven (7), and the West one-half (1/2) of Lot Eight (8), both in Block
Sixteen (16), Texas City First Division, in Galveston County, Texas, according
to the map or plat thereof, recorded in Volume 113, Page 26, in the Office of
the County Clerk of Galveston County, Texas.
TRACT 39
The East one-half (1/2) of Lot Eight (8), and all of Lots Nine (9) and Ten
(10), all in Block Sixteen (16), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 40
Lot Twelve (12), Block Sixteen (16), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
<PAGE> 73
TRACT 41
Lot Thirteen (13), Block Sixteen (16), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 42
Lots One (1), Two (2), Three (3) and Four (4), all in Block Seventeen (17),
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
TRACT 43
Lots Five (5) and Six (6), both in Block Seventeen (17), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 44
Lots Seven (7), Eight (8), Nine (9) and Ten (10), all in Block Seventeen (17),
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
TRACT 45
Lot Twelve (12), Block Seventeen (17), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 46
Lots Five (5), Six (6), Seven (7), Eight (8), Nine (9) and Ten (10), all in
Block Eighteen (18), Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
Office of the County Clerk of Galveston County, Texas.
[TRACTS 47-50 INTENTIONALLY DELETED]
TRACT 51
The South one-third (1/3) of Lots Thirteen (13), Fourteen (14), Fifteen (15),
and Sixteen (16), all in Block Thirty (30), Texas City First Division, in
Galveston County, Texas, according to the
<PAGE> 74
map or plat thereof, recorded in Volume 113, Page 26, in the Office of the
County Clerk of Galveston County, Texas.
TRACT 52
Lots Five (5) and Six (6) both in Block Thirty-Two (32), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 53
Lots Seven (7) and Eight (8), both in Block Thirty-Two (32), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 54
Lots Nine (9) and Ten (10), both in Block Thirty-Two (32), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 55
Lots One (1), Two (2), Three (3) and Four (4), all in Block Thirty-Three (33),
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
TRACT 56
Lots Seven (7) and Eight (8), both in Block Thirty-Three (33), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 57
Lot Nine (9), Block Thirty-Three (33), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 58
Lot Ten (10), Block Thirty-Three (33), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the
<PAGE> 75
map or plat thereof,recorded in Volume 113, Page 26, in the Office of the
County Clerk of Galveston County, Texas.
TRACT 52
Lots Five (5) and Six (6), both in Block Thirty-Two (32), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 53
Lots Seven (7) and Eight (8), both in Block Thirty-Two (32), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 54
Lots Nine (9) and Ten (10), both in Block Thirty-Two (32), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 55
Lots One (1), Two (2), Three (3) and Four (4), all in Block Thirty-Three (33),
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
TRACT 56
Lots Seven (7) and Eight (8), both in Block Thirty-Three (33), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 57
Lot Nine (9), Block Thirty-Three (33), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 58
Lot Ten (10), Block Thirty-Three (33), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the
<PAGE> 76
County Clerk of Galveston County, Texas.
TRACT 59
Lot Eleven (11), Block Thirty-Three (33), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 60
Lots Thirteen (13) and Fourteen (14), both in Block Thirty-Three (33), Texas
City First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 61
Lots Fifteen (15) and Sixteen (16), both in Block Thirty-Three (33), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 62
Lots Six (6) and Seven (7), both in Block Thirty-Four (34), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 63
Lot Eight, Block Thirty-Four (34), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 64
An undivided one-half (1/2) interest in lots One (1) and Two (2), both in Block
Thirty-Five (35), Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
Office of the County Clerk of Galveston County, Texas.
TRACT 65
Lots Fifteen (15) and Sixteen (16), both in Block Thirty-Five (35), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
<PAGE> 77
TRACT 66
Lots One (1) and Two (2), both in Block Forty-One (41), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 67
Lot Six (6), Block Forty-One (41), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 68
Lots Nine (9) and Ten (10), both in Block Forty-One (41), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 69
Lots One (1), Two (2), Three (3) and Four (4), all in Block Forty-Two (42),
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
TRACT 70
Lot Five (5), Block Forty-Two (42), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 71
Lot Nine (9), Block Forty-Two (42), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 72
Lot Ten (10), Block Forty-Two (42), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
<PAGE> 78
TRACT 73
Lots Eleven (11) and Twelve (12), both in Block Forty-Two (42), Texas City
First Division. in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 74
Lots Fifteen (15) and Sixteen (16), both in Block Forty-Two (42), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 75
Lots One (1) and Two (2), both in Block Forty-Three (43), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 76
Lots Six (6), Seven (7) and Eight (8), all in Block Forty-Three (43), Texas
City First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 77
Lot Nine (9), Block Forty-Three (43), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 78
Lot Ten (10), Block Forty-Tbree (43), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 79
Lots Fourteen (14), Fifteen (15) and Sixteen (16), all in Block Forty-Three
(43), Texas City First Division, in Galveston County, Texas, according to the
map or plat thereof, recorded in Volume 113, Page 26, in the Office of the
County Clerk of Galveston County, Texas.
<PAGE> 79
TRACT 80
Lots One (1) and Two (2), both in Block Forty-Four (44), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 81
Lots Three (3) and Four (4), both in Block Forty-Four (44), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 82
Lot Five (5), Block Forty-Four (44), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 83
Lots Six (6), Fifteen (15) and Sixteen (16), all in Block Forty-Four (44),
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
TRACT 84
Lot Seven (7), Block Forty-Four (44), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 85
Lot Eight (8), Block Forty-Four (44), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 86
Lot Nine (9), Block Forty-Four (44), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 87
<PAGE> 80
Lots Ten (10) and Eleven (11), both in Block Forty-Four (44), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 88
Lots Eleven (11), Twelve (12), Thirteen (13) and Fourteen (14), all in Block
Forty-Four (44), Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
Office of the County Clerk of Galveston County, Texas.
TRACT 89
Lots Thirteen (13), Fourteen (14), Fifteen (15) and Sixteen (16), all in Block
Sixty-One (61), Texas City First Division, in Galveston County, Texas,
according to the map or plat thereof, recorded in Volume 113, Page 26, in the
Office of the County Clerk of Galveston County, Texas.
TRACT 90
Lots One (1) and Two (2), both in Block Sixty-Three (63), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 91
Lots Three (3) and Four (4), both in Block Sixty-Three (63), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 92
Lot Five (5), Block Sixty-Three (63), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 93
Lots Six (6) and Seven (7), both in Block Sixty-Three (63), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 94
<PAGE> 81
Lot Twelve (12), Block Sixty-Three (63), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 95
Lots Thirteen (13) and the North fifteen feet (15') of Lot Fourteen (14), both
in Block Sixty-Three (63), Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26,
in the Office of the County Clerk of Galveston County, Texas.
TRACT 96
The South ten feet (10') of Lot Fourteen (14), and all of Lots Fifteen (15) and
Sixteen (16), all in Block Sixty-Three (63), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 97
Lots One (1) and Two (2), both in Block Sixty-Four (64), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 98
Lots Five (5) and Six (6), both in Block Sixty-Four (64), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 99
An undivided one-half (1/2) interest in and to Lots Seven (7), Eight (8) and
Nine (9), all in Block Sixty-Four (64), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 100
Lots Ten (10) and Eleven (11), both in Block Sixty-Four (64), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 101
<PAGE> 82
Lot Twelve (12), Block Sixty-Four (64), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 102
Lots Thirteen (13) and Fourteen (14), both in Block Sixty-Four (64), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 103
Lots Fifteen (15) and Sixteen (16), both in Block Sixty-Four (64), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 104
Lots One (1), Two (2) and Three (3), all in Block Sixty-Five (65), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 105
Lot Four (4), Block Sixty-Five (65), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 106
Lots Five (5) and Six (6), both in Block Sixty-Five (65), Texas City First
Division, in Galveston County, Texas, according to the map or PLAT thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 107
Lots Seven (7) and Eight (8), both in Block Sixty-Five (65), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 108
<PAGE> 83
Lots Nine (9) and Ten (10), both in Block Sixty-Five (65), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 109
Lots Thirteen (13) and Fourteen (14), both in Block Sixty-Five (65), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 110
Lots Fifteen (15) and Sixteen (16), both in Block Sixty-Five (65), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 111
Lots One (1), Two (2) and Three (3), all in Block Sixty-Six (66), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 112
Lots Six (6), Seven (7) and Eight (8), all in Block Sixty-Six (66), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 113
Lots Nine (9) and Ten (10), both in Block Sixty-Six (66), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 114
Lots Eleven (11) and Twelve (12), both in Block Sixty-Six (66), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 115
Lots Thirteen (13) and Fourteem (14), both in Block Sixty-Six (66), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page
<PAGE> 84
26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 116
Lots Fifteen (15) and Sixteen (16), both in Block Sixty-Six (66), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 117
Lots One (1), Two (2) and Three (3), all in Block Sixty-Seven (67), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 118
Lots Six (6) and Seven (7), all in Block Sixty-Seven (67), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 119
Lots Eight (8) and Nine (9), both in Block Sixty-Seven (67), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 120
Lots Ten (10), Eleven (11) and Twelve (12), all in Block Sixty-Seven (67),
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
TRACT 121
Lots Thirteen (13) and Fourteen (14), both in Block Sixty-Seven (67), Texas
City First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 122
Lots Fifteen (15) and Sixteen (16), both in Block Sixty-Seven (67), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
<PAGE> 85
TRACT 123
Lots One (1), Two (2), Three (3) and Four (4), all in Block Sixty-Eight (68),
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
TRACT 124
Lots Six (6) and Seven (7), both in Block Sixty-Eight (68), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 125
Lot Eight (8), Block Sixty-Eight (68), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 126
Lot Nine (9), Block Sixty-Eight (68), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 127
Lots Ten (10), Thirteen (13) and Fourteen (14), all in Block Sixty-Eight (68),
Texas City First Division, in Galveston County, Texas, according to the map or
plat thereof, recorded in Volume 113, Page 26, in the Office of the County
Clerk of Galveston County, Texas.
TRACT 128
Lots Eleven (11) and Twelve (12), both in Block Sixty-Eight (68), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 129
Lots Fifteen (15) and Sixteen (16), both in Block Sixty-Eight (68), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
<PAGE> 86
TRACT 130
Lots Nine (9) and Ten (10), both in Block Sixty-Nine (69), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 131
Lots One (1) and Two (2), both in Block Seventy-Nine (79), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 132
Lots Five (5) and Six (6), both in Block Eighty-One (81), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 133
Lots Seven (7) and Eight (8), both in Block Eighty-One (81), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 134
Lots Nine (9), Ten (10) and Eleven (11), all in Block Eighty-One (81), Texas
City First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 135
Lots Nine (9), Ten (10) and Eleven (11), in Block Nine (9), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 136
Lots Three (3), Four (4) and Five (5), in Block Forty-Three (43), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
<PAGE> 87
SCHEDULE 2
Permitted Encumbrances
[ ]
<PAGE> 88
SCHEDULE 2
Permitted Encumbrances
EXCEPTIONS FROM COVERAGE
In addition to the Exclusions and Conditions and Stipulations, your Policy
will not cover loss, costs, attorney's fees, and expenses resulting from:
1. The following restrictive covenants of record itemized below (We must
either insert specific recording data or delete this exception):
Any covenants, conditions or restrictions indicating a preference,
limitation or discrimination based on race, color, religion, sex,
handicap, familial status, or national origin are hereby deleted to the
extent such covenants, conditions or restrictions violate 42 USC
3604(c). Those recorded in Volume 245, Page 556, Volume 355, Page 178,
Volume 343, Page 596 and Volume 345, Page 494, in the Office of the
County Clerk of Galveston County, Texas. (As to Tract 1)
Any covenants, conditions or restrictions indicating a preference,
limitation or discrimination based on race, color, religion, sex,
handicap, familial status, or national origin are hereby deleted to the
extent such covenants, conditions or restrictions violate 42 USC
3604(c). Those recorded in Volume 349, Page 514, of the Deed Records of
Galveston County, Texas (As to Tract 20)
Any covenants, conditions or restrictions indicating a preference,
limitation or discrimination based on race, color, religion, sex,
handicap, familial status, or national origin are hereby deleted to the
extent such covenants, conditions or restrictions violate 42 USC
3604(c). Those recorded in Volume 339, Page 501, of the Deed Records of
Galveston County, Texas (As to Tract 23, Lots 6 and 7 only)
Any covenants, conditions or restrictions indicating a preference,
limitation or discrimination based on race, color, religion, sex,
handicap, familial status, or national origin are hereby deleted to the
extent such covenants, conditions or restrictions violate 42 USC
3604(c). Restrictions to the extent same are still in effect, affecting
Lots 6 and 7, herein above described, imposed thereon by instrumental
recorded in Volume 647, Page 389, in the Office of the County Clerk of
Galveston County, Texas (As to Tract 48)
Any covenants, conditions or restrictions indicating a preference,
limitation or discrimination based on race, color, religion, sex,
handicap, familial status, or national origin are hereby deleted to the
extent such covenants, conditions or restrictions violate 42 USC
3604(c). Those recorded in Volume 241, Page 299, of the Deed Records of
Galveston County, Texas (As to Tract 50; Lots 15 and 16 only)
Any covenants, conditions or restrictions indicating a preference,
limitation or discrimination based on race, color, religion, sex,
handicap, familial status, or national origin are hereby deleted to the
extent such covenants, conditions or restrictions violate 42 USC
3604(c). Those recorded in Volume 355, Page 360, Volume 265, Page 559,
Volume 385, Page 481, Volume 355, Page 441, Volume 761, Page 447, Volume
913, Page 467 and Volume 343, Page 596, of the County Clerk's Records of
Galveston County, Texas (As to Tract 86A)
Any covenants, conditions or restrictions indicating a preference,
limitation or discrimination based on race, color, religion, sex,
handicap, familial status, or national origin are hereby deleted to the
extent such covenants, conditions or restrictions violate 42 USC
3604(c). Item No. 1, Schedule B, is hereby deleted. (As to Tracts 2 to
19; Tracts 21 and 22; Tract 23, Lot 5, Tracts 24 to 47; Tracts 48, Lots
3, 4 and 5; Tract 49; Tract 50, Lot 14; Tracts 51 to 80, 82, 83, 85 and
86 and 87)
2. Any discrepancies, conflicts, or shortages in area or boundary lines, or
any encroachments or provisions, or any overlapping or improvements.
(This exception is hereby amended to read "Shortages in Area", as to
Tract 86A, only).
<PAGE> 89
-continued
5. Standby fees, taxes and assessments by any taxing authority for the year
1999, and subsequent years, and subsequent taxes and assessments by any
taxing authority for prior years due to change in land usage or ownership.
6. The terms and conditions of the documents creating your interest in the land.
8. Liens and leases that affect the title to the land, but that are subordinate
to the lien of the insured mortgage. (Applies to Mortgage Policy only.)
9. The following matters and all terms of the documents creating or offering
evidence of the matters. We must insert matters or delete this exception):
As to Tract One:
b. Easement and lease 30 feet x 50 feet parcel of land in Lots 4 and 5. Block
80, granted to Houston Pipe Line Company as set forth in instrument recorded
in Volume 1731, Page 738, in the Office of the County Clerk of Galveston
County, Texas.
As to Tract 15:
c. The rights and claims of co-tenants in the land and minerals to the rights of
anyone claiming under them, including but not limited to rights of partition,
claims for improvements, claims for reimbursement, owelty of partition and
agreements between co-tenants.
<PAGE> 90
-continued
As to Tract 26:
d. Subject to the terms, conditions and stipulations as set out in instrument
reserving a 1/2 interest in and to all oil, gas and other minerals, with the
rights of ingress and egress, recorded in Volume 3283, Page 272, in the
office of the County Clerk of Galveston County, Texas.
As to Tract 50:
e. Pipeline easement granted to Houston Pipe Line Company by instrument recorded
in Volume 945, Page 485, of the Deed Records of Galveston County, Texas.
As to Tract 69:
f. Easement granted to the City of Texas City, as evidenced by instrument dated
November 30, 1932 and recorded in Volume 485, Page 180, of the County Clerk's
Records of Galveston County, Texas.
g. An easement and right-of-way for the purposes of constructing and maintaining
such seawall, breakwater, levee, dike, concrete wall, and boulevard over and
upon that certain tract of land, granted to the County of Galveston, Texas,
by instrument recorded in Volume 487, Page 3, of the Deed Records of
Galveston County, Texas.
h. An easement of right-of-way to construct and maintain a concrete pipe storm
drain on and over subject property, granted to the City of Texas City, Texas,
by instrument recorded in Volume 1347 Page 45, of the Deed Records of
Galveston County, Texas.
As to Tract 86A:
i. Reservations of all minerals on undivided 1/6 interest, the royalties,
bonuses and rentals, and all other rights in connection with said mineral
rights, bonuses, and rentals as described in deed recorded in Volume 599,
Page 140, in the office of the County Clerk of Galveston County, Texas;
reference to which instrument is here made for all purposes, together with
all rights express or implied in and to the property covered by this
commitment arising out of or connected with said interest. Title to said
interest not checked subsequent to date of aforesaid instrument.
j. Easement for right-of-way purposes granted to the County of Galveston by
instrument recorded in Volume 559, Page 160, of the Deed Records of Galveston
County, Texas.
k. Easement for right-of-way purposes granted to the City of Texas City by
instrument recorded in Volume 769, Page 482, of the Deed Records of Galveston
County, Texas, as amended by instrument recorded under County Clerk's File
No. 8135051.
l. Easements for right-of-way purposes reserved by Texas City Terminal Railway
Company located by instrument recorded in Volume 761, Page 447, of the Deed
Records of Galveston County, Texas; as amended by agreement to relocate
railroad right-of-way dated July 30, 1986, recorded under Galveston County
Clerk's File No.). 8628662.
m. Easement granted to the County of Galveston, as evidenced by instrument dated
November 30, 1932, and recorded in Volume 485, Page 184, of the County
Clerk's Records of Galveston County, Texas.
n. Easement granted to the City of Texas City as evidenced by instrument dated
November 30, 1932, and recorded in Volume 485, Page 180, of the County
Clerk's Records of Galveston County, Texas.
o. Easement for pipeline purposes granted to Exxon Pipeline Company by
instrument recorded in Volume 2837, Page 350, of the Deed Records of
Galveston County, Texas.
<PAGE> 91
SCHEDULE B -- continued
p. Easements for pipeline purposes granted to Air Products and Chemicals,
Inc., by instrument filed for record in the office of the County Clerk of
Galveston County, Texas, under County Clerk's File No. 8103835 and
Galveston County Clerk's File No(s). 8124070.
q. Easement for pipeline granted to Union Carbide Corporation by instrument
recorded in Volume 1227, Page 212, of the Deed Records of Galveston County,
Texas.
r. Easement granted by Texas City Terminal Railway Company and Terminal
Industrial Land Company to Southwestern Bell Telephone Company dated August
12, 1947, and recorded in Volume 763, Page 71, of the Deed Records of
Galveston County, Texas.
s. Easement granted by Texas City Terminal Railway Company and Terminal
Industrial Land Company to Community Public Service Company dated September
18, 1947, and recorded in Volume 750, Page 94, of Deed Records of Galveston
County, Texas.
t. An easement to lay, construct, maintain, operate, repair, and remove a
24-inch steel pipeline and 12-inch branch including metering devices,
fenced enclosure and shelter for metering devices, and necessary valves,
for the transportation of natural gas, on or under that subject property,
granted to Houston Pipe Line Company, by instrument recorded in Volume 945,
Page 485, of the Deed Records of Galveston County, Texas.
u. Easements reserved by Texas City Terminal Railway Company over and across
subject property, located and clarified by instrument dated October 2,
1951, and recorded in Volume 913, Page 467, of the Deed Records of
Galveston County, Texas, except Tract IV released by instrument dated March
20, 1952, as amended by agreement by and between Texas City Terminal
Railway Company and Monsanto Chemical Company dated October 2, 1951, as
evidenced by instrument recorded in Volume 922, Page 237, of the Deed
Records of Galveston County, Texas; as amended by agreement to relocate
railroad right-of-way dated July 30, 1986, recorded under Galveston County
Clerk's File No. 8628662.
v. I. Easements for seaway purposes granted to the United States of America
by instrument recorded in Volume 2169, Page 264, of the Deed Records of
Galveston County, Texas. II. Easement granted by Monsanto Company to the
County of Galveston for the construction and maintenance of seawall
facilities by instrument recorded in Volume 2239, Page 211 of the Deed
Records of Galveston County, Texas.
w. Oil, gas and mineral lease dated April 5, 1961, by and between Texas City
Terminal Railway Company, a Texas corporation, as lessor, and the British
American Oil Producing Company, as lessee, recorded in Volume 1434, Page
221, of the Deed Records of Galveston County, Texas.
x. An easement and right-of-way for the purposes of constructing and
maintaining such seawall, break-water, levee, dike, concrete wall, and
boulevard over and upon that certain tract of land, granted to the County
of Galveston, Texas, by instrument recorded in Volume 487, Page 3 of the
Deed Records of Galveston County, Texas.
y. Pipeline easement granted to Magnolia Pipe Line Company, as set forth in
instrument recorded in Volume 1187, Page 126, and in Volume 1245, Page 329,
of the Deed Records of Galveston County, Texas.
z. Right-of-way and agreement by and between Texas City Terminal Railway
Company and Humble Oil & Refining Company, dated February 28, 1958,
recorded in Book 1255, Page 420, of the Deed Records of Galveston County,
Texas.
aa. A perpetual easement for right-of-way to lay, construct, improve, renew,
inspect, maintain, repair, and remove a railroad track or tracks, together
with the necessary switches and appurtenances thereto and house, occupy,
enjoy, maintain and operate a line of railroad over said strip of land,
reserved to Texas City Terminal Railway Company by instrument recorded in
Volume 1335, Page 38, of the Deed Records, of Galveston County, Texas.
<PAGE> 92
-continued
bb. Easement of right-of-way for a drainage ditch from Texas City Terminal
Railway Company to the City of Texas City, Texas, dated the 21st day of
August, 1959, recorded in Volume 1327, Page 543, of the Deed Records of
Galveston County, Texas.
cc. An easement of right-of-way to construct and maintain a concrete pipe Storm
drain on and over subject property, granted to the City of Texas City,
Texas, by instrument recorded in Volume 1347, Page 45, of the Deed Records
of Galveston County, Texas.
dd. Easement and agreement entered into by and between Monsanto Company and the
County of Galveston County, Texas, by instrument dated December 12, 1966,
recorded in Volume 1829, Page 318, of the Deed Records of Galveston County,
Texas.
ee. Terms, conditions and stipulations of that certain agreement by and between
Monsanto Company and the County of Galveston, recorded in Volume 2982, Page
594, and in Volume 3033, Page 510, of the Deed Records of Galveston County,
Texas.
ff. Easement granted to Houston Pipe Line Company by instrument recorded under
County Clerk's File No. 8621409, in Galveston County, Texas, and being
amended by instrument recorded under Galveston County Clerk's File No(s).
9439348, and being more particularly described and located therein.
As to Tracts 52, 53, 54, 57, 58, 59, 63, 64, 65, 66, and 86A;
gg. Easement and agreement entered into by and between Monsanto Company and the
County of Galveston County, Texas by instrument dated December 12, 1966,
recorded in Volume 1829, Page 318, of the Deed Records of Galveston County,
Texas.
As to Tract 74:
hh. Terms, conditions and stipulations of that certain easement on Coastal
Public Land No. CE-82-051 dated January 12, 1983, from the State of Texas,
to Monsanto Company filed for record in the office of the County Clerk of
Galveston County, Texas, under County Clerk's File No. 8302396.
As to Tract 75:
ii. Terms, conditions and stipulations of that certain lease dated September 1,
1974, by and between Texas City Terminal Railway Company, as lessor, and
Monsanto Company, a Corporation, as lessee of a 3.3175 acre parcel of land
for a term of 30 years with four options to extend for an additional 5 years
each; as described in instrument recorded under Galveston County Clerk's
File No(s) 8628664.
As to Tract 76:
jj. Terms, conditions and stipulations of those certain easements granted to
Union Carbide Chemicals Company dated August 9, 1957, recorded in Volume
1227, Page 207, and to Union Carbide Corporation dated August 26, 1957
recorded in Volume 1227, Page 322, of the Deed Records of Galveston County,
Texas, known as Line 6, and as set forth in instruments recorded under
Galveston County Clerk's File No(s). 8132304 and 8628665.
As to Tract 77:
kk. Terms, conditions and stipulations of that certain unrecorded easement dated
August 13, 1951, and August 9, 1951, granted to Monsanto Chemical Company,
known as Line No. 11, as set forth in instrument recorded under Galveston
County Clerk's File No(s). 8628665.
<PAGE> 93
-continued
As to Tract 78:
ll. Terms, conditions and stipulations of that certain easement dated March 28,
1951, granted to Sid Richardson Refining Company and Monsanto Chemical
Company, recorded in Volume 1144, Page 638, of the Deed Records of Galveston
County, Texas, known as Line No. 19, and as set forth in instrument recorded
under Galveston County Clerk's File No(s). 8628665.
As to Tract 79:
mm. Terms, conditions and stipulations of that certain easement dated January
28, 1982, granted to Monsanto Company by instrument recorded under County
Clerk's File No. 8211566, in Galveston County, Texas, known as Line Nos. 20
and 21, and as set forth in instrument recorded under Galveston County
Clerk's File No(s). 8628665.
as to Tract 80:
nn. Terms, conditions and stipulations of that certain unrecorded easement dated
September 9, 1965, granted to Monsanto Company known as Line Nos. 24 and 26,
as set forth in instrument recorded under Galveston County Clerk's File
No(s). 8628665.
As to Tract 82:
oo. Pipeline right-of-way dated July 25, 1975, granted to Monsanto Company,
known as Line No. 28, and as set forth in instrument recorded under
Galveston County Clerk's File No(s). 8628665.
As to Tract 83:
pp. Terms and conditions contained in the instrument dated November 12, 1976,
between Amoco Texas Refining Company and Monsanto Company as recorded in
Volume 2793, Page 309, of the Deed Records of Galveston County, Texas, known
as Line No. 29, and as set forth in instrument recorded under Galveston
County Clerk's File No(s). 8628665.
As to Tract 86A:
qq. Pipeline easement granted to Shell Pipe Line Corporation by instruments
recorded under Galveston County Clerk's File No(s). 8818591 and being more
particularly described and located therein.
rr. Pipeline easement granted to Valero Transmission, L.P., by instrument
recorded under Galveston County Clerk's File No(s). 9238636 and being more
particularly described and located therein.
ss. Pipeline easement granted to Valero Transmission, L.P., by instrument
recorded under Galveston County Clerk's File No(s). 9238637 and being more
particularly described and located therein.
tt. Terms, conditions and stipulations contained in lease agreement dated
February 8, 1991, by and between Sterling Chemicals, Inc., as lessor and S&L
Cogeneration Company, as lessee, a memorandum of which is recorded under
Galveston County Clerk's File No(s). 9106661, and terms, conditions and
stipulations in first amendment of memorandum of ground lease recorded under
Galveston County Clerk's File No(s). 9136151, describing amendments to said
lease together with non-exclusive easements granted to lessee and being more
particularly described and located therein.
uu. Terms, conditions and stipulations contained in lease agreement dated
February 8, 1991, by and between Sterling Chemicals, Inc. as lessor and
Union Carbide Industrial Gases, Inc., as lessee, a memorandum of which is
recorded under Galveston County Clerk's File No(s). 9106662.
<PAGE> 94
-continued
vv. Terms, conditions and stipulations contained in lease agreement dated May
15, 1995, by and between Sterling Chemicals, Inc., as lessor and Praxair
Hydrogen Supply, Inc., as lessee, a memorandum of which is recorded under
Galveston County Clerk's File No(s). 9525564.
As to all Fee Tracts, except Tract 87:
ww. The right to use the surface of subject property for mineral exploration
waived as set out in instrument(s) recorded under Galveston County Clerk's
File No(s). 8628663.
As to Tract 86A:
xx. The following unrecorded easements as set forth in Deed dated August 1,
1986, recorded under Galveston County Clerk's File No(s). 8628663 from
Monsanto Company to Sterling Chemicals, Inc.
i) A 6-inch ethylene pipeline easement in favor of Gulf Oil Corporation
together with a 32-foot by 46-foot metering station.
ii) An easement for a propylene pipeline metering station in favor of
Amoco.
iii) An easement for a nitrogen pipeline metering station in favor of Big
Three Industries.
iv) A 20-foot utility easement in favor of the City of Texas City together
with a 2-inch gas line and 6-inch gas line.
v) An easement for a 20-foot by 40-foot meter site for Air Products and
Chemicals, Inc.
vi) An easement for a 32' by 55' meter station in favor of Mobil Oil
Corporation.
vii) An easement for a metering station in favor of Houston Pipeline
Company and appurtenant pipeline easements.
yy. Easements granted to Texaco Chemical Company by instrument recorded under
Galveston County Clerk's File No. 9232094 and being more particularly
described therein.
zz. Memorandum of Ground Lease dated 3/28/99 by and between Sterling Chemicals,
Inc., a Delaware corporation, as Lessor and Praxair Hydrogen Supply, Inc.,
a Delaware corporation, as Lessee, filed for record on 4/19/99, under
Galveston County Clerk's File No. 9918227, and all the terms, condition and
stipulations contained therein.
aaa. Non-exclusive easement dated 5/1/96, granted to Amoco Gas Company, for
pipeline right-of-way purposes and metering station granted in instrument
for record under Galveston County Clerk's File No. 9713205.
bbb. Terms, conditions and stipulations contained in Industrial Solid Waste
Certifications of Remediation filed for record under Galveston County
Clerk's File No(s). 9904937 and 9920250.
ccc. Storm Sewer Easements as set forth in instrument recorded in Volume 2927,
Page 531, of the Deed Records of Galveston County, Texas.
ddd. Four inch (4") benzene and eight inch (8") propylene easement described as
lines 25 and 28, as set forth in instrument recorded under Galveston County
Clerk's File No. 8628655.
As to Tract 87:
eee. Easement granted by Texas City Terminal Railway Company and Terminal
Industrial Land Company to Southwestern Bell Telephone Company dated August
12, 1947, and recorded in Volume 763, Page 71, of the Deed Records of
Galveston County, Texas.
<PAGE> 95
-continued
fff. The following easements reflected in deed dated March 28, 1994, recorded
under Galveston County Clerk's File No(s). 9423534:
1. Any easement or easement rights for a pipe rack traversing subject
property from the North property line to the Southeast property line as
disclosed by survey prepared by S.A. Duitscher, R.P.L.S. No. 2143, dated
February 3, 1993;
2. Any easement or easement rights for a fire wall traversing subject
property from the North property line to the Southeast property line as
disclosed by survey prepared by S.A. Duitscher, R.P.L.S. No. 2143, dated
February 3, 1993.
As to Tract 86A:
ggg. UCC-I Financing Statement, filed for record on February 2, 1994, recorded
under Galveston County Clerk's File No. 9405068, given by Sterling
Chemicals, Inc. as owner/debtor, granting unto BP Chemicals, Inc., as
creditor and secured party, a security interest in the subject property and
as continued by instrument filed for record under Galveston County Clerk's
File No. 9847776.
<PAGE> 96
Misc. Parcels/Mortgage
SCHEDULE 1
PART III
PROPERTY DESCRIPTION
TRACT 1
Lot Eleven (11), Block Five (5), Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26, in
the Office of the County Clerk of Galveston County, Texas.
TRACT 2
Lots Seven (7), Eight (8) and Nine (9), all in Block Six (6), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 3
Lots Twelve (12) and Thirteen (13), and the South one-half (2) of Lot Fourteen
(14), all in Block Six (6), Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26, in
the Office of the County Clerk of Galveston County, Texas.
TRACT 4
Lots Three (3) and Four (4), both in Block Nine (9), Texas City First Division,
in Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 5
Lot Seven (7), Block Nine (9), Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26, in
the Office of the County Clerk of Galveston County, Texas.
-1-
<PAGE> 97
TRACT 6
Lot Six (6), Block Sixteen (16), Texas City First Division, in Galveston County,
Texas, according to the map or plat thereof, recorded in Volume 113, Page 26, in
the Office of the County Clerk of Galveston County, Texas.
TRACT 7
Lots Fifteen (15) and Sixteen (16), both in Block Seventeen (17), Texas City
First Division, in Galveston County, Texas, according to the map or plat
thereof, recorded in Volume 113, Page 26, in the Office of the County Clerk of
Galveston County, Texas.
TRACT 8
Lot Four (4), in Block Twenty-Five (25), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 9
Lots Three (3) and Four (4), both in Block Thirty-Two (32), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 10
Lots Five (5) and Six (6), both in Block Thirty-Three (33), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 11
Lot Twelve (12), Block Thirty-Three (33), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 12
Lot Eleven (11), Block Forty-Three (43), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
-2-
<PAGE> 98
TRACT 13
Lot Twelve (12), Block Forty-Three (43), Texas City First Division, in Galveston
County, Texas, according to the map or plat thereof, recorded in Volume 113,
Page 26, in the Office of the County Clerk of Galveston County, Texas.
TRACT 14
Lot Thirteen (13), Block Forty-Three (43), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 15
Lots Eight (8), Nine (9), Ten (10) and Eleven (11), all in Block Sixty-Three
(63), Texas City First Division, in Galveston County, Texas, according to the
map or plat thereof, recorded in Volume 113, Page 26, in the Office of the
County Clerk of Galveston County, Texas.
TRACT 16
Lot Eleven (11), in Block Sixty-Five (65), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 17
Lot Twelve (12), in Block Sixty-Five (65), Texas City First Division, in
Galveston County, Texas, according to the map or plat thereof, recorded in
Volume 113, Page 26, in the Office of the County Clerk of Galveston County,
Texas.
TRACT 18
Lots Four (4) and Five (5), both in Block Sixty-Six (66), Texas City First
Division, in Galveston County, Texas, according to the map or plat thereof,
recorded in Volume 113, Page 26, in the Office of the County Clerk of Galveston
County, Texas.
TRACT 19
Any and all claims, if any, which Grantor may have, of adverse possession and
use to Lot 5 in Block 79 of Texas City First Division, a subdivision in
Galveston County, Texas according to the map or plat thereof recorded in Volume
113, Page 26, in the Office of the County Clerk of Galveston County, Texas.
-3-
<PAGE> 99
TRACT 20
Miscellaneous:
(i) Line No. 17.
A six inch (6") pipeline for the delivery of sludge for treatment from
Monsanto's "North 80" tract but insofar and only insofar as said pipeline lies
within the boundaries of the plant site.
(ii) Electric Power Line Right of Way dated April 20, 1971, to be effective from
and after June 1, 1970, between Texas City Terminal Railway Company and Monsanto
Company.
(iii) All rights and interests referred to or described in that certain
Assignment of Lease, Right of Way and Pipeline Easements and Bill of Sale from
Monsanto Company to Sterling Chemicals, Inc. dated as of August 1, 1986 recorded
under Clerk's File No. 8628666 in the Official Public Records of Real Property
of Galveston County, Texas.
-4-
<PAGE> 100
All Property
SCHEDULE 2
PERMITTED ENCUMBRANCES
A. RESTRICTIVE COVENANTS
1. The following restrictive covenants of record itemized below:
Those recorded in Volume 245, Page 556, Volume 355, Page 178, Volume
343, Page 596 and Volume 345, Page 494, in the office of the County
Clerk of Galveston County, Texas (As to Tract 1).
Those recorded in Volume 349, Page 514, of the Deed Records of
Galveston County, Texas (As to Tract 20).
Those recorded in Volume 339, Page 501, of the Deed Records of
Galveston County, Texas (As to Tract 23, Lots 6 and 7 only).
Restrictions to the extent same are still in effect, affecting Lots 6
and 7, hereinabove described, imposed thereon by instrument recorded in
Volume 647, Page 389, in the Office of the County Clerk of Galveston
County, Texas (As to Tract 48).
Those recorded in Volume 241, Page 299, of the Deed Records of
Galveston County, Texas (As to Tract 50; Lots 15 and 16 only).
Those recorded in Volume 355, Page 360, Volume 265, Page 559, Volume
385, Page 481, Volume 355, Page 441, Volume 761, Page 447, Volume 913,
Page 467 and Volume 343, Page 596, of the County Clerk's Records of
Galveston County, Texas (As to Tract 86A).
B. GENERAL MATTERS
2. Second Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing dated July 23, 1999 from Sterling
Chemicals, Inc., Trustor to , Trustee for the benefit of
Harris Trust Company of New York (As to all Tracts).
<PAGE> 101
3. Any discrepancies, conflicts, or shortages in area or boundary lines,
or any encroachments or protrusions, or any overlapping of
improvements. (As to all Tracts).
4. Homestead or community property or survivorship rights. (As to all
Tracts).
5. Any titles or rights asserted by anyone, including but not limited to,
persons, the public, corporations, governments or other entities,
a. to tidelands, or lands comprising the shores or beds of navigable or
perennial rivers and streams, lakes, bays, gulfs or oceans, or
b. to lands beyond the line of the harbor or bulkhead lines as
established or changed by any government, or
c. to filled-in lands, or artificial islands, or
d. to statutory water rights, including riparian rights, or
e. to the area extending from the line of mean low tide to the line of
vegetation, or the right of access to that area or easement along
and across that area. (As to all Tracts).
6. Standby fees, taxes and assessments by any taxing authority for the
year 1996 and subsequent years, and subsequent taxes and assessments by
any taxing authority for prior years due to change in land usage or
ownership. (As to all Tracts).
7. Rights of parties in possession. (As to all Tracts).
8. Defects, errors, irregularities and the like in connection with
abandonment and/or vacation procedures with respect to public roads and
alleys. (As to all Tracts).
9. Crew's, materialmen's, mechanics', carriers', workmen's, repairmen's,
warehousemen's, maritime, or other like liens arising in the ordinary
course of business for sums not yet due or which are actually being
contested in good faith. (As to all Tracts).
10. Rights in respect of surface operations for pipelines, drainage,
ditches and reservoirs. (As to Tract 86A).
C. SPECIFIC MATTERS
PART I
THE FOLLOWING MATTERS AFFECT THE PROPERTIES DESCRIBED IN SCHEDULE 1, PART I
AS TO TRACT 1:
11. Easement and lease 30' x 50' parcel of land in Lots 4 and 5, Block 80,
granted to Houston Pipe Line Company as set forth in instrument
recorded in Volume 1731, Page 738, in the Office of the County Clerk of
Galveston County, Texas.
-2-
<PAGE> 102
AS TO TRACT 15:
12. The rights and claims of co-tenants in the land and minerals to the
rights of anyone claiming under them, including but not limited to
rights of partition, claims for improvements, claims for reimbursement,
owelty of partition and agreements between co-tenants.
AS TO TRACT 26:
13. Subject to the terms, conditions and stipulations as set out in
instrument reserving a 1/2 interest in and to all oil, gas and other
minerals, with the rights of ingress and egress, recorded in Volume
3283, Page 272, in the Office of the County Clerk of Galveston County,
Texas.
AS TO TRACT 50:
14. Pipeline easement granted to Houston Pipe Line Company by instrument
recorded in Volume 945, Page 485, of the Deed Records of Galveston
County, Texas.
AS TO TRACT 69:
15. Easement granted to the City of Texas City, as evidenced by instrument
dated November 30, 1932 and recorded in Volume 485, Page 180, of the
County Clerk's Records of Galveston County, Texas.
16. An easement and right-of-way for the purposes of constructing and
maintaining such seawall, breakwater, levee, dike, concrete wall, and
boulevard over and upon that certain tract of land, granted to the
County of Galveston, Texas, by instrument recorded in Volume 487, Page
3, of the Deed Records of Galveston County, Texas.
17. An easement of right-of-way to construct and maintain a concrete pipe
storm drain on and over subject property, granted to the City of Texas
City, Texas, by instrument recorded in Volume 1347, Page 45, of the
Deed Records of Galveston County, Texas.
AS TO TRACT 86A:
18. Reservation of all minerals on undivided 1/6 interest, the royalties,
bonuses and rentals, and all other rights in connection with said
mineral rights, bonuses, and rentals as described in deed recorded in
Volume 599, Page 140, in the office of the County Clerk of Galveston
County, Texas.
19. Easement for right-of-way purposes granted to the County of Galveston
by instrument recorded in Volume 559, Page 160, of the Deed Records of
Galveston County, Texas.
-3-
<PAGE> 103
20. Easement for right-of-way purposes granted to the City of Texas City by
instrument recorded in Volume 769, Page 482, of the Deed Records of
Galveston County, Texas, as amended by instrument recorded under County
Clerk's File No. 8135051.
21. Easements for right-of-way purposes reserved by Texas City Terminal
Company located by instrument recorded in Volume 761, Page 447, of the
Deed Records of Galveston County, Texas; as amended by agreement to
relocate railroad right-of-way dated July 30, 1986, recorded under
Galveston County Clerk's File No(s). 8628662.
22. Easement granted to the County of Galveston, as evidenced by instrument
dated November 30, 1932, and recorded in Volume 485, Page 184, of the
County Clerk's Records of Galveston County, Texas.
23. Easement granted to the City of Texas City as evidenced by instrument
dated November 30, 1932, and recorded in Volume 485, Page 180, of the
County Clerk's Records of Galveston County, Texas.
24. Easement for pipeline purposes granted to Exxon Pipeline Company by
instrument recorded in Volume 2837, Page 350, of the Deed Records of
Galveston County, Texas.
25. Easement for pipeline purposes granted to Air Products and Chemicals,
Inc., by instrument filed for record in the office of the County Clerk
of Galveston County, Texas, under County Clerk's File No. 8103835.
Filed for record under Galveston County Clerk's File No (s). 8124070.
26. Easement for pipeline granted to Union Carbide Corporation by
instrument recorded in Volume 1227, Page 212, of the Deed Records of
Galveston County, Texas.
27. Easement granted by Texas City Terminal Railway Company and Terminal
Industrial Land Company to Southwestern Bell Telephone Company dated
August 12, 1947, and recorded in Volume 763, Page 71, of the Deed
Records of Galveston County, Texas.
28. Easement granted by Texas City Terminal Railway Company and Terminal
Industrial Land Company to Community Public Service Company dated
September 18, 1947, and recorded in Volume 750, Page 94, of the Deed
Records of Galveston County, Texas.
29. An easement to lay, construct, maintain, operate, repair, and remove a
24-inch steel pipeline and 12-inch branch including metering devices,
fenced enclosure and shelter for metering devices, and necessary
valves, for the transportation of natural gas, on or under that subject
property, granted to Houston Pipe Line Company, by instrument recorded
in Volume 945, Page 485, of the Deed Records of Galveston County,
Texas.
-4-
<PAGE> 104
30. Easements reserved by Texas City Terminal Railway Company over and
across subject property, located and clarified by instrument dated
October 2, 1951, and recorded in Volume 913, Page 467, of the Deed
Records of Galveston County, Texas, except Tract IV released by
instrument dated March 20, 1952, as amended by agreement by and between
Texas City Terminal Railway Company and Monsanto Chemical Company dated
October 2, 1951, as evidenced by instrument recorded in Volume 922,
Page 237, of the Deed Records of Galveston County, Texas; as amended by
agreement to relocate railroad right-of-way dated July 30, 1986,
recorded under Galveston County Clerk's File No(s). 8628662.
31. (i) Easement for seaway purposes granted to the United States of
America by instrument recorded in Volume 2169, Page 464, of the Deed
Records of Galveston County, Texas. (ii) Easement granted by Monsanto
Company to the County of Galveston for the construction and maintenance
of seawall facilities by instrument recorded in Volume 2239, Page 211,
of the Deed Records of Galveston County, Texas.
32. Oil, gas and mineral lease dated April 5, 1961, by and between Texas
City Terminal Railway Company, a Texas corporation, as lessor, and the
British American Oil Producing Company, as lessee, recorded in Volume
1434, Page 221, of the Deed Records of Galveston County, Texas.
33. An easement and right-of-way for the purposes of constructing and
maintaining such seawall, breakwater, levee, dike, concrete wall, and
boulevard over and upon that certain tract of land, granted to the
County of Galveston, Texas, by instrument recorded in Volume 487, Page
3, of the Deed Records of Galveston County, Texas.
34. Pipeline easement granted to Magnolia Pipe Line Company, as set forth
in instrument recorded in Volume 1187, Page 126, and in Volume 1245,
Page 329, of the Deed Records of Galveston County, Texas.
35. Right-of-way and agreement by and between Texas City Terminal Railway
Company and Humble Oil & Refining Company, dated February 28, 1958,
recorded in Book 1255, Page 420, of the Deed Records of Galveston
County, Texas.
36. A perpetual easement for right-of-way to lay, construct, improve,
renew, inspect, maintain, repair, and remove a railroad track or
tracks, together with the necessary switches and appurtenances thereto
and house, occupy, enjoy, maintain and operate a line of railroad over
said strip of land, reserved to Texas City Terminal Railway Company by
instrument recorded in Volume 1335, Page 38, of the Deed Records, in
Galveston County, Texas.
37. Easement of right-of-way for a drainage ditch from Texas City Terminal
Railway Company to the City of Texas City, Texas, dated the 21st day of
August, 1959, recorded in Volume 1327, Page 543, of the Deed Records of
Galveston County, Texas.
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<PAGE> 105
38. An easement of right-of-way to construct and maintain a concrete pipe
storm drain on and over subject property, granted to the City of Texas
City, Texas, by instrument recorded in Volume 1347, Page 45, of the
Deed Records of Galveston County, Texas.
39. Easement and agreement entered into by and between Monsanto Company and
the County of Galveston County, Texas, by instrument dated December 12,
1966, recorded in Volume 1829, Page 318, of the Deed Records of
Galveston County, Texas.
40. Terms, conditions and stipulations of that certain agreement by and
between Monsanto Company and the County of Galveston, recorded in
Volume 2982, Page 594, and in Volume 3033, Page 510, of the Deed
Records of Galveston County, Texas.
41. Easement granted to Houston Pipe Line Company by instrument recorded
under County Clerk's File No. 8621409, in Galveston County, Texas, and
being amended by instrument recorded under Galveston County Clerk's
File No(s). 9439348, and being more particularly described and located
therein.
AS TO TRACTS 52, 53, 54, 57, 58, 59, 63, 64, 65, 66, AND 86A:
42. Easement and agreement entered into by and between Monsanto Company and
the County of Galveston County, Texas, by instrument dated December 12,
1966, recorded in Volume 1829, Page 318, of the Deed Records of
Galveston County, Texas.
AS TO TRACT 74:
43. Terms, conditions and stipulations of that certain easement on Coastal
Public Land No. CE-82-051 dated January 12, 1983, from the State of
Texas, to Monsanto Company filed for record in the office of the County
Clerk of Galveston County, Texas, under County Clerk's File No.
8302396.
AS TO TRACT 75:
44. Terms, conditions and stipulations of that certain lease dated
September 1, 1974, by and between Texas City Terminal Railway Company,
as lessor, and Monsanto Company, a Corporation, as lessee of a 3.3175
acre parcel of land for a term of 30 years with four options to extend
for an additional 5 years each; as described in instrument recorded
under Galveston County Clerk's File No(s). 8628664.
AS TO TRACT 76:
45. Terms, conditions and stipulations of those certain easements granted
to Union Carbide Chemicals Company dated August 9, 1957 recorded in
Volume 1227, Page 207 and to Union Carbide Corporation dated August 26,
1957, recorded in Volume 1227, Page 322, of the
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<PAGE> 106
Deed Records of Galveston County, Texas, known as Line 6, and as set
forth in instruments recorded under Galveston County Clerk's File
No(s). 8132304 and 8628665.
AS TO TRACT 77:
46. Terms, conditions and stipulations of that certain unrecorded easement
dated August 13, 1951, and August 9, 1951, granted to Monsanto Chemical
Company, known as Line No. 11, as set forth in instrument recorded
under Galveston County Clerk's File No(s). 8228665.
AS TO TRACT 78:
47. Terms, conditions and stipulations of that certain easement dated March
28, 1951, granted to Sid Richardson Refining Company and Monsanto
Chemical Company, recorded in Volume 1144, Page 638, of the Deed
Records of Galveston County, Texas, known as Line No. 19, and as set
forth in instrument recorded under Galveston County Clerk's File No(s).
8628665.
AS TO TRACT 79:
48. Terms, conditions and stipulations of that certain easement dated
January 28, 1982, granted to Monsanto Company by instrument recorded
under County Clerk's File No. 8211566, in Galveston County, Texas,
known as Line Nos. 20 and 21, and as set forth in instrument recorded
under Galveston County Clerk's File No(s). 8628665.
AS TO TRACT 80:
49. Terms, conditions and stipulations of that certain unrecorded easement
dated September 9, 1965, granted to Monsanto Company known as Line Nos.
24 and 26, as set forth in instrument recorded under Galveston County
Clerk's File No(s). 8628665.
AS TO TRACT 82:
50. Pipeline right-of-way dated July 25, 1975, granted to Monsanto Company,
known as Line No. 28, and as set forth in instrument recorded under
Galveston County Clerk's File No(s). 8628665.
AS TO TRACT 83:
51. Terms and conditions contained in the instrument dated November 12,
1976, between Amoco Texas Refining Company and Monsanto Company as
recorded in Volume 2793, Page 309, of the Deed Records of Galveston
County, Texas, known as Line No. 29, and as set forth in instrument
recorded under Galveston County Clerk's File No(s). 8628665.
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<PAGE> 107
AS TO TRACT 86A:
52. Pipeline easement granted to Shell Pipe Line Corporation by instrument
recorded under Galveston County Clerk's File No(s). 8818591 and being
more particularly described and located therein.
53. Pipeline easement granted to Valero Transmission, L.P., by instrument
recorded under Galveston County Clerk's File No(s). 9238636 and being
more particularly described and located therein.
54. Pipeline easement granted to Valero Transmission, L.P., by instrument
recorded under Galveston County Clerk's File No(s). 9238637 and being
more particularly described and located therein.
55. Terms, conditions and stipulations contained in lease agreement dated
February 8, 1991, by and between Sterling Chemicals, Inc., as lessor
and S&L Cogeneration Company, as lessee, a memorandum of which is
recorded under Galveston County Clerk's File No(s). 9106661, and terms,
conditions and stipulations in first amendment of memorandum of ground
lease recorded under Galveston County Clerk's File No(s). 9136151,
describing amendments to said lease together with non-exclusive
easements granted to lessee and being more particularly described and
located therein.
56. Terms, conditions and stipulations contained in lease agreement dated
February 8, 1991, by and between Sterling Chemicals, Inc., as lessor
and Union Carbide Industrial Gases, Inc., as lessee, a memorandum of
which is recorded under Galveston County Clerk's File No(s). 9106662.
57. Terms, conditions and stipulations contained in lease agreement dated
May 15, 1995, by and between Sterling Chemicals, Inc., as lessor and
Praxair Hydrogen Supply, Inc., as lessee, a memorandum of which is
recorded under Galveston County Clerk's File No(s). 9525564.
AS TO ALL TRACTS, EXCEPT TRACT 87:
58. The right to use the surface of subject property for mineral
exploration waived as set out in instrument(s) recorded under Galveston
County Clerk's File No(s). 8628663.
AS TO TRACT 86A:
59. The following unrecorded easements as set forth in Deed dated August 1,
1986, recorded under Galveston County Clerk's File No(s). 8628663 from
Monsanto Company to Sterling Chemicals, Inc.:
i) A 6-inch ethylene pipeline easement in favor of Gulf Oil
Corporation together with a 32-foot by 46-foot metering
station.
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<PAGE> 108
ii) An easement for a propylene pipeline metering station in favor
of Amoco.
iii) An easement for a nitrogen pipeline metering station in favor
of Big Three Industries.
iv) A 20-foot utility easement in favor of the City of Texas City
together with a 2-inch gas line and 6-inch gas line.
v) An easement for a 20-foot by 40-foot meter site for Air
Products and Chemicals, Inc.
vi) An easement for a 32' by 55' meter station in favor of Mobil
Oil Corporation.
vii) An easement for a metering station in favor of Houston
Pipeline Company and appurtenant pipeline easements.
60. Easements granted to Texaco Chemical Company by instrument recorded
under Galveston County Clerk's File No. 9232094 and being more
particularly described and located therein.
61. Memorandum of Ground Lease dated 3/23/99 by and between Sterling
Chemicals, Inc. a Delaware corporation, as Lessor and Praxair Hydrogen
Supply, Inc., a Delaware corporation, as Lessee, filed for record on
4/19/99, under Galveston County Clerk's File No. 9918227, and all the
terms, conditions and stipulations contained therein.
62. Non-exclusive easement dated 5/1/96, granted to Amoco Gas Company for
pipeline right-of-way purposes and metering station granted in
instrument for record under Galveston County Clerk's File No. 9713205.
63. Terms, conditions and stipulations contained in Industrial Solid Waste
Certifications of Remediation filed for record under Galveston County
Clerk's File No(s). 9904937 and 9920250.
64. Storm Sewer Easements as set forth in instrument recorded in Volume
2927, Page 531, of the Deed Records of Galveston County, Texas.
65. Four inch (4") benzene and eight inch (8") propylene easement described
as lines 25 and 28, as set forth in instrument recorded under Galveston
County Clerk's File No. 8628655.
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<PAGE> 109
AS TO TRACT 87:
66. Easement granted by Texas City Terminal Railway Company and Terminal
Industrial Land Company to Southwestern Bell Telephone Company dated
August 12, 1947, and recorded in Volume 763, Page 71, of the Deed
Records of Galveston County, Texas.
67. The following easements reflected in deed dated March 28, 1994,
recorded under Galveston County Clerk's File No(s). 9423534:
(i) Any easement or easement rights for a pipe rack traversing
subject property from the North property line to the Southeast
property line as disclosed by survey prepared by S.A.
Duitscher, R.P.L.S. No. 2143, dated February 3, 1993;
(ii) Any easement or easement rights for a fire wall traversing
subject property from the North property line to the Southeast
property line as disclosed by survey prepared by S.A.
Duitscher, R.P.L.S. No. 2143, dated February 3, 1993.
AS TO TRACT 86A:
68. UCC-1 Financing Statement, filed for record on February 2, 1994,
recorded under Galveston County Clerk's File No(s). 9405068, given by
Sterling Chemicals, Inc. as owner/debtor, granting unto BP Chemicals,
Inc., as creditor and secured party, a security interest in the subject
property and as continued by instrument filed for record under
Galveston County Clerk's File No. 9847776.
PART II
THE FOLLOWING MATTERS AFFECT THE PROPERTIES DESCRIBED IN SCHEDULE 1, PART II
69. Any and all restrictive covenants of record in Galveston County, Texas,
including, without limitation, those contained on the plat of Texas
City First Division recorded in Volume 113, Page 26 in the Office of
the County Clerk of Galveston County, Texas.
AS TO TRACT 3:
70. Any and all right, title and interest in and to Lot 5 held by L.
Birchfield, predecessor in title.
71. The rights and claims of co-tenants.
AS TO TRACT 17
72. Any and all rights, title or interest held by Margaret Ramos and/or
Tommie Ramos, predecessors in title.
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<PAGE> 110
AS TO TRACT 20
73. Vendors' lien created in instrument dated December 19, 1983, filed for
record in the Official Public Records of Real Property of Galveston
County, Texas at Film No. Code ###-##-####.
74. Deed of Trust dated December 19, 1983, securing payment of a promissory
note in the original principal amount of $23,000.00 to G. P. Reddell,
Jr., Trustee, recorded under Film Code No. 002-73-1128 in the Official
Public Records of Galveston County, Texas. 1.
AS TO TRACT 32
75. Any interest that may be held by Mary Alexander.
76. Abstract of Judgment recovered by the State of Texas against Mary E.
Alexander, a/k/a Mary A. Thornton of record on Film Code No.
###-##-#### in the Official Public Records of Real Property in
Galveston County, Texas, filed June 17, 1987, said Judgment in the
amount of $1,254.61 plus interest and court costs.
AS TO TRACT 45
77. Any and all right, title, or interest held by Ruby Reeves Forbes,
Individually and as Independent Executrix of the Estates of Ira Lee
Forbes.
AS TO TRACT 62
78. Any and all right, title or interest held by Robert Lee Loredo.
AS TO TRACT 64
79. Any rights, title, and interests of Marie L. Jamerson and Mary Girard
their heirs and assigns.
80. Rights and claims of co-tenants.
AS TO TRACT 69
81. Any and all right, title or interest of B. F. Patterson, Zack
Patterson, George W. Patterson and Amanda Patterson Sterling, their
heirs and assigns.
82. Rights and claims of co-tenants.
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<PAGE> 111
AS TO TRACT 70
83. Any and all right, title or interest that may be held by Walter Maberry
and wife, Mary Jane Maberry and Carl E. Porter, their heirs and
assigns.
AS TO TRACT 86
84. Vendor's Lien in favor of Cora May Michaelis, Individually and as
Independent Executrix of the Estate of Edward R. Michaelis, deceased,
in deed dated October 30, 1981 from Cora May Michaelis to Alma R.
Causey filed under Film Code No. 001-46-0610 in the Official Public
Records of Real Property in Galveston County, Texas.
85. Note and Deed of Trust to Patrick Reilly, Trustee, filed under Film
Code No. ###-##-#### in the Official Public Records of Real Property in
Galveston County, Texas.
AS TO TRACT 90
86. Abstract of Judgment recovered by United States National Bank of
Galveston vs. Coin Distributing Inc., and Alan D. Buck, et al. of
record on Film Code No. 005-10-1603 in the Official Public Records of
Real Property in Galveston County, Texas, filed February 23, 1987, said
Judgment in the amount of $46,670.86, plus interest and court costs.
AS TO TRACT 111
87. Any interest that may be held by James M. Allen as Independent
Administrator of the Estate of Mary Adams Long, Deceased.
AS TO TRACT 124
88. Abstract of Judgment recovered by United States National Bank of
Galveston vs. Coin Distributing Inc., and Alan D. Buck, et al. of
record on Film Code No. 005-10-1603 in the Official Public Records of
Real Property in Galveston County, Texas, filed February 23, 1987, said
Judgment in the amount of $46,670.86, plus interest and court costs.
AS TO TRACTS 135 AND 136
89. Any and all restrictions, easements, rights of way, covenants and
conditions of record in Galveston County, Texas.
PART III
THE FOLLOWING MATTERS AFFECT THE PROPERTIES DESCRIBED IN SCHEDULE 1, PART III:
AS TO TRACTS 1 THROUGH 20
90. Any and all restrictions, easements, rights of way, covenants and
conditions or any other matters of record in Galveston County, Texas.
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<PAGE> 1
EXHIBIT 4.3
================================================================================
STERLING FIBERS, INC.,
Mortgagor,
to
THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative and Collateral Agent,
Mortgagee
---------------------------------------------------
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
---------------------------------------------------
Dated as of July 23, 1999
This instrument affects certain real and personal property
located in Santa Rosa County,
State of Florida.
================================================================================
Record and return to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
This instrument was prepared by the above-named attorney.
Notice: This instrument contains inter alia obligations which may provide for:
(a) a variable rate of interest and/or
(b) future and/or revolving credit advances or
readvances, which when made, shall have the same
priority as advances or readvances made on the date
hereof whether or not (i) any advances or readvances
were made on the date hereof and (ii) any
indebtedness is outstanding at the time any advance
or re-advance is made.
Notwithstanding anything to the contrary contained herein, the
maximum principal indebtedness secured under any contingency
by this instrument shall in no event exceed $70,000,000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I COVENANTS AND AGREEMENTS OF THE MORTGAGOR
<S> <C> <C>
SECTION 1.1. Payment of Secured Obligations.......................................................4
SECTION 1.2. Title to Collateral, etc.............................................................4
SECTION 1.3. Title Insurance......................................................................5
SECTION 1.3.1. Title Insurance Policy...............................................................5
SECTION 1.3.2. Title Insurance Proceeds.............................................................5
SECTION 1.4. Recordation..........................................................................5
SECTION 1.5. Payment of Impositions, etc..........................................................5
SECTION 1.6. Insurance and Legal Requirements.....................................................6
SECTION 1.7. Security Interests, etc..............................................................6
SECTION 1.8. Permitted Contests...................................................................6
SECTION 1.9. Leases...............................................................................7
SECTION 1.10. Compliance with Instruments..........................................................7
SECTION 1.11. Maintenance and Repair, etc..........................................................7
SECTION 1.12. Alterations, Additions, etc..........................................................7
SECTION 1.13. Acquired Property Subject to Lien....................................................8
SECTION 1.14. Assignment of Rents, Proceeds, etc...................................................8
SECTION 1.15. No Claims Against the Mortgagee......................................................9
SECTION 1.16. Indemnification......................................................................9
SECTION 1.17. No Credit for Payment of Taxes......................................................10
SECTION 1.18. Intentionally Omitted...............................................................10
SECTION 1.19. No Transfer of the Property.........................................................10
SECTION 1.20. Security Agreement..................................................................10
SECTION 1.21. Representations and Warranties......................................................11
SECTION 1.22. Mortgagor's Covenants...............................................................11
ARTICLE II INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
SECTION 2.1. Insurance...........................................................................11
SECTION 2.1.1. Risks to be Insured.................................................................11
SECTION 2.1.2. Policy Provisions...................................................................12
SECTION 2.1.3. Delivery of Policies, etc...........................................................12
SECTION 2.1.4. Separate Insurance..................................................................13
SECTION 2.2. Damage, Destruction or Taking; Mortgagor to Give Notice;
Assignment of Awards............................................................13
SECTION 2.3. Application of Proceeds and Awards..................................................13
SECTION 2.4. Total Taking and Total Destruction..................................................15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE III EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration.....................................................16
SECTION 3.2. Legal Proceedings; Foreclosure......................................................16
SECTION 3.3. Power of Sale.......................................................................16
SECTION 3.4. Uniform Commercial Code Remedies....................................................17
SECTION 3.5. Mortgagee Authorized to Execute Deeds, etc..........................................17
SECTION 3.6. Purchase of Collateral by Mortgagee.................................................17
SECTION 3.7. Receipt a Sufficient Discharge to Purchaser.........................................17
SECTION 3.8. Waiver of Appraisement, Valuation, etc..............................................17
SECTION 3.9. Sale a Bar Against Mortgagor........................................................17
SECTION 3.10. Secured Obligations to Become Due on Sale...........................................17
SECTION 3.11. Application of Proceeds of Sale and Other Moneys....................................18
SECTION 3.12. Appointment of Receiver.............................................................18
SECTION 3.13. Possession, Management and Income...................................................19
SECTION 3.14. Right of Mortgagee to Perform Mortgagor's Covenants, etc............................19
SECTION 3.15. Subrogation.........................................................................19
SECTION 3.16. Remedies, etc., Cumulative..........................................................19
SECTION 3.17. Provisions Subject to Applicable Law................................................20
SECTION 3.18. No Waiver, etc......................................................................20
SECTION 3.19. Compromise of Actions, etc..........................................................20
ARTICLE IV DEFINITIONS
SECTION 4.1. Terms Defined in this Mortgage......................................................20
SECTION 4.2. Use of Defined Terms................................................................22
SECTION 4.3. Credit Agreement Definitions........................................................22
ARTICLE V MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements............................................22
SECTION 5.1.1. Further Assurances..................................................................22
SECTION 5.1.2. Financing Statements................................................................22
SECTION 5.2. Additional Security.................................................................23
SECTION 5.3. Defeasance; Partial Release, etc....................................................23
SECTION 5.3.1. Defeasance..........................................................................23
SECTION 5.3.2. Partial Release, etc................................................................23
SECTION 5.4. Notices, etc........................................................................23
SECTION 5.5. Waivers, Amendments, etc............................................................23
SECTION 5.6. Cross-References....................................................................23
SECTION 5.7. Headings............................................................................23
SECTION 5.8. Currency............................................................................24
SECTION 5.9. Governing Law.......................................................................24
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 5.10. Successors and Assigns, etc.........................................................24
SECTION 5.11. Waiver of Jury Trial; Submission to Jurisdiction....................................24
SECTION 5.12. Severability; Conflicts.............................................................24
SECTION 5.13. Loan Document.......................................................................25
SECTION 5.14. Usury Savings Clause................................................................25
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Schedule 1-A Legal Description of the Land
Schedule 1-B Legal Description of the Land
Schedule 2 Permitted Encumbrances
</TABLE>
<PAGE> 6
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING, dated as of July 23, 1999 (this "Mortgage"), made by STERLING
FIBERS, INC., a Delaware corporation (the "Mortgagor"), having an address at
1200 Smith, Suite 1900, Houston, Texas 77002-4312 to THE CIT GROUP/BUSINESS
CREDIT, INC., a New York corporation, having an address at Wall Street Plaza,
19th Floor, 88 Pine Street, New York, New York, 10005 as the Administrative
Agent and Collateral Agent under the Credit Agreement referred to below
(together with its successors and assigns from time to time acting as
Administrative Agent and Collateral under such Credit Agreement, the
"Mortgagee").
W I T N E S S E T H T H A T:
WHEREAS, the Mortgagor is on the date of delivery hereof the owner of
fee title (or easement or leasehold title if otherwise indicated on Schedule 1
hereto) to the parcel of land described in Schedule 1 hereto (the "Land") and of
the Improvements (such term and other capitalized terms used in this Mortgage
having the respective meanings specified or referred to in Article IV);
WHEREAS, pursuant to the terms, conditions and provisions of the
Revolving Credit Agreement, dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Sterling Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp Chemicals
U.S., Inc., Sterling Pulp Chemicals, Inc., Mortgagor, Sterling Chemicals Energy,
Inc. and Sterling Chemicals International, Inc., as Borrowers (collectively, the
"Borrowers"), various financial institutions, as the Lenders, DLJ Capital
Funding, Inc., as the Syndication Agent, The CIT Group/Business Credit, Inc. as
the Administrative Agent and Collateral Agent, and Credit Suisse First Boston,
as the Documentation Agent, the Lenders and the Issuer have agreed to make Loans
to, and to issue Letters of Credit for the account of, the Borrowers in the
maximum original principal amount of One Hundred Fifty Five Million Dollars
($155,000,000) (such Loans and Letters of Credit are hereinafter referred to
collectively as the "Credit Extensions").
WHEREAS, the Credit Extensions consist of, inter alia, Fixed Assets
Loans in a maximum principal amount not to exceed Seventy Million Dollars
($70,000,000) having a Stated Maturity Date of July 23, 2004; and
WHEREAS, the Mortgagor has duly authorized the execution, delivery and
performance of this Mortgage.
G R A N T:
NOW, THEREFORE, for and in consideration of the premises, and of the
mutual covenants herein contained, and in order to induce the Fixed Assets
Lenders to make the Fixed Assets Loans pursuant to the Credit Agreement, and in
order to secure the full, timely and proper payment and performance of and
compliance with each and every one of the Secured Obligations (as hereinafter
defined), the Mortgagor hereby irrevocably grants, bargains, sells, mortgages,
warrants, aliens, demises, releases, hypothecates, pledges, assigns, transfers
and conveys to the Mortgagee and its successors and assigns, forever, all of the
following (the "Collateral"):
<PAGE> 7
(a) Real Estate. All of Mortgagor's right, title and interest
in and to all of the Land and all additional lands and estates therein
now owned or hereafter acquired by the Mortgagor for use or development
with the Land or any portion thereof, together with all and singular
the tenements, rights, easements, hereditaments, rights of way,
privileges, liberties, appendages and appurtenances now or hereafter
belonging or in any way pertaining to the Land and such additional
lands and estates therein (including, without limitation, all rights
relating to storm and sanitary sewer, water, gas, electric, railway and
telephone services); all development rights, air rights, riparian
rights, water, water rights, water stock, all rights in, to and with
respect to any and all oil, gas, coal, minerals and other substances of
any kind or character underlying or relating to the Land and such
additional lands and estates therein and any interest therein; all
estate, claim, demand, right, title or interest of the Mortgagor in and
to any street, road, highway or alley, vacated or other, adjoining the
Land or any part thereof and such additional lands and estates therein;
all strips and gores belonging, adjacent or pertaining to the Land or
such additional lands and estates; and any after-acquired property
(herein collectively referred to as the "Real Estate");
(b) Improvements. All of Mortgagor's right, title and interest
in and to all buildings, structures and other improvements and any
additions and alterations thereto or replacements thereof, now or
hereafter built, constructed or located upon the Real Estate; and, to
the extent that any of the following items of property constitutes
fixtures under applicable laws, all furnishings, fixtures, fittings,
appliances, apparatus, equipment, machinery, building and construction
materials and other articles of every kind and nature whatsoever and
all replacements thereof, now or hereafter affixed or attached to,
placed upon or used in any way in connection with the complete and
comfortable use, enjoyment, occupation, operation, development and/or
maintenance of the Real Estate or such buildings, structures and other
improvements, including, but not limited to, partitions, furnaces,
boilers, oil burners, radiators and piping, plumbing and bathroom
fixtures, refrigeration, heating, ventilating, air conditioning and
sprinkler systems, other fire prevention and extinguishing apparatus
and materials, vacuum cleaning systems, gas and electric fixtures,
incinerators, compactors, elevators, engines, motors, generators and
all other articles of property which are considered fixtures under
applicable law (such buildings, structures and other improvements and
such other property are herein collectively referred to as the
"Improvements"; the Real Estate and the Improvements are herein
collectively referred to as the "Property");
(c) Goods. All of Mortgagor's right, title and interest in and
to all building materials, construction materials, appliances
(including, without limitation, stoves, ranges, ovens, disposals,
refrigerators, water fountains and coolers, fans, heaters, dishwashers,
clothes washers and dryers, water heaters, hood and fan combinations,
kitchen equipment, laundry equipment, kitchen cabinets and other
similar equipment), stocks, supplies, blinds, window shades, drapes,
carpets, floor coverings, manufacturing equipment and machinery, office
equipment, growing plants and shrubberies, control devices, equipment
(including window cleaning, building cleaning, swimming pool,
recreational, monitoring, garbage, pest control and other equipment),
motor vehicles, tools, furnishings, furniture, lighting, non-structural
additions to the Real Estate and Improvements and all other tangible
property of any kind or character, together with all replacements
thereof, now or hereafter located on or in or used or useful in
connection with the complete and comfortable use, enjoyment,
occupation, operation, development and/or maintenance of the Property,
regardless of whether or not located on or in the Property or located
elsewhere for purposes of storage, fabrication or otherwise (herein
collectively referred to as the "Goods");
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(d) Intangibles. All goodwill, trademarks, trade names, option
rights, purchase contracts, real and personal property tax refunds,
books and records and general intangibles of the Mortgagor relating to
the Property and all accounts, contract rights, instruments, chattel
paper and other rights of the Mortgagor for the payment of money for
property sold or lent, for services rendered, for money lent, or for
advances or deposits made, and any other intangible property of the
Mortgagor relating to the Property (herein collectively referred to as
the "Intangibles");
(e) Leases. All rights of the Mortgagor in, to and under all
leases, licenses, occupancy agreements, concessions and other
arrangements, oral or written, now existing or hereafter entered into,
whereby any Person agrees to pay money or any other consideration for
the use, possession or occupancy of, or any estate in, the Property or
any portion thereof or interest therein (herein collectively referred
to as the "Leases"), and the right, subject to applicable law, upon the
occurrence of any Event of Default hereunder, to receive and collect
the Rents (as hereinafter defined) paid or payable thereunder;
(f) Plans. All rights of the Mortgagor in and to all plans and
specifications, designs, drawings and other information, materials and
matters heretofore or hereafter prepared relating to the Improvements
or any construction on the Real Estate (herein collectively referred to
as the "Plans");
(g) Permits. All rights of the Mortgagor, to the extent
assignable, in, to and under all permits, franchises, licenses,
approvals and other authorizations respecting the use, occupation and
operation of the Property and every part thereof and respecting any
business or other activity conducted on or from the Property, and any
product or proceed thereof or therefrom, including, without limitation,
all building permits, certificates of occupancy and other licenses,
permits and approvals issued by governmental authorities having
jurisdiction (herein collectively referred to as the "Permits");
(h) Contracts. All right, title and interest of the Mortgagor,
to the extent assignable, in and to all agreements, contracts,
certificates, instruments, warranties, appraisals, engineering,
environmental, soils, insurance and other reports and studies, books,
records, correspondence, files and advertising materials, and other
documents, now or hereafter obtained or entered into, as the case may
be, pertaining to the construction, use, occupancy, possession,
operation, management, leasing, maintenance and/or ownership of the
Property and all right, title and interest of the Mortgagor therein
(herein collectively referred to as the "Contracts");
(i) Leases of Furniture, Furnishings and Equipment. All right,
title and interest of the Mortgagor as lessee in, to and under any
leases of furniture, furnishings, equipment and any other Goods now or
hereafter installed in or at any time used in connection with the
Property;
(j) Rents. All rents, issues, profits, royalties, avails,
income and other benefits derived or owned, directly or indirectly, by
the Mortgagor from the Property, including, without limitation, all
rents and other consideration payable by tenants, claims against
guarantors, and any cash or other securities deposited to secure
performance by tenants, under the Leases (herein collectively referred
to as "Rents");
(k) Proceeds. All proceeds of the conversion, voluntary or
involuntary of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards (herein collectively referred to as "Proceeds"); and
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(l) Other Property. All other property and rights of the
Mortgagor of every kind and character relating to the Property, and all
proceeds and products of any of the foregoing, provided however, the
Collateral shall not include any general intangibles or other rights
arising under any contracts, instruments, licenses, or other documents
as to which the grant of a lien and/or security interest would
constitute a violation of a valid and enforceable restriction in favor
of a third party on such grant, unless and until any required consents
shall have been obtained;
AND, without limiting any of the other provisions of this Mortgage, the
Mortgagor expressly grants to the Mortgagee, as secured party, a security
interest in all of those portions of the Collateral which are or may be subject
to the State Uniform Commercial Code provisions applicable to secured
transactions, subject, however, to the Permitted Encumbrances;
TO HAVE AND TO HOLD the Collateral unto the Mortgagee, its successors
and assigns, forever, subject, however, to the Permitted Encumbrances.
FURTHER to secure the full, timely and proper payment and performance
of the Secured Obligations, the Mortgagor hereby covenants and agrees with and
warrants to the Mortgagee as follows:
ARTICLE I
COVENANTS AND AGREEMENTS OF THE MORTGAGOR
SECTION I.1. Payment of Secured Obligations. (i) The Mortgagor agrees
that:
(a) it will duly and punctually pay and perform or cause to be
paid and performed each of the Secured Obligations at the time and in
accordance with the terms of the Loan Documents pertaining to the Fixed
Assets Loans, and
(b) when and as due and payable from time to time in
accordance with the terms hereof or of any other Loan Documents
pertaining to the Fixed Assets Loans, pay and perform, or cause to be
paid and performed, all other Secured Obligations.
SECTION I.2. Title to Collateral, etc. The Mortgagor represents and
warrants to and covenants with the Mortgagee that:
(a) except as otherwise permitted by the terms of the Credit
Agreement, as of the date hereof and at all times hereafter while this
Mortgage is outstanding, the Mortgagor (1) is and shall be the absolute
owner of the legal and beneficial title to the applicable interest in
the Property and to all other property included in the Collateral, and
(2) has and shall have good and marketable title in fee simple
absolute, or good and sufficient easement or leasehold title, as
currently represented in the granting clause as of the date hereof, to
the Property, subject in each case only to this Mortgage, the liens
expressly permitted pursuant to the terms of the Credit Agreement and
the encumbrances set forth in Schedule 2 hereto (collectively, the
"Permitted Encumbrances");
(b) the Mortgagor has good and lawful right, power and
authority to execute this Mortgage and to convey, transfer, assign,
mortgage and grant a security interest in the Collateral, all as
provided herein;
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(c) this Mortgage has been duly executed, acknowledged and
delivered on behalf of the Mortgagor, all consents and other actions
required to be taken by the officers, directors, shareholders and
partners, as the case may be, of the Mortgagor have been duly and fully
given and performed and this Mortgage constitutes the legal, valid and
binding obligation of the Mortgagor, enforceable against the Mortgagor
in accordance with its terms; and
(d) the Mortgagor, at its expense, will warrant and defend to
the Mortgagee and any purchaser under the power of sale herein or at
any foreclosure sale such title to the Collateral and the first
mortgage lien and first priority perfected security interest of this
Mortgage thereon and therein against all claims and demands and will
maintain, preserve and protect such lien and security interest and will
keep this Mortgage a valid, direct first mortgage lien of record on the
Property and a first priority perfected security interest in the
Collateral other than the Property, subject only to the Permitted
Encumbrances.
SECTION I.3. Title Insurance.
SECTION I.3.1. Title Insurance Policy. Concurrently with the execution
and delivery of this Mortgage, the Mortgagor, at its expense, has obtained and
delivered to the Mortgagee a loan policy or policies of title insurance in an
amount, and in form and substance, reasonably satisfactory to the Mortgagee
naming the Mortgagee as the insured, insuring the title to and the first
mortgage lien of this Mortgage on the Property, with endorsements reasonably
requested by the Mortgagee. The Mortgagor has duly paid in full all premiums and
other charges due in connection with the issuance of such policy or policies of
title insurance.
SECTION I.3.2. Title Insurance Proceeds. All proceeds received by and
payable to the Mortgagee for any loss under the loan policy or policies of title
insurance delivered to the Mortgagee pursuant to Section 1.3.1, or under any
policy or policies of title insurance delivered to the Mortgagee in substitution
therefor or replacement thereof, shall be the property of the Mortgagee and
shall be applied by the Mortgagee in accordance with the provisions of Section
2.3.
SECTION I.4. Recordation. The Mortgagor, at its expense, will at all
times cause this Mortgage and any instruments amendatory hereof or supplemental
hereto and any instruments of assignment hereof or thereof (and any appropriate
financing statements or other instruments and continuations thereof), and each
other instrument delivered in connection with the Fixed Assets Loans or any
other Loan Document pertaining to the Fixed Assets Loans and intended thereunder
to be recorded, registered and filed, to be kept recorded, registered and filed,
in such manner and in such places, and will pay all such recording,
registration, filing fees, taxes and other charges, and will comply with all
such statutes and regulations as may be required by law in order to establish,
preserve, perfect and protect the lien and security interest of this Mortgage as
a valid, direct first mortgage lien on the Property and first priority perfected
security interest in the Collateral other than the Property, subject only to the
Permitted Encumbrances. The Mortgagor will pay or cause to be paid, and will
indemnify the Mortgagee in respect of, all taxes (including interest and
penalties) at any time payable in connection with the filing and recording of
this Mortgage and any and all supplements and amendments hereto.
SECTION I.5. Payment of Impositions, etc. Subject to Section 1.8
(relating to permitted contests), the Mortgagor will pay or cause to be paid
before the same would become delinquent and before any fine, penalty, interest
or cost may be added for non-payment, all taxes, assessments, water and sewer
rates, charges, license fees, inspection fees and other governmental levies or
payments, of every kind and nature whatsoever, general and special, ordinary and
extraordinary, unforeseen as well
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as foreseen, which at any time may be assessed, levied, confirmed, imposed or
which may become a lien upon the Collateral, or any portion thereof, or which
are payable with respect thereto, or upon the rents, issues, income or profits
thereof, or on the occupancy, operation, use, possession or activities thereof,
whether any or all of the same be levied directly or indirectly or as excise
taxes or as income taxes, and all taxes, assessments or charges which may be
levied on the Secured Obligations, or the interest thereon (collectively, the
"Impositions"). The Mortgagor will deliver to the Mortgagee, upon request,
copies of official receipts or other satisfactory proof evidencing such
payments.
SECTION I.6. Insurance and Legal Requirements. Subject to Section 1.8
(relating to permitted contests), the Mortgagor, at its expense, will comply in
all material respects, or cause compliance in all material respects with
(a) all provisions of any insurance policy covering or
applicable to the Collateral or any part thereof, all requirements of
the issuer of any such policy, and all orders, rules, regulations and
other requirements of the National Board of Fire Underwriters (or any
other body exercising similar functions) applicable to or affecting the
Collateral or any part thereof or any use or condition of the
Collateral or any part thereof (collectively, the "Insurance
Requirements"); and
(b) all laws, including Environmental Laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements of all governments, departments, commissions, boards,
courts, authorities, agencies, officials and officers, foreseen or
unforeseen, ordinary or extraordinary, which now or at any time
hereafter may be applicable to the Collateral or any part thereof, or
any of the adjoining sidewalks, curbs, vaults and vault space, if any,
streets or ways, or any use or condition of the Collateral or any part
thereof (collectively, the "Legal Requirements");
noncompliance of which could reasonably be expected to cause a Material Adverse
Effect whether or not compliance therewith shall require structural changes in
or interference with the use and enjoyment of the Collateral or any part
thereof.
SECTION I.7. Security Interests, etc. The Mortgagor will not directly
or indirectly create or permit or suffer to be created or to remain, and will
promptly discharge or cause to be discharged, any deed of trust, mortgage,
encumbrance or charge on, pledge of, security interest in or conditional sale or
other title retention agreement with respect to or any other lien on or in the
Collateral or any part thereof or the interest of the Mortgagor or the Mortgagee
therein, or any Proceeds thereof or Rents or other sums arising therefrom, other
than (a) Permitted Encumbrances, and (b) liens of mechanics, materialmen,
suppliers or vendors or rights thereto incurred in the ordinary course of the
business of the Mortgagor for sums not yet due or any such liens or rights
thereto which are at the time being contested as permitted by Section 1.8. The
Mortgagor will not postpone the payment of any sums for which liens of
mechanics, materialmen, suppliers or vendors or rights thereto have been
incurred (unless such liens or rights thereto are at the time being contested as
permitted by Section 1.8), for more than 60 days after the completion of the
action giving rise to such liens or rights thereto.
SECTION I.8. Permitted Contests. The Mortgagor at its expense may
contest, or cause to be contested, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount or validity or application, in
whole or in part, of any Imposition, Legal Requirement or Insurance Requirement
or lien of a mechanic, materialman, supplier or vendor, provided that, (a) in
the case of an unpaid Imposition, lien, encumbrance or charge, such proceedings
shall suspend the collection thereof from the Mortgagor, the Mortgagee, and the
Collateral (including any rent or other income
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therefrom) and shall not materially interfere with the payment of any such rent
or income, (b) neither the Collateral nor any rent or other income therefrom nor
any part thereof or interest therein would be in any material danger of being
sold, forfeited, lost, impaired or interfered with, (c) in the case of a Legal
Requirement, neither the Mortgagor nor the Mortgagee would be in material danger
of any civil or criminal liability for failure to comply therewith, (d) the
Mortgagor shall have furnished such security, if any, as may be required in the
proceedings or as may be reasonably requested by the Mortgagee, (e) the
non-payment of the whole or any part of any Imposition will not result in the
delivery of a tax deed to the Collateral or any part thereof because of such
non-payment, (f) the payment of any sums required to be paid with respect to any
of the Fixed Asset Notes or under this Mortgage (other than any unpaid
Imposition, lien, encumbrance or charge at the time being contested in
accordance with this Section 1.8) shall not be interfered with or otherwise
affected, (g) in the case of any Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor under Section 2.1, and (h) that
adequate reserves, determined in accordance with GAAP, shall have been set aside
on the Mortgagor's books.
SECTION I.9. Leases. The Mortgagor represents and warrants to the
Mortgagee that, as of the date hereof, there are no written or oral leases or
other agreements of any kind or nature relating to the occupancy of any portion
of the Property by any Person other than the Mortgagor other than the Permitted
Encumbrances. Except as is permitted by the Credit Agreement, the Mortgagor will
not enter into any such written or oral lease or other agreement with respect to
any portion of the Property without first obtaining the written consent of the
Mortgagee.
SECTION I.10. Compliance with Instruments. The Mortgagor at its expense
will promptly comply in all material respects with all rights of way or use,
privileges, franchises, servitudes, licenses, easements, tenements,
hereditaments and appurtenances forming a part of the Property and all
instruments creating or evidencing the same, in each case, to the extent
compliance therewith is required of the Mortgagor under the terms thereof.
Except as is permitted by the Credit Agreement, the Mortgagor will not take any
action which may result in a forfeiture or termination of the rights afforded to
the Mortgagor under any such instruments and will not, without the prior written
consent of the Mortgagee, amend any of such instruments in any manner adverse to
the Fixed Assets Lenders in any material respect.
SECTION I.11. Maintenance and Repair, etc. Subject to the provisions of
Section 1.12, the Mortgagor will keep or cause to be kept all presently and
subsequently erected or acquired Improvements and the sidewalks, curbs, vaults
and vault space, if any, located on or adjoining the same, and the streets and
the ways adjoining the same, in good and substantial order and repair and in
such a fashion that neither the value nor utility of the Collateral will be
diminished, and, at its sole cost and expense, will promptly make or cause to be
made all necessary and appropriate repairs, replacements and renewals thereof,
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen, so that its business carried on in
connection therewith may be properly conducted at all times. The Mortgagor at
its expense will do or cause to be done all shoring of foundations and walls of
any building or other Improvements on the Property and (to the extent permitted
by law) of the ground adjacent thereto, and every other act necessary or
appropriate for the preservation and safety of the Property by reason of or in
connection with any excavation or other building operation upon the Property and
upon any adjoining property, whether or not the Mortgagor shall, by any Legal
Requirement, be required to take such action or be liable for failure to do so.
SECTION I.12. Alterations, Additions, etc. So long as no Event of
Default shall have occurred and be continuing, the Mortgagor shall have the
right at any time and from time to time to
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make or cause to be made reasonable alterations of and additions to the Property
or any part thereof, provided that any alteration or addition: (a) shall not
change the general character or the use of the Property or reduce the fair
market value thereof below its value immediately before such alteration or
addition, or impair the usefulness of the Property; (b) is effected with due
diligence, in a good and workmanlike manner and in compliance in all material
respects with all Legal Requirements and Insurance Requirements; (c) subject to
Section 1.8 is promptly and fully paid for, or caused to be paid for, by the
Mortgagor; and (d) is made, in case the estimated cost of such alteration or
addition exceeds U.S. $1,000,000, under the supervision of a qualified architect
or engineer or another professional.
SECTION I.13. Acquired Property Subject to Lien. Subject to the
Permitted Encumbrances, all property at any time acquired by the Mortgagor and
provided or required by this Mortgage to be or become subject to the lien and
security interest hereof, whether such property is acquired by exchange,
purchase, construction or otherwise, shall forthwith become subject to the lien
and security interest of this Mortgage without further action on the part of the
Mortgagor or the Mortgagee. The Mortgagor, at its expense, will execute and
deliver to the Mortgagee (and will record and file as provided in Section 1.4)
an instrument supplemental to this Mortgage reasonably satisfactory in substance
and form to the Mortgagee, whenever such an instrument is necessary under
applicable law to subject to the lien and security interest of this Mortgage all
right, title and interest of the Mortgagor in and to all property provided or
required by this Mortgage to be subject to the lien and security interest
hereof.
SECTION I.14. Assignment of Rents, Proceeds, etc. The assignment, grant
and conveyance of the Leases, Rents, Proceeds and other rents, income, proceeds
and benefits of the Collateral contained in the Granting Clause of this Mortgage
shall constitute an absolute, present and irrevocable assignment, grant and
conveyance, provided, however, that permission is hereby given to the Mortgagor,
so long as no Event of Default has occurred and be continuing hereunder, to
collect, receive and apply such Rents, Proceeds and other rents, income,
proceeds and benefits as they become due and payable, but not further in advance
thereof than is customary, and in accordance with all of the other terms,
conditions and provisions hereof, of the Loan Documents, and of the Leases,
contracts, agreements and other instruments with respect to which such payments
are made or such other benefits are conferred. Upon the occurrence and
continuance of an Event of Default, such permission shall terminate immediately
and automatically, without notice to the Mortgagor or any other Person except as
required by law, and shall not be reinstated upon a cure of such Event of
Default without the express written consent of the Mortgagee. Such assignment
shall be fully effective without any further action on the part of the Mortgagor
or the Mortgagee and the Mortgagee shall be entitled, at its option, upon the
occurrence and continuance of an Event of Default hereunder, to collect, receive
and apply all Rents, Proceeds and all other rents, income, proceeds and benefits
from the Collateral, including all right, title and interest of the Mortgagor in
any escrowed sums or deposits or any portion thereof or interest therein,
whether or not the Mortgagee takes possession of the Collateral or any part
thereof. The Mortgagor further grants to the Mortgagee the right, at the
Mortgagee's option, upon the occurrence and continuance of an Event of Default
hereunder, to:
(a) enter upon and take possession of the Property for the
purpose of collecting Rents, Proceeds and said rents, income, proceeds
and other benefits;
(b) dispossess by the customary summary proceedings any
tenant, purchaser or other Person defaulting in the payment of any
amount when and as due and payable, or in the performance of any other
obligation, under any Lease, contract or other instrument to which said
Rents, Proceeds or other rents, income, proceeds or benefits relate;
(c) let or convey the Collateral or any portion thereof or any
interest therein; and
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(d) apply Rents, Proceeds and such rents, income, proceeds and
other benefits, after the payment of all necessary fees, charges and
expenses, on account of the Secured Obligations in accordance with
Section 3.11.
SECTION I.15. No Claims Against the Mortgagee. Nothing contained in
this Mortgage shall constitute any consent or request by the Mortgagee, express
or implied, for the performance of any labor or the furnishing of any materials
or other property in respect of the Property or any part thereof, or be
construed to permit the making of any claim against the Mortgagee in respect of
labor or services or the furnishing of any materials or other property or any
claim that any lien based on the performance of such labor or the furnishing of
any such materials or other property is prior to the lien and security interest
of this Mortgage. ALL CONTRACTORS, SUBCONTRACTORS, VENDORS AND OTHER PERSONS
DEALING WITH THE PROPERTY, OR WITH ANY PERSONS INTERESTED THEREIN, ARE HEREBY
REQUIRED TO TAKE NOTICE OF THE PROVISIONS OF THIS SECTION.
SECTION I.16. Indemnification. The Mortgagor will protect, indemnify,
save harmless and defend the Mortgagee, the Fixed Assets Lenders, and each of
their respective officers, directors, shareholders, employees, representatives
and agents (collectively, the "Indemnified Parties" and individually, an
"Indemnified Party"), from and against any and all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) imposed upon or
incurred by or asserted against any Indemnified Party by reason of (a) ownership
of an interest in this Mortgage, any other Loan Document or the Property, (b)
any accident, injury to or death of persons or loss of or damage to or loss of
the use of property occurring on or about the Property or any part thereof or
the adjoining sidewalks, curbs, vaults and vault spaces, if any, streets, alleys
or ways, (c) any use, non-use or condition of the Property or any part thereof
or the adjoining sidewalks, curbs, vaults and vault spaces, if any, streets,
alleys or ways, (d) any failure on the part of the Mortgagor to perform or
comply with any of the terms of this Mortgage or any Loan Document, (e)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Collateral or any part thereof made or suffered to be
made by or on behalf of the Mortgagor, (f) any negligence or tortious act on the
part of the Mortgagor or any of its agents, contractors, lessees, licensees or
invitees, (g) any work in connection with any alterations, changes, new
construction or demolition of or additions to the Property, or (h) (i) any
Hazardous Material on, in, under or affecting all or any portion of the
Property, the groundwater, or any surrounding areas, (ii) any misrepresentation,
inaccuracy or breach of any warranty, covenant or agreement contained or
referred to in Sections 1.21 and 1.22, (iii) any violation or claim of violation
by the Mortgagor of any Environmental Laws, or (iv) the imposition of any lien
for damages caused by or the recovery of any costs for the cleanup, release or
threatened release of any Hazardous Material, except to the extent that any of
the matters described in subsections (a)-(h) arise out of the gross negligence
or willful misconduct of any Indemnified Party. If any action or proceeding be
commenced, to which action or proceeding any Indemnified Party is made a party
by reason of the execution of this Mortgage or any other Loan Document, or in
which it becomes necessary to defend or uphold the lien of this Mortgage, all
sums paid by the Indemnified Parties, for the expense of any litigation to
prosecute or defend the rights and lien created hereby or otherwise, shall be
paid by the Mortgagor to such Indemnified Parties, as the case may be, as
hereinafter provided. The Mortgagor will pay and save the Indemnified Parties
harmless against any and all liability with respect to any intangible personal
property tax or similar imposition of the State or any subdivision or authority
thereof now or hereafter in effect, to the extent that the same may be payable
by the Indemnified Parties in respect of this Mortgage, any Loan Document or any
Secured Obligation. All amounts payable to the Indemnified Parties under this
Section 1.16 shall be deemed indebtedness secured by this Mortgage and any such
amounts which are not paid within ten (10) days after written demand therefor
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by any Indemnified Party shall bear interest at the rate provided for in Section
3.2.2 of the Credit Agreement from the date of such demand. In case any action,
suit or proceeding is brought against any Indemnified Party by reason of any
such occurrence, the Mortgagor, upon request of such Indemnified Party, will, at
the Mortgagor's expense, resist and defend such action, suit or proceeding or
cause the same to be resisted or defended by counsel designated by the Mortgagor
and approved by such Indemnified Party. The obligations of the Mortgagor under
this Section 1.16 shall survive any discharge or reconveyance of this Mortgage
and payment in full of the Secured Obligations.
SECTION I.17. No Credit for Payment of Taxes. The Mortgagor shall not
be entitled to any credit against the Secured Obligations by reason of the
payment of any tax on the Property or any part thereof or by reason of the
payment of any other Imposition, and shall not apply for or claim any deduction
from the taxable value of the Property or any part thereof by reason of this
Mortgage.
SECTION I.18. Intentionally Omitted
SECTION I.19. No Transfer of the Property. Except as is provided in the
Credit Agreement, and except for the Permitted Encumbrances, the Mortgagor shall
not, without the prior written consent of the Mortgagee, which consent may be
granted or withheld in the sole and absolute discretion of the Mortgagee (i)
sell, convey, assign or otherwise transfer the Property or any portion of the
Mortgagor's interest therein or (ii) further encumber the Property or permit the
Property to become encumbered by any lien, claim, security interest or other
indebtedness of any kind or nature other than the Permitted Encumbrances.
SECTION I.20 Security Agreement. With respect to the items of personal
property and fixtures referred to and described in the Granting Clause of this
Mortgage and included as part of the Collateral, this Mortgage is hereby made
and declared to be a security agreement encumbering each and every item of
personal property and fixtures now or hereafter owned by Mortgagor and included
herein as a part of the Collateral, in compliance with the provisions of the
Uniform Commercial Code as enacted in the State. In this respect, Mortgagor, as
"Debtor", expressly grants to Mortgagee, as "Secured Party", a security interest
in and to all of the property now or hereafter owned by Mortgagor which
constitutes the personal property and fixtures hereinabove referred to and
described in this Mortgage, including all extensions, accessions, additions,
improvements, betterments, renewals, replacements and substitutions thereof or
thereto, and all proceeds from the sale or other disposition thereof. Mortgagor
agrees that Mortgagee may file this Mortgage, or a reproduction thereof, in the
real estate records or other appropriate index, as, and this Mortgage shall be
deemed to be, a financing statement filed as a fixture filing in accordance with
the laws of the State. Any reproduction of this Mortgage or of any other
security agreement or financing statement executed by Mortgagor shall be
sufficient as a financing statement. In addition, Mortgagor agrees to execute
and deliver to Mortgagee, upon Mortgagee's request, any other security agreement
and financing statements, as well as extensions, renewals, and amendments
thereof, and reproductions of this Mortgage, in such form as Mortgagee may
reasonably require to perfect a security interest with respect to said items.
Mortgagor shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all
reasonable costs and expenses of any record searches for financing statements
Mortgagee may reasonably require. Except as is provided in the Credit Agreement,
and except for the Permitted Encumbrances, without the prior written consent of
Mortgagee, Mortgagor shall not create or suffer to be created pursuant to the
Uniform Commercial Code any other security interest in the above-described
personal property and fixtures, including any replacements and additions
thereto. Upon the occurrence and continuance of an Event of Default under this
Mortgage, the Mortgagee shall have and shall be entitled to exercise any and all
of the rights and remedies (i) as prescribed in this Mortgage, or (ii) as
prescribed by general law, or (iii) as prescribed by the specific
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statutory provisions now or hereafter enacted and specified in said Uniform
Commercial Code, all at Mortgagee's sole election. Mortgagor and Mortgagee agree
that the filing of any financing statements in the records normally having to do
with personal property shall not in any way affect the agreement of Mortgagor
and Mortgagee that everything located in, on or about, or used or intended to be
used with or in connection with the use, operation or enjoyment of, the
Collateral, which is described or reflected as a fixture in this Mortgage, is,
and at all times and for all purposes and in all proceedings, both legal and
equitable, shall be, regarded as part of the Real Estate conveyed hereby.
Mortgagor warrants that Mortgagor's name, identity and address are as set forth
herein. The mailing address of the Mortgagee from which information may be
obtained concerning the security interest created herein is also set forth
herein. This information hereof is provided in order that this Mortgage shall
comply with the requirements of the Uniform Commercial Code as enacted in the
State for instruments to be filed as financing statements. In accordance with
the laws of the State, this Mortgage shall remain effective as a fixture filing
until this Mortgage is released or satisfied of record or its effectiveness
otherwise terminates as to the Collateral.
SECTION I.21. Representations and Warranties. In order to induce the
Mortgagee to enter into this Mortgage, the Credit Agreement and the other Loan
Documents, the Mortgagor agrees that all of the representations and warranties
set forth in the Credit Agreement are incorporated into this Mortgage by
reference as if fully set forth herein.
SECTION I.22. Mortgagor's Covenants. In order to induce the Mortgagee
to enter into this Mortgage, the Credit Agreement and the other Loan Documents,
the Mortgagor agrees that all of the covenants of Mortgagor set forth in the
Credit Agreement are incorporated into this Mortgage by reference as if fully
set forth herein.
SECTION I.23. Attornment. Mortgagee hereby acknowledges and agrees that
the liens granted herein are subject to the rights of certain lessees under the
Leases as disclosed in the Credit Agreement and will be subject to the rights of
lessees under any Leases entered into by Mortgagor after the date hereof which
are permitted as Permitted Real Estate Liens pursuant to the Credit Agreement,
subject to the express rights contained in the applicable Lease. The rights of
the tenants under the Leases to the leased premises shall not be adversely
affected by the exercise by Mortgagee of any of its rights hereunder, nor shall
any such tenant be in any way deprived of its rights under the applicable Lease
except in accordance with the terms of such Lease. In the event that Mortgagee
succeeds to the interest of Mortgagor under a Lease, such Lease shall not be
terminated or affected thereby except as set forth therein, and any sale of the
applicable leased premises by Mortgagee or pursuant to the judgment of any court
in an action to enforce the remedies provided for in this Mortgage shall be made
subject to such Lease and the rights of such tenant expressly set forth
thereunder. If Mortgagee succeeds to the interests of Mortgagor in and to the
applicable leased premises or under such Lease or enters into possession of such
leased premises, the Mortgagee, and such tenants, shall be bound to each other
under all of the express terms, covenants and conditions of such Lease, as if
the Mortgagee was originally the Mortgagor as lessor thereunder.
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
SECTION II.1. Insurance.
SECTION II.1.1. Risks to be Insured. The Mortgagor will, at its
expense, maintain or cause to be maintained with insurance carriers approved by
the Mortgagee (a) insurance with respect to the
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Improvements against loss or damage by fire, lightning and such other risks as
are included in standard "all-risk" policies, in amounts sufficient to prevent
the Mortgagor and the Mortgagee from becoming a co-insurer of any partial loss
under the applicable policies, but in any event in amounts not less than the
then full insurable value (actual replacement value) of the Improvements, as
determined by the Mortgagor in accordance with generally accepted insurance
practice and approved by the Mortgagee or, at the request of the Mortgagee, as
determined at the Mortgagor's expense by the insurer or insurers or by an expert
approved by the Mortgagee, (b) comprehensive public liability, including bodily
injury and product liability and property damage, insurance, with personal
injury endorsements, applicable to the Property in such amounts as are
customarily carried by Persons operating similar properties in the same general
locality, but in any event with a combined single limit of not less than Twenty
Million Dollars ($20,000,000) per occurrence, (c) explosion insurance in respect
of any steam and pressure boilers and similar apparatus located in the Property
in such amounts as are usually carried by persons operating similar properties
in the same general locality, but in any event in an amount not less than Twenty
Million Dollars ($20,000,000), (d) business interruption insurance (including
added expense coverage) against all insurable perils for a period of not fewer
than twelve (12) months (subject to a reasonable aggregate deductible not
exceeding ten (10) days per any occurrence), (e) worker's compensation insurance
to the full extent required by applicable law for all employees of the Mortgagor
engaged in any work on or about the Property and employer's liability insurance
with a limit of not less than Ten Million Dollars ($10,000,000) for each
occurrence, (f) all-risk, builders' risk insurance with respect to the Property
during any period during which there is any construction work being performed,
against loss or damage by fire or other risks, including vandalism, malicious
mischief and sprinkler leakage, as are included in so-called "extended coverage"
clauses at the time available and (g) such other insurance with respect to the
Property in such amounts and against such insurable hazards as the Mortgagee
from time to time may reasonably require by written notice to the Mortgagor.
SECTION II.1.2. Policy Provisions. All insurance maintained by the
Mortgagor pursuant to Section 2.1.1 shall (a) (except for worker's compensation
insurance) list the Mortgagor and the Mortgagee, as additional insureds as their
respective interests may appear, (b) (except for worker's compensation and
public liability insurance) provide that the proceeds for any losses shall be
adjusted by the Mortgagor subject to the approval of the Mortgagee in the event
the proceeds shall exceed $1,000,000, and shall be payable to the Mortgagee, to
be held and applied as provided in Section 2.3, (c) include effective waivers by
the insurer of all rights of subrogation against any named insured, the
indebtedness secured by this Mortgage and the Property and all claims for
insurance premiums against the Mortgagee, (d) provide that any losses shall be
payable notwithstanding (i) any act, failure to act or negligence of or
violation of warranties, declarations or conditions contained in such policy by
any named insured, (ii) the occupation or use of the Property for purposes more
hazardous than permitted by the terms thereof, (iii) any foreclosure or other
action or proceeding taken by the Mortgagee pursuant to any provision of this
Mortgage, or (iv) any change in title or ownership of the Property, (e) provide
that no cancellation, reduction in amount or material change in coverage thereof
or any portion thereof shall be effective until at least thirty (30) days after
receipt by the Mortgagee of written notice thereof, (f) provide that any notice
under such policies shall be simultaneously delivered to the Mortgagee, and (g)
be satisfactory in all other reasonable respects to the Mortgagee. Any insurance
maintained pursuant to this Section 2.1 may be evidenced by blanket insurance
policies covering the Property and other properties or assets of the Mortgagor,
provided that any such policy shall specify the portion, if less than all, of
the total coverage of such policy that is allocated to the Property and shall in
all other respects comply with the requirements of this Section 2.1.
SECTION II.1.3. Delivery of Policies, etc. The Mortgagor will deliver
to the Mortgagee, promptly upon request, (a) certificates of all policies
evidencing all insurance required to be maintained
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under Section 2.1.1 (or, in the case of blanket policies, certificates thereof
by the insurers together with a counterpart of each blanket policy), and (b)
evidence as to the payment of all premiums due thereon (with respect to public
liability insurance policies, all installments for the current year due thereon
to such date), provided that the Mortgagee shall not be deemed by reason of its
custody of such certificates to have knowledge of the contents thereof or of the
applicable policies. The Mortgagor will also deliver to the Mortgagee prior to
the expiration of any policy a binder or certificate of the insurer evidencing
the replacement thereof and when the new policy is issued a certificate of such
new policy (or, in the case of a replacement blanket policy, a certificate
thereof of the insurer together with a counterpart of the blanket policy). In
the event the Mortgagor shall fail to effect or maintain any insurance required
to be effected or maintained pursuant to the provisions of this Section 2.1, the
Mortgagor will indemnify the Mortgagee against damage, loss or liability
resulting from all risks for which such insurance should have been effected or
maintained.
SECTION II.1.4. Separate Insurance. The Mortgagor will not take out
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained pursuant to this Section 2.1.
SECTION II.2. Damage, Destruction or Taking; Mortgagor to Give Notice;
Assignment of Awards. In case of
(a) any material damage to or destruction of the Collateral or
any material part thereof, or
(b) any taking, whether for permanent or temporary use, of all
or any material part of the Collateral or any material interest therein
or material right accruing thereto, as the result of the exercise of
the right of condemnation or eminent domain, or a change of grade
affecting the Collateral or any portion thereof (a "Taking"), or the
commencement of any proceedings or negotiations which may result in a
Taking,
the Mortgagor will promptly give written notice thereof to the Mortgagee,
generally describing the nature and extent of such damage or destruction and the
Mortgagor's best estimate of the cost of restoring the Collateral, or the nature
of such proceedings or negotiations and the nature and extent of the Taking
which might result therefrom, as the case may be. The Mortgagee shall be
entitled to all insurance proceeds payable on account of such damage or
destruction and to all awards or payments allocable to the Collateral on account
of such Taking up to the amount of the Secured Obligations, and the Mortgagor
hereby irrevocably assigns, transfers and sets over to the Mortgagee all rights
of the Mortgagor to any such proceeds, awards or payments and irrevocably
authorizes and empowers the Mortgagee, at its option, in the name of the
Mortgagor or otherwise, to file and prosecute what would otherwise be the
Mortgagor's claim for any such proceeds, award or payment and to collect,
receipt for and retain the same for disposition in accordance with Section 2.3.
The Mortgagor will pay all reasonable costs and expenses incurred by the
Mortgagee in connection with any such damage, destruction or Taking and seeking
and obtaining any insurance proceeds, awards or payments in respect thereof.
SECTION II.3. Application of Proceeds and Awards. The Mortgagee may, at
its option, apply all amounts recovered under any insurance policy required to
be maintained by the Mortgagor hereunder and all awards received by it on
account of any Taking in any one or more of the following ways:
(a) to the payment of the reasonable costs and expenses
incurred by the Mortgagee in obtaining any such insurance proceeds or
awards, including the fees and expenses of
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attorneys and insurance and other experts and consultants, the costs of
litigation, arbitration, mediation, investigations and other judicial,
administrative or other proceedings and all other out-of-pocket
expenses;
(b) to the payment of the principal of the Fixed Asset Loans
and any interest (including post-petition interest payable in any
proceedings for bankruptcy under applicable law ("Post-Petition
Interest") to the extent such interest is a Secured Obligation) accrued
and unpaid thereon, without regard to whether any portion or all of
such amounts shall be matured or unmatured, and, in case such amount
shall be insufficient to pay in full all such amounts, then such amount
shall be applied, first, to the payment of all amounts of interest
(including Post-Petition Interest to the extent such interest is a
Secured Obligation) accrued on the Fixed Asset Loans and unpaid,
second, to the payment of all amounts of principal at the time
outstanding;
(c) to the payment of, or the application to, any Secured
Obligation (other than as provided in clause (b) above);
(d) to fulfill any of the other covenants contained herein, in
the Credit Agreement pertaining to the Fixed Assets Loans, or in any
other Loan Document pertaining to the Fixed Assets Loans, as the
Mortgagee may determine in its sole discretion;
(e) to the Mortgagor for application to the cost of restoring
the Collateral and the replacement of Goods destroyed, damaged or
taken; or
(f) to the Mortgagor.
Notwithstanding the foregoing provisions of this Section 2.3 to the
contrary (but subject to the provisions of Section 2.4), and if each of the
following conditions is satisfied, the Mortgagee, upon request of the Mortgagor,
shall apply insurance proceeds or condemnation awards received by it to the
restoration or replacement of the Collateral, to the extent necessary for the
restoration or replacement thereof:
(i) there shall then exist no uncured Event of
Default;
(ii) the Mortgagor shall furnish to the Mortgagee a
certificate of an architect or engineer reasonably acceptable
to the Mortgagee stating (x) that the Collateral is capable of
being restored, prior to the maturity of the Credit Agreement,
to substantially the same condition as existed prior to the
casualty or Taking, (y) the aggregate estimated direct and
indirect costs of such restoration and (z) as to any Taking,
that the property taken in such Taking, or sold under threat
thereof, is not necessary to the Mortgagor's customary use or
occupancy of the Property or Mortgagor otherwise provides
Mortgagee adequate assurance that the Collateral can be
restored; and
(iii) in the event that the estimated cost of
restoration set forth in the certificate of such architect or
engineer (and such revisions to such estimate as are from time
to time made) exceeds the net insurance proceeds or
condemnation awards actually received from time to time, the
Mortgagor shall deposit the amount of such excess with the
Mortgagee.
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In the event that such insurance proceeds or condemnation awards are to
be utilized in the restoration of the Collateral, the Mortgagee shall disburse
such Proceeds and the additional amounts deposited by the Mortgagor for such
restoration after receipt of a written request for disbursement, on not fewer
than five (5) nor more than twelve (12) Business Days notice and, to the extent
applicable, in accordance with the Mortgagee's customary construction loan
procedures and conditions. In the event that such insurance or condemnation
awards are to be utilized to replace the Collateral so destroyed or taken, the
Mortgagee shall disburse such Proceeds after receipt of a written request for
disbursement, on not fewer than five (5) Business Days nor more than twelve (12)
Business Days notice simultaneously with the acquisition of such replacement
property by the Mortgagor. In the event that, after the restoration or
replacement of the Collateral, any insurance or condemnation awards shall
remain, such amount shall be paid to the Mortgagor. Insurance proceeds and
condemnation awards shall be invested in the manner reasonably requested by the
Mortgagor and approved by the Mortgagee, and all interest earned thereon shall
be applied as provided in this Section 2.3. If, prior to the receipt by the
Mortgagee of such insurance proceeds or condemnation awards, the Collateral
shall have been sold on foreclosure, the Mortgagee shall have the right to
receive said insurance proceeds or condemnation awards to the extent of any
deficiency found to be due upon such sale, with legal interest thereon, whether
or not a deficiency judgment shall have been sought or recovered or denied, and
the reasonable attorneys' fees, costs and disbursements incurred by the
Mortgagee in connection with the collection of such award or payment.
SECTION II.4. Total Taking and Total Destruction. In the event of a
Total Destruction or a Total Taking, the Mortgagee shall apply all amounts
recovered under any insurance policy referred to in Section 2.1.1 and all awards
received by it on account of any such Taking as follows:
(a) first, to the payment of the reasonable costs and expenses
incurred by the Mortgagee in obtaining any such insurance proceeds or
awards, including the fees and expenses of attorneys and insurance and
other experts and consultants, the costs of litigation, arbitration,
mediation, investigations and other judicial, administrative or other
proceedings and all other out-of-pocket expenses;
(b) second, to the payment of the principal of the Fixed
Assets Loans and any interest (including Post-Petition Interest to the
extent such interest is a Secured Obligation) accrued and unpaid
thereon, without regard to whether any portion or all of such amounts
shall be matured or unmatured, and, in case such amount shall be
insufficient to pay in full all such amounts, then such amount shall be
applied, first, to the payment of all amounts of interest (including
Post-Petition Interest to the extent such interest is a Secured
Obligation) accrued on the Fixed Assets Loans and unpaid, and second,
to the payment of all amounts of principal at the time outstanding;
(c) third, to the payment of, or the application to, any
Secured Obligation (other than as provided in clause (b) above);
(d) fourth, to fulfill any of the other covenants contained
herein as the Mortgagee may determine; and
(e) fifth, the balance, if any, to the Mortgagor.
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ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION III.1. Events of Default; Acceleration. If an "Event of
Default" (pursuant to and as defined in the Credit Agreement) shall have
occurred and be continuing, then and in any such event the Mortgagee may at any
time thereafter (unless all Events of Default shall theretofore have been
remedied and all costs and expenses, including, without limitation, attorneys'
fees and expenses incurred by or on behalf of the Mortgagee, shall have been
paid in full by the Mortgagor) declare, by written notice to the Mortgagor, the
Fixed Assets Loans and all other Secured Obligations to be due and payable
immediately or on a date specified in such notice (provided that, upon the
occurrence of any Event of Default described in Section 8.1.9 of the Credit
Agreement, the Fixed Assets Loans and all other Secured Obligations shall
automatically become due and payable), and on such date the same shall be and
become due and payable, together with interest accrued thereon, without
presentment, demand, protest or notice, all of which the Mortgagor hereby
waives. The Mortgagor will pay on demand all costs and expenses, including,
without limitation, attorneys' fees and expenses, incurred by or on behalf of
the Mortgagee in enforcing this Mortgage, or any other Loan Document evidencing
or securing the Fixed Assets Loans, or occasioned by any default hereunder or
thereunder.
SECTION III.2. Legal Proceedings; Judicial Foreclosure. If an Event of
Default shall have occurred and be continuing, the Mortgagee at any time may, at
its election, proceed at law or in equity or otherwise to enforce the payment
and performance of the Secured Obligations in accordance with the terms hereof
and thereof and to foreclose the lien of this Mortgage as against all or any
part of the Collateral and to have the same sold under the judgment or decree of
a court of competent jurisdiction. The Mortgagee shall be entitled to recover in
such proceedings all costs incident thereto, including attorneys' fees and
expenses in such amounts as may be fixed by the court.
SECTION III.3. Power of Sale. If an Event of Default shall have
occurred and be continuing, the Mortgagee may grant, bargain, sell, assign,
transfer, convey and deliver the whole or, from time to time, any part of the
Collateral, or any interest in any part thereof, at any private sale or at
public auction, with or without demand, advertisement or notice, for cash, on
credit or for other property, for immediate or future delivery, and for such
price or prices and on such terms as the Mortgagee in its sole discretion may
determine, or as may be required by law, and upon such sale the Mortgagee may
execute and deliver to the purchaser(s) instruments of conveyance pursuant to
the terms hereof and to applicable laws. Without limiting the authority granted
in this Section 3.3, the Mortgagee shall, without demand on the Mortgagor, after
the lapse of such time as may then be required by law, and notice of default and
notice of sale having been given as then required by law, sell the Collateral on
the date and at the time and place designated in the notice of sale, either as a
whole or in separate parcels and in such order as the Mortgagee may determine,
but subject to any statutory right of the Mortgagor to direct the order in which
such property, if consisting of several known lots, parcels or interests, shall
be sold, at public auction to the highest bidder, the purchase price payable in
lawful money of the United States at the time of sale. The Person conducting the
sale may, for any cause deemed expedient, postpone the sale from time to time
until it shall be completed and, in every such case, notice of postponement
shall be given by public declaration thereof by such Person at the time and
place last appointed for the sale; provided that, if the sale is postponed for
longer than one (1) day beyond the day designated in the notice of sale, notice
of sale and notice of the time, date and place of sale shall be given in the
same manner as the original notice of sale. The Mortgagee shall execute and
deliver to the purchaser at any such sale a mortgagee's deed conveying the
property so sold, but without any covenant or warranty, express or implied. The
recitals in such mortgagee's deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any Person, including the Mortgagee, may bid
at the sale.
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SECTION III.4. Uniform Commercial Code Remedies. If an Event of Default
shall have occurred and be continuing, the Mortgagee may exercise from time to
time and at any time any rights and remedies available to it under applicable
law upon default in the payment of indebtedness, including, without limitation,
any right or remedy available to it as a secured party under the Uniform
Commercial Code of the State. The Mortgagor shall, promptly upon request by the
Mortgagee, assemble the Collateral, or any portion thereof generally described
in such request, and make it available to the Mortgagee at such place or places
designated by the Mortgagee and reasonably convenient to the Mortgagee or the
Mortgagor. If the Mortgagee elects to proceed under the Uniform Commercial Code
of the State to dispose of portions of the Collateral, the Mortgagee, at its
option, may give the Mortgagor notice of the time and place of any public sale
of any such property, or of the date after which any private sale or other
disposition thereof is to be made, by sending notice by registered or certified
first class mail, postage prepaid, to the Mortgagor at least ten (10) days
before the time of the sale or other disposition. If any notice of any proposed
sale, assignment or transfer by the Mortgagee of any portion of the Collateral
or any interest therein is required by law, the Mortgagor conclusively agrees
that ten (10) days notice to the Mortgagor of the date, time and place (and, in
the case of a private sale, the terms) thereof is reasonable.
SECTION III.5. Mortgagee Authorized to Execute Deeds, etc. The
Mortgagor irrevocably appoints the Mortgagee (which appointment is coupled with
an interest) the true and lawful attorney of the Mortgagor, in its name and
stead and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement hereof, whether pursuant to power of
sale, foreclosure or otherwise, to execute and deliver all such deeds, bills of
sale, assignments, releases and other instruments as may be designated in any
such request.
SECTION III.6. Purchase of Collateral by Mortgagee. The Mortgagee may
be a purchaser of the Collateral or of any part thereof or of any interest
therein at any sale thereof, whether pursuant to power of sale, foreclosure or
otherwise, and the Mortgagee may apply upon the purchase price thereof the
indebtedness secured hereby owing to the Mortgagee. Such purchaser shall, upon
any such purchase, acquire good title to the properties so purchased, free of
the security interest and lien of this Mortgage and free of all rights of
redemption in the Mortgagor.
SECTION III.7. Receipt a Sufficient Discharge to Purchaser. Upon any
sale of the Collateral or any part thereof or any interest therein, whether
pursuant to power of sale, foreclosure or otherwise, the receipt of the
Mortgagee or the officer making the sale under judicial proceedings shall be a
sufficient discharge to the purchaser for the purchase money, and such purchaser
shall not be obliged to see to the application thereof.
SECTION III.8. Waiver of Appraisement, Valuation, etc. The Mortgagor
hereby waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter in
force and all rights of marshaling in the event of any sale of the Collateral or
any part thereof or any interest therein.
SECTION III.9. Sale a Bar Against Mortgagor. Any sale of the Collateral
or any part thereof or any interest therein under or by virtue of this Mortgage,
whether pursuant to power of sale, foreclosure or otherwise, shall forever be a
bar against the Mortgagor.
SECTION III.10. Secured Obligations to Become Due on Sale. Except as
otherwise provided in the Credit Agreement, upon any sale of the Collateral or
any portion thereof or interest therein by virtue of the exercise of any remedy
by the Mortgagee under or by virtue of this Mortgage, whether pursuant to power
of sale, foreclosure or otherwise in accordance with this Mortgage or by virtue
of
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any other remedy available at law or in equity or by statute or otherwise, at
the option of the Mortgagee, any sums or monies due and payable pursuant to the
Credit Agreement pertaining to the Fixed Assets Loans, the Loan Documents
pertaining to the Fixed Assets Loans and in connection with the Fixed Assets
Loans and/or the Secured Obligations shall, if not previously declared due and
payable, immediately become due and payable, together with interest accrued
thereon, and all other indebtedness which this Mortgage by its terms secures.
SECTION III.11. Application of Proceeds of Sale and Other Moneys.
Except as otherwise provided in the Credit Agreement, the proceeds of any sale
of the Collateral or any part thereof or any interest therein under or by virtue
of this Mortgage, whether pursuant to power of sale, foreclosure or otherwise,
and all other moneys at any time held by the Mortgagee as part of the
Collateral, shall be applied in such order of priority as the Mortgagee shall
determine in its sole and absolute discretion including, without limitation, as
follows:
(a) first, to the payment of the reasonable costs and expenses
of such sale (including, without limitation, the cost of evidence of
title and the costs and expenses, if any, of taking possession of,
retaining custody over, repairing, managing, operating, maintaining and
preserving the Collateral or any part thereof prior to such sale), all
reasonable costs and expenses incurred by the Mortgagee or any other
Person in obtaining or collecting any insurance proceeds, condemnation
awards or other amounts received by the Mortgagee, all reasonable costs
and expenses of any receiver of the Collateral or any part thereof, and
any Impositions or other charges or expenses prior to the security
interest or lien of this Mortgage, which the Mortgagee may consider it
necessary or desirable to pay;
(b) second, to the payment of any Secured Obligation (other
than those set forth in Section 3.11(c) below);
(c) third, to the payment of all amounts of principal of and
interest (including Post-Petition Interest to the extent such interest
is a Secured Obligation) at the time due and payable under the Credit
Agreement pertaining to the Fixed Assets Loans at the time outstanding
(whether due by reason of maturity or by reason of any prepayment
requirement or by declaration or acceleration or otherwise), including
interest at the rate provided for in the Credit Agreement on any
overdue principal and (to the extent permitted under applicable law) on
any overdue interest; and, in case such moneys shall be insufficient to
pay in full such principal and interest, then, first, to the payment of
all amounts of interest (including Post-Petition Interest to the extent
such interest is a Secured Obligation) at the time due and payable and,
second, to the payment of all amounts of principal at the time due and
payable under the Fixed Assets Loans; and
(d) fourth, the balance, if any, held by the Mortgagee after
payment in full of all amounts referred to in subdivisions Sections
3.11(a), (b) and (c) above, shall, unless a court of competent
jurisdiction may otherwise direct by final order not subject to appeal,
be paid to or upon the direction of the Mortgagor.
SECTION III.12. Appointment of Receiver. If an Event of Default shall
have occurred and be continuing, the Mortgagee shall, as a matter of right,
without notice, and without regard to the adequacy of any security for the
indebtedness secured hereby or the solvency of the Mortgagor, be entitled to the
appointment of a receiver for all or any part of the Collateral, whether such
receivership be incidental to a proposed sale of the Collateral or otherwise,
and the Mortgagor hereby consents to the appointment of such a receiver and will
not oppose any such appointment.
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SECTION III.13. Possession, Management and Income. If an Event of
Default shall have occurred and be continuing, in addition to, and not in
limitation of, the rights and remedies provided in Section 1.14, the Mortgagee,
upon five (5) days written notice to the Mortgagor, may enter upon and take
possession of the Collateral or any part thereof by force, summary proceeding,
ejectment or otherwise and may remove the Mortgagor and all other Persons and
any and all property therefrom and may hold, operate, maintain, repair, preserve
and manage the same and receive all earnings, income, Rents, issues and Proceeds
accruing with respect thereto or any part thereof. The Mortgagee shall be under
no liability for or by reason of any such taking of possession, entry, removal
or holding, operation or management, except that any amounts so received by the
Mortgagee shall be applied to pay all costs and expenses of so entering upon,
taking possession of, holding, operating, maintaining, repairing, preserving and
managing the Collateral or any part thereof, and any Impositions or other
charges prior to the lien and security interest of this Mortgage which the
Mortgagee may consider it necessary or desirable to pay, and any balance of such
amounts shall be applied as provided in Section 3.11.
SECTION III.14. Right of Mortgagee to Perform Mortgagor's Covenants,
etc. If the Mortgagor shall fail to make any payment or perform any act required
to be made or performed hereunder or under the Credit Agreement pertaining to
the Fixed Assets Loans or any other Loan Document pertaining to the Fixed Assets
Loans, the Mortgagee, without notice to or demand upon the Mortgagor and without
waiving or releasing any obligation or Event of Default, may (but shall be under
no obligation to) at any time thereafter make such payment or perform such act
for the account and at the expense of the Mortgagor, and may enter upon the
Collateral for such purpose and take all such action thereon as, in the
Mortgagee's opinion, may be necessary or appropriate therefor. No such entry and
no such action shall be deemed an eviction of any lessee of the Property or any
part thereof. All sums so paid by the Mortgagee and all costs and expenses
(including, without limitation, attorneys' fees and expenses) so incurred,
together with interest thereon at the rate provided for in Section 3.2.2 of the
Credit Agreement from the date of payment or incurring, shall constitute
additional indebtedness under the Credit Agreement secured by this Mortgage and
shall be paid by the Mortgagor to the Mortgagee on demand.
SECTION III.15. Subrogation. To the extent that the Mortgagee, on or
after the date hereof, pays any sum due under any provision of any Legal
Requirement or any instrument creating any lien prior or superior to the lien of
this Mortgage, or the Mortgagor or any other Person pays any such sum with the
proceeds of the Fixed Assets Loans, the Mortgagee shall have and be entitled to
a lien on the Collateral equal in priority to the lien discharged, and the
Mortgagee shall be subrogated to, and receive and enjoy all rights and liens
possessed, held or enjoyed by, the holder of such lien, which shall remain in
existence and benefit the Mortgagee in securing the Secured Obligations.
SECTION III.16. Remedies, etc., Cumulative. Each right, power and
remedy of the Mortgagee provided for in this Mortgage, the Credit Agreement
pertaining to the Fixed Assets Loans or any other Loan Document pertaining to
the Fixed Assets Loans, or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power or remedy provided for in this Mortgage, the Credit
Agreement or any other Loan Document pertaining to the Fixed Assets Loans, or
now or hereafter existing at law or in equity or by statute or otherwise, and
the exercise or beginning of the exercise by the Mortgagee of any one or more of
the rights, powers or remedies provided for in this Mortgage, the Credit
Agreement, or any other Loan Document pertaining to the Fixed Assets Loans, or
now or hereafter existing at law or in equity or by statute or otherwise shall
not preclude the simultaneous or later exercise by the Mortgagee of any or all
such other rights, powers or remedies.
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<PAGE> 25
SECTION III.17. Provisions Subject to Applicable Law. All rights,
powers and remedies provided in this Mortgage may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Mortgage invalid, unenforceable or not entitled to be recorded,
registered or filed under the provisions of any applicable law. If any term of
this Mortgage or any application thereof shall be invalid or unenforceable, the
remainder of this Mortgage and any other application of such term shall not be
affected thereby.
SECTION III.18. No Waiver, etc. No failure by the Mortgagee to insist
upon the strict performance of any term hereof or of the Credit Agreement, or of
any other Loan Document, or to exercise any right, power or remedy consequent
upon a breach hereof or thereof, shall constitute a waiver of any such term or
of any such breach. No waiver of any breach shall affect or alter this Mortgage,
which shall continue in full force and effect with respect to any other then
existing or subsequent breach. By accepting payment or performance of any amount
or other Secured Obligations secured hereby before or after its due date, the
Mortgagee shall not be deemed to have waived its right either to require prompt
payment or performance when due of all other amounts and Secured Obligations
payable hereunder or to declare a default for failure to effect such prompt
payment.
SECTION III.19. Compromise of Actions, etc. Any action, suit or
proceeding brought by the Mortgagee pursuant to any of the terms of this
Mortgage, the Credit Agreement pertaining to the Fixed Assets Loans, any other
Loan Document pertaining to the Fixed Assets Loans, or otherwise, and any claim
made by the Mortgagee hereunder or thereunder, may be compromised, withdrawn or
otherwise dealt with by the Mortgagee without any notice to or approval of the
Mortgagor.
ARTICLE IV
DEFINITIONS
SECTION IV.1. Terms Defined in this Mortgage. When used herein the
following terms have the following meanings:
"Borrowers" shall have the meaning set forth in the second recital.
"Collateral" shall have the meaning set forth in the granting clause.
"Contracts" shall have the meaning set forth in clause (h) of the
granting clause.
"Credit Agreement" shall have the meaning set forth in the second
recital.
"Credit Extensions" shall have the meaning set forth in the the second
recital.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time, or both, would constitute an Event of Default.
"Goods" shall have the meaning set forth in clause (c) of the granting
clause.
"herein", "hereof", "hereto", and "hereunder" and similar terms refer
to this Mortgage and not to any particular Section, paragraph or provision of
this Mortgage.
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<PAGE> 26
"Impositions" shall have the meaning set forth in Section 1.5.
"Improvements" shall have the meaning set forth in clause (b) of the
granting clause.
"Indemnified Parties" shall have the meaning set forth in Section 1.16.
"Insurance Requirements" shall have the meaning set forth in paragraph
(a) of Section 1.6.
"Intangibles" shall have the meaning set forth in clause (d) of the
granting clause.
"Land" shall have the meaning set forth in the first recital.
"Leases" shall have the meaning set forth in clause (e) of the granting
clause.
"Legal Requirements" shall have the meaning set forth in paragraph (b)
of Section 1.6.
"Mortgage" shall have the meaning set forth in the preamble.
"Mortgagee" shall have the meaning set forth in the preamble.
"Mortgagor" shall have the meaning set forth in the preamble.
"Permits" shall have the meaning set forth in clause (g) of the
granting clause.
"Permitted Encumbrances" shall have the meaning set forth in Section
1.2.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency or officer.
"Plans" shall have the meaning set forth in clause (f) of the granting
clause.
"Post-Petition Interest" shall have the meaning set forth in Section
2.3.
"Proceeds" shall have the meaning set forth in clause (k) of the
granting clause.
"Property" shall have the meaning set forth in clause (b) of the
granting clause.
"Real Estate" shall have the meaning set forth in clause (a) of the
granting clause.
"Rents" shall have the meaning set forth in clause (j) of the granting
clause.
"Secured Obligations" means the Fixed Assets Obligations and all
Obligations with respect to the Fixed Assets Loans now or hereafter existing
under the Credit Agreement or any Loan Document pertaining to the Fixed Assets
Loans, and all obligations (monetary or otherwise) arising under or in
connection with the Fixed Assets Notes or the Fixed Assets Loans, whether for
principal, interest, costs, fees, expenses or otherwise and all other Fixed
Assets Obligations.
"State" means the State of Florida.
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<PAGE> 27
"Total Destruction" means any damage to or destruction of the
Improvements or any part thereof which, in the reasonable estimation of the
Mortgagee shall require the expenditure of an amount in excess of Ten Million
Dollars ($10,000,000) to restore the Improvements to substantially the same
condition of the Improvements immediately prior to such damage or destruction.
"Total Taking" means a Taking, whether permanent or for temporary use,
which, in the reasonable judgment of the Mortgagee, shall substantially
interfere with and adversely affect the normal operation of the Property by the
Mortgagor to such an extent as would reasonably be anticipated to cause a
Material Adverse Effect.
SECTION IV.2. Use of Defined Terms. Terms for which meanings are
provided in this Mortgage shall, unless otherwise defined or the context
otherwise requires, have such meanings when used in any certificate and any
opinion, notice or other communication delivered from time to time in connection
with this Mortgage or pursuant hereto.
SECTION IV.3. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Mortgage, including
its preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE V
MISCELLANEOUS
SECTION V.1. Further Assurances; Financing Statements.
SECTION V.1.1. Further Assurances. The Mortgagor, at its expense, will
execute, acknowledge and deliver all such instruments and take all such other
action as the Mortgagee from time to time may reasonably request:
(a) to better subject to the lien and security interest of
this Mortgage all or any portion of the Collateral,
(b) to perfect, publish notice or protect the validity of the
lien and security interest of this Mortgage,
(c) to preserve and defend the title to the Collateral and the
rights of the Mortgagee therein against the claims of all Persons as
long as this Mortgage shall remain undischarged,
(d) to better subject to the lien and security interest of
this Mortgage or to maintain or preserve the lien and security interest
of this Mortgage with respect to any replacement or substitution for
any Collateral or any other after-acquired property except as provided
in the Credit Agreement, or
(e) in order to further effectuate the purposes of this
Mortgage and to carry out the terms hereof and to better assure and
confirm to the Mortgagee its rights, powers and remedies hereunder.
SECTION V.1.2. Financing Statements. Notwithstanding any other
provision of this Mortgage, the Mortgagor hereby agrees that, without notice to
or the consent of the Mortgagor, the
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<PAGE> 28
Mortgagee may file with the appropriate public officials such financing
statements, continuation statements, amendments and similar documents as are or
may become necessary to perfect, preserve or protect the security interest
granted by this Mortgage.
SECTION V.2. Additional Security. Without notice to or consent of the
Mortgagor, and without impairment of the security interest and lien and rights
created by this Mortgage, the Mortgagee and the Lenders may accept from the
Mortgagor or any other Person additional security for the Secured Obligations.
Neither the giving of this Mortgage nor the acceptance of any such additional
security shall prevent the Mortgagee from resorting, first, to such additional
security, or, first, to the security created by this Mortgage, or concurrently
to both, in any case without affecting the Mortgagee's lien and rights under
this Mortgage.
SECTION V.3. Defeasance; Partial Release, etc.
SECTION V.3.1. Defeasance. If the Fixed Assets Loans and all other
amounts owing pursuant to the Credit Agreement pertaining to the Fixed Assets
Loans and the other Loan Documents pertaining to the Fixed Assets Loans shall be
repaid in full in accordance with the terms thereof, and if the Mortgagor shall
pay, in full, the principal of and premium, if any, and interest on the Secured
Obligations in accordance with the terms thereof and hereof and all other sums
payable hereunder by the Mortgagor and shall comply with all the terms,
conditions and requirements hereof and of the Secured Obligations, or otherwise
as may be provided in the Credit Agreement, then on such date, the Mortgagee
shall, upon the request of the Mortgagor and at the Mortgagor's sole cost and
expense, execute and deliver such instruments, in form and substance reasonably
satisfactory to the Mortgagee, as may be necessary to effectively reconvey,
release and discharge this Mortgage.
SECTION V.3.2. Partial Release, etc. The Mortgagee may, at any time and
from time to time, without liability therefor, and without prior notice to the
Mortgagor, release or reconvey any part of the Collateral, consent to the making
of any map or plat of the Property, join in granting any easement thereon or
join in any extension agreement or agreement subordinating the lien of this
Mortgage.
SECTION V.4. Notices, etc. All notices and other communications
provided to any of the parties hereto shall be in writing and addressed,
delivered or transmitted to such party as set forth in the Credit Agreement.
SECTION V.5. Waivers, Amendments, etc. The provisions of this Mortgage
may be amended, discharged or terminated and the observance or performance of
any provision of this Mortgage may be waived, either generally or in a
particular instance and either retroactively or prospectively, only by an
instrument in writing executed by the Mortgagor and the Mortgagee.
SECTION V.6. Cross-References. References in this Mortgage and in each
instrument executed pursuant hereto to any Section or Article are, unless
otherwise specified, to such Section or Article of this Mortgage or such
instrument, as the case may be, and references in any Section, Article or
definition to any clause are, unless otherwise specified, to such clause of such
Section, Article or definition.
SECTION V.7. Headings. The various headings of this Mortgage and of
each instrument executed pursuant hereto are inserted for convenience only and
shall not affect the meaning or interpretation of this Mortgage or such
instrument or any provisions hereof or thereof.
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<PAGE> 29
SECTION V.8. Currency. Unless otherwise expressly stated, all
references to any currency or money, or any dollar amount, or amounts
denominated in "Dollars" herein will be deemed to refer to the lawful currency
of the United States.
SECTION V.9. Governing Law. THIS MORTGAGE SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE.
SECTION V.10. Successors and Assigns, etc. This Mortgage shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
SECTION V.11. Waiver of Jury Trial; Submission to Jurisdiction.
(a) EACH OF THE MORTGAGOR AND THE MORTGAGEE HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS MORTGAGE, THE CREDIT AGREEMENT, ANY
LOAN DOCUMENT PERTAINING TO THE FIXED ASSETS LOANS OR ANY OTHER RELATED
INSTRUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE MORTGAGOR OR THE
MORTGAGEE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE MORTGAGEE
AND THE FIXED ASSETS LENDERS TO ENTER INTO THE TRANSACTIONS PROVIDED
FOR IN THE CREDIT AGREEMENT AND TO MAKE THE FIXED ASSETS LOANS.
(b) FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INVOLVING THIS
MORTGAGE, THE CREDIT AGREEMENT AS PERTAINS TO THE FIXED ASSETS LOANS OR
ANY OTHER LOAN DOCUMENT AS PERTAINS TO THE FIXED ASSETS LOANS, THE
MORTGAGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ALL FEDERAL AND STATE COURTS LOCATED IN THE STATE AND
CONSENTS THAT IT MAY BE SERVED WITH ANY PROCESS OR PAPER BY REGISTERED
MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE IN ACCORDANCE
WITH APPLICABLE LAW, PROVIDED A REASONABLE TIME FOR APPEARANCE IS
ALLOWED. THE MORTGAGOR AND MORTGAGEE EACH EXPRESSLY WAIVES, TO THE
EXTENT IT MAY LAWFULLY DO SO, ANY OBJECTION, CLAIM OR DEFENSE WHICH IT
MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF THIS MORTGAGE, THE CREDIT AGREEMENT OR ANY
OTHER LOAN DOCUMENT PERTAINING TO THE FIXED LOANS IN ANY SUCH COURT,
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND
FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO ANY
SUCH CLAIM, SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT
SUCH COURT DOES NOT HAVE JURISDICTION OVER THE PERSON OF THE MORTGAGOR.
NOTHING CONTAINED HEREIN WILL BE DEEMED TO PRECLUDE THE MORTGAGEE FROM
BRINGING AN ACTION AGAINST THE MORTGAGOR IN ANY OTHER JURISDICTION.
SECTION V.12. Severability; Conflicts. Any provision of this Mortgage,
the Credit Agreement or any other Loan Document pertaining to the Fixed Assets
Loans which is prohibited or unenforceable in any jurisdiction shall as to such
provision and such jurisdiction, be ineffective to the
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<PAGE> 30
extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Mortgage, the Credit Agreement or such Loan
Document pertaining to the Fixed Assets Loans or affecting the validity or
enforceability of such provision in any other jurisdiction. In the event of any
conflict between the terms of this Mortgage and the terms of the Credit
Agreement, the terms of the Credit Agreement shall control.
SECTION V.13. Loan Document. This Mortgage is a Loan Document executed
pursuant to the Credit Agreement and, unless otherwise expressly indicated
herein, shall be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION V.14. Usury Savings Clause. It is the intention of the
Mortgagor and the Mortgagee to conform strictly to the usury laws governing the
Loan Documents pertaining to the Fixed Assets Loans, and any interest payable
under the Loan Documents pertaining to the Fixed Assets Loans shall be subject
to reduction to the amount not in excess of the maximum non-usurious amount
allowed under such laws, as construed by the courts having jurisdiction over
such matters. In the event the maturity of the Secured Obligations is
accelerated by reason of any provision of the Loan Documents pertaining to the
Fixed Assets Loans, or by reason of an election by the Mortgagee resulting from
an Event of Default, then earned interest may never include more than the
maximum amount permitted by law, computed from the dates of each advance of loan
proceeds under the Credit Agreement until payment, and any interest in excess of
the maximum amount permitted by law shall be canceled automatically or, if
theretofore paid, at the option of the Mortgagee, shall be rebated to the
Mortgagor, or shall be credited on the principal amount of the Secured
Obligations or, if all principal has been repaid, then the excess shall be
rebated to the Mortgagor. If any interest is canceled, credited against
principal or rebated to the Mortgagor in accordance with the foregoing sentence
and, if thereafter the interest payable hereunder is less than the maximum
amount permitted by applicable law, the rate hereunder shall automatically be
increased to the maximum extent possible to permit repayment to the Mortgagee
and the Lenders as soon as possible of any interest in excess of the maximum
amount permitted by law which was earlier canceled, credited against principal
or rebated to the Mortgagor pursuant to the provisions of the foregoing
sentence.
SECTION 5.15. Future Advances. This Mortgage is a "Future Advance
Mortgage" under the laws of the State. Any and all future advances under this
Mortgage and the Loan Documents pertaining to the Fixed Assets Loans shall have
the same priority as if the future advance was made on the date that this
Mortgage was recorded. This Mortgage shall secure the Secured Obligations,
whenever incurred, such Secured Obligations to be due at the times provided in
the Loan Documents pertaining to the Fixed Assets Loans. Notice is hereby given
that the Secured Obligations may increase as a result of any defaults hereunder
by Mortgagor due to, for example, and without limitation, unpaid interest or
late charges, unpaid taxes or insurance premiums which the Mortgagee elects to
advance, defaults under leases that the Mortgagee elects to cure, attorney fees
or costs incurred in enforcing the Loan Documents pertaining to the Fixed Assets
Loans or other expenses incurred by the Mortgagee in protecting the Collateral,
the security of this Mortgage or the Mortgagee's rights and interests.
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<PAGE> 31
IN WITNESS WHEREOF, the undersigned, by its duly elected officers and
pursuant to proper authority of its board of directors has duly executed,
sealed, acknowledged and delivered this instrument as of the day and year first
above written.
STERLING FIBERS, INC., a Delaware corporation
By:
------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
DRAFTED BY:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
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<PAGE> 32
[CORPORATION NOTARY PAGE]
MULTI-STATE CORPORATE ACKNOWLEDGMENT
State of New York
County of New York
On this ________________ day of July, 1999, before me, the undersigned officer,
personally appeared:
(a) ________________________________, with a residence at
____________________________.
(b) __________________________________, with a residence at
____________________________.
personally known and acknowledged himself/herself/themselves to me (or proved to
me on the basis of satisfactory evidence) to be the
(a) ________ President, and
(b) ________ Secretary
respectively of _______________________, (hereinafter, the "Corporation")
and that as such officer(s), being duly authorized to do so pursuant to its
bylaws or a resolution of its board of directors, executed, subscribed and
acknowledged the foregoing instrument for the purposes therein contained, by
signing the name of the Corporation by himself/herself/themselves in their
authorized capacities as such officer(s) as his/her/their free and voluntary act
and deed and the free and voluntary act and deed of said Corporation.
In Witness Whereof, I hereunto set my hand and official seal.
------------------------------------
Notary Public
Notarial Seal My Commission Expires:
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<PAGE> 33
SCHEDULE 1
Legal Description of the Land
[ ]
<PAGE> 34
SCHEDULE 2
Permitted Encumbrances
[ ]
<PAGE> 1
EXHIBIT 4.4
Record and return to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
STERLING PULP CHEMICALS, INC.,
Grantor,
to
THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT")
as the Administrative Agent under the Credit Agreement referred to below
(together with its successors and assigns from time to time acting as
Administrative Agent under such Credit Agreement, the "Administrative Agent")
and
U.S. BANK TRUST NATIONAL ASSOCIATION
as Georgia co-agent (together with its successors and assigns from time to
time acting as Georgia co-agent, the "Georgia Agent," with the Administrative
Agent and the Georgia Agent herein collectively referred to as "Grantee")
---------------------------------------------------
LEASEHOLD DEED TO SECURE DEBT, ASSIGNMENT AND
SECURITY AGREEMENT
---------------------------------------------------
Dated as of July 23, 1999
This instrument affects certain real and personal property
located in Lowndes County,
State of Georgia.
This instrument was prepared by the above named attorney.
Notice: This instrument contains inter alia obligations which may provide for:
(a) a variable rate of interest and/or
(b) future and/or revolving credit advances or readvances, which
when made, shall have the same priority as advances or
readvances made on the date hereof whether or not (i) any
advances or readvances were made on the date hereof and (ii)
any indebtedness is outstanding at the time any advance or
re-advance is made.
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
COVENANTS AND AGREEMENTS OF THE Grantor
SECTION 1.1. Payment of Secured Obligations...........................4
SECTION 1.2. Title to Collateral, etc. ...............................5
SECTION 1.3. Title Insurance..........................................5
SECTION 1.3.1. Title Insurance Policy...................................5
SECTION 1.3.2. Title Insurance Proceeds.................................5
SECTION 1.4. Recordation..............................................5
SECTION 1.5. Payment of Impositions, etc. ............................6
SECTION 1.6. Insurance and Legal Requirements.........................6
SECTION 1.7. Security Interests, etc. ................................6
SECTION 1.8. Permitted Contests.......................................7
SECTION 1.9. Leases...................................................7
SECTION 1.10. Compliance with Instruments..............................7
SECTION 1.11. Maintenance and Repair, etc. ............................8
SECTION 1.12. Alterations, Additions, etc. ............................8
SECTION 1.13. Acquired Property Subject to Security Title/Security
Interest...............................................8
SECTION 1.14. Assignment of Rents, Proceeds, etc. .....................8
SECTION 1.15. No Claims Against the Grantee............................9
SECTION 1.16. Indemnification..........................................9
SECTION 1.17. No Credit for Payment of Taxes..........................10
SECTION 1.18. Intentionally Omitted...................................10
SECTION 1.19. No Transfer of the Property.............................10
SECTION 1.20. Security Agreement......................................10
SECTION 1.21. Representations and Warranties..........................11
SECTION 1.22. Grantor's Covenants.....................................11
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
SECTION 2.1. Insurance...............................................11
SECTION 2.1.1. Risks to be Insured.....................................11
SECTION 2.1.2. Policy Provisions.......................................12
SECTION 2.1.3. Delivery of Policies, etc. .............................12
SECTION 2.1.4. Separate Insurance......................................13
SECTION 2.2. Damage, Destruction or Taking; Grantor to Give Notice;
Assignment of Awards..................................13
<PAGE> 3
SECTION 2.3. Application of Proceeds and Awards......................13
SECTION 2.4. Total Taking and Total Destruction......................15
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration.........................15
SECTION 3.2. Legal Proceedings; Foreclosure..........................16
SECTION 3.3. Power of Sale...........................................16
SECTION 3.4. Uniform Commercial Code Remedies........................17
SECTION 3.5. Grantee Authorized to Execute Deeds, etc. ..............17
SECTION 3.6. Purchase of Collateral by Grantee.......................17
SECTION 3.7. Receipt a Sufficient Discharge to Purchaser.............17
SECTION 3.8. Waiver of Appraisement, Valuation, etc. ................17
SECTION 3.9. Sale a Bar Against Grantor..............................18
SECTION 3.10. Secured Obligations to Become Due on Sale...............18
SECTION 3.11. Application of Proceeds of Sale and Other Moneys........18
SECTION 3.12. Appointment of Receiver.................................19
SECTION 3.13. Possession, Management and Income.......................19
SECTION 3.14. Right of Grantee to Perform Grantor's Covenants, etc....19
SECTION 3.15. Subrogation.............................................19
SECTION 3.16. Remedies, etc., Cumulative..............................19
SECTION 3.17. Provisions Subject to Applicable Law....................20
SECTION 3.18. No Waiver, etc. ........................................20
SECTION 3.19. Compromise of Actions, etc. ............................20
ARTICLE IV
DEFINITIONS
SECTION 4.1. Terms Defined in this Deed..............................21
SECTION 4.2. Use of Defined Terms....................................22
SECTION 4.3. Credit Agreement Definitions............................22
<PAGE> 4
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements................22
SECTION 5.1.1. Further Assurances......................................23
SECTION 5.1.2. Financing Statements....................................23
SECTION 5.2. Additional Security.....................................23
SECTION 5.3. Satisfaction; Partial Release, etc. ....................23
SECTION 5.3.1. Satisfaction............................................23
SECTION 5.3.2. Partial Release, etc. ..................................24
SECTION 5.4. Notices, etc............................................24
SECTION 5.5. Waivers, Amendments, etc................................24
SECTION 5.6. Cross-References........................................24
SECTION 5.7. Headings................................................24
SECTION 5.8. Currency................................................24
SECTION 5.9. Governing Law...........................................24
SECTION 5.10. Successors and Assigns, etc.............................24
SECTION 5.11. Waiver of Jury Trial; Submission to Jurisdiction........24
SECTION 5.12. Severability; Conflicts.................................25
SECTION 5.13. Loan Document...........................................25
SECTION 5.14. Usury Savings Clause....................................25
SECTION 5.15. Future Advances.........................................26
SECTION 5.16. Georgia Co-Agent........................................26
Schedule 1-A Legal Description of the Land
Schedule 1-B Legal Description of the Land
Schedule 2 Permitted Encumbrances
<PAGE> 5
LEASEHOLD DEED TO SECURE DEBT,
ASSIGNMENT AND SECURITY AGREEMENT
THIS LEASEHOLD DEED TO SECURE DEBT, ASSIGNMENT AND SECURITY AGREEMENT,
dated as of July 23, 1999 (this "Deed"), made by STERLING PULP CHEMICALS, INC.,
a Georgia corporation (the "Grantor"), having an address at 1200 Smith Street,
Suite 1900, Houston, Texas 77002-4312, to THE CIT GROUP/BUSINESS CREDIT, INC.
("CIT"), a corporation, having an address at 1211 Avenue of the Americas, 22nd
Floor, New York, New York 10036, as the Administrative Agent under the Credit
Agreement referred to below (together with its successors and assigns from time
to time acting as Administrative Agent under such Credit Agreement, the
"Administrative Agent"), and U.S. BANK TRUST NATIONAL ASSOCIATION, a banking
association, having an address at GAAT 3384, 3384 Peachtree Road NE, Atlanta,
Georgia 30326, as Georgia co-agent (together with its successors and assigns
from time to time acting as Georgia co-agent, the "Georgia Agent," with the
Administrative Agent and the Georgia Agent herein collectively referred to as
"Grantee").
W I T N E S S E T H T H A T:
WHEREAS, the Grantor is on the date of delivery hereof the owner of an
easement or leasehold estate as indicated herein or on Schedule 1 hereto to the
parcel of land (and any easements or other rights or interests) described in
Schedule 1 hereto (the "Land") and of the Improvements (such term and other
capitalized terms used in this Deed having the respective meanings specified or
referred to in Article IV);
WHEREAS, pursuant to the terms, conditions and provisions of the Revolving
Credit Agreement, dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Sterling Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp Chemicals
U.S., Inc., Grantor, Sterling Fibers, Inc., Sterling Chemicals Energy, Inc. and
Sterling Chemicals International, Inc., as Borrowers (collectively, the
"Borrowers"), various financial institutions, as the Lenders, DLJ Capital
Funding, Inc., as the Syndication Agent, The CIT Group/Business Credit, Inc. as
the Administrative Agent, and Credit Suisse First Boston, as the Documentation
Agent, the Lenders and the Issuer have agreed to make Loans to, and to issue
Letters of Credit for the account of, the Borrowers in the maximum original
principal amount of One Hundred Fifty Five Million Dollars ($155,000,000) (such
Loans and Letters of Credit are hereinafter referred to collectively as the
"Credit Extensions").
WHEREAS, the Credit Extensions consist of, inter alia, Fixed Assets Loans
in a maximum principal amount not to exceed Seventy Million Dollars
($70,000,000) having a Stated Maturity Date of July 23, 2004; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Deed.
G R A N T:
NOW, THEREFORE, for and in consideration of the premises, and of the
mutual covenants herein contained, and in order to induce the Fixed Assets
Lenders to make the Fixed Assets Loans pursuant to the Credit Agreement, and in
order to secure the full, timely and proper payment and performance of and
compliance with each and every one of the Secured Obligations (as hereinafter
defined), the Grantor hereby irrevocably grants, bargains, sells, sets over,
warrants, aliens, demises, releases, hypothecates, pledges, assigns, transfers
and conveys to the Grantee and its successors, successors-in-title and assigns,
forever, all of the following (the "Collateral"):
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(a) Real Estate. All of Grantor's estate, interest, rights,
privileges and benefits (including, without limitation, any option to
purchase fee simple title) existing under or created by that certain
Indenture of Lease by and between Valdosta-Lowndes County Industrial
Authority (as Lessor) and Sterling Pulp Chemicals US, Inc. (as Lessee)
dated October 1, 1995, and recorded in Deed Book 1331, Page 27, Lowndes
County, Georgia Records, with a Memorandum of Lease Agreement dated as of
October 1, 1995, being recorded in Deed Book 1240, page 1, aforesaid
records, as assigned by Sterling Pulp Chemicals US, Inc. to Grantor by
instrument dated August 6, 1996, and recorded in Deed Book 1333, Page 123,
and rerecorded in Deed Book 1349, Page 83, aforesaid records
(collectively, the "Authority Lease") covering and affecting the Land, and
all of Grantor's interest in and to all of the Land and all additional
lands and estates therein now owned or hereafter-acquired by the Grantor
for use or development with the Land or any portion thereof, together with
all and singular the tenements, rights, easements, hereditaments, rights
of way, privileges, liberties, appendages and appurtenances now or
hereafter belonging or in any way pertaining to the Land and such
additional lands and estates therein (including, without limitation, all
rights relating to storm and sanitary sewer, water, gas, electric, railway
and telephone services); all development rights, air rights, riparian
rights, water, water rights, water stock, all rights in, to and with
respect to any and all oil, gas, coal, minerals and other substances of
any kind or character underlying or relating to the Land and such
additional lands and estates therein and any interest therein; all estate,
claim, demand, right, title or interest of the Grantor in and to any
street, road, highway or alley, vacated or other, adjoining the Land or
any part thereof and such additional lands and estates therein; all strips
and gores belonging, adjacent or pertaining to the Land or such additional
lands and estates; and any after-acquired property (herein collectively
referred to as the "Real Estate");
(b) Improvements. All of Grantor's right, title and interest in and
to all buildings, structures and other improvements and any additions and
alterations thereto or replacements thereof, now or hereafter built,
constructed or located upon the Real Estate; and, to the extent that any
of the following items of property constitutes fixtures under applicable
laws, all furnishings, fixtures, fittings, appliances, apparatus,
equipment, machinery, building and construction materials and other
articles of every kind and nature whatsoever and all replacements thereof,
now or hereafter affixed or attached to, placed upon or used in any way in
connection with the complete and comfortable use, enjoyment, occupation,
operation, development and/or maintenance of the Real Estate or such
buildings, structures and other improvements, including, but not limited
to, partitions, furnaces, boilers, oil burners, radiators and piping,
plumbing and bathroom fixtures, refrigeration, heating, ventilating, air
conditioning and sprinkler systems, other fire prevention and
extinguishing apparatus and materials, vacuum cleaning systems, gas and
electric fixtures, incinerators, compactors, elevators, engines, motors,
generators and all other articles of property which are considered
fixtures under applicable law (such buildings, structures and other
improvements and such other property are herein collectively referred to
as the "Improvements"; the Real Estate and the Improvements are herein
collectively referred to as the "Property");
(c) Goods. All of Grantor's right, title and interest in and to all
building materials, construction materials, appliances (including, without
limitation, stoves, ranges, ovens, disposals, refrigerators, water
fountains and coolers, fans, heaters, dishwashers, clothes washers and
dryers, water heaters, hood and fan combinations, kitchen equipment,
laundry equipment, kitchen cabinets and other similar equipment), stocks,
supplies, blinds, window shades, drapes, carpets, floor coverings,
manufacturing equipment and machinery, office equipment, growing plants
and shrubberies, control devices, equipment (including window cleaning,
building cleaning, swimming pool, recreational, monitoring, garbage, pest
control and other equipment), motor vehicles, tools, furnishings,
furniture, lighting, non-structural additions to the Real Estate and
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<PAGE> 7
Improvements and all other tangible property of any kind or character,
together with all replacements thereof, now or hereafter located on or in
or used or useful in connection with the complete and comfortable use,
enjoyment, occupation, operation, development and/or maintenance of the
Property, regardless of whether or not located on or in the Property or
located elsewhere for purposes of storage, fabrication or otherwise
(herein collectively referred to as the "Goods");
(d) [intentionally omitted];
(e) Leases. All rights of the Grantor in, to and under all leases
(other than the Authority Lease), licenses, occupancy agreements,
concessions and other arrangements, oral or written, now existing or
hereafter entered into, whereby any Person agrees to pay money or any
other consideration for the use, possession or occupancy of, or any estate
in, the Property or any portion thereof or interest therein (herein
collectively referred to as the "Leases"), and the right, subject to
applicable law, upon the occurrence of any Event of Default hereunder, to
receive and collect the Rents (as hereinafter defined) paid or payable
thereunder;
(f) Plans. All rights of the Grantor in and to all plans and
specifications, designs, drawings and other information, materials and
matters heretofore or hereafter prepared relating to the Improvements or
any construction on the Real Estate (herein collectively referred to as
the "Plans");
(g) Permits. All rights of the Grantor, to the extent assignable,
in, to and under all permits, franchises, licenses, approvals and other
authorizations respecting the use, occupation and operation of the
Property and every part thereof and respecting any business or other
activity conducted on or from the Property, and any product or proceed
thereof or therefrom, including, without limitation, all building permits,
certificates of occupancy and other licenses, permits and approvals issued
by governmental authorities having jurisdiction (herein collectively
referred to as the "Permits");
(h) Contracts. All right, title and interest of the Grantor, to the
extent assignable, in and to all certificates, warranties, appraisals,
engineering, environmental, soils, insurance and other reports and
studies, books, records, correspondence, files and advertising materials,
and other documents, now or hereafter obtained or entered into, as the
case may be, pertaining to the construction, use, occupancy, possession,
operation, management, leasing, maintenance and/or ownership of the
Property and all right, title and interest of the Grantor therein (herein
collectively referred to as the "Contracts");
(i) Leases of Furniture, Furnishings and Equipment. All right, title
and interest of the Grantor as lessee in, to and under any leases of
furniture, furnishings, equipment and any other Goods now or hereafter
installed in or at any time used in connection with the Property;
(j) Rents. All rents, issues, profits, royalties, avails, income and
other benefits derived or owned, directly or indirectly, by the Grantor
from the Property, including, without limitation, all rents and other
consideration payable by tenants, claims against guarantors, and any cash
or other securities deposited to secure performance by tenants, under the
Leases (herein collectively referred to as "Rents");
(k) Proceeds. All proceeds of the conversion, voluntary or
involuntary of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards (herein collectively referred to as "Proceeds"); and
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<PAGE> 8
(l) Other Property. All other property and rights of the Grantor of
every kind and character relating to the Property, and all proceeds and
products of any of the foregoing, provided however, the Collateral shall
not include any general intangibles or other rights arising under any
contracts, instruments, licenses, or other documents as to which the grant
of a lien and/or security interest would constitute a violation of a valid
and enforceable restriction in favor of a third party on such grant,
unless and until any required consents shall have been obtained;
AND, without limiting any of the other provisions of this Deed, the
Grantor expressly grants to the Grantee, as secured party, a security interest
in all of those portions of the Collateral which are or may be subject to the
State Uniform Commercial Code provisions applicable to secured transactions,
subject, however, to the Permitted Encumbrances;
TO HAVE AND TO HOLD the Collateral to the use, benefit and behoof of the
Grantee, its successors, successors-in-title and assigns, forever, subject,
however, to the Permitted Encumbrances. This Deed is intended to operate and is
to be construed as a deed passing the title to the Collateral to Grantee and is
made under those provisions of the existing laws of the State relating to deeds
to secure debt and not as a mortgage, and is given to secure the payment of the
Secured Obligations.
FURTHER to secure the full, timely and proper payment and performance of
the Secured Obligations, the Grantor hereby covenants and agrees with and
warrants to the Grantee as follows:
ARTICLE I
COVENANTS AND AGREEMENTS OF THE GRANTOR
SECTION 1.1. Payment of Secured Obligations. (i) The Grantor agrees that:
(a) Grantor will duly and punctually pay and perform or cause to be
paid and performed the Fixed Assets Loans (some or all of which Fixed
Assets Loans are evidenced by Fixed Assets Notes ) at the time and in
accordance with the Loan Documents pertaining to the Fixed Assets Loans,
which Fixed Assets Loans shall not exceed the maximum principal amount of
Seventy Million and 00/100 Dollars ($70,000,000) and all of which Fixed
Assets Loans have a Stated Maturity Date of July 23, 2004, and
(b) when and as due and payable from time to time in accordance with
the terms of this Deed or of any other Loan Documents pertaining to the
Fixed Assets Loans, pay and perform, or cause to be paid and performed,
all other Secured Obligations.
SECTION 1.2. Title to Collateral, etc. The Grantor represents and warrants
to and covenants with the Grantee that:
(a) except as otherwise permitted by the terms of the Credit
Agreement, as of the date hereof and at all times hereafter while this
Deed is outstanding, the Grantor (1) is and shall be the absolute owner of
the legal and beneficial title to the applicable interest in the Property
and to all other property included in the Collateral, and (2) has and
shall have good and sufficient easement or leasehold estate, as currently
represented in the granting clause as of the date hereof, to the Property,
subject in each case only to this Deed, the liens expressly permitted
pursuant to the terms of the Credit Agreement and the encumbrances set
forth in Schedule 2 hereto (collectively, the "Permitted Encumbrances");
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<PAGE> 9
(b) the Grantor has good and lawful right, power and authority to
execute this Deed and to convey, transfer, assign, set over and grant the
security title to and a security interest in the Collateral, all as
provided herein;
(c) this Deed has been duly executed, acknowledged and delivered on
behalf of the Grantor, all consents and other actions required to be taken
by the officers, directors, shareholders and partners, as the case may be,
of the Grantor have been duly and fully given and performed and this Deed
constitutes the legal, valid and binding obligation of the Grantor,
enforceable against the Grantor in accordance with its terms; and
(d) the Grantor, at its expense, will warrant and defend to the
Grantee and any purchaser under the power of sale herein or at any
foreclosure sale such title to the Collateral and the first security title
and first priority perfected security interest of this Deed thereon and
therein against all claims and demands and will maintain, preserve and
protect such security title and security interest and will keep this Deed
a valid, direct first security title of record on the Property and a first
priority perfected security interest in the Collateral other than the
Property, subject only to the Permitted Encumbrances.
SECTION 1.3. Title Insurance.
SECTION 1.3.1. Title Insurance Policy. Concurrently with the execution and
delivery of this Deed, the Grantor, at its expense, has obtained and delivered
to the Grantee a loan policy or policies of title insurance in an amount, and in
form and substance, reasonably satisfactory to the Grantee naming the Grantee as
the insured, insuring the title to and the first security title of this Deed on
the Property, with endorsements reasonably requested by the Grantee. The Grantor
has duly paid in full all premiums and other charges due in connection with the
issuance of such policy or policies of title insurance.
SECTION 1.3.2. Title Insurance Proceeds. All proceeds received by and
payable to the Grantee for any loss under the loan policy or policies of title
insurance delivered to the Grantee pursuant to Section 1.3.1, or under any
policy or policies of title insurance delivered to the Grantee in substitution
therefor or replacement thereof, shall be the property of the Grantee and shall
be applied by the Grantee in accordance with the provisions of Section 2.3.
SECTION 1.4. Recordation. The Grantor, at its expense, will at all times
cause this Deed and any instruments amendatory hereof or supplemental hereto and
any instruments of assignment hereof or thereof (and any appropriate financing
statements or other instruments and continuations thereof), and each other
instrument delivered in connection with the Fixed Assets Loans, the Credit
Agreement or any other Loan Document pertaining to the Fixed Assets Loans and
intended thereunder to be recorded, registered and filed, to be kept recorded,
registered and filed, in such manner and in such places, and will pay all such
recording, registration, filing fees, taxes and other charges, and will comply
with all such statutes and regulations as may be required by law in order to
establish, preserve, perfect and protect the security title and security
interest of this Deed as a valid, direct first security title on the Property
and first priority perfected security interest in the Collateral other than the
Property, subject only to the Permitted Encumbrances. The Grantor will pay or
cause to be paid, and will indemnify the Grantee in respect of, all taxes
(including interest and penalties) at any time payable in connection with the
filing and recording of this Deed and any and all supplements and amendments
hereto.
SECTION 1.5. Payment of Impositions, etc. Subject to Section 1.8 (relating
to permitted contests), the Grantor will pay or cause to be paid before the same
would become delinquent and before any fine, penalty, interest or cost may be
added for non-payment, all taxes, assessments, water and sewer rates, charges,
license fees, inspection fees and other governmental levies or payments, of
every kind and
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<PAGE> 10
nature whatsoever, general and special, ordinary and extraordinary, unforeseen
as well as foreseen, which at any time may be assessed, levied, confirmed,
imposed or which may become a lien upon the Collateral, or any portion thereof,
or which are payable with respect thereto, or upon the rents, issues, income or
profits thereof, or on the occupancy, operation, use, possession or activities
thereof, whether any or all of the same be levied directly or indirectly or as
excise taxes or as income taxes, and all taxes, assessments or charges which may
be levied on the Secured Obligations, or the interest thereon (collectively, the
"Impositions"). The Grantor will deliver to the Grantee, upon request, copies of
official receipts or other satisfactory proof evidencing such payments.
SECTION 1.6. Insurance and Legal Requirements. Subject to Section 1.8
(relating to permitted contests), the Grantor, at its expense, will comply in
all material respects, or cause compliance in all material respects with
(a) all provisions of any insurance policy covering or applicable to
the Collateral or any part thereof, all requirements of the issuer of any
such policy, and all orders, rules, regulations and other requirements of
the National Board of Fire Underwriters (or any other body exercising
similar functions) applicable to or affecting the Collateral or any part
thereof or any use or condition of the Collateral or any part thereof
(collectively, the "Insurance Requirements"); and
(b) all laws, including Environmental Laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements of all
governments, departments, commissions, boards, courts, authorities,
agencies, officials and officers, foreseen or unforeseen, ordinary or
extraordinary, which now or at any time hereafter may be applicable to the
Collateral or any part thereof, or any of the adjoining sidewalks, curbs,
vaults and vault space, if any, streets or ways, or any use or condition
of the Collateral or any part thereof (collectively, the "Legal
Requirements");
noncompliance of which could reasonably be expected to cause a Material Adverse
Effect whether or not compliance therewith shall require structural changes in
or interference with the use and enjoyment of the Collateral or any part
thereof.
SECTION 1.7. Security Interests, etc. The Grantor will not directly or
indirectly create or permit or suffer to be created or to remain, and will
promptly discharge or cause to be discharged, any deed to secure debt, deed of
trust, mortgage, encumbrance or charge on, pledge of, security interest in or
conditional sale or other title retention agreement with respect to or any other
lien or security interest or security title on or in the Collateral or any part
thereof or the interest of the Grantor or the Grantee therein, or any Proceeds
thereof or Rents or other sums arising therefrom, other than (a) Permitted
Encumbrances, and (b) liens of mechanics, materialmen, suppliers or vendors or
rights thereto incurred in the ordinary course of the business of the Grantor
for sums not yet due or any such liens or rights thereto which are at the time
being contested as permitted by Section 1.8. The Grantor will not postpone the
payment of any sums for which liens of mechanics, materialmen, suppliers or
vendors or rights thereto have been incurred (unless such liens or rights
thereto are at the time being contested as permitted by Section 1.8), for more
than 60 days after the completion of the action giving rise to such liens or
rights thereto.
SECTION 1.8. Permitted Contests. The Grantor at its expense may contest,
or cause to be contested, by appropriate legal proceedings conducted in good
faith and with due diligence, the amount or validity or application, in whole or
in part, of any Imposition, Legal Requirement or Insurance Requirement or lien
of a mechanic, materialman, supplier or vendor, provided that, (a) in the case
of an unpaid Imposition, lien, encumbrance or charge, such proceedings shall
suspend the collection thereof
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<PAGE> 11
from the Grantor, the Grantee, and the Collateral (including any rent or other
income therefrom) and shall not materially interfere with the payment of any
such rent or income, (b) neither the Collateral nor any rent or other income
therefrom nor any part thereof or interest therein would be in any material
danger of being sold, forfeited, lost, impaired or interfered with, (c) in the
case of a Legal Requirement, neither the Grantor nor the Grantee would be in
material danger of any civil or criminal liability for failure to comply
therewith, (d) the Grantor shall have furnished such security, if any, as may be
required in the proceedings or as may be reasonably requested by the Grantee,
(e) the non-payment of the whole or any part of any Imposition will not result
in the delivery of a tax deed to the Collateral or any part thereof because of
such non-payment, (f) the payment of any sums required to be paid with respect
to any of the Fixed Asset Notes or under this Deed (other than any unpaid
Imposition, lien, encumbrance or charge at the time being contested in
accordance with this Section 1.8) shall not be interfered with or otherwise
affected, (g) in the case of any Insurance Requirement, the failure of the
Grantor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Grantor under Section 2.1, and (h) that
adequate reserves, determined in accordance with GAAP, shall have been set aside
on the Grantor's books.
SECTION 1.9. Leases. The Grantor represents and warrants to the Grantee
that, as of the date hereof, there are no written or oral leases or other
agreements of any kind or nature relating to the occupancy of any portion of the
Property by any Person other than the Grantor other than the Permitted
Encumbrances. Except as is permitted by the Credit Agreement, the Grantor will
not enter into any such written or oral lease or other agreement with respect to
any portion of the Property without first obtaining the written consent of the
Grantee.
SECTION 1.10. Compliance with Instruments. The Grantor at its expense will
promptly comply in all material respects with all rights of way or use,
privileges, franchises, servitudes, licenses, easements, tenements,
hereditaments and appurtenances forming a part of the Property and all
instruments creating or evidencing the same, in each case, to the extent
compliance therewith is required of the Grantor under the terms thereof. Except
as is permitted by the Credit Agreement, the Grantor will not take any action
which may result in a forfeiture or termination of the rights afforded to the
Grantor under any such instruments and will not, without the prior written
consent of the Grantee, amend any of such instruments in any manner adverse to
the Fixed Assets Lenders in any material respect.
SECTION 1.11. Maintenance and Repair, etc. Subject to the provisions of
Section 1.12, the Grantor will keep or cause to be kept all presently and
subsequently erected or acquired Improvements and the sidewalks, curbs, vaults
and vault space, if any, located on or adjoining the same, and the streets and
the ways adjoining the same, in good and substantial order and repair and in
such a fashion that neither the value nor utility of the Collateral will be
diminished, and, at its sole cost and expense, will promptly make or cause to be
made all necessary and appropriate repairs, replacements and renewals thereof,
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen, so that its business carried on in
connection therewith may be properly conducted at all times. The Grantor at its
expense will do or cause to be done all shoring of foundations and walls of any
building or other Improvements on the Property and (to the extent permitted by
law) of the ground adjacent thereto, and every other act necessary or
appropriate for the preservation and safety of the Property by reason of or in
connection with any excavation or other building operation upon the Property and
upon any adjoining property, whether or not the Grantor shall, by any Legal
Requirement, be required to take such action or be liable for failure to do so.
SECTION 1.12. Alterations, Additions, etc. So long as no Event of Default
shall have occurred and be continuing, the Grantor shall have the right at any
time and from time to time to make or cause to be made reasonable alterations of
and additions to the Property or any part thereof, provided that any alteration
or addition: (a) shall not change the general character or the use of the
Property or reduce the
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<PAGE> 12
fair market value thereof below its value immediately before such alteration or
addition, or impair the usefulness of the Property; (b) is effected with due
diligence, in a good and workmanlike manner and in compliance in all material
respects with all Legal Requirements and Insurance Requirements; (c) subject to
Section 1.8 is promptly and fully paid for, or caused to be paid for, by the
Grantor; and (d) is made, in case the estimated cost of such alteration or
addition exceeds U.S. $1,000,000, under the supervision of a qualified architect
or engineer or another professional.
SECTION 1.13. Acquired Property Subject to Security Title/Security
Interest. Subject to the Permitted Encumbrances and except as otherwise
permitted by the Credit Agreement, all property at any time acquired by the
Grantor and provided or required by this Deed to be or become subject to the
security title and security interest hereof, whether such property is acquired
by exchange, purchase, construction or otherwise, shall forthwith become subject
to the security title and security interest of this Deed without further action
on the part of the Grantor or the Grantee. The Grantor, at its expense, will
execute and deliver to the Grantee (and will record and file as provided in
Section 1.4) an instrument supplemental to this Deed reasonably satisfactory in
substance and form to the Grantee, whenever such an instrument is necessary
under applicable law to subject to the security title and security interest of
this Deed all right, title and interest of the Grantor in and to all property
provided or required by this Deed to be subject to the security title and
security interest hereof.
SECTION 1.14. Assignment of Rents, Proceeds, etc. The assignment, grant
and conveyance of the Leases, Rents, Proceeds and other rents, income, proceeds
and benefits of the Collateral contained in the granting clause of this Deed
constitutes an absolute, present and irrevocable assignment, grant and
conveyance, provided, however, that a revocable license is hereby given to the
Grantor, so long as no Event of Default has occurred and be continuing
hereunder, to collect, receive and apply such Rents, Proceeds and other rents,
income, proceeds and benefits as they become due and payable, but not further in
advance thereof than is customary, and in accordance with all of the other
terms, conditions and provisions hereof, of the Loan Documents, and of the
Leases, contracts, agreements and other instruments with respect to which such
payments are made or such other benefits are conferred. Upon the occurrence and
continuance of an Event of Default, such license shall terminate immediately and
automatically, without notice to the Grantor or any other Person except as
required by law, and shall not be reinstated upon a cure of such Event of
Default without the express written consent of the Grantee. Such assignment
shall be fully effective without any further action on the part of the Grantor
or the Grantee and the Grantee shall be entitled, at its option, upon the
occurrence and continuance of an Event of Default hereunder, to collect, receive
and apply all Rents, Proceeds and all other rents, income, proceeds and benefits
from the Collateral, including all right, title and interest of the Grantor in
any escrowed sums or deposits or any portion thereof or interest therein,
whether or not the Grantee takes possession of the Collateral or any part
thereof. The Grantor further grants to the Grantee the right, at the Grantee's
option, upon the occurrence and continuance of an Event of Default hereunder,
to:
(a) enter upon and take possession of the Property for the purpose
of collecting Rents, Proceeds and said rents, income, proceeds and other
benefits;
(b) dispossess by the customary summary proceedings any tenant,
purchaser or other Person defaulting in the payment of any amount when and
as due and payable, or in the performance of any other obligation, under
any Lease, contract or other instrument to which said Rents, Proceeds or
other rents, income, proceeds or benefits relate;
(c) let or convey the Collateral or any portion thereof or any
interest therein; and
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(d) apply Rents, Proceeds and such rents, income, proceeds and other
benefits, after the payment of all necessary fees, charges and expenses,
on account of the Secured Obligations in accordance with Section 3.11.
SECTION 1.15. No Claims Against the Grantee. Nothing contained in this
Deed shall constitute any consent or request by the Grantee, express or implied,
for the performance of any labor or the furnishing of any materials or other
property in respect of the Property or any part thereof, or be construed to
permit the making of any claim against the Grantee in respect of labor or
services or the furnishing of any materials or other property or any claim that
any lien based on the performance of such labor or the furnishing of any such
materials or other property is prior to the security title and security interest
of this Deed. ALL CONTRACTORS, SUBCONTRACTORS, VENDORS AND OTHER PERSONS DEALING
WITH THE PROPERTY, OR WITH ANY PERSONS INTERESTED THEREIN, ARE HEREBY REQUIRED
TO TAKE NOTICE OF THE PROVISIONS OF THIS SECTION.
SECTION 1.16. Indemnification. The Grantor will protect, indemnify, save
harmless and defend the Grantee, the Fixed Assets Lenders, and each of their
respective officers, directors, shareholders, employees, representatives and
agents (collectively, the "Indemnified Parties" and individually, an
"Indemnified Party"), from and against any and all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) imposed upon or
incurred by or asserted against any Indemnified Party by reason of (a) ownership
of an interest in this Deed, any other Loan Document pertaining to the Fixed
Assets Loans or the Property, (b) any accident, injury to or death of persons or
loss of or damage to or loss of the use of property occurring on or about the
Property or any part thereof or the adjoining sidewalks, curbs, vaults and vault
spaces, if any, streets, alleys or ways, (c) any use, non-use or condition of
the Property or any part thereof or the adjoining sidewalks, curbs, vaults and
vault spaces, if any, streets, alleys or ways, (d) any failure on the part of
the Grantor to perform or comply with any of the terms of this Deed or any Loan
Document pertaining to the Fixed Assets Loans, (e) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Collateral or any part thereof made or suffered to be made by or on behalf of
the Grantor, (f) any negligence or tortious act on the part of the Grantor or
any of its agents, contractors, lessees, licensees or invitees, (g) any work in
connection with any alterations, changes, new construction or demolition of or
additions to the Property, or (h) (i) any Hazardous Material on, in, under or
affecting all or any portion of the Property, the groundwater, or any
surrounding areas, (ii) any misrepresentation, inaccuracy or breach of any
warranty, covenant or agreement contained or referred to in Sections 1.21 and
1.22, (iii) any violation or claim of violation by the Grantor of any
Environmental Laws, or (iv) the imposition of any lien for damages caused by or
the recovery of any costs for the cleanup, release or threatened release of any
Hazardous Material, except to the extent that any of the matters described in
subsections (a)-(h) arise out of the gross negligence or willful misconduct of
any Indemnified Party. If any action or proceeding be commenced, to which action
or proceeding any Indemnified Party is made a party by reason of the execution
of this Deed or any other Loan Document pertaining to the Fixed Assets Loans, or
in which it becomes necessary to defend or uphold the lien of this Deed, all
sums paid by the Indemnified Parties, for the expense of any litigation to
prosecute or defend the rights and lien created hereby or otherwise, shall be
paid by the Grantor to such Indemnified Parties, as the case may be, as
hereinafter provided. The Grantor will pay and save the Indemnified Parties
harmless against any and all liability with respect to any intangible personal
property tax or similar imposition of the State or any subdivision or authority
thereof now or hereafter in effect, to the extent that the same may be payable
by the Indemnified Parties in respect of this Deed, any Loan Document pertaining
to the Fixed Assets Loans or any Secured Obligation. All amounts payable to the
Indemnified Parties under this Section 1.16 shall be deemed indebtedness secured
by this Deed and any such amounts which are not paid within ten (10) days after
written demand therefor by any Indemnified Party shall bear interest at the rate
provided for in Section 3.2.2 of the Credit Agreement from the date of such
demand. In case any action, suit or proceeding is brought against any
Indemnified Party by reason
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of any such occurrence, the Grantor, upon request of such Indemnified Party,
will, at the Grantor's expense, resist and defend such action, suit or
proceeding or cause the same to be resisted or defended by counsel designated by
the Grantor and approved by such Indemnified Party. The obligations of the
Grantor under this Section 1.16 shall survive any cancellation and surrender of
this Deed.
SECTION 1.17. No Credit for Payment of Taxes. The Grantor shall not be
entitled to any credit against the Secured Obligations by reason of the payment
of any tax on the Property or any part thereof or by reason of the payment of
any other Imposition, and shall not apply for or claim any deduction from the
taxable value of the Property or any part thereof by reason of this Deed.
SECTION 1.18. Intentionally Omitted
SECTION 1.19. No Transfer of the Property. Except as is provided in the
Credit Agreement, and except for the Permitted Encumbrances, the Grantor shall
not, without the prior written consent of the Grantee, which consent may be
granted or withheld in the sole and absolute discretion of the Grantee (i) sell,
convey, assign or otherwise transfer the Property or any portion of the
Grantor's interest therein or (ii) further encumber the Property or permit the
Property to become encumbered by any lien, claim, security title, security
interest or other indebtedness of any kind or nature other than the Permitted
Encumbrances.
SECTION 1.20 Security Agreement. With respect to the items of personal
property and fixtures referred to and described in the granting clause of this
Deed and included as part of the Collateral, this Deed is hereby made and
declared to be a security agreement encumbering each and every item of personal
property and fixtures now or hereafter owned by Grantor and included herein as a
part of the Collateral, in compliance with the provisions of the Uniform
Commercial Code as enacted in the State. In this respect, Grantor, as "Debtor",
expressly grants to Grantee, as "Secured Party", a security interest in and to
all of the property now or hereafter owned by Grantor which constitutes the
personal property and fixtures hereinabove referred to and described in this
Deed, including all extensions, accessions, additions, improvements,
betterments, renewals, replacements and substitutions thereof or thereto, and
all proceeds from the sale or other disposition thereof. Grantor agrees to
execute and deliver to Grantee, upon Grantee's request, any other security
agreement and financing statements, as well as extensions, renewals, and
amendments thereof, in such form as Grantee may reasonably require to perfect a
security interest with respect to said items. Grantor shall pay all costs of
filing such financing statements and any extensions, renewals, amendments and
releases thereof, and shall pay all reasonable costs and expenses of any record
searches for financing statements Grantee may reasonably require. Except as is
provided in the Credit Agreement, and except for the Permitted Encumbrances,
without the prior written consent of Grantee, Grantor shall not create or suffer
to be created pursuant to the Uniform Commercial Code any other security
interest in the above-described personal property and fixtures, including any
replacements and additions thereto. Upon the occurrence and continuance of an
Event of Default under this Deed, the Grantee shall have and shall be entitled
to exercise any and all of the rights and remedies (i) as prescribed in this
Deed, or (ii) as prescribed by general law, or (iii) as prescribed by the
specific statutory provisions now or hereafter enacted and specified in said
Uniform Commercial Code, all at Grantee's sole election. Grantor and Grantee
agree that the filing of any financing statements in the records normally having
to do with personal property shall not in any way affect the agreement of
Grantor and Grantee that everything located in, on or about, or used or intended
to be used with or in connection with the use, operation or enjoyment of, the
Collateral, which is described or reflected as a fixture in this Deed, is, and
at all times and for all purposes and in all proceedings, both legal and
equitable, shall be, regarded as part of the Real Estate conveyed hereby.
Grantor warrants that Grantor's name, identity and address are as set forth
herein. The mailing address of the Grantee from which information may be
obtained concerning the security interest created herein is also set forth
herein.
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SECTION 1.21. Representations and Warranties. In order to induce the
Grantee to enter into this Deed, the Credit Agreement and the other Loan
Documents pertaining to the Fixed Assets Loans, the Grantor agrees that all of
the representations and warranties of Grantor set forth in the Credit Agreement
are incorporated into this Deed by reference as if fully set forth herein.
SECTION 1.22. Grantor's Covenants. In order to induce the Grantee to enter
into this Deed, the Credit Agreement and the other Loan Documents, the Grantor
agrees that all of the covenants of Grantor set forth in the Credit Agreement
are incorporated into this Deed by reference as if fully set forth herein.
SECTION 1.23. Attornment. Grantee hereby acknowledges and agrees that the
security title and security interest granted herein are subject to the rights of
certain lessees under the Leases as disclosed in the Credit Agreement and will
be subject to the rights of lessees under any Leases entered into by Grantor
after the date hereof which are permitted as Permitted Real Estate Liens
pursuant to the Credit Agreement, subject to the express rights contained in the
applicable Lease. The rights of the tenants under the Leases to the leased
premises shall not be adversely affected by the exercise by Grantee of any of
its rights hereunder, nor shall any such tenant be in any way deprived of its
rights under the applicable Lease except in accordance with the terms of such
Lease. In the event that Grantee succeeds to the interest of Grantor under a
Lease, such Lease shall not be terminated or affected thereby except as set
forth therein, and any sale of the applicable leased premises by Grantee or
pursuant to the judgment of any court in an action to enforce the remedies
provided for in this Deed shall be made subject to such Lease and the rights of
such tenant expressly set forth thereunder. If Grantee succeeds to the interests
of Grantor in and to the applicable leased premises or under such Lease or
enters into possession of such leased premises, the Grantee, and such tenants,
shall be bound to each other under all of the express terms, covenants and
conditions of such Lease, as if the Grantee was originally the Grantor as lessor
thereunder.
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
SECTION 2.1. Insurance.
SECTION 2.1.1. Risks to be Insured. The Grantor will, at its expense,
maintain or cause to be maintained with insurance carriers approved by the
Grantee (a) insurance with respect to the Improvements against loss or damage by
fire, lightning and such other risks as are included in standard "all-risk"
policies, in amounts sufficient to prevent the Grantor and the Grantee from
becoming a co-insurer of any partial loss under the applicable policies, but in
any event in amounts not less than the then full insurable value (actual
replacement value) of the Improvements, as determined by the Grantor in
accordance with generally accepted insurance practice and approved by the
Grantee or, at the request of the Grantee, as determined at the Grantor's
expense by the insurer or insurers or by an expert approved by the Grantee, (b)
comprehensive public liability, including bodily injury and product liability
and property damage, insurance, with personal injury endorsements, applicable to
the Property in such amounts as are customarily carried by Persons operating
similar properties in the same general locality, but in any event with a
combined single limit of not less than Twenty Million Dollars ($20,000,000) per
occurrence, (c) explosion insurance in respect of any steam and pressure boilers
and similar apparatus located in the Property in such amounts as are usually
carried by persons operating similar properties in the same general locality,
but in any event in an amount not less than Twenty Million Dollars
($20,000,000), (d) business interruption insurance (including added expense
coverage) against all insurable perils for a period of not fewer than twelve
(12) months (subject to a reasonable aggregate deductible not exceeding ten (10)
days per any occurrence), (e) worker's compensation insurance to the full extent
required by applicable law for all employees of the Grantor engaged in any work
on or about the Property and
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employer's liability insurance with a limit of not less than Ten Million Dollars
($10,000,000) for each occurrence, (f) all-risk, builders' risk insurance with
respect to the Property during any period during which there is any construction
work being performed, against loss or damage by fire or other risks, including
vandalism, malicious mischief and sprinkler leakage, as are included in
so-called "extended coverage" clauses at the time available and (g) such other
insurance with respect to the Property in such amounts and against such
insurable hazards as the Grantee from time to time may reasonably require by
written notice to the Grantor.
SECTION 2.1.2. Policy Provisions. All insurance maintained by the Grantor
pursuant to Section 2.1.1 shall (a) (except for worker's compensation insurance)
list the Grantee as an additional insured as its interests may appear, (b)
(except for worker's compensation and public liability insurance) provide that
the proceeds for any losses shall be adjusted by the Grantor subject to the
approval of the Grantee in the event the proceeds shall exceed $1,000,000, and
shall be payable to the Grantee, to be held and applied as provided in Section
2.3, (c) include effective waivers by the insurer of all rights of subrogation
against any named insured, the indebtedness secured by this Deed and the
Property and all claims for insurance premiums against the Grantee, (d) (except
for worker's compensation and public liability insurance) provide that any
losses shall be payable notwithstanding (i) any act, failure to act or
negligence of or violation of warranties, declarations or conditions contained
in such policy by any named insured, (ii) the occupation or use of the Property
for purposes more hazardous than permitted by the terms thereof, (iii) any
foreclosure or other action or proceeding taken by the Grantee pursuant to any
provision of this Deed, or (iv) any change in title or ownership of the
Property, (e) provide that no cancellation, reduction in amount or material
change in coverage thereof or any portion thereof shall be effective until at
least thirty (30) days after receipt by the Grantee of written notice thereof,
(f) provide that any notice under such policies shall be simultaneously
delivered to the Grantee, and (g) be satisfactory in all other reasonable
respects to the Grantee. Any insurance maintained pursuant to this Section 2.1
may be evidenced by blanket insurance policies covering the Property and other
properties or assets of the Grantor, provided that any such policy shall specify
the portion, if less than all, of the total coverage of such policy that is
allocated to the Property and shall in all other respects comply with the
requirements of this Section 2.1.
SECTION 2.1.3. Delivery of Policies, etc. The Grantor will deliver to the
Grantee, promptly upon request, (a) certificates of all policies evidencing all
insurance required to be maintained under Section 2.1.1 (or, in the case of
blanket policies, certificates thereof by the insurers together with a
counterpart of each blanket policy), and (b) evidence as to the payment of all
premiums due thereon (with respect to public liability insurance policies, all
installments for the current year due thereon to such date), provided that the
Grantee shall not be deemed by reason of its custody of such policies to have
knowledge of the contents thereof. The Grantor will also deliver to the Grantee
prior to the expiration of any policy a binder or certificate of the insurer
evidencing the replacement thereof and when the new policy is issued a
certificate of the new policy (or, in the case of a replacement blanket policy,
a certificate thereof of the insurer together with a counterpart of the blanket
policy). In the event the Grantor shall fail to effect or maintain any insurance
required to be effected or maintained pursuant to the provisions of this Section
2.1, the Grantor will indemnify the Grantee against damage, loss or liability
resulting from all risks for which such insurance should have been effected or
maintained.
SECTION 2.1.4. Separate Insurance. The Grantor will not take out separate
insurance concurrent in form or contributing in the event of loss with that
required to be maintained pursuant to this Section 2.1.
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SECTION 2.2. Damage, Destruction or Taking; Grantor to Give Notice;
Assignment of Awards. In case of
(a) any material damage to or destruction of the Collateral or any
material part thereof, or
(b) any taking, whether for permanent or temporary use, of all or
any material part of the Collateral or any material interest therein or
material right accruing thereto, as the result of the exercise of the
right of condemnation or eminent domain, or a change of grade affecting
the Collateral or any portion thereof (a "Taking"), or the commencement of
any proceedings or negotiations which may result in a Taking,
the Grantor will promptly give written notice thereof to the Grantee, generally
describing the nature and extent of such damage or destruction and the Grantor's
best estimate of the cost of restoring the Collateral, or the nature of such
proceedings or negotiations and the nature and extent of the Taking which might
result therefrom, as the case may be. The Grantee shall be entitled to all
insurance proceeds payable on account of such damage or destruction and to all
awards or payments allocable to the Collateral on account of such Taking up to
the amount of the Secured Obligations, and the Grantor hereby irrevocably
assigns, transfers and sets over to the Grantee all rights of the Grantor to any
such proceeds, awards or payments and irrevocably authorizes and empowers the
Grantee, at its option, in the name of the Grantor or otherwise, to file and
prosecute what would otherwise be the Grantor's claim for any such proceeds,
award or payment and to collect, receipt for and retain the same for disposition
in accordance with Section 2.3. The Grantor will pay all reasonable costs and
expenses incurred by the Grantee in connection with any such damage, destruction
or Taking and seeking and obtaining any insurance proceeds, awards or payments
in respect thereof.
SECTION 2.3. Application of Proceeds and Awards. The Grantee may, at its
option, apply all amounts recovered under any insurance policy required to be
maintained by the Grantor hereunder and all awards received by it on account of
any Taking in any one or more of the following ways:
(a) to the payment of the reasonable costs and expenses incurred by
the Grantee in obtaining any such insurance proceeds or awards, including
the fees and expenses of attorneys and insurance and other experts and
consultants, the costs of litigation, arbitration, mediation,
investigations and other judicial, administrative or other proceedings and
all other out-of-pocket expenses;
(b) to the payment of the principal of the Fixed Asset Loans and any
interest (including post-petition interest payable in any proceedings for
bankruptcy under applicable law ("Post-Petition Interest") to the extent
such interest is a Secured Obligation) accrued and unpaid thereon, without
regard to whether any portion or all of such amounts shall be matured or
unmatured; and, in case such amount shall be insufficient to pay in full
all such amounts, then such amount shall be applied, first, to the payment
of all amounts of interest (including Post-Petition Interest to the extent
such interest is a Secured Obligation) accrued on the Fixed Asset Loans
and unpaid, second, to the payment of all amounts of principal at the time
outstanding;
(c) to the payment of, or the application to, any Secured Obligation
(other than as provided in clause (b) above);
(d) to fulfill any of the other covenants contained herein, in the
Credit Agreement pertaining to the Fixed Assets Loans, or in any other
Loan Document pertaining to the Fixed Assets Loans, as the Grantee may
determine in its sole discretion;
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(e) to the Grantor for application to the cost of restoring the
Collateral and the replacement of Goods destroyed, damaged or taken; or
(f) to the Grantor.
Notwithstanding the foregoing provisions of this Section 2.3 to the
contrary (but subject to the provisions of Section 2.4), and if each of the
following conditions is satisfied, the Grantee, upon request of the Grantor,
shall apply insurance proceeds or condemnation awards received by it to the
restoration or replacement of the Collateral, to the extent necessary for the
restoration or replacement thereof:
(i) there shall then exist no uncured Event of Default;
(ii) the Grantor shall furnish to the Grantee a certificate of
an architect or engineer reasonably acceptable to the Grantee
stating (x) that the Collateral is capable of being restored, prior
to the maturity of the Credit Agreement, to substantially the same
condition as existed prior to the casualty or Taking, (y) the
aggregate estimated direct and indirect costs of such restoration
and (z) as to any Taking, that the property taken in such Taking, or
sold under threat thereof, is not necessary to the Grantor's
customary use or occupancy of the Property or Grantor otherwise
provides Grantee adequate assurance that the Collateral can be
restored or is not necessary to Grantor's customary use or occupancy
of the Property; and
(iii) in the event that the estimated cost of restoration set
forth in the certificate of such architect or engineer (and such
revisions to such estimate as are from time to time made) exceeds
the net insurance proceeds or condemnation awards actually received
from time to time, the Grantor shall deposit the amount of such
excess with the Grantee.
In the event that such insurance proceeds or condemnation awards are to be
utilized in the restoration of the Collateral, the Grantee shall disburse such
Proceeds and the additional amounts deposited by the Grantor for such
restoration after receipt of a written request for disbursement, on not fewer
than five (5) nor more than twelve (12) Business Days notice and, to the extent
applicable, in accordance with the Grantee's customary construction loan
procedures and conditions. In the event that such insurance or condemnation
awards are to be utilized to replace the Collateral so destroyed or taken, the
Grantee shall disburse such Proceeds after receipt of a written request for
disbursement, on not fewer than five (5) Business Days nor more than twelve (12)
Business Days notice simultaneously with the acquisition of such replacement
property by the Grantor. In the event that, after the restoration or replacement
of the Collateral, any insurance or condemnation awards shall remain, such
amount shall be paid to the Grantor. Insurance proceeds and condemnation awards
shall be invested in the manner reasonably requested by the Grantor and approved
by the Grantee, and all interest earned thereon shall be applied as provided in
this Section 2.3. If, prior to the receipt by the Grantee of such insurance
proceeds or condemnation awards, the Collateral shall have been sold on
foreclosure, the Grantee shall have the right to receive said insurance proceeds
or condemnation awards to the extent of any deficiency found to be due upon such
sale, with legal interest thereon, whether or not a deficiency judgment shall
have been sought or recovered or denied, and the reasonable attorneys' fees,
costs and disbursements incurred by the Grantee in connection with the
collection of such award or payment.
SECTION 2.4. Total Taking and Total Destruction. In the event of a Total
Destruction or a Total Taking, the Grantee shall apply all amounts recovered
under any insurance policy referred to in Section 2.1.1 and all awards received
by it on account of any such Taking as follows:
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(a) first, to the payment of the reasonable costs and expenses
incurred by the Grantee in obtaining any such insurance proceeds or
awards, including the fees and expenses of attorneys and insurance and
other experts and consultants, the costs of litigation, arbitration,
mediation, investigations and other judicial, administrative or other
proceedings and all other out-of-pocket expenses;
(b) second, to the payment of the principal of the Fixed Assets
Loans and any interest (including Post-Petition Interest to the extent
such interest is a Secured Obligation) accrued and unpaid thereon, without
regard to whether any portion or all of such amounts shall be matured or
unmatured; and, in case such amount shall be insufficient to pay in full
all such amounts, then such amount shall be applied, first, to the payment
of all amounts of interest (including Post-Petition Interest to the extent
such interest is a Secured Obligation) accrued on the Fixed Assets Loans
and unpaid, and second, to the payment of all amounts of principal at the
time outstanding;
(c) third, to the payment of, or the application to, any Secured
Obligation (other than as provided in clause (b) above);
(d) fourth, to fulfill any of the other covenants contained herein
as the Grantee may determine; and
(e) fifth, the balance, if any, to the Grantor.
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration. If an "Event of Default"
(pursuant to and as defined in the Credit Agreement) shall have occurred and be
continuing, then and in any such event the Grantee may at any time thereafter
(unless all Events of Default shall theretofore have been remedied and all costs
and expenses, including, without limitation, attorneys' fees and expenses
incurred by or on behalf of the Grantee, shall have been paid in full by the
Grantor) declare, by written notice to the Grantor, the Fixed Assets Loans and
all other Secured Obligations to be due and payable immediately or on a date
specified in such notice (provided that, upon the occurrence of any Event of
Default described in Section 8.1.9 of the Credit Agreement, the Fixed Assets
Loans and all other Secured Obligations shall automatically become due and
payable), and on such date the same shall be and become due and payable,
together with interest accrued thereon, without presentment, demand, protest or
notice, all of which the Grantor hereby waives. The Grantor will pay on demand
all costs and expenses, including, without limitation, attorneys' fees and
expenses, incurred by or on behalf of the Grantee in enforcing this Deed, or any
other Loan Document evidencing or securing the Fixed Assets Loans, or occasioned
by any default hereunder or thereunder.
SECTION 3.2. Legal Proceedings; Judicial Foreclosure. If an Event of
Default shall have occurred and be continuing, the Grantee at any time may, at
its election, proceed at law or in equity or otherwise to enforce the payment
and performance of the Secured Obligations in accordance with the terms hereof
and thereof and to foreclose the security title of this Deed as against all or
any part of the Collateral and to have the same sold under the judgment or
decree of a court of competent jurisdiction. The Grantee shall be entitled to
recover in such proceedings all costs incident thereto, including attorneys'
fees and expenses in such amounts as may be fixed by the court.
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SECTION 3.3. Power of Sale. If an Event of Default shall have occurred and
be continuing, Grantee, at its option, may sell the Collateral or any part of
the Collateral at one or more public sale or sales before the door of the
courthouse of the county in which the Land or any part of the Land is situated,
to the highest bidder for cash, in order to pay the Secured Obligations, and all
expenses of sale and of all proceedings in connection therewith, including
attorney's fees, after advertising the time, place and terms of sale once a week
for four (4) weeks immediately preceding such sale (but without regard to the
number of days) in a newspaper in which Sheriff's sales are advertised in said
county. At any such public sale, Grantee may execute and deliver to the
purchaser a conveyance of the Collateral or any part of the Collateral, and to
this end, Grantor hereby constitutes and appoints Grantee the agent and
attorney-in-fact of Grantor to make such sale and conveyance, and thereby to
divest Grantor of all right, title and equity that Grantor may have in and to
the Collateral and to vest the same in the purchaser or purchasers at such sale
or sales, and all the acts and doings of said agent and attorney-in-fact are
hereby ratified and confirmed and any recitals in said conveyance or conveyances
as to facts essential to a valid sale shall be binding upon Grantor. The
aforesaid power of sale and agency hereby granted are coupled with an interest
and are irrevocable by death or otherwise, are granted as cumulative of the
other remedies provided hereby or by law for collection of the Secured
Obligations and shall not be exhausted by one exercise thereof but may be
exercised until full payment of all of the Secured Obligations. In the event of
any sale under this Deed by virtue of the exercise of the powers herein granted,
or pursuant to any order in any judicial proceeding or otherwise, the Collateral
may be sold as an entirety or in separate parcels and in such manner or order as
Grantee in its sole discretion may elect. One or more exercises of the powers
herein granted shall not extinguish nor exhaust such powers, until the entire
Collateral is sold or the Secured Obligations paid in full. If the Secured
Obligations are now or hereafter further secured by any chattel mortgages,
pledges, contracts of guaranty, assignments of lease or other security
instruments, Grantee may at its option exhaust the remedies granted under any of
said security instruments either concurrently or independently, and in such
order as Grantee may determine. Upon any public foreclosure sale or sales of all
or any portion of the Collateral under the power herein granted, Grantee may bid
for and purchase the Collateral and shall be entitled to apply all or any part
of the Secured Obligations as a credit to the purchase price. In the event of
any such public foreclosure sale or sales under the power herein granted,
Grantor shall be deemed a tenant holding over and shall forthwith deliver
possession to the purchaser or purchasers at such sale or be summarily
dispossessed according to provisions of law applicable to tenants holding over.
SECTION 3.4. Uniform Commercial Code Remedies. If an Event of Default
shall have occurred and be continuing, the Grantee may exercise from time to
time and at any time any rights and remedies available to it under applicable
law upon default in the payment of indebtedness, including, without limitation,
any right or remedy available to it as a secured party under the Uniform
Commercial Code of the State. The Grantor shall, promptly upon request by the
Grantee, assemble the Collateral, or any portion thereof generally described in
such request, and make it available to the Grantee at such place or places
designated by the Grantee and reasonably convenient to the Grantee or the
Grantor. If the Grantee elects to proceed under the Uniform Commercial Code of
the State to dispose of portions of the Collateral, the Grantee, at its option,
may give the Grantor notice of the time and place of any public sale of any such
property, or of the date after which any private sale or other disposition
thereof is to be made, by sending notice by registered or certified first class
mail, postage prepaid, to the Grantor at least ten (10) days before the time of
the sale or other disposition. If any notice of any proposed sale, assignment or
transfer by the Grantee of any portion of the Collateral or any interest therein
is required by law, the Grantor conclusively agrees that ten (10) days notice to
the Grantor of the date, time and place (and, in the case of a private sale, the
terms) thereof is reasonable.
SECTION 3.5. Grantee Authorized to Execute Deeds, etc. The Grantor
irrevocably appoints the Grantee (which appointment is coupled with an interest
and is irrevocable by death or otherwise) the true and lawful attorney-in-fact
of the Grantor, in its name and stead and on its behalf, for the purpose of
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effectuating any sale, assignment, transfer or delivery for the enforcement
hereof, whether pursuant to power of sale, foreclosure or otherwise, to execute
and deliver all such deeds, bills of sale, assignments, releases and other
instruments as may be designated in any such request.
SECTION 3.6. Purchase of Collateral by Grantee. The Grantee may be a
purchaser of the Collateral or of any part thereof or of any interest therein at
any public sale thereof, whether pursuant to power of sale, foreclosure or
otherwise, and the Grantee may apply upon the purchase price thereof the
indebtedness secured hereby owing to the Grantee. Such purchaser shall, upon any
such purchase, acquire good title to the properties so purchased, free of the
security interest and security title of this Deed and free of all rights of
redemption in the Grantor.
SECTION 3.7. Receipt a Sufficient Discharge to Purchaser. Upon any sale
of the Collateral or any part thereof or any interest therein, whether pursuant
to power of sale, foreclosure or otherwise, the receipt of the Grantee or the
officer making the sale under judicial proceedings shall be a sufficient
discharge to the purchaser for the purchase money, and such purchaser shall not
be obliged to see to the application thereof.
SECTION 3.8. Waiver of Appraisement, Valuation, etc. The Grantor hereby
waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter in
force and all rights of marshaling in the event of any sale of the Collateral or
any part thereof or any interest therein.
SECTION 3.9. Sale a Bar Against Grantor. Any sale of the Collateral or
any part thereof or any interest therein under or by virtue of this Deed,
whether pursuant to power of sale, foreclosure or otherwise, shall forever be a
bar against the Grantor.
SECTION 3.10. Secured Obligations to Become Due on Sale. Except as
otherwise provided in the Credit Agreement, upon any sale of the Collateral or
any portion thereof or interest therein by virtue of the exercise of any remedy
by the Grantee under or by virtue of this Deed, whether pursuant to power of
sale, foreclosure or otherwise in accordance with this Deed or by virtue of any
other remedy available at law or in equity or by statute or otherwise, at the
option of the Grantee, any sums or monies due and payable pursuant to the Credit
Agreement pertaining to the Fixed Assets Loans, the Loan Documents pertaining to
the Fixed Assets Loans and in connection with the Fixed Assets Loans and/or the
Secured Obligations shall, if not previously declared due and payable,
immediately become due and payable, together with interest accrued thereon, and
all other indebtedness which this Deed by its terms secures.
SECTION 3.11. Application of Proceeds of Sale and Other Moneys. Except
as otherwise provided in the Credit Agreement or herein, the proceeds of any
sale of the Collateral or any part thereof or any interest therein under or by
virtue of this Deed, whether pursuant to power of sale, foreclosure or
otherwise, and all other moneys at any time held by the Grantee as part of the
Collateral, shall be applied in such order of priority as the Grantee shall
determine in its sole and absolute discretion including, without limitation, as
follows:
(a) first, to the payment of the reasonable costs and expenses of
such sale (including, without limitation, the cost of evidence of title
and the costs and expenses, if any, of taking possession of, retaining
custody over, repairing, managing, operating, maintaining and preserving
the Collateral or any part thereof prior to such sale), all reasonable
costs and expenses incurred by the Grantee or any other Person in
obtaining or collecting any insurance proceeds, condemnation awards or
other amounts received by the Grantee, all reasonable costs and expenses
of any receiver of the Collateral or any part thereof, and any Impositions
or other charges or expenses
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prior to the security interest or security title of this Deed, which the
Grantee may consider it necessary or desirable to pay;
(b) second, to the payment of any Secured Obligation (other than
those set forth in Section 3.11(c) below);
(c) third, to the payment of all amounts of principal of and
interest (including Post-Petition Interest to the extent such interest is
a Secured Obligation) at the time due and payable under the Credit
Agreement pertaining to the Fixed Assets Loans at the time outstanding
(whether due by reason of maturity or by reason of any prepayment
requirement or by declaration or acceleration or otherwise), including
interest at the rate provided for in the Credit Agreement on any overdue
principal and (to the extent permitted under applicable law) on any
overdue interest; and, in case such moneys shall be insufficient to pay in
full such principal and interest, then, first, to the payment of all
amounts of interest (including Post-Petition Interest to the extent such
interest is a Secured Obligation) at the time due and payable and, second,
to the payment of all amounts of principal at the time due and payable
under the Fixed Assets Loans; and
(d) fourth, the balance, if any, held by the Grantee after payment
in full of all amounts referred to in subdivisions Sections 3.11(a), (b)
and (c) above, shall, unless a court of competent jurisdiction may
otherwise direct by final order not subject to appeal, be paid to or upon
the direction of the Grantor.
SECTION 3.12. Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, the Grantee shall, as a matter of right, without
notice, and without regard to the adequacy of any security for the indebtedness
secured hereby or the solvency of the Grantor, be entitled to the appointment of
a receiver for all or any part of the Collateral, whether such receivership be
incidental to a proposed sale of the Collateral or otherwise, and the Grantor
hereby consents to the appointment of such a receiver and will not oppose any
such appointment.
SECTION 3.13. Possession, Management and Income. If an Event of Default
shall have occurred and be continuing, in addition to, and not in limitation of,
the rights and remedies provided in Section 1.14, the Grantee, upon five (5)
days written notice to the Grantor, may enter upon and take possession of the
Collateral or any part thereof by force, summary proceeding, ejectment or
otherwise and may remove the Grantor and all other Persons and any and all
property therefrom and may hold, operate, maintain, repair, preserve and manage
the same and receive all earnings, income, Rents, issues and Proceeds accruing
with respect thereto or any part thereof. The Grantee shall be under no
liability for or by reason of any such taking of possession, entry, removal or
holding, operation or management, except that any amounts so received by the
Grantee shall be applied to pay all costs and expenses of so entering upon,
taking possession of, holding, operating, maintaining, repairing, preserving and
managing the Collateral or any part thereof, and any Impositions or other
charges prior to the security title and security interest of this Deed which the
Grantee may consider it necessary or desirable to pay, and any balance of such
amounts shall be applied as provided in Section 3.11.
SECTION 3.14. Right of Grantee to Perform Grantor's Covenants, etc. If
the Grantor shall fail to make any payment or perform any act required to be
made or performed hereunder or under the Credit Agreement pertaining to the
Fixed Assets Loans or any other Loan Document pertaining to the Fixed Assets
Loans, the Grantee, without notice to or demand upon the Grantor and without
waiving or releasing any obligation or Event of Default, may (but shall be under
no obligation to) at any time thereafter make such payment or perform such act
for the account and at the expense of the Grantor, and may enter upon the
Collateral for such purpose and take all such action thereon as, in the
Grantee's opinion, may be necessary or appropriate therefor. No such entry and
no such action shall be deemed an
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eviction of any lessee of the Property or any part thereof. All sums so paid by
the Grantee and all costs and expenses (including, without limitation,
attorneys' fees and expenses) so incurred, together with interest thereon at the
rate provided for in Section 3.2.2 of the Credit Agreement from the date of
payment or incurring, shall constitute additional indebtedness under the Credit
Agreement secured by this Deed and shall be paid by the Grantor to the Grantee
on demand.
SECTION 3.15. Subrogation. To the extent that the Grantee, on or after
the date hereof, pays any sum due under any provision of any Legal Requirement
or any instrument creating any lien or security title prior or superior to the
lien or security title of this Deed, or the Grantor or any other Person pays any
such sum with the proceeds of the Fixed Assets Loans, the Grantee shall have and
be entitled to a lien or security title on the Collateral equal in priority to
the lien or security title discharged, and the Grantee shall be subrogated to,
and receive and enjoy all rights and liens or security titles possessed, held or
enjoyed by, the holder of such lien or security title, which shall remain in
existence and benefit the Grantee in securing the Secured Obligations.
SECTION 3.16. Remedies, etc., Cumulative. Each right, power and remedy
of the Grantee provided for in this Deed, the Credit Agreement or any other Loan
Document pertaining to the Fixed Assets Loans, or now or hereafter existing at
law or in equity or by statute or otherwise shall be cumulative and concurrent
and shall be in addition to every other right, power or remedy provided for in
this Deed, the Credit Agreement or any other Loan Document pertaining to the
Fixed Assets Loans, or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by the
Grantee of any one or more of the rights, powers or remedies provided for in
this Deed, the Credit Agreement, or any other Loan Document pertaining to the
Fixed Assets Loans, or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by
the Grantee of any or all such other rights, powers or remedies.
SECTION 3.17. Provisions Subject to Applicable Law. All rights, powers
and remedies provided in this Deed may be exercised only to the extent that the
exercise thereof does not violate any applicable provisions of law and are
intended to be limited to the extent necessary so that they will not render this
Deed invalid, unenforceable or not entitled to be recorded, registered or filed
under the provisions of any applicable law. If any term of this Deed or any
application thereof shall be invalid or unenforceable, the remainder of this
Deed and any other application of such term shall not be affected thereby.
SECTION 3.18. No Waiver, etc. No failure by the Grantee to insist upon
the strict performance of any term hereof or of the Credit Agreement, or of any
other Loan Document, or to exercise any right, power or remedy consequent upon a
breach hereof or thereof, shall constitute a waiver of any such term or of any
such breach. No waiver of any breach shall affect or alter this Deed, which
shall continue in full force and effect with respect to any other then existing
or subsequent breach. By accepting payment or performance of any amount or other
Secured Obligations secured hereby before or after its due date, the Grantee
shall not be deemed to have waived its right either to require prompt payment or
performance when due of all other amounts and Secured Obligations payable
hereunder or to declare a default for failure to effect such prompt payment.
SECTION 3.19. Compromise of Actions, etc. Any action, suit or proceeding
brought by the Grantee pursuant to any of the terms of this Deed, the Credit
Agreement pertaining to the Fixed Assets Loans, any other Loan Document
pertaining to the Fixed Assets Loans, or otherwise, and any claim made by the
Grantee hereunder or thereunder, may be compromised, withdrawn or otherwise
dealt with by the Grantee without any notice to or approval of the Grantor.
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SECTION 3.20 Foreclosure - Authority Lease. If action is brought to
foreclose this Deed, the rents, income and profits issuing from the Land and the
Improvements shall be collected either through a receiver appointed by the court
after notice of application for such appointment has been given to the Lessor
under the Authority Lease or by Grantee. Notwithstanding anything to the
contrary contained in this Deed, all such money collected shall be first applied
for the payment of the rent due and owing under the Authority Lease or to become
due and owing to the Lessor under the Authority Lease, then for any ad valorem
taxes, insurance premiums or other charges due and payable under the Authority
Lease and for all other maintenance and operating charges and disbursements
incurred in connection with the operation and maintenance of the Land and the
Improvements. The balance of such monies shall be applied pursuant to the terms
of this Deed.
ARTICLE IV
DEFINITIONS
SECTION 4.1. Terms Defined in this Deed. When used herein the following
terms have the following meanings:
"Borrowers" shall have the meaning set forth in the second recital.
"Collateral" shall have the meaning set forth in the granting clause.
"Contracts" shall have the meaning set forth in clause (h) of the
granting clause.
"Credit Agreement" shall have the meaning set forth in the second
recital.
"Credit Extensions" shall have the meaning set forth in the the second
recital.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time, or both, would constitute an Event of Default.
"Goods" shall have the meaning set forth in clause (c) of the granting
clause.
"herein", "hereof", "hereto", and "hereunder" and similar terms refer to
this Deed and not to any particular Section, paragraph or provision of this
Deed.
"Impositions" shall have the meaning set forth in Section 1.5.
"Improvements" shall have the meaning set forth in clause (b) of the
granting clause.
"Indemnified Parties" shall have the meaning set forth in Section 1.16.
"Insurance Requirements" shall have the meaning set forth in paragraph
(a) of Section 1.6.
"Land" shall have the meaning set forth in the first recital.
"Leases" shall have the meaning set forth in clause (e) of the granting
clause.
"Legal Requirements" shall have the meaning set forth in paragraph (b)
of Section 1.6.
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"Deed" shall have the meaning set forth in the preamble.
"Grantee" shall have the meaning set forth in the preamble.
"Grantor" shall have the meaning set forth in the preamble.
"Permits" shall have the meaning set forth in clause (g) of the
granting clause.
"Permitted Encumbrances" shall have the meaning set forth in Section 1.2.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency or officer.
"Plans" shall have the meaning set forth in clause (f) of the granting
clause.
"Post-Petition Interest" shall have the meaning set forth in Section 2.3.
"Proceeds" shall have the meaning set forth in clause (k) of the
granting clause.
"Property" shall have the meaning set forth in clause (b) of the
granting clause.
"Real Estate" shall have the meaning set forth in clause (a) of the
granting clause.
"Rents" shall have the meaning set forth in clause (j) of the granting
clause.
"Secured Obligations" means the Fixed Assets Obligations and all
Obligations with respect to the Fixed Assets Loans now or hereafter existing
under the Credit Agreement or any Loan Document pertaining to the Fixed Assets
Loans, and all obligations (monetary or otherwise) arising under or in
connection with the Fixed Assets Notes or the Fixed Assets Loans, whether for
principal, interest, costs, fees, expenses or otherwise and all other Fixed
Assets Obligations, all advances, if any, made by Grantee pursuant to the terms
of this Deed, and all duties and obligations of Grantor under this Deed.
"State" means the State of Georgia.
"Total Destruction" means any damage to or destruction of the Improvements
or any part thereof which, in the reasonable estimation of the Grantee shall
require the expenditure of an amount in excess of Ten Million Dollars
($10,000,000) to restore the Improvements to substantially the same condition of
the Improvements immediately prior to such damage or destruction.
"Total Taking" means a Taking, whether permanent or for temporary use,
which, in the reasonable judgment of the Grantee, shall substantially interfere
with and adversely affect the normal operation of the Property by the Grantor to
such an extent as would reasonably be anticipated to cause a Material Adverse
Effect.
SECTION 4.2. Use of Defined Terms. Terms for which meanings are provided
in this Deed shall, unless otherwise defined or the context otherwise requires,
have such meanings when used in any certificate and any opinion, notice or other
communication delivered from time to time in connection with this Deed or
pursuant hereto.
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SECTION 4.3. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Deed, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements.
SECTION 5.1.1. Further Assurances. The Grantor, at its expense, will
execute, acknowledge and deliver all such instruments and take all such other
action as the Grantee from time to time may reasonably request:
(a) to better subject to the security title and security interest of
this Deed all or any portion of the Collateral,
(b) to perfect, publish notice or protect the validity of the
security title and security interest of this Deed,
(c) to preserve and defend the title to the Collateral and the
rights of the Grantee therein against the claims of all Persons as long as
this Deed shall remain undischarged,
(d) to better subject to the security title and security interest of
this Deed or to maintain or preserve the security title and security
interest of this Deed with respect to any replacement or substitution for
any Collateral or any other after-acquired property except as provided in
the Credit Agreement, or
(e) in order to further effectuate the purposes of this Deed and to
carry out the terms hereof and to better assure and confirm to the Grantee
its rights, powers and remedies hereunder.
SECTION 5.1.2. Financing Statements. Notwithstanding any other provision
of this Deed, the Grantor hereby agrees that, without notice to or the consent
of the Grantor, the Grantee may file with the appropriate public officials such
financing statements, continuation statements, amendments and similar documents
as are or may become necessary to perfect, preserve or protect the security
interest granted by this Deed.
SECTION 5.2. Additional Security. Without notice to or consent of the
Grantor, and without impairment of the security interest and security title and
rights created by this Deed, the Grantee and the Lenders may accept from the
Grantor or any other Person additional security for the Secured Obligations.
Neither the giving of this Deed nor the acceptance of any such additional
security shall prevent the Grantee from resorting, first, to such additional
security, or, first, to the security created by this Deed, or concurrently to
both, in any case without affecting the Grantee's security title and rights
under this Deed.
SECTION 5.3. Satisfaction; Partial Release, etc.
SECTION 5.3.1. Satisfaction. If the Fixed Assets Loans and all other
amounts owing pursuant to the Credit Agreement pertaining to the Fixed Assets
Loans and the other Loan Documents pertaining to the Fixed Assets Loans shall be
repaid in full in accordance with the terms thereof, and if the Grantor shall
pay, in full, the principal of and premium, if any, and interest on the Secured
Obligations in
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accordance with the terms thereof and hereof and all other sums payable
hereunder by the Grantor and shall comply with all the terms, conditions and
requirements hereof and of the Secured Obligations, or otherwise as may be
provided in the Credit Agreement, then on such date, the Grantee shall, upon the
request of the Grantor and at the Grantor's sole cost and expense, execute and
deliver such instruments, in form and substance reasonably satisfactory to the
Grantee, as may be necessary to effectively cancel and surrender this Deed;
provided, however, this Deed secures a revolving credit facility pursuant to the
Credit Agreement and there may be repayment and disbursements of principal from
time to time as provided in the Credit Agreement. It is expressly agreed that
the outstanding principal balance of the Secured Obligations may, from time to
time, be reduced to a zero balance without such repayment operating to
extinguish and release the security title and security interest created by this
Deed. This Deed shall remain in full force and effect as to any subsequent
future advances made after the zero balance without loss of priority until the
Secured Obligations have been paid in full and satisfied and all agreements
between Grantee and Grantor for further advances pursuant to the Credit
Agreement have been terminated and this Deed is cancelled of record. To the
extent it can legally do so, Grantor hereby waives the operation of any
applicable statute, law or regulation having a contrary effect.
SECTION 5.3.2. Partial Release, etc. The Grantee may, at any time and from
time to time, without liability therefor, and without prior notice to the
Grantor, release or reconvey any part of the Collateral, consent to the making
of any map or plat of the Property, join in granting any easement thereon or
join in any extension agreement or agreement subordinating the security title
and security interest of this Deed.
SECTION 5.4. Notices, etc. All notices and other communications provided
to any of the parties hereto shall be in writing and addressed, delivered or
transmitted to such party as set forth in the Credit Agreement.
SECTION 5.5. Waivers, Amendments, etc. The provisions of this Deed may be
amended, discharged or terminated and the observance or performance of any
provision of this Deed may be waived, either generally or in a particular
instance and either retroactively or prospectively, only by an instrument in
writing executed by the Grantor and the Grantee.
SECTION 5.6. Cross-References. References in this Deed and in each
instrument executed pursuant hereto to any Section or Article are, unless
otherwise specified, to such Section or Article of this Deed or such instrument,
as the case may be, and references in any Section, Article or definition to any
clause are, unless otherwise specified, to such clause of such Section, Article
or definition.
SECTION 5.7. Headings. The various headings of this Deed and of each
instrument executed pursuant hereto are inserted for convenience only and shall
not affect the meaning or interpretation of this Deed or such instrument or any
provisions hereof or thereof.
SECTION 5.8. Currency. Unless otherwise expressly stated, all references
to any currency or money, or any dollar amount, or amounts denominated in
"Dollars" herein will be deemed to refer to the lawful currency of the United
States.
SECTION 5.9. Governing Law. THIS DEED SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE.
SECTION 5.10. Successors and Assigns, etc. This Deed shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors, successors-in-title and assigns.
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SECTION 5.11. Waiver of Jury Trial; Submission to Jurisdiction.
(a) EACH OF THE GRANTOR AND THE GRANTEE HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS DEED, THE CREDIT AGREEMENT, ANY LOAN DOCUMENT OR
ANY OTHER RELATED INSTRUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE GRANTOR OR THE
GRANTEE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE GRANTEE AND THE
FIXED ASSETS LENDERS TO ENTER INTO THE TRANSACTIONS PROVIDED FOR IN THE
CREDIT AGREEMENT AND TO MAKE THE FIXED ASSETS LOANS.
(b) FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INVOLVING THIS DEED,
THE CREDIT AGREEMENT AS PERTAINS TO THE FIXED ASSETS LOANS OR ANY OTHER
LOAN DOCUMENT AS PERTAINS TO THE FIXED ASSETS LOANS, THE GRANTOR HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ALL
FEDERAL AND STATE COURTS LOCATED IN THE STATE AND CONSENTS THAT IT MAY BE
SERVED WITH ANY PROCESS OR PAPER BY REGISTERED MAIL OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE IN ACCORDANCE WITH APPLICABLE LAW, PROVIDED A
REASONABLE TIME FOR APPEARANCE IS ALLOWED. THE GRANTOR AND GRANTEE EACH
EXPRESSLY WAIVES, TO THE EXTENT IT MAY LAWFULLY DO SO, ANY OBJECTION,
CLAIM OR DEFENSE WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF
ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS DEED, THE CREDIT
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY SUCH COURT, IRREVOCABLY WAIVES
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY
WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO ANY SUCH CLAIM, SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE
JURISDICTION OVER THE PERSON OF THE GRANTOR. NOTHING CONTAINED HEREIN WILL
BE DEEMED TO PRECLUDE THE GRANTEE FROM BRINGING AN ACTION AGAINST THE
GRANTOR IN ANY OTHER JURISDICTION.
SECTION 5.12. Severability; Conflicts. Any provision of this Deed, the
Credit Agreement or any other Loan Document which is prohibited or unenforceable
in any jurisdiction shall as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Deed, the Credit Agreement or such
Loan Document or affecting the validity or enforceability of such provision in
any other jurisdiction. In the event of any conflict between the terms of this
Deed and the terms of the Credit Agreement, the terms of the Credit Agreement
shall control.
SECTION 5.13. Loan Document. This Deed is a Loan Document executed
pursuant to the Credit Agreement and, unless otherwise expressly indicated
herein, shall be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 5.14. Usury Savings Clause. It is the intention of the Grantor and
the Grantee to conform strictly to the usury laws governing the Loan Documents,
and any interest payable under the Loan Documents shall be subject to reduction
to the amount not in excess of the maximum non-usurious amount allowed under
such laws, as construed by the courts having jurisdiction over such matters. In
the
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event the maturity of the Secured Obligations is accelerated by reason of any
provision of the Loan Documents, or by reason of an election by the Grantee
resulting from an Event of Default, then earned interest may never include more
than the maximum amount permitted by law, computed from the dates of each
advance of loan proceeds under the Credit Agreement until payment, and any
interest in excess of the maximum amount permitted by law shall be canceled
automatically or, if theretofore paid, at the option of the Grantee, shall be
rebated to the Grantor, or shall be credited on the principal amount of the
Secured Obligations or, if all principal has been repaid, then the excess shall
be rebated to the Grantor. If any interest is canceled, credited against
principal or rebated to the Grantor in accordance with the foregoing sentence
and, if thereafter the interest payable hereunder is less than the maximum
amount permitted by applicable law, the rate hereunder shall automatically be
increased to the maximum extent possible to permit repayment to the Grantee and
the Lenders as soon as possible of any interest in excess of the maximum amount
permitted by law which was earlier canceled, credited against principal or
rebated to the Grantor pursuant to the provisions of the foregoing sentence.
SECTION 5.15. Future Advances. This Deed is a "Future Advance Deed" under
the laws of the State. Any and all future advances under this Deed and the Loan
Documents pertaining to the Fixed Assets Loans shall have the same priority as
if the future advance was made on the date that this Deed was recorded. This
Deed shall secure the Secured Obligations, whenever incurred, such Secured
Obligations to be due at the times provided in the Loan Documents pertaining to
the Fixed Assets Loans. Notice is hereby given that the Secured Obligations may
increase as a result of any defaults hereunder by Grantor due to, for example,
and without limitation, unpaid interest or late charges, unpaid taxes or
insurance premiums which the Grantee elects to advance, defaults under leases
that the Grantee elects to cure, attorney fees or costs incurred in enforcing
the Loan Documents pertaining to the Fixed Assets Loans or other expenses
incurred by the Grantee in protecting the Collateral, the security of this Deed
or the Grantee's rights and interests.
SECTION 5.16. Georgia Agent. The rights, powers, duties and obligations
conferred or imposed upon CIT under the Credit Agreement pursuant to this Deed
with respect to the Collateral (including, without limitation, holding the
security title hereunder) are hereby conferred and imposed upon the Georgia
Agent to the extent, but only to the extent, that pursuant to the laws of the
State in effect from time to time CIT shall be incompetent or unqualified to
exercise or perform such rights, power, duties and obligations.
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IN WITNESS WHEREOF, the undersigned, by its duly elected officers and
pursuant to proper authority of its board of directors has duly executed,
sealed, acknowledged and delivered this instrument as of the day and year first
above written.
STERLING PULP CHEMICALS, INC., a
Georgia corporation
By: /s/ [SIGNATURE ILLEGIBLE]
Name: [NAME ILLEGIBLE]
Title: Treasurer
[CORPORATE SEAL]
Signed, sealed and delivered in the presence of:
/s/ [SIGNATURE ILLEGIBLE]
Unofficial Witness
/s/ DAWN M. SCHOENIG
Notary Public
My commission expires: 8/3/99
[AFFIX NOTARIAL SEAL]
DAWN M. SCHOENIG
Notary Public, State of New York
No. 52-4900811
Qualified in Suffolk County
Commission Expires August 3, 1999
DRAFTED BY:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Michael Sloyer, Esq.
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SCHEDULE 1
Legal Description of the Land
[ ]
<PAGE> 32
SCHEDULE 1
All that tract or parcel of land situate, lying and being in Land Lot 170 of
the 11th Land District of Lowndes County, Georgia, and being more particularly
described as all of that certain 28 acres depicted as TRACT I upon that certain
plat of map of survey made by Robin Nelson Harris, Georgia Registered Land
Surveyor No. 2101, dated August 14, 1995, entitled "Survey for Valdosta-Lowndes
County Industrial Authority", a copy of which is of record in Plat Record Book
38, page 200, public records of Lowndes County, Georgia.
TOGETHER WITH, a perpetual non-exclusive easement for ingress and egress over
and through that certain 6.80 acres depicted as TRACT IV upon that certain plat
or map of survey made by Robin Nelson Harris, Georgia Registered Land Surveyor
No. 2101, dated August 14, 1995, entitled "Survey for Valdosta-Lowndes County
Industrial Authority", a copy of which is of record in Plat Record Book 38,
page 200, public records of Lowndes County, Georgia.
NOTE: THE VALDOSTA-LOWNDES COUNTY INDUSTRIAL AUTHORITY HAS CONVEYED HUNT ROAD
(100 DEGREES R/W) TO LOWNDES COUNTY, GEORGIA AS EVIDENCED BY RIGHT OF WAY DEED
DATED FEBRUARY 29, 1996, AND RECORDED IN DEED BOOK 1275, PAGE 263; AND RIGHT OF
WAY DEED DATED APRIL 3, 1996, AND RECORDED IN DEED BOOK 1289, PAGE 92 AFORESAID
RECORDS; SAID ROAD RUNS THROUGH THE MAJORITY OF TRACT IV.
<PAGE> 33
SCHEDULE 2
Permitted Encumbrances
[ ]
<PAGE> 34
SCHEDULE 2
5. Any adverse claim to any portion of said land which has been created by
artificial means or has accreted to any such portion so created and riparian
rights, if any.
1. Defects, liens, encumbrances, adverse claims, or other matters, if any,
created, first appearing in the public records or attaching subsequent to the
effective date hereof but prior to the date the proposed Insured acquires for
value of record the estate or interest or mortgage thereon covered by this
Commitment.
2. Ad valorem taxes for the year 1999 and subsequent years, not yet due nor
payable.
3. No insurance is afforded as to the exact amount of acreage contained in the
property described herein.
4. Rights of others in and to the ingress/egress easement area insured
hereunder.
5. Said ingress/egress easement area insured hereunder has a Georgia Power
Company Easement (Deed Book 3, page 346 and Deed Book 104, page 257) running
through said property. A Governmental Encroachment Agreement has been entered
into by and between The Georgia Power Company and Valdosta-Lowndes County
Industrial Authority, dated March 19, 1996, and recorded in Deed Book 1690,
page 78, public records of Lowndes County, Georgia (affects a portion of Tract
IV-insured easement tract).
<PAGE> 35
6. Any loss or damage resulting from failure to comply with the terms and
provisions of lease by and between Valdosta-Lowndes County Industrial
Authority, Lessor and Sterling Pulp Chemicals US, Inc., a Delaware Corporation,
Lessee, dated October 1, 1995, and recorded in Deed Book 1331, page 27, public
records of Lowndes County, Georgia; ASSIGNED by Sterling Pulp Chemicals US,
Inc., a Delaware corporation to Sterling Pulp Chemicals, Inc., a Georgia
corporation by instrument dated August 6, 1996, and recorded in Deed Book 1333,
page 123, rerecorded in Deed Book 1349, page 83, aforesaid records.
7. Security deed and security agreement from Valdosta-Lowndes County Industrial
Authority to Synovus Trust Company, dated October 1, 1995, and recorded in Deed
Book 1239, page 283, public records of Lowndes County, Georgia, and evidenced
by memorandum of indenture trust dated October 1, 1995, and recorded in Deed
Book 1240, page 4, aforesaid records; assigned to Texas Commerce Bank National
Association, by instrument dated October 1, 1995, and recorded in Deed Book
1240, page 12, reassigned to Synovus Trust Company by instrument dated August
20, 1996, and recorded in Deed Book 1333, page 199-rerecorded in Deed Book
1349, page 85, aforesaid records.
8. UCC-2 indicating Valdosta-Lowndes County Industrial Authority, Debtor;
Synovus Trust Company, Trustee, Secured Party; recorded in Deed Book 1240, page
7, public records Lowndes County, Georgia.
9. Communications systems right of way and easement by and between Camelia
Investment Company, and American Telephone and Telegraph Company, dated April
25, 1991, and recorded in Deed Book 818, page 176, public records of Lowndes
County, Georgia; said easement area is a 10 foot wide strip of land lying
withing and parallel to the east right of way line of existing Georgia Power
Company Transmission Easement.
<PAGE> 1
EXHIBIT 4.5
FIXED ASSETS SECURITY AGREEMENT
THIS FIXED ASSETS SECURITY AGREEMENT (as amended, supplemented, amended
and restated or otherwise modified from time to time, this "Agreement"), dated
as of July 23, 1999, is among STERLING CHEMICALS, INC., a Delaware corporation,
STERLING CANADA, INC., a Delaware corporation, STERLING PULP CHEMICALS US, INC.,
a Delaware corporation, STERLING PULP CHEMICALS, INC., a Georgia corporation,
STERLING FIBERS, INC., a Delaware corporation, STERLING CHEMICALS ENERGY, INC.,
a Delaware corporation, and STERLING CHEMICALS INTERNATIONAL, INC., a Delaware
corporation (each individually a "Borrower" and collectively the "Borrowers"),
and each other Person (such capitalized term and all other capitalized terms not
otherwise defined herein shall have the meanings provided for or incorporated by
reference in Article I below) that may, from time to time become, pursuant to
the terms of the Credit Agreement, a party to this Agreement (individually
referred to as a "Grantor", and collectively referred to as the "Grantors"), and
THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT"), as the Administrative Agent for
each of the Fixed Assets Secured Parties.
W I T N E S S E T H :
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July 23,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among the Borrowers, the various
financial institutions as are, or may from time to time become, parties thereto
(the "Lenders"), DLJ Capital Funding, Inc., as the Syndication Agent, Credit
Suisse First Boston, as the Documentation Agent, and CIT, as the Administrative
Agent, the Lenders and the Issuer have extended Commitments to make Credit
Extensions to the Borrowers;
WHEREAS, as a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
each Grantor is required to execute and deliver this Agreement;
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this
Agreement inasmuch as such Grantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrowers by
the Lenders and the Issuer pursuant to
<PAGE> 2
the Credit Agreement and the execution and delivery of Rate Protection
Agreements between the Borrowers and certain Fixed Assets Secured Parties;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Fixed Assets Lenders to make each Fixed Asset Loan (including the initial Fixed
Assets Loans) to the Borrowers pursuant to the Credit Agreement and (ii) the
Fixed Assets Secured Parties to enter into Rate Protection Agreement(s), each
Grantor jointly and severally agrees, for the benefit of each Fixed Assets
Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION I.1. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Agreement" is defined in the preamble.
"Borrower" and "Borrowers" are defined in the preamble.
"CIT" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in clause (c) of Section 4.3.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing
hardware, integrated computer systems, central processing units, memory
units, display terminals, printers, features, computer elements, card
readers, tape drives, hard and soft disk drives, cables, electrical
supply hardware, generators, power equalizers, accessories and all
peripheral devices and other related computer hardware;
(b) all software programs (including both source code, object
code and all related applications and data files), whether now owned,
licensed or leased or hereafter acquired by any Grantor, designed for
use on the computers and electronic data processing hardware described
in clause (a) above;
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(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) through
(c); and
(e) all rights with respect to all of the foregoing, including
any and all copyrights, licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support
rights, improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any of
the foregoing.
"Copyright Collateral" means all copyrights of each Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in force
in the United States including all of such Grantor's right, title and interest
in and to all copyrights registered in the United States Copyright Office and
also including the copyrights referred to in Item A of Schedule IV attached
hereto, and all applications for registration thereof, whether pending or in
preparation, all copyright licenses in the United States, including each
copyright license referred to in Item B of Schedule IV attached hereto, the
right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto, all extensions and renewals of any thereof and all
proceeds of the foregoing, including licenses, royalties, income, payments,
claims, damages and proceeds of suit.
"Credit Agreement" is defined in the first recital.
"Equipment" is defined in clause (a) of Section 2.1.
"Fixed Assets Termination Date" means the date on which all Fixed
Assets Obligations have been paid in full in cash, all Rate Protection
Agreements where the counterparty is a Fixed Assets Lender (or its Affiliate)
have been terminated and the Fixed Assets Loan Commitment shall have terminated.
"Grantor" and "Grantors" are defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Intercompany Note" means, with respect to any Grantor, as the payee
thereunder, a promissory note substantially in the form of Exhibit D hereto
(with such modifications as the Administrative Agent may consent to, such
consent not to be unreasonably withheld), which promissory note shall evidence
all intercompany loans which may be made from time to time by the such Grantor
to any of its Foreign Restricted Subsidiaries as the maker of such promissory
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<PAGE> 4
note, as amended, modified or supplemented from time to time, in accordance with
Section 4.7, together with any promissory note of such Grantor taken in
extension or renewal thereof or substitution therefor.
"Inventory" is defined in clause (b) of Section 2.1
"Lenders" is defined in the first recital.
"Material Contracts" is defined in clause (c) of Section 2.1
"Patent Collateral" means:
(a) all letters patent and applications for letters patent in
the United States, including all patent applications in preparation for
filing in the United States and including each patent and patent
application referred to in Item A of Schedule II attached hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(c) all patent licenses in the United States, including each
patent license referred to in Item B of Schedule II attached hereto;
and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, referred to in clauses (a) or (b)
above, and for breach or enforcement of any patent license referred to
in clause (c) above.
"Receivables" is defined in clause (c) of Section 2.1.
"Related Contracts" is defined in clause (c) of Section 2.1.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like
nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the United
States or hereafter adopted or acquired in the United States, whether
currently in use or not, all registrations and recordings thereof and
all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United
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<PAGE> 5
States Patent and Trademark Office or in any office or agency of the
United States of America or any State, including those referred to in
Item A of Schedule III attached hereto;
(b) all Trademark licenses in the United States, including
each Trademark license referred to in Item B of Schedule III attached
hereto;
(c) all reissues, extensions or renewals of any of the items
described in clause (a) and (b);
(d) all of the goodwill of the business connected with the use
of, and symbolized by the items described in, clauses (a) and (b); and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by any Grantor against third parties for
past, present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any Trademark,
Trademark registration or Trademark license referred to in clauses (a)
through (c) above, or for any injury to the goodwill associated with
the use of any such Trademark or for breach or enforcement of any such
Trademark license.
"Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential or proprietary or useful information and all
know-how obtained by or used in or contemplated at any time for use in the
business of any Grantor (all of the foregoing being collectively called a "Trade
Secret"), whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying, incorporating
or referring in any way to such Trade Secret, all Trade Secret licenses,
including each Trade Secret license referred to in Schedule V attached hereto,
and including the right to sue for and to enjoin and to collect damages for the
actual or threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
SECTION I.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION I.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Credit Agreement or the context otherwise requires, terms for which meanings
are provided in the U.C.C. are used in this Agreement, including its preamble
and recitals, with such meanings.
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<PAGE> 6
ARTICLE II
SECURITY INTEREST
SECTION II.1. Grant of Security. Each Grantor hereby assigns, pledges,
hypothecates, charges, delivers, and transfers to the Administrative Agent, for
its benefit and the ratable benefit of each of the Fixed Assets Secured Parties,
and hereby grants to the Administrative Agent, for its benefit and the ratable
benefit of each of the Fixed Assets Secured Parties, a continuing security
interest in all of the following, whether now or hereafter existing or acquired
by such Grantor (the "Collateral"):
(a) all equipment in all of its forms of such Grantor,
wherever located, including all parts thereof and all accessions,
additions, attachments, improvements, substitutions and replacements
thereto and therefor and all accessories related thereto (any and all
of the foregoing being the "Equipment");
(b) all inventory in all of its forms of such Grantor,
wherever located, including
(i) all raw materials and work in process therefor,
finished goods thereof and materials used or consumed in the
manufacture or production thereof,
(ii) all goods in which such Grantor has an interest
in mass or a joint or other interest or right of any kind
(including goods in which such Grantor has an interest or
right as consignee), and
(iii) all goods which are returned to or repossessed
by such Grantor,
and all accessions thereto, products thereof and documents therefor
(any and all such inventory, materials, goods, accessions, products and
documents being the "Inventory");
(c) all accounts, contracts (including, but not limited to,
all service contracts, supply contracts and marketing agreements (all
such service contracts, supply contracts and marketing agreements,
collectively, the "Material Contracts")), contract rights, chattel
paper, documents, instruments, general intangibles, including Tax
refunds of such Grantor, whether or not arising out of or in connection
with the sale or lease of goods or the rendering of services, and all
rights of such Grantor now or hereafter existing in and to all security
agreements, guaranties, leases and other contracts securing or
otherwise relating to any such accounts, contracts, contract rights,
chattel paper, documents, instruments, and general intangibles (any and
all such accounts, contracts, contract rights, chattel paper,
documents, instruments, warehouse receipts, bills of lading, Material
Contracts, and general intangibles being the "Receivables", and any and
all such security agreements, guaranties, leases and other contracts
being the "Related Contracts");
(d) in furtherance of, and not in limitation of, clause (c),
all Material Contracts, together with (i) all rights of such Grantor to
receive monies due and to become due under or pursuant to each Material
Contract, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty, guaranty or collateral security with
respect to each Material Contract, (iii) all claims of such Grantor for
damages arising out
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<PAGE> 7
of or for breach or default under each Material Contract, (iv) all
rights of such Grantor to terminate a Material Contract, to perform
thereunder and to compel performance and otherwise exercise all
remedies thereunder and (v) to the extent not included in the
foregoing, all proceeds of any and all of the foregoing;
(e) all Intellectual Property Collateral of such Grantor;
(f) the Collateral Account and each Lockbox (including all
deposits and investments therein and all earnings thereon);
(g) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 2.1;
(h) all Intercompany Notes in which such Grantor has an
interest (including each Intercompany Note described in Schedule V
hereto);
(i) all interest and other payments and rights with respect to
each Intercompany Note in which such Grantor has an interest;
(j) all of such Grantor's other property and rights of every
kind and description and interests therein; and
(k) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
clauses (a) through (j), and, to the extent not otherwise included, all
payments under insurance (whether or not the Administrative Agent is
the loss payee thereof) or any indemnity, warranty or guaranty, payable
by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include any general
intangibles or other rights arising under any contracts, instruments, licenses
or other documents as to which the grant of a security interest would constitute
a violation of a valid and enforceable restriction in favor of a third party on
such grant, unless and until any required consents shall have been obtained.
Each Grantor agrees to use its best efforts to obtain any such required consent
with respect to any material item of such Collateral.
SECTION II.2. Security for Fixed Assets Obligations. This Agreement
secures the payment in cash in full of all Fixed Assets Obligations.
SECTION II.3. Delivery of Intercompany Notes. All Collateral comprised
of Intercompany Notes shall be delivered to and held by or on behalf of (and
endorsed to the order of) the Administrative Agent pursuant hereto, in suitable
form for transfer by delivery.
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<PAGE> 8
SECTION II.4. Payments on Intercompany Notes. In the event that any
payment of principal or interest is to be made on any Intercompany Note at a
time when no Default of the nature referred to in Section 8.1.9 of the Credit
Agreement or Event of Default has occurred and is continuing or would result
therefrom, such payment may be paid directly to the applicable Grantor. If any
such Default or Event of Default has occurred and is continuing, then any such
payment shall be paid directly to the Administrative Agent.
SECTION II.5. Continuing Security Interest; Transfer of Notes. This
Agreement shall create a continuing security interest in the Collateral and
shall:
(a) remain in full force and effect until the Fixed Assets
Termination Date;
(b) be binding upon each Grantor, its successors, transferees
and assigns; and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative
Agent and each other Secured Party.
Without limiting the generality of the foregoing clause (c), any Fixed Assets
Secured Party may assign or otherwise transfer (in whole or in part) any Fixed
Assets Loan Commitment or Fixed Assets Loan held by it to any other Person, and
such other Person shall thereupon become vested with all the rights and benefits
in respect thereof granted to such Fixed Assets Security Party under any Loan
Document (including this Agreement) or otherwise, subject, however, to any
contrary provisions in such assignment or transfer, and to the provisions of
Section 10.11 of the Credit Agreement. Upon (i) the sale, transfer or other
disposition of Collateral in accordance with the Credit Agreement or (ii) the
Fixed Assets Termination Date, the security interests granted herein shall
automatically terminate and all rights to the applicable Collateral shall revert
to the applicable Grantor with respect to (A) such Collateral (in the case of
clause (i)) or (B) all Collateral (in the case of clause (ii)). Upon any such
sale, transfer, disposition or termination, the Administrative Agent will, at
such Grantor's sole expense, execute and deliver to such Grantor, without any
representations, warranties or recourse, such documents (including applicable
Intercompany Notes) as such Grantor shall reasonably request to evidence such
termination or release.
SECTION II.6. Grantor Remains Liable. Anything herein to the contrary
notwithstanding:
(a) each Grantor will remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and will perform all of its duties and obligations under such contracts
and agreements to the same extent as if this Agreement had not been
executed;
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<PAGE> 9
(b) the exercise by the Administrative Agent of any of its
rights hereunder will not release any Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral; and
(c) neither the Administrative Agent nor any other Fixed
Assets Secured Party will have any obligation or liability under any
such contracts or agreements included in the Collateral by reason of
this Agreement, nor will the Administrative Agent or any other Fixed
Assets Secured Party be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
SECTION II.7. Security Interest Absolute. All rights of the
Administrative Agent and the security interests granted to the Administrative
Agent hereunder, and all obligations of each Grantor hereunder, shall be
absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any Loan
Document;
(b) the failure of any Fixed Assets Secured Party
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrowers, any other Obligor or
any other Person under the provisions of any Loan Document or
otherwise or
(ii) to exercise any right or remedy against any
guarantor of, or collateral securing, any Fixed Assets
Obligations;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Fixed Assets Obligations or any
other extension, compromise or renewal of any Fixed Assets Obligations;
(d) any reduction, limitation, impairment or termination of
any Fixed Assets Obligations for any reason (other than the repayment
in full and in cash of all Fixed Assets Obligations), including any
claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and each Grantor hereby waives any right to or
claim of) any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise or unenforceability of, or any
other event or occurrence affecting, any Fixed Assets Obligations or
otherwise;
(e) any amendment to, rescission, waiver or other modification
of, or any consent to departure from, any of the terms of any Loan
Document;
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<PAGE> 10
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Fixed Assets Obligations;
or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any
Borrower, any other Obligor, any surety or any guarantor.
SECTION II.8. Postponement of Subrogation, etc. Each Grantor hereby
agrees that it will not exercise any rights which it may acquire by reason of
any payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the Fixed Assets Termination Date. Any amount paid to any
Grantor on account of any payment made hereunder prior to the Fixed Assets
Termination Date shall be held in trust for the benefit of the Fixed Assets
Secured Parties and shall immediately be paid to the Administrative Agent for
the ratable benefit of the Fixed Assets Secured Parties and credited and applied
against the Fixed Assets Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement; provided, however, that if:
(a) such Grantor has made payment to the Administrative Agent
for the ratable benefit of the Fixed Assets Secured Parties of all or
any part of the Fixed Assets Obligations; and
(b) the Fixed Assets Termination Date has occurred,
each Fixed Assets Secured Party agrees that, at the requesting Grantor's
request, the Administrative Agent, on behalf of the Fixed Assets Secured
Parties, will execute and deliver to such Grantor appropriate documents (without
recourse and without representation or warranty) necessary to evidence the
transfer by subrogation to such Grantor of an interest in the Fixed Assets
Obligations resulting from such payment by such Grantor. In furtherance of the
foregoing, prior to the Fixed Assets Termination Date, each Grantor shall
refrain from taking any action or commencing any proceeding against any Borrower
or any other Obligor (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Agreement to the Administrative Agent or any other
Fixed Assets Secured Party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1. Representations and Warranties. Each Grantor represents
and warrants to each Fixed Assets Secured Party as set forth in this Article
III.
SECTION III.2. Location of Collateral, etc. All of the Equipment,
Inventory and Lockboxes of such Grantor are respectively located at the places
specified in Item 3 of the
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Perfection Certificate. None of the Equipment and Inventory has, within the four
months preceding the date of this Agreement if then owned by such Grantor, been
located at any place other than the places specified in Item 3 of the Perfection
Certificate. The place of business and chief executive office of such Grantor
and the office where such Grantor keeps its records concerning the Receivables,
and all originals of all chattel paper which evidence Receivables are located at
the address set forth in Item 3 of the Perfection Certificate. Such Grantor has
no trade names other than those specified in Item 1 of the Perfection
Certificate. During the four months preceding the date hereof, such Grantor has
not been known by any legal name nor has it had a federal taxpayer
identification number different from the one set forth on Item 2 of the
Perfection Certificate, nor has such Grantor been the subject of any merger or
other corporate reorganization, except as set forth in Item 1 of the Perfection
Certificate. If the Collateral includes any Inventory located in the State of
California, such Grantor is not a "retail merchant" within the meaning of
Section 9102 of the California U.C.C. All Receivables evidenced by a promissory
note or other instrument, negotiable document or chattel paper have been duly
endorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance reasonably satisfactory to the Administrative Agent
and delivered and pledged to the Administrative Agent pursuant to Section 4.6.
Such Grantor is not a party to any Federal, State or local government contract
except as set forth in Item 13 of the Perfection Certificate.
SECTION III.3. Ownership, No Liens, etc. Such Grantor owns its
Collateral free and clear of any Lien, except for the security interest created
by this Agreement, the Lien in favor of the Current Assets Secured Parties and
Permitted Liens. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Administrative Agent
relating to this Agreement or as have been filed in connection with Permitted
Liens.
SECTION III.4. Possession and Control. Such Grantor has exclusive
possession and control of its Equipment and Inventory except where the absence
of possession and control results from actions of such Grantor in the ordinary
course of business.
SECTION III.5. Negotiable Documents, Instruments and Chattel Paper.
Such Grantor has, contemporaneously herewith, delivered to the Administrative
Agent possession of all originals of all negotiable documents, instruments and
chattel paper currently owned or held by such Grantor (duly endorsed in blank,
if requested by the Administrative Agent).
SECTION III.6. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral owned by such Grantor the loss, impairment or
infringement of which might have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting and
has not been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and
enforceable;
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(c) such Grantor has made all necessary filings and
recordations to protect its interest in such Intellectual Property
Collateral, including (if permissible) recordations of all of its
interests in the Patent Collateral and Trademark Collateral in the
United States Patent and Trademark Office and its claims to the
Copyright Collateral in the United States Copyright Office;
(d) such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted
rights of any third party which could reasonably be expected to have a
Material Adverse Effect (except for (i) Liens created under the Loan
Documents, and (ii) Permitted Liens and except for rights of licensees
under licenses of such Intellectual Property Collateral in the ordinary
course of business); and
(e) with respect to any Intellectual Property Collateral that
has been registered, such Grantor has performed and will continue to
perform all acts and has paid and will continue to pay all required
fees and Taxes to maintain each and every such item of Intellectual
Property Collateral in full force and effect in the United States.
Such Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, licenses, technology, know-how,
processes and rights with respect to any of the foregoing necessary for or of
importance to the conduct of such Grantor's business as currently conducted.
SECTION III.7. Validity, etc. This Agreement creates a valid first
priority security interest in the Collateral securing the payment of the Fixed
Assets Obligations, and
(a) in the case of Collateral comprised of negotiable
documents, instruments and chattel paper, upon the delivery of such
Collateral to the Administrative Agent, such security interest will be
a valid first-priority, perfected security interest; and
(b) in the case of all other Collateral, upon the filing of
the U.C.C. financing statements (Form U.C.C.-1) delivered by such
Grantor to the Administrative Agent with respect to such Collateral,
such security interest will be a valid first-priority, perfected
security interest.
Each Grantor has filed all U.C.C. financing statements (Form U.C.C.-1) referred
to above in the appropriate offices therefor (or has provided the Administrative
Agent with copies thereof suitable for filing in such offices) and has taken all
of the other actions referred to above necessary to create perfected and
first-priority security interests in the applicable Collateral.
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SECTION III.8. Authorization, Approval, etc. Except as have been
obtained or made and are in full force and effect, no material authorization,
material approval or other action by, and no material notice to or material
filing with, any Governmental Authority or regulatory body is required either
(a) for the grant by such Grantor of the security interest granted hereby, the
pledge by such Grantor of any Collateral pursuant hereto or for the execution,
delivery and performance of this Agreement by such Grantor or (b) for the
perfection of or the exercise by the Administrative Agent of its rights and
remedies hereunder.
SECTION III.9. Compliance with Laws. Such Grantor is in compliance with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to materially
adversely affect the value of the Collateral.
SECTION III.10. As to Intercompany Notes. In the case of each
Intercompany Note, all of such Intercompany Notes have been duly authorized,
executed, endorsed, issued and delivered, and are the legal, valid and binding
obligation of the issuers thereof, and are not in default.
ARTICLE IV
COVENANTS
SECTION IV.1. Certain Covenants. Each Grantor covenants and agrees
that, at all times prior to the Fixed Assets Termination Date, such Grantor
will, unless the Fixed Assets Required Lenders shall otherwise consent in
writing, perform, comply with and be bound by the obligations set forth in this
Article IV.
SECTION IV.2. As to Equipment and Inventory. Such Grantor hereby agrees
that it will:
(a) keep all the Equipment and Inventory (other than Inventory
sold in the ordinary course of business) at the places therefor
specified in Section 3.2 or, upon 30 days' prior written notice to the
Administrative Agent, at such other places in a jurisdiction where all
representations and warranties set forth in Article III shall be true
and correct in all material respects, and all action required pursuant
to the first sentence of Section 4.6 shall have been taken with respect
to the Equipment and Inventory;
(b) cause the Equipment to be maintained and preserved in its
existing condition, ordinary wear and tear excepted, or in the case of
any loss or damage to any of the Equipment, as soon as practicable
after the occurrence thereof, make or cause to be made all repairs,
replacements and other improvements in connection therewith which are
necessary or desirable to such end; and promptly furnish to the
Administrative Agent a
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statement respecting any loss or damage to any of the Equipment which
is material in amount; and
(c) pay promptly when due all property and other Taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against,
the Equipment and Inventory, except to the extent the validity thereof
is being contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP have been set aside.
SECTION IV.3. As to Receivables. (a) Such Grantor will keep its chief
executive office and the office(s) where it keeps its records concerning the
Receivables, and all originals of all chattel paper which evidences Receivables,
located at the address(es) set forth in Section 3.2 and shall keep its other
places of business at the addresses set forth in Item 1 of the Perfection
Certificate, or, upon 30 days' prior written notice to the Administrative Agent,
at such other locations in a jurisdiction where all actions required by the
first sentence of Section 4.6 shall have been taken with respect to the
Receivables and such other Collateral; not change its name or federal taxpayer
identification number except upon 30 days' prior written notice to the
Administrative Agent; hold and preserve such records; and permit representatives
of the Administrative Agent at any time during normal business hours to inspect
and make abstracts from such records.
(b) Such Grantor shall have the right to collect, demand, receive,
receipt for, sue for, compound and give acquittances for any and all amounts due
or to become due on Receivables and settle and adjust disputes and claims with
its customers and account debtors, handle returns and recoveries and grant
discounts, credits and allowances with respect to Receivables in the ordinary
course of business so long as no Default of the nature set forth in Section
8.1.9 of the Credit Agreement nor any Event of Default shall have occurred and
be continuing.
(c) All proceeds of Collateral received by such Grantor shall be
deposited into a deposit account of such Grantor, unless, upon the occurrence
and during the continuance of a Default of the nature set forth in Section 8.1.9
of the Credit Agreement or an Event of Default, such Grantor is otherwise
notified in writing by the Administrative Agent. Following any such notice by
the Administrative Agent to such Grantor pursuant to this Section, all proceeds
of Collateral received by such Grantor shall be delivered in kind for deposit to
an account or accounts specified by the Administrative Agent (collectively, the
"Collateral Account"). Such proceeds of Collateral received by such Grantor
shall, prior to deposit in the Collateral Account, be held separate and apart
from, and not commingled with, any other property and in express trust for the
benefit of the Administrative Agent until delivery thereof is made to the
Collateral Account.
(d) During any time that an Event of Default shall have occurred and be
continuing, the Administrative Agent shall have the right to apply any amount in
the Collateral Account to the payment of any Fixed Assets Obligations which are
due and payable, including any Fixed Assets
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Obligations that have been declared due and payable pursuant to Section 8.3 of
the Credit Agreement.
(e) With respect to the Collateral Account, it is hereby confirmed and
agreed that (i) deposits in each Collateral Account are subject to a security
interest as contemplated hereby, (ii) each such Collateral Account shall be
under the sole dominion and control of the Administrative Agent and (iii) the
Administrative Agent shall have the sole right of withdrawal over such
Collateral.
SECTION IV.4. As to Collateral. (a) Until the occurrence and
continuance of a Default of the nature set forth in Section 8.1.9 of the Credit
Agreement or an Event of Default, and such time as the Administrative Agent
shall notify such Grantor of the revocation of such power and authority, such
Grantor (i) may in the ordinary course of its business (except to the extent
prohibited under any Loan Document) at its own expense, refine, process, store,
transport, sell, lease or furnish under the contracts of service any of the
Inventory normally held by such Grantor for such purpose, and use and consume,
in the ordinary course of its business (except to the extent prohibited under
the Credit Agreement or any other Loan Document), any raw materials, including
work in process or materials normally held by such Grantor for such purpose,
(ii) will, at its own expense, endeavor to collect, as and when due, all amounts
due with respect to any Collateral, including the taking of such action with
respect to such collection as the Administrative Agent may reasonably request
upon the occurrence and during the continuance of a Default of the nature set
forth in Section 8.1.9 of the Credit Agreement or an Event of Default or, in the
absence of such request, as such Grantor may deem advisable, and (iii) may
grant, in the ordinary course of business (except to the extent prohibited under
any Loan Document), to any party obligated on any of the Collateral, any rebate,
refund or allowance to which such party may be lawfully entitled, and may
accept, in connection therewith, the return of goods, the sale or lease of which
shall have given rise to such Collateral. The Administrative Agent, however,
may, at any time upon the occurrence and during the continuance of a Default of
the nature set forth in Section 8.1.9 of the Credit Agreement or an Event of
Default, notify any parties obligated on any of the Collateral to make payment
to the Administrative Agent of any amounts due or to become due thereunder and
enforce collection of any of the Collateral by suit or otherwise and surrender,
release or exchange all or any part thereof, or compromise or extend or renew
for any period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of the Administrative Agent, upon
the occurrence and during the continuance of a Default of the nature set forth
in Section 8.1.9 of the Credit Agreement or an Event of Default, such Grantor
will, at its own expense, notify any parties obligated on any of the Collateral
to make payment to the Administrative Agent of any amounts due or to become due
thereunder.
(b) Upon the occurrence and during the continuance of a Default of the
nature set forth in Section 8.1.9 of the Credit Agreement or an Event of
Default, the Administrative Agent is authorized to endorse, in the name of such
Grantor, any item, howsoever received by the Administrative Agent, representing
any payment on or other proceeds of any of the Collateral.
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SECTION IV.5. As to Intellectual Property Collateral. Each Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral of such Grantor:
(a) such Grantor will not (i) do any act, or omit to do any
act, whereby any of the Patent Collateral may lapse or become abandoned
or dedicated to the public or unenforceable, (ii) permit any of its
licensees to, (A) fail to continue to use any of the Trademark
Collateral in order to maintain all of the Trademark Collateral in full
force free from any claim of abandonment for non-use, (B) fail to
maintain as in the past the quality of products and services offered
under all of the Trademark Collateral, (C) fail to employ all of the
Trademark Collateral registered with any Federal or State authority
with an appropriate notice of such registration, (D) adopt or use any
other Trademark which is confusingly similar or a colorable imitation
of any of the Trademark Collateral, (E) use any of the Trademark
Collateral registered with any Federal or State authority except for
the uses for which registration or application for registration of all
of the Trademark Collateral has been made, or (F) do or permit any act
or knowingly omit to do any act whereby any of the Trademark Collateral
may lapse or become invalid or unenforceable or (iii) do or permit any
act or knowingly omit to do any act whereby any of the Copyright
Collateral or any of the Trade Secrets Collateral may lapse or become
invalid or unenforceable or placed in the public domain except upon
expiration of the end of an unrenewable term of a registration thereof,
unless such Grantor shall either (x) reasonably and in good faith determine (and
notice of such determination shall have been delivered to the Administrative
Agent) that any of the Intellectual Property Collateral is not of material
economic value to such Grantor, or (y) in the exercise of its reasonable
business judgment determines to do otherwise;
(b) such Grantor shall notify the Administrative Agent
promptly if it knows, or has reason to know, that any application or
registration relating to any material item of the Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in
the public domain or invalid or unenforceable, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any
U.S. court) regarding such Grantor's ownership of any material item of
the Intellectual Property Collateral, its right to register the same or
to keep and maintain and enforce the same;
(c) in no event will such Grantor or any of its agents,
employees, designees or licensees file an application for the
registration of any Intellectual Property Collateral with the United
States Patent and Trademark Office or the United States Copyright
Office, unless it promptly informs the Administrative Agent, and upon
request of the Administrative Agent, executes and delivers any and all
agreements, instruments,
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documents and papers as the Administrative Agent may reasonably request
to evidence the Administrative Agent's security interest in such
Intellectual Property Collateral and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby;
(d) unless such Grantor shall otherwise determine in the
exercise of its reasonable business judgment, such Grantor will take
all necessary steps, including in any proceeding before the United
States Patent and Trademark Office or the United States Copyright
Office, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of any material item of the Intellectual Property
Collateral, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and
Taxes (except to the extent that dedication, abandonment or
invalidation is permitted under the foregoing clauses (a), (b) and
(c)); and
(e) such Grantor will, contemporaneously herewith, execute and
deliver to the Administrative Agent a Patent Security Agreement,
Trademark Security Agreement and Copyright Security Agreement in the
forms of Exhibit A, Exhibit B and Exhibit C hereto, and shall execute
and deliver to the Administrative Agent any other document required to
acknowledge or register or perfect the Administrative Agent's interest
in any material item of the Intellectual Property Collateral.
SECTION IV.6. Further Assurances, etc. Such Grantor agrees that, from
time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may reasonably request,
in order to perfect, preserve and protect any security interest granted or
purported to be granted hereby or to enable the Administrative Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, such Grantor will:
(a) if any Receivable shall be evidenced by a promissory note
or other instrument, negotiable document or chattel paper, deliver and
pledge to the Administrative Agent hereunder such promissory note,
instrument, negotiable document or chattel paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all
in form and substance satisfactory to the Administrative Agent;
(b) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or
notices (including any assignment of claim form under or pursuant to
the federal assignment of claims statute, 31 U.S.C. Section 3726, any
successor or amended version thereof or any regulation promulgated
under or pursuant to any version thereof), as may be necessary or
desirable, or as the Administrative Agent
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may request, in order to perfect and preserve the security interests
and other rights granted or purported to be granted to the
Administrative Agent hereby; and
(c) furnish to the Administrative Agent, from time to time at
the Administrative Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law. A carbon, photographic or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
SECTION IV.7. As to Intercompany Notes. Each Grantor will, at all
times, keep pledged to the Administrative Agent pursuant hereto on a first
priority, perfected basis all Intercompany Notes and all interest, principal and
other proceeds received by the Administrative Agent with respect to the
Intercompany Notes. Each Grantor agrees after any Default of the nature referred
to in Section 8.1.9 of the Credit Agreement or any Event of Default shall have
occurred and be continuing, promptly upon receipt of notice thereof by such
Grantor and without any request therefor by the Administrative Agent, to deliver
(properly endorsed where required hereby or requested by the Administrative
Agent) to the Administrative Agent all interest, all principal, all other cash
payments and all proceeds of the Intercompany Notes. Each Grantor will not
amend, supplement or otherwise modify, or permit, consent or suffer to occur any
amendment, supplement or modification of any terms or provisions contained in,
or applicable to, any Intercompany Notes included in the Collateral if the
effect thereof is to impair, or is in any manner adverse to, the rights or
interests of the Administrative Agent or any other Fixed Assets Secured Party
hereunder or under any Loan Document, without the prior written consent of the
Administrative Agent.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION V.1. Administrative Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Administrative Agent as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the
Administrative Agent's discretion, upon the occurrence and during the
continuance of a Default of the nature set forth in Section 8.1.9 of the Credit
Agreement or an Event of Default, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including:
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(a) to ask, demand, collect, sue for, recover, compromise and
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent with respect to any of
the Collateral; and
(d) to perform the affirmative obligations of such Grantor
hereunder (including all obligations of such Grantor pursuant to
Section 4.6).
Such Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION V.2. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by such
Grantor pursuant to Section 6.3.
SECTION V.3. Administrative Agent Has No Duty. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest (on behalf
of the Fixed Assets Secured Parties) in the Collateral and shall not impose any
duty on it to exercise any such powers. Except for reasonable care of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Administrative Agent shall have no duty as to any Collateral
or responsibility for:
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any investment property, whether or not the Administrative Agent has
or is deemed to have knowledge of such matters; or
(b) taking any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.
SECTION V.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, that the Administrative Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral, if it takes such action for that purpose
as any Grantor reasonably requests in writing from time to time, but failure of
the Administrative Agent to comply with any such request at any time shall not
in itself be deemed a
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failure to exercise reasonable care. If an Event of Default has occurred and is
continuing, the Administrative Agent shall not be required to comply with any
request of the Grantor with respect to the matters described in this Section.
ARTICLE VI
REMEDIES
SECTION VI.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may
(i) require each Grantor to, and such Grantor hereby
agrees that it will, at its expense and upon request of the
Administrative Agent forthwith, assemble all or part of the
Collateral as directed by the Administrative Agent and make it
available to the Administrative Agent at a place to be
designated by the Administrative Agent which is reasonably
convenient to both parties, and
(ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's
offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Administrative
Agent may deem commercially reasonable. Each Grantor agrees
that, to the extent notice of sale shall be required by law,
at least ten days prior notice to such Grantor of the time and
place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification.
The Administrative Agent shall not be obligated to make any
sale of such Collateral regardless of notice of sale having
been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned.
(b) All cash proceeds received by the Administrative Agent in
respect of any sale of, collection from or other realization upon all
or any part of the Collateral shall be applied by the Administrative
Agent against all or any part of the Fixed Assets Obligations as
follows:
(i) first, to the payment of any amounts payable to
the Administrative Agent pursuant to Section 10.3 of the
Credit Agreement and Section 6.3;
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(ii) second, to the equal and ratable payment of
Fixed Assets Obligations, in accordance with each Fixed Assets
Secured Party's Fixed Assets Obligations owing to it under or
pursuant to the Credit Agreement or any other Loan Document,
or under or pursuant to any Rate Protection Agreement included
in the Fixed Assets Obligations, as to each Fixed Assets
Secured Party, applied
(A) first to fees and expense reimbursements
then due to such Fixed Assets Secured Party,
(B) then to interest due to such Fixed
Assets Secured Party,
(C) then to pay or prepay principal of the
Fixed Assets Loans owing to, or to reduce the "credit
exposure" of, such Fixed Assets Secured Party under
any Rate Protection Agreement, as the case may be,
and
(D) then to pay the remaining outstanding
Fixed Assets Obligations;
(iii) third, without duplication of any amounts paid
pursuant to clause (b)(ii) above, to the Indemnified Parties
to the extent of any amounts owing pursuant to Section 10.4 of
the Credit Agreement; and
(iv) fourth, to be held as additional collateral
security until the Fixed Assets Termination Date, after which
such remaining cash proceeds shall be paid over to the
applicable Grantor or to whomsoever may be lawfully entitled
to receive such surplus.
For purposes of this Agreement, the "credit exposure" at any time of
any Fixed Assets Secured Party with respect to a Rate Protection
Agreement to which such Fixed Assets Secured Party is a party shall be
determined at such time in accordance with the customary methods of
calculating credit exposure under similar arrangements by the
counterparty to such arrangements, taking into account potential
interest rate movements and the respective termination provisions and
notional principal amount and term of such Rate Protection Agreement.
(c) The Administrative Agent may
(i) transfer all or any part of the Collateral into
the name of the Administrative Agent or its nominee, with or
without disclosing that such Collateral is subject to the lien
and security interest hereunder,
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(ii) notify the parties obligated on any of the
Collateral to make payment to the Administrative Agent of any
amount due or to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts or other writings in
such Grantor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral
and
(vi) execute (in the name, place and stead of such
Grantor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
SECTION VI.2. Compliance with Restrictions. Each Grantor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and
purchasers to Persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority or official, and such
Grantor further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Administrative Agent be liable nor accountable to such Grantor for
any discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
SECTION VI.3. Indemnity and Expenses. Each Grantor hereby jointly and
severally indemnifies and holds harmless the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or resulting
from this Agreement (including enforcement of this Agreement), except claims,
losses or liabilities resulting from the Administrative Agent's gross negligence
or wilful misconduct and each Grantor will upon demand pay to the Administrative
Agent the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur, in each case, in connection with:
(a) the administration of this Agreement;
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(b) the custody, preservation, use or operation of or the sale
of, collection from or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by any Grantor to perform or observe any of
the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION VII.1. Loan Document. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION VII.2. Amendments; etc. No amendment to or waiver of any
provision of this Agreement nor consent to any departure by any Grantor herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be) and each Grantor and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION VII.3. Protection of Collateral. The Administrative Agent may
from time to time, at its option, perform any act which each Grantor agrees
hereunder to perform and which such Grantor shall fail to perform after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default) and the Administrative Agent may from time to time take any other
action which the Administrative Agent reasonably deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein.
SECTION VII.4. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and addressed,
delivered or transmitted, if to any Grantor, at the address or facsimile number
of the Company provided for in the Credit Agreement, and if to the
Administrative Agent, at the address or facsimile number provided for in the
Credit Agreement, or as to any such party, at such other address or facsimile
number as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. Any notice, (a)
if mailed and properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when received, or
(b) if transmitted by facsimile, shall be deemed given when transmitted (and
telephonic confirmation of receipt thereof has been received).
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SECTION VII.5. Headings. The various headings of this Agreement are
inserted for convenience only, and shall not affect the meaning or
interpretation of this Agreement or any provisions thereof.
SECTION VII.6. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION VII.7. Counterparts; Effectiveness. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original (whether such counterpart is originally executed or an
electronic copy of an original) and all of which shall constitute together but
one and the same agreement. This Agreement shall become effective as of the date
first above written and be binding upon a Grantor when a counterpart hereof
executed on behalf of such Grantor shall have been received by the
Administrative Agent.
SECTION VII.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCLUDING THE LAW OF CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
SECTION VII.9. Additional Grantors. Upon the execution and delivery by
any other Person of an instrument in the form of Annex I hereto, together with
each Schedule thereto, such Person shall become a "Grantor" hereunder with the
same force and effect as if originally named as a Grantor herein. The execution
and delivery of any such instrument shall not require the consent of any other
Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor
as a party to this Agreement.
SECTION VII.10. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-24-
<PAGE> 25
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
STERLING CHEMICALS, INC.
By
---------------------------------------
Title:
STERLING CANADA, INC.
By
---------------------------------------
Title:
STERLING PULP CHEMICALS US, INC.
By
---------------------------------------
Title:
STERLING PULP CHEMICALS, INC.
By
---------------------------------------
Title:
STERLING FIBERS, INC.
By
---------------------------------------
Title:
STERLING CHEMICALS ENERGY, INC.
By
---------------------------------------
Title:
<PAGE> 26
STERLING CHEMICALS INTERNATIONAL, INC.
By
---------------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative Agent, on behalf of
the Fixed Assets Secured Parties
By
---------------------------------------
Title:
<PAGE> 27
SCHEDULE I
to Security Agreement
([NAME OF GRANTOR])
Perfection Certificate
See Exhibit M to the Credit Agreement
<PAGE> 28
SCHEDULE II
to Security Agreement
([NAME OF GRANTOR])
Item A. Patents
Issued Patents
--------------
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ----------- -----
Pending Patent Applications
---------------------------
Serial No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
Patent Applications in Preparation
----------------------------------
Expected
Docket No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE> 29
SCHEDULE III
to Security Agreement
([NAME OF GRANTOR])
Item A. Trademarks
Registered Trademarks
---------------------
Trademark Registration No. Registration Date
--------- ---------------- -----------------
Pending Trademark Applications
------------------------------
Trademark Serial No. Filing Date
--------- ---------- -----------
Trademark Applications in Preparation
-------------------------------------
Expected Products/
Trademark Docket No. Filing Date Services
--------- ---------- ----------- ---------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Date Date
--------- -------- -------- --------- ----------
<PAGE> 30
SCHEDULE IV
to Security Agreement
([NAME OF GRANTOR])
Item A. Copyrights
Registered Copyrights
---------------------
Registration No. Registration Date Author(s) Title
---------------- ----------------- --------- -----
Copyright Pending Registration Applications
-------------------------------------------
Serial No. Filing Date Author(s) Title
---------- ----------- --------- -----
Copyright Registration Applications in Preparation
--------------------------------------------------
Expected
Docket No. Filing Date Author(s) Title
---------- ----------- --------- -----
Item B. Copyright Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE> 31
SCHEDULE V
to Security Agreement
([NAME OF GRANTOR])
Trade Secret or Know-How Licenses
---------------------------------
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE> 32
SCHEDULE VI
to Security Agreement
[NAME OF GRANTOR]
Intercompany Notes
Maximum Amount of
Intercompany Loans
Maker Evidenced Thereby Date
- ----- ------------------ ----
<PAGE> 33
EXHIBIT A
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of
____________, ____, is made between ___________________, a ____________________
(the "Grantor"), and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Fixed Assets Secured Parties.
W I T N E S S E T H :
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Fixed Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement
and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Patent
Collateral (as defined below) to secure all Fixed Assets Obligations;
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Fixed Assets Lenders to make
<PAGE> 34
Fixed Assets Loans (including the initial Fixed Assets Loans) to the Borrowers
pursuant to the Credit Agreement and (ii) the Fixed Assets Secured Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Fixed Assets Secured Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Fixed Assets Obligations, the Grantor does hereby pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Fixed Assets
Secured Party, all of the following property (the "Patent Collateral"), whether
now owned or hereafter acquired or existing by it:
(a) all letters patent and applications for letters patent in
the United States, including all patent applications in preparation for
filing in the United States and including each patent and patent
application referred to in Item A of Schedule I attached hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(c) all patent licenses in the United States, including each
patent license referred to in Item B of Schedule I attached hereto; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, referred to in clauses (a) or (b)
above, and for breach or enforcement of any patent license referred to
in clause (c) above.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Patent Collateral with the United States Patent
and Trademark Office. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Administrative Agent for its benefit and the benefit of each Fixed Assets
Secured Party under the Security Agreement. The Security Agreement (and all
rights and remedies of the Administrative Agent and each Fixed Assets Secured
Party thereunder) shall remain in full force and effect in accordance with its
terms.
SECTION 4. Release of Security Interest. Upon (i) the sale, transfer or
other disposition of any Patent Collateral in accordance with the Credit
Agreement or (ii) the Fixed Assets
Exhibit A
-2-
<PAGE> 35
Termination Date, the Administrative Agent shall, at the Grantor's expense,
execute and deliver to the Grantor all instruments and other documents as may be
necessary or proper to release the lien on and security interest in the Patent
Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent with respect
to the security interest in the Patent Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Grantor
shall have been received by the Administrative Agent.
SECTION 8. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.
Exhibit A
-3-
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF GRANTOR]
By
------------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC. as
Administrative Agent, on behalf of
the Fixed Assets Secured Parties
By
------------------------------------
Title:
Exhibit A
-4-
<PAGE> 37
SCHEDULE I
to Patent Security Agreement
Item A. Patents
Issued Patents
--------------
Patent No. Issue Date Inventor(s) Title
---------- ---------- ----------- -----
Pending Patent Applications
---------------------------
Serial No. Filing Date Inventor(s) Title
---------- ----------- ----------- -----
Patent Applications in Preparation
----------------------------------
Expected
Docket No. Filing Date Inventor(s) Title
---------- ----------- ----------- -----
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE> 38
EXHIBIT B
to Security Agreement
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of
____________, ____, is made between ___________________, a ____________________
(the "Grantor"), and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Fixed Assets Secured Parties.
W I T N E S S E T H :
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Fixed Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement
and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Trademark
Collateral (as defined below) to secure all Fixed Assets Obligations;
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
<PAGE> 39
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Fixed Assets Lenders to make Fixed Assets Loans (including the initial Fixed
Assets Loans) to the Borrowers pursuant to the Credit Agreement, and (ii) the
Fixed Assets Secured Parties to enter into Rate Protection Agreements, the
Grantor agrees, for the benefit of each Fixed Assets Secured Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Fixed Assets Obligations, the Grantor does hereby, pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Fixed Assets
Secured Party, all of the following property (the "Trademark Collateral"),
whether now owned or hereafter acquired or existing by it:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like
nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the United
States or hereafter adopted or acquired in the United States, whether
currently in use or not, all registrations and recordings thereof and
all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
office or agency of the United States of America or any State,
including those referred to in Item A of Schedule I attached hereto;
(b) all Trademark licenses in the United States, including
each Trademark license referred to in Item B of Schedule I attached
hereto;
(c) all reissues, extensions or renewals of any of the items
described in clause (a) and (b);
(d) all of the goodwill of the business connected with the use
of, and symbolized by the items described in, clauses (a) and (b); and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by the Grantor against third parties for
past, present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license referred to in clauses (a)
Exhibit B
-2-
<PAGE> 40
through (c) above, or for any injury to the goodwill associated with
the use of any such Trademark or for breach or enforcement of any such
Trademark license.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Trademark Collateral with the United States
Patent and Trademark Office. The security interest granted hereby has been
granted as a supplement to, and not in limitation of, the security interest
granted to the Administrative Agent for its benefit and the benefit of each
Fixed Assets Secured Party under the Security Agreement. The Security Agreement
(and all rights and remedies of the Administrative Agent and each Fixed Assets
Secured Party thereunder) shall remain in full force and effect in accordance
with its terms.
SECTION 4. Release of Security Interest. Upon (i) the sale, transfer or
other disposition of any Trademark Collateral in accordance with the Credit
Agreement or (ii) the Fixed Assets Termination Date, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Trademark Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent with respect
to the security interest in the Trademark Collateral granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Grantor
shall have been received by the Administrative Agent.
SECTION 8. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.
Exhibit B
-3-
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF GRANTOR]
By
-----------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC. as
Administrative Agent, on behalf of
the Fixed Assets Secured Parties
By
-----------------------------------
Title:
EXHIBIT B
-4-
<PAGE> 42
SCHEDULE I
to Trademark Security Agreement
Item A. Trademarks
Registered Trademarks
---------------------
Trademark Registration No. Registration Date
--------- ---------------- -----------------
Pending Trademark Applications
------------------------------
Trademark Serial No. Filing Date
--------- ---------- -----------
Trademark Applications in Preparation
-------------------------------------
Expected Products/
Trademark Docket No. Filing Date Services
--------- ---------- ----------- ---------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Date Date
--------- -------- -------- --------- ----------
<PAGE> 43
EXHIBIT C
to Security Agreement
COPYRIGHT SECURITY AGREEMENT
This COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of
____________, ____, is made between ___________________, a ____________________
(the "Grantor"), and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Fixed Assets Secured Parties.
W I T N E S S E T H :
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Security Agreement, dated as of July __, 1999 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement
and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Copyright
Collateral (as defined below) to secure all Fixed Assets Obligations;
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Fixed Assets Lenders to make
<PAGE> 44
Fixed Assets Loans (including the initial Fixed Assets Loans) to the Borrowers
pursuant to the Credit Agreement, and (ii) the Fixed Assets Secured Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Fixed Assets Secured Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Fixed Assets Obligations, the Grantor does hereby pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Fixed Assets
Secured Party, all of the following property (the "Copyright Collateral"),
whether now owned or hereafter acquired or existing by it, being all copyrights
of the Grantor, whether statutory or common law, registered or unregistered, now
or hereafter in force in the United States including all of the Grantor's right,
title and interest in and to all copyrights registered in the United States
Copyright Office and also including the copyrights referred to in Item A of
Schedule I attached hereto, and all applications for registration thereof,
whether pending or in preparation, all copyright licenses in the United States,
including each copyright license referred to in Item B of Schedule I attached
hereto, the right to sue for past, present and future infringements of any
thereof, all rights corresponding thereto in the United States, all extensions
and renewals of any thereof and all proceeds of the foregoing, including
licenses, royalties, income, payments, claims, damages and proceeds of suit.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Copyright Collateral with the United States
Copyright Office. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Administrative Agent for its benefit and the benefit of each Fixed Assets
Secured Party under the Security Agreement. The Security Agreement (and all
rights and remedies of the Administrative Agent and each Fixed Assets Secured
Party thereunder) shall remain in full force and effect in accordance with its
terms.
SECTION 4. Release of Security Interest. Upon (i) the sale, transfer or
other disposition of any Copyright Collateral in accordance with the Credit
Agreement or (ii) the Fixed Assets Termination Date, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Copyright Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent with respect
to the security interest in the Copyright Collateral granted hereby are more
fully set forth in the Security
Exhibit C
-2-
<PAGE> 45
Agreement, the terms and provisions of which (including the remedies provided
for therein) are incorporated by reference herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Grantor
shall have been received by the Administrative Agent.
SECTION 8. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.
Exhibit C
-3-
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF GRANTOR]
By
------------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC. as
Administrative Agent, on behalf of
the Fixed Assets Secured Parties
By
------------------------------------
Title:
Exhibit C
-4-
<PAGE> 47
SCHEDULE I
to Copyright Security Agreement
Item A. Copyrights
Registered Copyrights
---------------------
Registration No. Registration Date Author(s) Title
---------------- ----------------- --------- -----
Copyright Pending Registration Applications
-------------------------------------------
Serial No. Filing Date Author(s) Title
---------- ----------- --------- -----
Copyright Registration Applications in Preparation
--------------------------------------------------
Expected
Docket No. Filing Date Author(s) Title
---------- ----------- --------- -----
Item B. Copyright Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE> 48
PROMISSORY NOTE
$2,000,000 July __, 1999
FOR VALUE RECEIVED, the undersigned, [FOREIGN RESTRICTED SUBSIDIARY], a
_______________ corporation (the "Maker"), promises to pay to the order of
______________, a _______________ corporation (the "Payee"), on demand, TWO
MILLION DOLLARS ($2,000,000) or, if less, the aggregate unpaid principal amount
of all intercompany loans made by the Payee to the Maker. Terms not otherwise
defined herein are defined in the Revolving Credit Agreement, dated as of July
__, 1999 (together with all amendments, supplements and other modifications, if
any, from time to time hereafter made thereto, the "Credit Agreement"), among
the Payee, each other Borrower party thereto, the various financial institutions
as are, or may from time to time become, parties thereto (the "Lenders"), DLJ
Capital Funding, Inc., as the Syndication Agent, Credit Suisse First Boston, as
the Documentation Agent, and The CIT Group/Business Credit, Inc., as the
Administrative Agent.
The unpaid principal amount of this promissory note (this "Note") from
time to time outstanding shall bear interest at a rate of interest equal to such
rate per annum as shall be agreed upon from time to time by the Payee and the
Maker payable at such times as shall be agreed upon by the Payee and the Maker,
and all payments of principal of and interest on this Note shall be payable in
lawful currency of the United States of America. All such payments and may be
recorded on the books and records of the Maker and the Payee and may be recorded
on the grid attached hereto by the holder hereof (including recordations made by
the Administrative Agent as pledgee). Upon notice from the Administrative Agent
that a Default of the nature referred to in Section 8.1.9 of the Credit
Agreement or an Event of Default has occurred and is continuing under the Credit
Agreement, the Maker shall make such payments, in same day funds, to such other
account as the Administrative Agent shall direct in such notice.
This Note is one of the Pledged Notes referred to in the Security
Agreement, and evidences Indebtedness permitted under the Credit Agreement. Upon
the occurrence and during the continuance of an Event of Default under the
Credit Agreement, and notice thereof having been delivered by the Administrative
Agent to the Maker, the Administrative Agent shall have all rights of the Payee
to collect and make demand, and enforce all rights with respect to, the
Indebtedness evidenced by this Note.
Payee agrees that this Note is subordinate in right of payment to all
Obligations of Maker and all obligations of Maker in respect of Indebtedness
outstanding under the Senior Secured Note Documents.
<PAGE> 49
Reference is made to the Credit Agreement for a description of the
Security Agreements pursuant to which this Note has been pledged to the
Administrative Agent as security for the Obligations outstanding from time to
time under the Credit Agreement and each other Loan Document.
In addition to, but not in limitation of, the foregoing, the Maker
further agrees to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder (including the Administrative Agent as
pledgee) of this Note endeavoring to collect any amounts payable hereunder which
are not paid when due, whether by acceleration or otherwise.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCLUDING THE LAW OF CONFLICTS BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS
NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[NAME OF MAKER]
By:
------------------------------
Title:
----------------------
Pay to the order of:
-----------------------------
[NAME OF PAYEE]
By:
-------------------------------
Title:
-------------------------
<PAGE> 50
GRID
Intercompany Loans made by ____________ to ____________ and payments of
principal of such Loans.
<TABLE>
<CAPTION>
====================================================================================================================
Amount of Amount of
Intercompany Principal Outstanding Principal Notation Made By
Date Loan Payment Balance
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
<S> <C> <C> <C> <C>
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
- --------------------- ------------------------- ------------------------- ----------------------- ------------------
====================================================================================================================
</TABLE>
<PAGE> 51
ANNEX I
to Security Agreement
SUPPLEMENT TO SECURITY AGREEMENT
THIS SUPPLEMENT NO. ___, dated as of ________ __, ____ (this
"Supplement"), to the Fixed Assets Security Agreement, dated as of July __, 1999
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Security Agreement"), among the initial signatories thereto and
each other Person which from time to time thereafter became a party thereto
pursuant to Section 7.9 thereof (each, individually, a "Grantor", and,
collectively, the "Grantors"), and THE CIT GROUP/BUSINESS CREDIT, INC., as
Administrative Agent for each of the Fixed Assets Secured Parties (such
capitalized term and all other capitalized terms being used herein with the
meanings provided, or incorporated by reference, in the Security Agreement), is
made by the undersigned.
W I T N E S S E T H:
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, as a condition precedent to the making and maintenance of the
Credit Extensions under the Credit Agreement, the undersigned is required to
execute and deliver this Supplement;
WHEREAS, the undersigned has duly authorized the execution, delivery
and performance of this Supplement and the Security Agreement;
WHEREAS, the Security Agreement provides that additional parties may
become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement;
<PAGE> 52
WHEREAS, pursuant to the provisions of Section 7.9 of the Security
Agreement, the undersigned is becoming a Grantor under the Security Agreement;
and
WHEREAS, the undersigned desires to become a Grantor under the Security
Agreement in order to induce the Fixed Assets Secured Parties to continue to
make and maintain Fixed Assets Loans under the Credit Agreement as consideration
therefor;
NOW, THEREFORE, the undersigned agrees, for the benefit of each Fixed
Assets Secured Party, as follows:
SECTION 1. In accordance with the Security Agreement, the undersigned
by its signature below becomes a Grantor under the Security Agreement with the
same force and effect as if it were an original signatory thereto as a Grantor.
In furtherance of the foregoing, each reference to a "Grantor" in the Security
Agreement shall be deemed to include the undersigned and the Schedules hereto
shall be deemed to be Schedules thereto.
SECTION 2. The undersigned hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by the undersigned
and constitutes a legal, valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and general equitable
principles.
SECTION 3. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect in accordance with its terms.
SECTION 4. Any provision of this Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Supplement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 5. Without limiting the provisions of the Credit Agreement (or
any other Loan Document, including the Security Agreement), the undersigned
agrees to reimburse the Administrative Agent for its reasonable out-of-pocket
expenses in connection with this Supplement, including reasonable attorneys'
fees and expenses of the Administrative Agent.
SECTION 6. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCLUDING THE LAW OF
CONFLICTS BUT INCLUDING FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THIS
SUPPLEMENT, THE SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND THEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH
RESPECT THERETO.
Annex I
-2-
<PAGE> 53
SECTION 7. This Supplement hereby incorporates by reference the
provisions of the Security Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Security
Agreement.
SECTION 8. This Supplement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original (whether
such counterpart is originally executed or an electronic copy of an original)
and all of which shall constitute together but one and the same agreement. This
Supplement shall become effective and binding as of the date first above written
when a counterpart hereof executed on behalf of the Grantor shall have been
received by the Administrative Agent.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
[NAME OF ADDITIONAL GRANTOR]
By
-----------------------------------
Title:
ACKNOWLEDGED AND ACCEPTED BY:
THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative Agent, on behalf of the
Fixed Assets Secured Parties
By
------------------------------
Title:
Annex I
-3-
<PAGE> 54
SCHEDULE I
to Supplement No. __
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Perfection Certificate
See Exhibit M to the Credit Agreement
<PAGE> 55
SCHEDULE II
to Supplement No. ___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Item A. Patents
Issued Patents
--------------
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ----------- -----
Pending Patent Applications
---------------------------
Serial No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
Patent Applications in Preparation
----------------------------------
Expected
Docket No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE> 56
SCHEDULE III
to Supplement No. ___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Item A. Trademarks
Registered Trademarks
---------------------
Trademark Registration No. Registration Date
--------- ---------------- -----------------
Pending Trademark Applications
------------------------------
Trademark Serial No. Filing Date
--------- ---------- -----------
Trademark Applications in Preparation
-------------------------------------
Expected Products/
Trademark Docket No. Filing Date Services
--------- ---------- ----------- ---------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Date Date
--------- -------- -------- --------- ----------
<PAGE> 57
SCHEDULE IV
to Supplement No. ___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Item A. Copyrights
Registered Copyrights
---------------------
Registration No. Registration Date Author(s) Title
---------------- ----------------- --------- -----
Copyright Pending Registration Applications
-------------------------------------------
Serial No. Filing Date Author(s) Title
---------- ----------- --------- -----
Copyright Registration Applications in Preparation
--------------------------------------------------
Expected
Docket No. Filing Date Author(s) Title
---------- ----------- --------- -----
Item B. Copyright Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE> 58
SCHEDULE V
to Supplement No. ___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Trade Secret or Know-How Licenses
---------------------------------
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE> 1
EXHIBIT 4.6
CURRENT ASSETS SECURITY AGREEMENT
THIS CURRENT ASSETS SECURITY AGREEMENT (as amended, supplemented,
amended and restated or otherwise modified from time to time, this "Agreement"),
dated as of July 23, 1999, is among STERLING CHEMICALS, INC., a Delaware
corporation, STERLING CANADA, INC., a Delaware corporation, STERLING PULP
CHEMICALS US, INC., a Delaware corporation, STERLING PULP CHEMICALS, INC., a
Georgia corporation, STERLING FIBERS, INC., a Delaware corporation, STERLING
CHEMICALS ENERGY, INC., a Delaware corporation, and STERLING CHEMICALS
INTERNATIONAL, INC., a Delaware corporation (each individually a "Borrower" and
collectively the "Borrowers"), and each other Person (such capitalized term and
all other capitalized terms not otherwise defined herein shall have the meanings
provided for or incorporated by reference in Article I below) that may, from
time to time become, pursuant to the terms of the Credit Agreement, a party to
this Agreement (individually referred to as a "Grantor", and collectively
referred to as the "Grantors"), and THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT"),
as the Administrative Agent for each of the Current Assets Secured Parties.
W I T N E S S E T H :
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July 23,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among the Borrowers, the various
financial institutions as are, or may from time to time become, parties thereto
(the "Lenders"), DLJ Capital Funding, Inc., as the Syndication Agent, Credit
Suisse First Boston, as the Documentation Agent, and CIT, as the Administrative
Agent, the Lenders and the Issuer have extended Commitments to make Credit
Extensions to the Borrowers;
WHEREAS, as a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
each Grantor is required to execute and deliver this Agreement;
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this
Agreement inasmuch as such Grantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrowers by
the Lenders and the Issuer pursuant to
<PAGE> 2
the Credit Agreement and the execution and delivery of Rate Protection
Agreements between the Borrowers and certain Current Assets Secured Parties;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Current Assets Lenders, the Swing Line Lender and the Issuer to make Current
Assets Loans and Swing Line Loans and issue Letters of Credit to the Borrowers
pursuant to the Credit Agreement and (ii) the Current Assets Secured Parties to
enter into Rate Protection Agreement(s), each Grantor jointly and severally
agrees, for the benefit of each Current Assets Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION I.1. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Agreement" is defined in the preamble.
"Borrower" and "Borrowers" are defined in the preamble.
"CIT" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in clause (c) of Section 4.3.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing
hardware, integrated computer systems, central processing units, memory
units, display terminals, printers, features, computer elements, card
readers, tape drives, hard and soft disk drives, cables, electrical
supply hardware, generators, power equalizers, accessories and all
peripheral devices and other related computer hardware;
(b) all software programs (including both source code, object
code and all related applications and data files), whether now owned,
licensed or leased or hereafter acquired by any Grantor, designed for
use on the computers and electronic data processing hardware described
in clause (a) above;
-2-
<PAGE> 3
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) through
(c); and
(e) all rights with respect to all of the foregoing, including
any and all copyrights, licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support
rights, improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any of
the foregoing.
"Copyright Collateral" means all copyrights of each Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in force
in the United States including all of such Grantor's right, title and interest
in and to all copyrights registered in the United States Copyright Office and
also including the copyrights referred to in Item A of Schedule IV attached
hereto, and all applications for registration thereof, whether pending or in
preparation, all copyright licenses in the United States, including each
copyright license referred to in Item B of Schedule IV attached hereto, the
right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto, all extensions and renewals of any thereof and all
proceeds of the foregoing, including licenses, royalties, income, payments,
claims, damages and proceeds of suit.
"Credit Agreement" is defined in the first recital.
"Current Assets Termination Date" means the date on which all Current
Assets Obligations have been paid in full in cash, all Letters of Credit have
been terminated, expired or Cash Collateralized, all Rate Protection Agreements
have been terminated and all Current Assets Commitments have been permanently
terminated.
"Grantor" and "Grantors" are defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Intercompany Note" means, with respect to any Grantor, as the payee
thereunder, a promissory note substantially in the form of Exhibit D hereto
(with such modifications as the Administrative Agent may consent to, such
consent not to be unreasonably withheld), which promissory note shall evidence
all intercompany loans which may be made from time to time by the such Grantor
to any of its Foreign Restricted Subsidiaries as the maker of such promissory
note, as amended, modified or supplemented from time to time, in accordance with
Section 4.7,
-3-
<PAGE> 4
together with any promissory note of such Grantor taken in extension or renewal
thereof or substitution therefor.
"Inventory" is defined in clause (a) of Section 2.1
"Lenders" is defined in the first recital.
"Material Contracts" is defined in clause (c) of Section 2.1
"Patent Collateral" means:
(a) all letters patent and applications for letters patent in
the United States, including all patent applications in preparation for
filing in the United States and including each patent and patent
application referred to in Item A of Schedule II attached hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(c) all patent licenses in the United States, including each
patent license referred to in Item B of Schedule II attached hereto;
and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, referred to in clauses (a) or (b)
above, and for breach or enforcement of any patent license referred to
in clause (c) above.
"Receivables" is defined in clause (b) of Section 2.1.
"Related Contracts" is defined in clause (b) of Section 2.1.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like
nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the United
States or hereafter adopted or acquired in the United States, whether
currently in use or not, all registrations and recordings thereof and
all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
office or agency of the United States of
-4-
<PAGE> 5
America or any State, including those referred to in Item A of Schedule
III attached hereto;
(b) all Trademark licenses in the United States, including
each Trademark license referred to in Item B of Schedule III attached
hereto;
(c) all reissues, extensions or renewals of any of the items
described in clause (a) and (b);
(d) all of the goodwill of the business connected with the use
of, and symbolized by the items described in, clauses (a) and (b); and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by any Grantor against third parties for
past, present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any Trademark,
Trademark registration or Trademark license referred to in clauses (a)
through (c) above, or for any injury to the goodwill associated with
the use of any such Trademark or for breach or enforcement of such
Trademark license.
"Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential or proprietary or useful information and all
know-how obtained by or used in or contemplated at any time for use in the
business of any Grantor (all of the foregoing being collectively called a "Trade
Secret"), whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying, incorporating
or referring in any way to such Trade Secret, all Trade Secret licenses,
including each Trade Secret license referred to in Schedule V attached hereto,
and including the right to sue for and to enjoin and to collect damages for the
actual or threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
SECTION I.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION I.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Credit Agreement or the context otherwise requires, terms for which meanings
are provided in the U.C.C. are used in this Agreement, including its preamble
and recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION II.1. Grant of Security. Each Grantor hereby assigns, pledges,
hypothecates, charges, delivers and transfers to the Administrative Agent, for
its benefit and the ratable benefit of each of the Current Assets Secured
Parties, and hereby grants to the Administrative Agent, for
-5-
<PAGE> 6
its benefit and the ratable benefit of each of the Current Assets Secured
Parties, a continuing security interest in all of the following, whether now or
hereafter existing or acquired by such Grantor (the "Collateral"):
(a) all inventory in all of its forms of such Grantor,
wherever located, including
(i) all raw materials and work in process therefor,
finished goods thereof and materials used or consumed in the
manufacture or production thereof,
(ii) all goods in which such Grantor has an interest
in mass or a joint or other interest or right of any kind
(including goods in which such Grantor has an interest or
right as consignee), and
(iii) all goods which are returned to or repossessed
by such Grantor,
and all accessions thereto, products thereof and documents therefor
(any and all such inventory, materials, goods, accessions, products and
documents being the "Inventory");
(b) all accounts, contracts (including, but not limited to,
all service contracts, supply contracts and marketing agreements (all
such service contracts, supply contracts and marketing agreements,
collectively, the "Material Contracts")), contract rights, chattel
paper, documents, instruments, general intangibles, including Tax
refunds, of such Grantor, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of
services, and all rights of such Grantor now or hereafter existing in
and to all security agreements, guaranties, leases and other contracts
securing or otherwise relating to any such accounts, contracts,
contract rights, chattel paper, documents, instruments and general
intangibles (any and all such accounts, contracts, contract rights,
chattel paper, documents, instruments, warehouse receipts, bills of
lading, Material Contracts and general intangibles being the
"Receivables", and any and all such security agreements, guaranties,
leases and other contracts being the "Related Contracts");
(c) in furtherance of, and not in limitation of, clause (b),
all Material Contracts, together with (i) all rights of such Grantor to
receive monies due and to become due under or pursuant to each Material
Contract, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty, guaranty or collateral security with
respect to each Material Contract, (iii) all claims of such Grantor for
damages arising out of or for breach or default under each Material
Contract, (iv) all rights of such Grantor to terminate a Material
Contract, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder and (v) to the extent not included in
the foregoing, all proceeds of any and all of the foregoing;
(d) all Intellectual Property Collateral of such Grantor;
-6-
<PAGE> 7
(e) the Collateral Account and each Lockbox (including all
deposits and investments therein and all earnings thereon);
(f) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 2.1;
(g) all Intercompany Notes in which such Grantor has an
interest (including each Intercompany Note described in Schedule V
hereto);
(h) all interest and other payments and rights with respect to
each Intercompany Note in which such Grantor has an interest;
(i) all of such Grantor's other property and rights of every
kind and description and interests therein; and
(j) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
clauses (a) through (i), and, to the extent not otherwise included, all
payments under insurance (whether or not the Administrative Agent is
the loss payee thereof) or any indemnity, warranty or guaranty, payable
by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include (a) any equipment,
machinery, furnishings, furniture, real property, fixtures or any other Fixed
Assets in all of their forms of such Grantor, wherever located, including all
parts thereof and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor and all accessories and
general intangibles related thereto, or (b) any general intangibles or other
rights arising under any contracts, instruments, licenses or other documents as
to which the grant of a security interest would constitute a violation of a
valid and enforceable restriction in favor of a third party on such grant,
unless and until any required consents shall have been obtained. Each Grantor
agrees to use its best efforts to obtain any such required consent with respect
to any material item of such Collateral.
SECTION II.2. Security for Current Assets Obligations. This Agreement
secures the payment in cash in full of all Current Assets Obligations.
SECTION II.3. Delivery of Intercompany Notes. All Collateral comprised
of Intercompany Notes shall be delivered to and held by or on behalf of (and
endorsed to the order of) the Administrative Agent pursuant hereto, in suitable
form for transfer by delivery.
SECTION II.4. Payments on Intercompany Notes. In the event that any
payment of principal or interest is to be made on any Intercompany Note at a
time when no Default of the nature referred to in Section 8.1.9 of the Credit
Agreement or Event of Default has occurred and
-7-
<PAGE> 8
is continuing or would result therefrom, such payment may be paid directly to
the applicable Grantor. If any such Default or Event of Default has occurred and
is continuing, then any such payment shall be paid directly to the
Administrative Agent.
SECTION II.5. Continuing Security Interest; Transfer of Notes. This
Agreement shall create a continuing security interest in the Collateral and
shall:
(a) remain in full force and effect until the Current Assets
Termination Date;
(b) be binding upon each Grantor, its successors, transferees
and assigns; and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative
Agent and each other Current Assets Secured Party.
Without limiting the generality of the foregoing clause (c), any Current Assets
Secured Party may assign or otherwise transfer (in whole or in part) any Current
Assets Loan Commitment or Swing Line Loan Commitment or Current Assets Loan held
by it to any other Person, and such other Person shall thereupon become vested
with all the rights and benefits in respect thereof granted to such Current
Assets Secured Party under any Loan Document (including this Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 10.11 of the Credit Agreement. Upon
(i) the sale, transfer or other disposition of Collateral in accordance with the
Credit Agreement or (ii) the Current Assets Termination Date, the security
interests granted herein shall automatically terminate and all rights to the
applicable Collateral shall revert to the applicable Grantor with respect to (A)
such Collateral (in the case of clause (i)) or (B) all Collateral (in the case
of clause (ii)). Upon any such sale, transfer, disposition or termination, the
Administrative Agent will, at such Grantor's sole expense, execute and deliver
to such Grantor, without any representations, warranties or recourse, such
documents (including applicable Intercompany Notes) as such Grantor shall
reasonably request to evidence such termination or release.
SECTION II.6. Grantor Remains Liable. Anything herein to the contrary
notwithstanding:
(a) each Grantor will remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and will perform all of its duties and obligations under such contracts
and agreements to the same extent as if this Agreement had not been
executed;
(b) the exercise by the Administrative Agent of any of its
rights hereunder will not release any Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral; and
-8-
<PAGE> 9
(c) neither the Administrative Agent nor any other Current
Assets Secured Party will have any obligation or liability under any
such contracts or agreements included in the Collateral by reason of
this Agreement, nor will the Administrative Agent or any other Current
Assets Secured Party be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
SECTION II.7. Security Interest Absolute. All rights of the
Administrative Agent and the security interests granted to the Administrative
Agent hereunder, and all obligations of each Grantor hereunder, shall be
absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any Loan
Document;
(b) the failure of any Current Assets Secured Party
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrowers, any other Obligor or
any other Person under the provisions of any Loan Document or
otherwise or
(ii) to exercise any right or remedy against any
guarantor of, or collateral securing, any Current Assets
Obligations;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Current Assets Obligations or
any other extension, compromise or renewal of any Current Assets
Obligations;
(d) any reduction, limitation, impairment or termination of
any Current Assets Obligations for any reason (other than the repayment
in full and in cash of all Current Assets Obligations), including any
claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and each Grantor hereby waives any right to or
claim of) any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise or unenforceability of, or any
other event or occurrence affecting, any Current Assets Obligations or
otherwise;
(e) any amendment to, rescission, waiver or other modification
of, or any consent to departure from, any of the terms of any Loan
Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral) or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty for any of the Current Assets Obligations;
or
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(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any
Borrower, any other Obligor, any surety or any guarantor.
SECTION II.8. Postponement of Subrogation, etc. Each Grantor hereby
agrees that it will not exercise any rights which it may acquire by reason of
any payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the Current Assets Termination Date. Any amount paid to any
Grantor on account of any payment made hereunder prior to the Current Assets
Termination Date shall be held in trust for the benefit of the Current Assets
Secured Parties and shall immediately be paid to the Administrative Agent for
the ratable benefit of the Current Assets Secured Parties and credited and
applied against the Current Assets Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement; provided, however, that if:
(a) such Grantor has made payment to the Administrative Agent
for the ratable benefit of the Current Assets Secured Parties of all or
any part of the Current Assets Obligations; and
(b) the Current Assets Termination Date has occurred,
each Current Assets Secured Party agrees that, at the requesting Grantor's
request, the Administrative Agent, on behalf of the Current Assets Secured
Parties, will execute and deliver to such Grantor appropriate documents (without
recourse and without representation or warranty) necessary to evidence the
transfer by subrogation to such Grantor of an interest in the Current Assets
Obligations resulting from such payment by such Grantor. In furtherance of the
foregoing, prior to the Current Assets Termination Date, each Grantor shall
refrain from taking any action or commencing any proceeding against any Borrower
or any other Obligor (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Agreement to the Administrative Agent or any other
Current Assets Secured Party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1. Representations and Warranties. Each Grantor represents
and warrants to each Current Assets Secured Party as set forth in this Article
III.
SECTION III.2. Location of Collateral, etc. All of the Inventory and
Lockboxes of such Grantor are respectively located at the places specified in
Item 3 of the Perfection Certificate. None of the Inventory has, within the four
months preceding the date of this Agreement if then owned by such Grantor, been
located at any place other than the places specified in Item 3 of the Perfection
Certificate. The place of business and chief executive office of such Grantor
and the
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office where such Grantor keeps its records concerning the Receivables, and all
originals of all chattel paper which evidence Receivables, are located at the
address set forth in Item 3 of the Perfection Certificate. Such Grantor has no
trade names other than those specified in Item 1 of the Perfection Certificate.
During the four months preceding the date hereof, such Grantor has not been
known by any legal name nor has it had a federal taxpayer identification number
different from the one set forth on Item 2 of the Perfection Certificate, nor
has such Grantor been the subject of any merger or other corporate
reorganization, except as set forth in Item 1 of the Perfection Certificate. If
the Collateral includes any Inventory located in the State of California, such
Grantor is not a "retail merchant" within the meaning of Section 9102 of the
California U.C.C. All Receivables evidenced by a promissory note or other
instrument, negotiable document or chattel paper have been duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance reasonably satisfactory to the Administrative Agent and delivered
and pledged to the Administrative Agent pursuant to Section 4.6. Such Grantor is
not a party to any Federal, State or local government contract except as set
forth in Item 13 of the Perfection Certificate.
SECTION III.3. Ownership, No Liens, etc. Such Grantor owns its
Collateral free and clear of any Lien, except for the security interest created
by this Agreement, the Lien in favor of the Fixed Assets Secured Parties and
Permitted Liens. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Administrative Agent
relating to this Agreement or as have been filed in connection with Permitted
Liens.
SECTION III.4. Possession and Control. Each Grantor has exclusive
possession and control of its Inventory except where the absence of possession
and control results from actions of such Grantor in the ordinary course of
business.
SECTION III.5. Negotiable Documents, Instruments and Chattel Paper.
Such Grantor has, contemporaneously herewith, delivered to the Administrative
Agent possession of all originals of all negotiable documents, instruments and
chattel paper currently owned or held by such Grantor (duly endorsed in blank,
if requested by the Administrative Agent).
SECTION III.6. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral owned by such Grantor the loss, impairment or
infringement of which might have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting and
has not been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and
enforceable;
(c) such Grantor has made all necessary filings and
recordations to protect its interest in such Intellectual Property
Collateral, including (if permissible) recordations of
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all of its interests in the Patent Collateral and Trademark Collateral
in the United States Patent and Trademark Office and its claims to the
Copyright Collateral in the United States Copyright Office;
(d) such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted
rights of any third party which could reasonably be expected to have a
Material Adverse Effect (except for (i) Liens created under the Loan
Documents, and (ii) Permitted Liens and except for rights of licensees
under licenses of such Intellectual Property Collateral in the ordinary
course of business); and
(e) with respect to any Intellectual Property Collateral that
has been registered, such Grantor has performed and will continue to
perform all acts and has paid and will continue to pay all required
fees and Taxes to maintain each and every such item of Intellectual
Property Collateral in full force and effect in the United States.
Such Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, licenses, technology, know-how,
processes and rights with respect to any of the foregoing necessary for or of
importance to the conduct of such Grantor's business as currently conducted.
SECTION III.7. Validity, etc. This Agreement creates a valid
first-priority security interest in the Collateral securing the payment of the
Current Assets Obligations, and
(a) in the case of Collateral comprised of negotiable
documents, instruments and chattel paper, upon the delivery of such
Collateral to the Administrative Agent, such security interest will be
a valid first-priority, perfected security interest; and
(b) in the case of all other Collateral, upon the filing of
the U.C.C. financing statements (Form U.C.C.-1) delivered by such
Grantor to the Administrative Agent with respect to such Collateral,
such security interest will be a valid first-priority, perfected
security interest.
Each Grantor has filed all U.C.C. financing statements (Form U.C.C.-1) referred
to above in the appropriate offices therefor (or has provided the Administrative
Agent with copies thereof suitable for filing in such offices) and has taken all
of the other actions referred to above necessary to create perfected and
first-priority security interests in the applicable Collateral.
SECTION III.8. Authorization, Approval, etc. Except as have been
obtained or made and are in full force and effect, no material authorization,
material approval or other action by, and no material notice to or material
filing with, any Governmental Authority or regulatory body is required either
(a) for the grant by such Grantor of the security interest granted hereby, the
pledge by such Grantor of any Collateral pursuant hereto or for the execution,
delivery and
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performance of this Agreement by such Grantor or (b) for the perfection of or
the exercise by the Administrative Agent of its rights and remedies hereunder.
SECTION III.9. Compliance with Laws. Such Grantor is in compliance with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to materially
adversely affect the value of the Collateral.
SECTION III.10. As to Intercompany Notes. In the case of each
Intercompany Note, all of such Intercompany Notes have been duly authorized,
executed, endorsed, issued and delivered, and are the legal, valid and binding
obligation of the issuers thereof, and are not in default.
ARTICLE IV
COVENANTS
SECTION IV.1. Certain Covenants. Each Grantor covenants and agrees
that, at all times prior to the Current Assets Termination Date, such Grantor
will, unless the Required Lenders shall otherwise consent in writing, perform,
comply with and be bound by the obligations set forth in this Article IV.
SECTION IV.2. As to Inventory. Such Grantor hereby agrees that it will:
(a) keep all the Inventory (other than Inventory sold in the
ordinary course of business) at the places therefor specified in
Section 3.2 or, upon 30 days' prior written notice to the
Administrative Agent, at such other places in a jurisdiction where all
representations and warranties set forth in Article III shall be true
and correct in all material respects, and all action required pursuant
to the first sentence of Section 4.6 shall have been taken with respect
to the Inventory; and
(b) pay promptly when due all property and other Taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against,
the Inventory, except to the extent the validity thereof is being
contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP have been set aside.
SECTION IV.3. As to Receivables. (a) Such Grantor will keep its chief
executive office and the office(s) where it keeps its records concerning the
Receivables, and all originals of all chattel paper which evidences Receivables,
located at the address(es) set forth in Section 3.2 and shall keep its other
places of business at the addresses set forth in Item 1 of the Perfection
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Certificate, or, upon 30 days' prior written notice to the Administrative Agent,
at such other locations in a jurisdiction where all actions required by the
first sentence of Section 4.6 shall have been taken with respect to the
Receivables and such other Collateral; not change its name or federal taxpayer
identification number except upon 30 days' prior written notice to the
Administrative Agent; hold and preserve such records; and permit representatives
of the Administrative Agent at any time during normal business hours to inspect
and make abstracts from such records.
(b) Such Grantor shall have the right to collect, demand, receive,
receipt for, sue for, compound and give acquittances for any and all amounts due
or to become due on Receivables and settle and adjust disputes and claims with
its customers and account debtors, handle returns and recoveries and grant
discounts, credits and allowances with respect to Receivables in the ordinary
course of business so long as no Default of the nature set forth in Section
8.1.9 of the Credit Agreement nor any Event of Default shall have occurred and
be continuing.
(c) All proceeds of Collateral received by such Grantor shall be
deposited into a deposit account of such Grantor, unless, during the occurrence
and continuance of a Default of the nature set forth in Section 8.1.9 of the
Credit Agreement or an Event of Default, such Grantor is otherwise notified in
writing by the Administrative Agent. Following any such notice by the
Administrative Agent to such Grantor pursuant to this Section, all proceeds of
Collateral received by such Grantor shall be delivered in kind for deposit to an
account or accounts specified by the Administrative Agent (collectively, the
"Collateral Account"). Such proceeds of Collateral received by such Grantor
shall, prior to deposit in the Collateral Account, be held separate and apart
from, and not commingled with, any other property and in express trust for the
benefit of the Administrative Agent until delivery thereof is made to the
Collateral Account.
(d) During any time that an Event of Default shall have occurred and be
continuing, the Administrative Agent shall have the right to apply any amount in
the Collateral Account to the payment of any Current Assets Obligations which
are due and payable, including any Current Assets Obligations that have been
declared due and payable pursuant to Section 8.3 of the Credit Agreement.
(e) With respect to the Collateral Account, it is hereby confirmed and
agreed that (i) deposits in each Collateral Account are subject to a security
interest as contemplated hereby, (ii) each such Collateral Account shall be
under the sole dominion and control of the Administrative Agent and (iii) the
Administrative Agent shall have the sole right of withdrawal over such
Collateral.
SECTION IV.4. As to Collateral. (a) Until the occurrence and
continuance of a Default of the nature set forth in Section 8.1.9 of the Credit
Agreement or an Event of Default, and such time as the Administrative Agent
shall notify such Grantor of the revocation of such power and authority, such
Grantor (i) may in the ordinary course of its business (except to the extent
prohibited under any Loan Document) at its own expense, refine, process, store,
transport, sell,
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lease or furnish under the contracts of service any of the Inventory normally
held by such Grantor for such purpose, and use and consume, in the ordinary
course of its business (except to the extent prohibited under the Credit
Agreement or any other Loan Document), any raw materials, including work in
process or materials normally held by such Grantor for such purpose, (ii) will,
at its own expense, endeavor to collect, as and when due, all amounts due with
respect to any Collateral, including the taking of such action with respect to
such collection as the Administrative Agent may reasonably request upon the
occurrence and during the continuance of a Default of the nature set forth in
Section 8.1.9 of the Credit Agreement or an Event of Default or, in the absence
of such request, as such Grantor may deem advisable, and (iii) may grant, in the
ordinary course of business (except to the extent prohibited under any Loan
Document), to any party obligated on any of the Collateral, any rebate, refund
or allowance to which such party may be lawfully entitled, and may accept, in
connection therewith, the return of goods, the sale or lease of which shall have
given rise to such Collateral. The Administrative Agent, however, may, at any
time upon the occurrence and during the continuance of a Default of the nature
set forth in Section 8.1.9 of the Credit Agreement or an Event of Default,
notify any parties obligated on any of the Collateral to make payment to the
Administrative Agent of any amounts due or to become due thereunder and enforce
collection of any of the Collateral by suit or otherwise and surrender, release
or exchange all or any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of the Administrative Agent, upon
the occurrence and during the continuance of a Default of the nature set forth
in Section 8.1.9 of the Credit Agreement or an Event of Default, such Grantor
will, at its own expense, notify any parties obligated on any of the Collateral
to make payment to the Administrative Agent of any amounts due or to become due
thereunder.
(b) Upon the occurrence and during the continuance of a Default of the
nature set forth in Section 8.1.9 of the Credit Agreement or an Event of
Default, the Administrative Agent is authorized to endorse, in the name of such
Grantor, any item, howsoever received by the Administrative Agent, representing
any payment on or other proceeds of any of the Collateral.
SECTION IV.5. As to Intellectual Property Collateral. Each Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral of such Grantor:
(a) such Grantor will not (i) do any act, or omit to do any
act, whereby any of the Patent Collateral may lapse or become abandoned
or dedicated to the public or unenforceable, (ii) permit any of its
licensees to, (A) fail to continue to use any of the Trademark
Collateral in order to maintain all of the Trademark Collateral in full
force free from any claim of abandonment for non-use, (B) fail to
maintain as in the past the quality of products and services offered
under all of the Trademark Collateral, (C) fail to employ all of the
Trademark Collateral registered with any Federal or State authority
with an appropriate notice of such registration, (D) adopt or use any
other Trademark which is confusingly similar or a colorable imitation
of any of the Trademark Collateral, (E) use
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any of the Trademark Collateral registered with any Federal or State
authority except for the uses for which registration or application for
registration of all of the Trademark Collateral has been made, or (F)
do or permit any act or knowingly omit to do any act whereby any of the
Trademark Collateral may lapse or become invalid or unenforceable or
(iii) do or permit any act or knowingly omit to do any act whereby any
of the Copyright Collateral or any of the Trade Secrets Collateral may
lapse or become invalid or unenforceable or placed in the public domain
except upon expiration of the end of an unrenewable term of a
registration thereof,
unless such Grantor shall either (x) reasonably and in good faith determine
(and notice of such determination shall have been delivered to the
Administrative Agent) that any of the Intellectual Property Collateral is not of
material economic value to such Grantor, or (y) in the exercise of its
reasonable business judgment determines to do otherwise;
(b) such Grantor shall notify the Administrative Agent
promptly if it knows, or has reason to know, that any application or
registration relating to any material item of the Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in
the public domain or invalid or unenforceable, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any
U.S. court) regarding such Grantor's ownership of any material item of
the Intellectual Property Collateral, its right to register the same or
to keep and maintain and enforce the same;
(c) in no event will such Grantor or any of its agents,
employees, designees or licensees file an application for the
registration of any Intellectual Property Collateral with the United
States Patent and Trademark Office or the United States Copyright
Office, unless it promptly informs the Administrative Agent, and upon
request of the Administrative Agent, executes and delivers any and all
agreements, instruments, documents and papers as the Administrative
Agent may reasonably request to evidence the Administrative Agent's
security interest in such Intellectual Property Collateral and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(d) unless such Grantor shall otherwise determine in the
exercise of its reasonable business judgment, such Grantor will take
all necessary steps, including in any proceeding before the United
States Patent and Trademark Office or the United States Copyright
Office, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, any material item of the Intellectual Property
Collateral, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and
Taxes (except to the extent that
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dedication, abandonment or invalidation is permitted under the
foregoing clauses (a), (b) and (c)); and
(e) such Grantor will, contemporaneously herewith, execute and
deliver to the Administrative Agent a Patent Security Agreement,
Trademark Security Agreement and Copyright Security Agreement in the
forms of Exhibit A, Exhibit B and Exhibit C hereto, and shall execute
and deliver to the Administrative Agent any other document required to
acknowledge or register or perfect the Administrative Agent's interest
in any material item of the Intellectual Property Collateral.
SECTION IV.6. Further Assurances, etc. Such Grantor agrees that, from
time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may reasonably request,
in order to perfect, preserve and protect any security interest granted or
purported to be granted hereby or to enable the Administrative Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, such Grantor will:
(a) if any Receivable shall be evidenced by a promissory note
or other instrument, negotiable document or chattel paper, deliver and
pledge to the Administrative Agent hereunder such promissory note,
instrument, negotiable document or chattel paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all
in form and substance satisfactory to the Administrative Agent;
(b) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or
notices (including any assignment of claim form under or pursuant to
the federal assignment of claims statute, 31 U.S.C. Section 3726, any
successor or amended version thereof or any regulation promulgated
under or pursuant to any version thereof), as may be necessary or
desirable, or as the Administrative Agent may request, in order to
perfect and preserve the security interests and other rights granted or
purported to be granted to the Administrative Agent hereby; and
(c) furnish to the Administrative Agent, from time to time at
the Administrative Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law. A carbon, photographic or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
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SECTION IV.7. As to Intercompany Notes. Each Grantor will, at all
times, keep pledged to the Administrative Agent pursuant hereto on a
first-priority, perfected basis all Intercompany Notes and all interest,
principal and other proceeds received by the Administrative Agent with respect
to the Intercompany Notes. Each Grantor agrees after any Default of the nature
referred to in Section 8.1.9 of the Credit Agreement or any Event of Default
shall have occurred and be continuing, promptly upon receipt of notice thereof
by such Grantor and without any request therefor by the Administrative Agent, to
deliver (properly endorsed where required hereby or requested by the
Administrative Agent) to the Administrative Agent all interest, all principal,
all other cash payments and all proceeds of the Intercompany Notes. Each Grantor
will not amend, supplement or otherwise modify, or permit, consent or suffer to
occur any amendment, supplement or modification of any terms or provisions
contained in, or applicable to, any Intercompany Notes included in the
Collateral if the effect thereof is to impair, or is in any manner adverse to,
the rights or interests of the Administrative Agent or any other Current Assets
Secured Party hereunder or under any Loan Document, without the prior written
consent of the Administrative Agent.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION V.1. Administrative Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Administrative Agent as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the
Administrative Agent's discretion, upon the occurrence and during the
continuance of a Default of the nature set forth in Section 8.1.9 of the Credit
Agreement or an Event of Default, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise and
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent with respect to any of
the Collateral; and
(d) to perform the affirmative obligations of such Grantor
hereunder (including all obligations of such Grantor pursuant to
Section 4.6).
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Such Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION V.2. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by such
Grantor pursuant to Section 6.3.
SECTION V.3. Administrative Agent Has No Duty. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest (on behalf
of the Current Assets Secured Parties) in the Collateral and shall not impose
any duty on it to exercise any such powers. Except for reasonable care of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Administrative Agent shall have no duty as to any Collateral
or responsibility for:
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any investment property, whether or not the Administrative Agent has
or is deemed to have knowledge of such matters; or
(b) taking any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.
SECTION V.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, that the Administrative Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral, if it takes such action for that purpose
as any Grantor reasonably requests in writing from time to time, but failure of
the Administrative Agent to comply with any such request at any time shall not
in itself be deemed a failure to exercise reasonable care. If an Event of
Default has occurred and is continuing, the Administrative Agent shall not be
required to comply with any request of the Grantor with respect to the matters
described in this Section.
ARTICLE VI
REMEDIES
SECTION VI.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may
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(i) require each Grantor to, and such Grantor hereby
agrees that it will, at its expense and upon request of the
Administrative Agent forthwith, assemble all or part of the
Collateral as directed by the Administrative Agent and make it
available to the Administrative Agent at a place to be
designated by the Administrative Agent which is reasonably
convenient to both parties, and
(ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's
offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Administrative
Agent may deem commercially reasonable. Each Grantor agrees
that, to the extent notice of sale shall be required by law,
at least ten days prior notice to such Grantor of the time and
place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification.
The Administrative Agent shall not be obligated to make any
sale of such Collateral regardless of notice of sale having
been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned.
(b) All cash proceeds received by the Administrative Agent in
respect of any sale of, collection from or other realization upon all
or any part of the Collateral shall be applied by the Administrative
Agent against all or any part of the Current Assets Obligations as
follows:
(i) first, to the payment of any amounts payable to
the Administrative Agent pursuant to Section 10.3 of the
Credit Agreement and Section 6.3;
(ii) second, to the equal and ratable payment of
Current Assets Obligations, in accordance with each Current
Assets Secured Party's Current Assets Obligations owing to it
under or pursuant to the Credit Agreement or any other Loan
Document, or under or pursuant to any Rate Protection
Agreement included in the Current Assets Obligations, as to
each Current Assets Secured Party, applied
(A) first to fees and expense reimbursements
then due to such Current Assets Secured Party,
(B) then to interest due to such Current
Assets Secured Party,
(C) then to pay or prepay principal of the
Current Assets Loans and Swing Line Loans owing to,
or to reduce the "credit exposure" of,
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such Current Assets Secured Party under any Rate
Protection Agreement, as the case may be, and
(D) then to pay the remaining outstanding
Current Assets Obligations and Cash Collateralize all
Letter of Credit Outstandings;
(iii) third, without duplication of any amounts paid
pursuant to clause (b)(ii) above, to the Indemnified Parties
to the extent of any amounts owing pursuant to Section 10.4 of
the Credit Agreement; and
(iv) fourth, to be held as additional collateral
security until the Current Assets Termination Date, after
which such remaining cash proceeds shall be paid over to the
applicable Grantor (or the Fixed Assets Secured Parties, if
applicable) or to whomsoever may be lawfully entitled to
receive such surplus.
For purposes of this Agreement, the "credit exposure" at any time of
any Current Assets Secured Party with respect to a Rate Protection
Agreement to which such Current Assets Secured Party is a party shall
be determined at such time in accordance with the customary methods of
calculating credit exposure under similar arrangements by the
counterparty to such arrangements, taking into account potential
interest rate movements and the respective termination provisions and
notional principal amount and term of such Rate Protection Agreement.
(c) The Administrative Agent may
(i) transfer all or any part of the Collateral into
the name of the Administrative Agent or its nominee, with or
without disclosing that such Collateral is subject to the lien
and security interest hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Administrative Agent of any
amount due or to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts or other writings in
such Grantor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral
and
-21-
<PAGE> 22
(vi) execute (in the name, place and stead of such
Grantor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
SECTION VI.2. Compliance with Restrictions. Each Grantor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and
purchasers to Persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral) or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority or official, and such
Grantor further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Administrative Agent be liable nor accountable to such Grantor for
any discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
SECTION VI.3. Indemnity and Expenses. Each Grantor hereby jointly and
severally indemnifies and holds harmless the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or resulting
from this Agreement (including enforcement of this Agreement), except claims,
losses, or liabilities resulting from the Administrative Agent's gross
negligence or wilful misconduct and, each Grantor will, upon demand pay to the
Administrative Agent the amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel and of any experts and
agents, which the Administrative Agent may incur, in each case, in connection
with:
(a) the administration of this Agreement;
(b) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the
Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by any Grantor to perform or observe any of
the provisions hereof.
-22-
<PAGE> 23
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION VII.1. Loan Document. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION VII.2. Amendments; etc. No amendment to or waiver of any
provision of this Agreement nor consent to any departure by any Grantor herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be) and each Grantor and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION VII.3. Protection of Collateral. The Administrative Agent may
from time to time, at its option, perform any act which each Grantor agrees
hereunder to perform and which such Grantor shall fail to perform after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default) and the Administrative Agent may from time to time take any other
action which the Administrative Agent reasonably deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein.
SECTION VII.4. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and addressed,
delivered or transmitted, if to any Grantor, at the address or facsimile number
of the Company provided for in the Credit Agreement, and, if to the
Administrative Agent, at the address or facsimile number provided for in the
Credit Agreement, or as to any such party at such other address or facsimile
number as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. Any notice, (a)
if mailed and properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when received, or
(b) if transmitted by facsimile, shall be deemed given when transmitted (and
telephonic confirmation of receipt thereof has been received).
SECTION VII.5. Headings. The various headings of this Agreement are
inserted for convenience only, and shall not affect the meaning or
interpretation of this Agreement or any provisions thereof.
SECTION VII.6. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION VII.7. Counterparts; Effectiveness. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original (whether such counterpart is originally executed or an
electronic copy of an original) and all of which shall
-23-
<PAGE> 24
constitute together but one and the same agreement. This Agreement shall become
effective as of the date first above written and be binding upon a Grantor when
a counterpart hereof executed on behalf of such Grantor shall have been received
by the Administrative Agent.
SECTION VII.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCLUDING THE LAW OF CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
SECTION VII.9. Additional Grantors. Upon the execution and delivery by
any other Person of an instrument in the form of Annex I hereto, together with
each Schedule thereto, such Person shall become a "Grantor" hereunder with the
same force and effect as if originally named as a Grantor herein. The execution
and delivery of any such instrument shall not require the consent of any other
Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor
as a party to this Agreement.
SECTION VII.10. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-24-
<PAGE> 25
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
STERLING CHEMICALS, INC.
By
--------------------------------------
Title:
STERLING CANADA, INC.
By
--------------------------------------
Title:
STERLING PULP CHEMICALS US, INC.
By
--------------------------------------
Title:
STERLING PULP CHEMICALS, INC.
By
--------------------------------------
Title:
STERLING FIBERS, INC.
By
--------------------------------------
Title:
<PAGE> 26
STERLING CHEMICALS ENERGY, INC.
By
--------------------------------------
Title:
STERLING CHEMICALS INTERNATIONAL, INC.
By
-------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative Agent, on behalf
of the Current Assets Secured Parties
By
--------------------------------------
Title:
<PAGE> 27
SCHEDULE I
to Security Agreement
([NAME OF GRANTOR])
Perfection Certificate
See Exhibit M to the Credit Agreement
<PAGE> 28
SCHEDULE II
to Security Agreement
([NAME OF GRANTOR])
Item A. Patents
Issued Patents
--------------
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ----------- ------
Pending Patent Applications
---------------------------
Serial No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
Patent Applications in Preparation
----------------------------------
Expected
Docket No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- ------
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- -------- --------- ---------- -------
<PAGE> 29
SCHEDULE III
to Security Agreement
([NAME OF GRANTOR])
Item A. Trademarks
Registered Trademarks
---------------------
Trademark Registration No. Registration Date
- --------- ---------------- -----------------
Pending Trademark Applications
------------------------------
Trademark Serial No. Filing Date
- --------- ---------- -----------
Trademark Applications in Preparation
-------------------------------------
Expected Products/
Trademark Docket No. Filing Date Services
- --------- ---------- ----------- --------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Date Date
- --------- -------- -------- --------- ----------
<PAGE> 30
SCHEDULE IV
to Security Agreement
([NAME OF GRANTOR])
Item A. Copyrights
Registered Copyrights
---------------------
Registration No. Registration Date Author(s) Title
- ---------------- ----------------- --------- -----
Copyright Pending Registration Applications
-------------------------------------------
Serial No. Filing Date Author(s) Title
- ---------- ----------- --------- -----
Copyright Registration Applications in Preparation
---------------------------------------------------
Expected
Docket No. Filing Date Author(s) Title
- ---------- ----------- --------- -----
Item B. Copyright Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- -------- --------- ---------- -------
<PAGE> 31
SCHEDULE V
to Security Agreement
([NAME OF GRANTOR])
Trade Secret or Know-How Licenses
---------------------------------
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- -------- --------- ---------- -------
<PAGE> 32
SCHEDULE VI
to Pledge and Security Agreement
([NAME OF GRANTOR])
Intercompany Notes
- ------------------
Maximum Amount of
Intercompany Loans
Maker Evidenced Thereby Date
- ----- ----------------- ----
<PAGE> 33
EXHIBIT A
to Security Agreement
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of
__________ __, ____, is made between ___________________, a ____________________
(the "Grantor"), and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Current Assets Secured Parties.
W I T N E S S E T H :
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Current Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement
and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Patent
Collateral (as defined below) to secure all Current Assets Obligations;
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
<PAGE> 34
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Current Assets Lenders, the Swing Line Lender and the Issuer to make Current
Assets Loans and Swing Line Loans and issue Letters of Credit to the Borrowers
pursuant to the Credit Agreement and (ii) the Current Assets Secured Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Current Assets Secured Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Current Assets Obligations, the Grantor does hereby pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Current Assets
Secured Party, all of the following property (the "Patent Collateral"), whether
now owned or hereafter acquired or existing by it:
(a) all letters patent and applications for letters patent in
the United States, including all patent applications in preparation for
filing in the United States and including each patent and patent
application referred to in Item A of Schedule I attached hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(c) all patent licenses in the United States, including each
patent license referred to in Item B of Schedule I attached hereto; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, referred to in clauses (a) or (b)
above, and for breach or enforcement of any patent license referred to
in clause (c) above.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Patent Collateral with the United States Patent
and Trademark Office. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Administrative Agent for its benefit and the benefit of each Current Assets
Secured Party under the Security Agreement. The Security Agreement (and all
rights and remedies of the Administrative Agent and each Current Assets Secured
Party thereunder) shall remain in full force and effect in accordance with its
terms.
Exhibit A
-2-
<PAGE> 35
SECTION 4. Release of Security Interest. Upon (i) the sale, transfer or
other disposition of any Patent Collateral in accordance with the Credit
Agreement or (ii) the Current Assets Termination Date, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Patent Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent with respect
to the security interest in the Patent Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Grantor
shall have been received by the Administrative Agent.
SECTION 8. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.
Exhibit A
-3-
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF GRANTOR]
By
----------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative Agent, on behalf
of the Current Assets Secured Parties
By
----------------------------------
Title:
Exhibit A
-4-
<PAGE> 37
SCHEDULE I
to Patent Security Agreement
Item A. Patents
Issued Patents
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ---------- -----
Pending Patent Applications
---------------------------
Serial No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
Patent Applications in Preparation
----------------------------------
Expected
Docket No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- ------
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- -------- --------- ---------- -------
<PAGE> 38
EXHIBIT B
to Security Agreement
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of
__________ __, ____, is made between ___________________, a ____________________
(the "Grantor"), and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Current Assets Secured Parties.
W I T N E S S E T H :
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Current Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement
and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Trademark
Collateral (as defined below) to secure all Current Assets Obligations;
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
<PAGE> 39
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Current Assets Lenders, the Swing Line Lender and the Issuer to make Current
Assets Loans and Swing Line Loans and issue Letters of Credit to the Borrowers
pursuant to the Credit Agreement, and (ii) the Current Assets Secured Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Current Assets Secured Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Current Assets Obligations, the Grantor does hereby pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Current Assets
Secured Party, all of the following property (the "Trademark Collateral"),
whether now owned or hereafter acquired or existing by it:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like
nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the United
States or hereafter adopted or acquired in the United States, whether
currently in use or not, all registrations and recordings thereof and
all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
office or agency of the United States of America or any State,
including those referred to in Item A of Schedule I attached hereto;
(b) all Trademark licenses in the United States, including
each Trademark license referred to in Item B of Schedule I attached
hereto;
(c) all reissues, extensions or renewals of any of the items
described in clause (a) and (b);
(d) all of the goodwill of the business connected with the use
of, and symbolized by the items described in, clauses (a) and (b); and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by the Grantor against third parties for
past, present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license referred to in clauses (a)
Exhibit B
-2-
<PAGE> 40
through (c) above, or for any injury to the goodwill associated with
the use of any such Trademark or for breach or enforcement of any such
Trademark license.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Trademark Collateral with the United States
Patent and Trademark Office. The security interest granted hereby has been
granted as a supplement to, and not in limitation of, the security interest
granted to the Administrative Agent for its benefit and the benefit of each
Current Assets Secured Party under the Security Agreement. The Security
Agreement (and all rights and remedies of the Administrative Agent and each
Current Assets Secured Party thereunder) shall remain in full force and effect
in accordance with its terms.
SECTION 4. Release of Security Interest. Upon (i) the sale, transfer or
other disposition of any Trademark Collateral in accordance with the Credit
Agreement or (ii) the Current Assets Termination Date, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Trademark Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent with respect
to the security interest in the Trademark Collateral granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Grantor
shall have been received by the Administrative Agent.
SECTION 8. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.
Exhibit B
-3-
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF GRANTOR]
By
-------------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC. as
Administrative Agent, on behalf of
the Current Assets Secured Parties
By
-------------------------------------
Title:
Exhibit B
-4-
<PAGE> 42
SCHEDULE I
to Trademark Security Agreement
Item A. Trademarks
Registered Trademarks
---------------------
Trademark Registration No. Registration Date
- --------- ---------------- ------------------
Pending Trademark Applications
------------------------------
Trademark Serial No. Filing Date
- --------- ---------- -----------
Trademark Applications in Preparation
-------------------------------------
Expected Products/
Trademark Docket No. Filing Date Services
- --------- --------- ----------- ---------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Date Date
- --------- -------- -------- --------- ----------
<PAGE> 43
EXHIBIT C
to Security Agreement
COPYRIGHT SECURITY AGREEMENT
This COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of
__________ __, ____, is made between ___________________, a ____________________
(the "Grantor"), and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Current Assets Secured Parties.
W I T N E S S E T H :
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Current Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement
and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Copyright
Collateral (as defined below) to secure all Current Assets Obligations;
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
<PAGE> 44
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Current Assets Lenders, the Swing Line Lender and the Issuer to make Current
Assets Loans and Swing Line Loans and issue Letters of Credit to the Borrowers
pursuant to the Credit Agreement, and (ii) the Current Assets Secured Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Current Assets Secured Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Current Assets Obligations, the Grantor does hereby pledge and
hypothecate to the Administrative Agent, and grant to the Administrative Agent a
security interest in, for its benefit and the benefit of each Current Assets
Secured Party, all of the following property (the "Copyright Collateral"),
whether now owned or hereafter acquired or existing by it, being all copyrights
of the Grantor, whether statutory or common law, registered or unregistered, now
or hereafter in force in the United States including all of the Grantor's right,
title and interest in and to all copyrights registered in the United States
Copyright Office and also including the copyrights referred to in Item A of
Schedule I attached hereto, and all applications for registration thereof,
whether pending or in preparation, all copyright licenses in the United States,
including each copyright license referred to in Item B of Schedule I attached
hereto, the right to sue for past, present and future infringements of any
thereof, all rights corresponding thereto in the United States, all extensions
and renewals of any thereof and all proceeds of the foregoing, including
licenses, royalties, income, payments, claims, damages and proceeds of suit.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Copyright Collateral with the United States
Copyright Office. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Administrative Agent for its benefit and the benefit of each Current Assets
Secured Party under the Security Agreement. The Security Agreement (and all
rights and remedies of the Administrative Agent and each Current Assets Secured
Party thereunder) shall remain in full force and effect in accordance with its
terms.
SECTION 4. Release of Security Interest. Upon (i) the sale, transfer or
other disposition of any Copyright Collateral in accordance with the Credit
Agreement or (ii) the Current Assets Termination Date, the Administrative Agent
shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Copyright Collateral which has been granted
hereunder.
Exhibit C
-2-
<PAGE> 45
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Administrative Agent with respect
to the security interest in the Copyright Collateral granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Grantor
shall have been received by the Administrative Agent.
SECTION 8. Agreement Subject to Revolver Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Revolver Intercreditor Agreement.
Exhibit C
-3-
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF GRANTOR]
By
-----------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC. as
Administrative Agent, on behalf of
the Current Assets Secured Parties
By
-----------------------------------
Title:
Exhibit C
-4-
<PAGE> 47
SCHEDULE I
to Copyright Security Agreement
Item A. Copyrights
Registered Copyrights
---------------------
Registration No. Registration Date Author(s) Title
- ---------------- ----------------- --------- -----
Copyright Pending Registration Applications
-------------------------------------------
Serial No. Filing Date Author(s) Title
- ---------- ----------- --------- -----
Copyright Registration Applications in Preparation
--------------------------------------------------
Expected
Docket No. Filing Date Author(s) Title
- ---------- ----------- --------- -----
Item B. Copyright Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- --------- --------- ----------- -------
<PAGE> 48
EXHIBIT D
to Security Agreement
PROMISSORY NOTE
$2,000,000 July __, 1999
FOR VALUE RECEIVED, the undersigned, [FOREIGN RESTRICTED SUBSIDIARY], a
_______________ corporation (the "Maker"), promises to pay to the order of
______________, a _______________ corporation (the "Payee"), on demand, TWO
MILLION DOLLARS ($2,000,000) or, if less, the aggregate unpaid principal amount
of all intercompany loans made by the Payee to the Maker. Terms not otherwise
defined herein are defined in the Revolving Credit Agreement, dated as of July
__, 1999 (together with all amendments, supplements and other modifications, if
any, from time to time hereafter made thereto, the "Credit Agreement"), among
the Payee, each other Borrower party thereto, the various financial institutions
as are, or may from time to time become, parties thereto (the "Lenders"), DLJ
Capital Funding, Inc., as the Syndication Agent, Credit Suisse First Boston, as
the Documentation Agent, and The CIT Group/Business Credit, Inc., as the
Administrative Agent.
The unpaid principal amount of this promissory note (this "Note") from
time to time outstanding shall bear interest at a rate of interest equal to such
rate per annum as shall be agreed upon from time to time by the Payee and the
Maker payable at such times as shall be agreed upon by the Payee and the Maker,
and all payments of principal of and interest on this Note shall be payable in
lawful currency of the United States of America. All such payments and may be
recorded on the books and records of the Maker and the Payee and may be recorded
on the grid attached hereto by the holder hereof (including recordations made by
the Administrative Agent as pledgee). Upon notice from the Administrative Agent
that a Default of the nature referred to in Section 8.1.9 of the Credit
Agreement or an Event of Default has occurred and is continuing under the Credit
Agreement, the Maker shall make such payments, in same day funds, to such other
account as the Administrative Agent shall direct in such notice.
This Note is one of the Pledged Notes referred to in the Security
Agreement, and evidences Indebtedness permitted under the Credit Agreement. Upon
the occurrence and during the continuance of an Event of Default under the
Credit Agreement, and notice thereof having been delivered by the Administrative
Agent to the Maker, the Administrative Agent shall have all rights of the Payee
to collect and make demand, and enforce all rights with respect to, the
Indebtedness evidenced by this Note.
<PAGE> 49
Payee agrees that this Note is subordinate in right of payment to all
Obligations of Maker and all obligations of Maker in respect of Indebtedness
outstanding under the Senior Secured Note Documents.
Reference is made to the Credit Agreement for a description of the
Security Agreements pursuant to which this Note has been pledged to the
Administrative Agent as security for the Obligations outstanding from time to
time under the Credit Agreement and each other Loan Document.
In addition to, but not in limitation of, the foregoing, the Maker
further agrees to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder (including the Administrative Agent as
pledgee) of this Note endeavoring to collect any amounts payable hereunder which
are not paid when due, whether by acceleration or otherwise.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCLUDING THE LAW OF CONFLICTS BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS
NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[NAME OF MAKER]
By:
---------------------------------
Title:
---------------------------
Pay to the order of:
-------------------------------------
[NAME OF PAYEE]
By:
---------------------------------
Title:
---------------------------
<PAGE> 50
GRID
Intercompany Loans made by _______ to _______ and payments of principal
of such Loans.
<TABLE>
<CAPTION>
===============================================================================
Amount of Amount of Outstanding
Intercompany Principal Principal Notation
Date Loan Payment Balance Made By
- ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
- ------------ ------------- ------------- ------------- -------------
===============================================================================
</TABLE>
<PAGE> 51
ANNEX I
to Security Agreement
SUPPLEMENT TO SECURITY AGREEMENT
THIS SUPPLEMENT NO. ___, dated as of ________ __, ____ (this
"Supplement"), to the Current Assets Security Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement"), among the initial signatories thereto
and each other Person which from time to time thereafter became a party thereto
pursuant to Section 7.9 thereof (each, individually, a "Grantor", and,
collectively, the "Grantors"), and THE CIT GROUP/BUSINESS CREDIT, INC., as
Administrative Agent for each of the Current Assets Secured Parties (such
capitalized term and all other capitalized terms being used herein with the
meanings provided, or incorporated by reference, in the Security Agreement), is
made by the undersigned.
W I T N E S S E T H:
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation (the "Company"), Sterling Canada, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, as a condition precedent to the making and maintenance of the
Credit Extensions under the Credit Agreement, the undersigned is required to
execute and deliver this Supplement;
WHEREAS, the undersigned has duly authorized the execution, delivery
and performance of this Supplement and the Security Agreement;
WHEREAS, the Security Agreement provides that additional parties may
become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement;
<PAGE> 52
WHEREAS, pursuant to the provisions of Section 7.9 of the Security
Agreement, the undersigned is becoming a Grantor under the Security Agreement;
and
WHEREAS, the undersigned desires to become a Grantor under the Security
Agreement in order to induce the Current Assets Secured Parties to continue to
make and maintain Current Assets Loans and Swing Line Loans and issue and
maintain Letters of Credit under the Credit Agreement as consideration therefor;
NOW, THEREFORE, the undersigned agrees, for the benefit of each Current
Assets Secured Party, as follows:
SECTION 1. In accordance with the Security Agreement, the undersigned
by its signature below becomes a Grantor under the Security Agreement with the
same force and effect as if it were an original signatory thereto as a Grantor.
In furtherance of the foregoing, each reference to a "Grantor" in the Security
Agreement shall be deemed to include the undersigned and the Schedules hereto
shall be deemed to be Schedules thereto.
SECTION 2. The undersigned hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by the undersigned
and constitutes a legal, valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and general equitable
principles.
SECTION 3. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect in accordance with its terms.
SECTION 4. Any provision of this Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Supplement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 5. Without limiting the provisions of the Credit Agreement (or
any other Loan Document, including the Security Agreement), the undersigned
agrees to reimburse the Administrative Agent for its reasonable out-of-pocket
expenses in connection with this Supplement, including reasonable attorneys'
fees and expenses of the Administrative Agent.
SECTION 6. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCLUDING THE LAW OF
CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS, EXCEPT
TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
Annex I
-2-
<PAGE> 53
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 7. This Supplement hereby incorporates by reference the
provisions of the Security Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Security
Agreement.
SECTION 8. This Supplement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original (whether
such counterpart is originally executed or an electronic copy of an original)
and all of which shall constitute together but one and the same agreement. This
Supplement shall become effective and binding as of the date first above written
when a counterpart hereof executed on behalf of the Grantor shall have been
received by the Administrative Agent.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
[NAME OF ADDITIONAL GRANTOR]
By
------------------------------
Title:
ACKNOWLEDGED AND ACCEPTED BY:
THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative Agent, on behalf of the
Current Assets Secured Parties
By
--------------------------------
Title:
Annex I
-3-
<PAGE> 54
SCHEDULE I
to Supplement No. __
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Perfection Certificate
See Exhibit M to the Credit Agreement
<PAGE> 55
SCHEDULE II
to Supplement No. ___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Item A. Patents
Issued Patents
--------------
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ----------- -----
Pending Patent Applications
---------------------------
Serial No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
Patent Applications in Preparation
----------------------------------
Expected
Docket No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- -------- --------- ---------- -------
<PAGE> 56
SCHEDULE III
to Supplement No. ___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Item A. Trademarks
Registered Trademarks
---------------------
Trademark Registration No. Registration Date
- --------- ---------------- -----------------
Pending Trademark Applications
-------------------------------
Trademark Serial No. Filing Date
- --------- ---------- -----------
Trademark Applications in Preparation
-------------------------------------
Expected Products/
Trademark Docket No. Filing Date Services
- --------- ---------- ----------- ---------
Item B. Trademark Licenses
Effective Expiration
Trademark Licensor Licensee Date Date
- --------- -------- -------- --------- ----------
<PAGE> 57
SCHEDULE IV
to Supplement No. ___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Item A. Copyrights
Registered Copyrights
---------------------
Registration No. Registration Date Author(s) Title
- ---------------- ----------------- --------- -----
Copyright Pending Registration Applications
-------------------------------------------
Serial No. Filing Date Author(s) Title
- ---------- ----------- --------- ------
Copyright Registration Applications in Preparation
--------------------------------------------------
Expected
Docket No. Filing Date Author(s) Title
- --------- ----------- --------- -----
Item B. Copyright Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- -------- --------- ---------- -------
<PAGE> 58
SCHEDULE V
to Supplement No. ___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Trade Secret or Know-How Licenses
---------------------------------
Effective Expiration Subject
Licensor Licensee Date Date Matter
- -------- -------- --------- ---------- -------
<PAGE> 1
EXHIBIT 4.7
PARENT PLEDGE AGREEMENT
THIS PARENT PLEDGE AGREEMENT (as amended, supplemented, amended and
restated or otherwise modified from time to time, this "Pledge Agreement"),
dated as of July 23, 1999, is made between STERLING CHEMICALS HOLDINGS, INC., a
Delaware corporation (the "Pledgor"), and THE CIT GROUP/BUSINESS CREDIT, INC.,
as Administrative Agent (such capitalized term and all other capitalized terms
not otherwise defined herein shall have the meanings provided for or
incorporated by reference in Article I below) for each of the Fixed Assets
Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of the date
hereof (together with all amendments, supplements, restatements and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), among Sterling Chemicals, Inc., a Delaware corporation (the
"Company"), Sterling Canada, Inc., a Delaware corporation, Sterling Pulp
Chemicals US, Inc., a Delaware corporation, Sterling Pulp Chemicals, Inc., a
Georgia corporation, Sterling Fibers, Inc., a Delaware corporation, Sterling
Chemicals Energy, Inc., a Delaware corporation, and Sterling Chemicals
International, Inc., a Delaware corporation, (collectively, the "Borrowers"),
the various financial institutions as are, or may from time to time become,
parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the Syndication
Agent, Credit Suisse First Boston, as the Documentation Agent, and the
Administrative Agent, the Lenders and the Issuer have extended Fixed Asset Loan
Commitments to make Fixed Asset Loans to the Borrowers;
WHEREAS, the Pledgor owns 100% of the Capital Securities of the
Company;
WHEREAS, as a condition precedent to the making of any Credit Extension
under the Credit Agreement, the Pledgor is required to execute and deliver this
Pledge Agreement;
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement; and
WHEREAS, it is in the best interest of the Pledgor to execute this
Pledge Agreement inasmuch as the Pledgor will derive substantial direct and
indirect benefits from the Credit Extensions made from time to time to the
Borrowers by the Lenders pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Fixed Assets Lenders to make
Fixed Assets
<PAGE> 2
Loans (including the initial Fixed Assets Loans) to the Borrowers pursuant to
the Credit Agreement, the Pledgor and the Administrative Agent, for the ratable
benefit of each Fixed Assets Secured Party, agree as follows:
ARTICLE I
DEFINITIONS
SECTION I.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrowers" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Company" is defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends,
Capital Securities resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers or
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other Capital
Securities constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business, but shall not include liquidating dividends.
"Fixed Assets Termination Date" means the date on which all Fixed
Assets Obligations have been paid in full in cash, all Rate Protection
Agreements where the counterparty is a Fixed Assets Lender (or its Affiliate)
have been terminated and the Fixed Assets Loan Commitment shall have terminated.
"Lenders" is defined in the first recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Property" means all Pledged Shares, all other pledged Capital
Securities, all other equity securities, all assignments of any amounts due or
to become due with respect
-2-
<PAGE> 3
thereto, all other instruments which are now being delivered by the Pledgor to
the Administrative Agent or may from time to time hereafter be delivered by the
Pledgor to the Administrative Agent for the purpose of pledge under this Pledge
Agreement or any other Loan Document, and all proceeds of any of the foregoing.
"Pledged Share Issuer" means each Person identified in Attachment 1
hereto as the issuer of the Pledged Shares identified opposite the name of such
Person.
"Pledged Shares" means the Capital Securities of any Pledged Share
Issuer in the amounts and percentages listed in Attachment 1 hereto.
"Pledgor" is defined in the preamble.
"Securities Act" is defined in clause (a) of Section 6.2.
SECTION I.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION I.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Credit Agreement or the context otherwise requires, terms for which meanings
are provided in the U.C.C. are used in this Pledge Agreement, including its
preamble and recitals, with such meanings.
ARTICLE II
PLEDGE
SECTION II.1. Grant of Security Interest. The Pledgor hereby pledges,
hypothecates, assigns, charges, delivers and transfers to the Administrative
Agent, for the ratable benefit of each of the Fixed Assets Secured Parties, and
hereby grants to the Administrative Agent, for the ratable benefit of the Fixed
Assets Secured Parties, a continuing security interest in, all of the following
property (collectively, the "Collateral"):
(a) all issued and outstanding Capital Securities of each
Pledged Share Issuer identified in Attachment 1 hereto;
-3-
<PAGE> 4
(b) all other Pledged Shares issued from time to time;
(c) all other Pledged Property, whether now or hereafter
delivered to the Administrative Agent in connection with this Pledge
Agreement;
(d) all Dividends, Distributions and other payments and rights
with respect to any Pledged Property; and
(e) all proceeds of any of the foregoing.
SECTION II.2. Security for Fixed Assets Obligations. This Pledge
Agreement secures the payment in full and in cash of all Fixed Assets
Obligations.
SECTION II.3. Delivery of Pledged Property. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares shall be delivered to and held by or on behalf of the Administrative
Agent pursuant hereto, shall be in suitable form for transfer by delivery and
shall be accompanied by all necessary instruments of transfer or assignment,
duly executed in blank.
SECTION II.4. Dividends on Pledged Shares. In the event that any
Dividend is to be paid on any Pledged Share at a time when (x) no Default of the
nature referred to in Section 8.1.9 of the Credit Agreement has occurred and is
continuing, and (y) no Event of Default has occurred and is continuing, such
Dividend may be paid directly to the Pledgor. If any such Default or Event of
Default has occurred and is continuing, then any such Dividend shall be paid
directly to the Administrative Agent.
SECTION II.5. Continuing Security Interest. This Pledge Agreement shall
create a continuing security interest in the Collateral and shall:
(a) remain in full force and effect until the Fixed Assets
Termination Date;
(b) be binding upon the Pledgor and its successors,
transferees and assigns; and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Fixed Assets
Secured Parties.
Without limiting the foregoing clause (c), any Fixed Assets Lender may assign or
otherwise transfer (in whole or in part) any Fixed Assets Loan Commitment or any
Fixed Assets Loan held by it to any other Person or entity, and such other
Person or entity shall thereupon become vested with all the rights and benefits
in respect thereof granted to such Fixed Assets Lender under any Loan Document
(including this Pledge Agreement) or otherwise, subject, however, to any
contrary provisions in such assignment or transfer, and to the provisions of
Section 10.11 of the Credit Agreement. The security interest granted herein
shall terminate and all rights to the Collateral shall revert to the Pledgor on
the Fixed Assets Termination
-4-
<PAGE> 5
Date. Upon any such termination or release of Collateral, the Administrative
Agent will, at the Pledgor's sole expense, deliver to the Pledgor, without any
representations, warranties or recourse of any kind whatsoever, all certificates
and instruments representing or evidencing all Pledged Shares, together with all
other Collateral held by the Administrative Agent hereunder, and execute and
deliver to the Pledgor such documents as the Pledgor shall reasonably request to
evidence such termination or release.
SECTION II.6. Waiver, etc. The Pledgor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Fixed Assets Obligations and this Pledge Agreement and any requirement that any
Fixed Assets Secured Party protect, secure, perfect or insure any Lien, or any
property subject thereto, or exhaust any right or take any action against any
Obligor or any other Person (including any other guarantor) or entity or any
collateral securing the Fixed Assets Obligations of any Obligor, as the case may
be.
SECTION II.7. Security Interest Absolute. All rights of the
Administrative Agent and the Liens granted to the Administrative Agent
hereunder, and all obligations of the Pledgor hereunder, shall be absolute and
unconditional, irrespective of
(a) any lack of validity or enforceability of any Loan
Document,
(b) the failure of any Fixed Assets Secured Party
(i) to assert any claim or demand or to enforce any
right or remedy against the Pledgor, any other Obligor or any
other Person under the provisions of the Loan Documents or
otherwise, or
(ii) to exercise any right or remedy against any
guarantor of, or collateral securing, any Fixed Assets
Obligations of the Pledgor or any other Obligor,
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Fixed Assets Obligations or any
other extension, compromise or renewal of any Obligation of the Pledgor
or any other Obligor,
(d) any reduction, limitation, impairment or termination of
any Fixed Assets Obligation of the Pledgor or any other Obligor for any
reason (other than the repayment in full and in cash of all Fixed
Assets Obligations), including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and the Pledgor
hereby waives any right to or claim of) any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise or
unenforceability of, or any other event or occurrence affecting, any
Fixed Assets Obligation of the Pledgor, any other Obligor or otherwise,
-5-
<PAGE> 6
(e) any amendment to, rescission, waiver or other modification
of, or any consent to departure from, any of the terms of the Loan
Documents,
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Fixed Assets Obligations,
or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Pledgor, any other Obligor, any surety or any guarantor.
SECTION II.8. Postponement of Subrogation, etc. The Pledgor will not
exercise any rights which it may acquire by reason of any payment made
hereunder, whether by way of subrogation, reimbursement or otherwise, until the
Fixed Assets Termination Date. Any amount paid to the Pledgor on account of any
payment made hereunder prior to the Fixed Assets Termination Date shall be held
in trust for the benefit of the Fixed Assets Secured Parties and shall
immediately be paid to the Administrative Agent for the ratable benefit of the
Fixed Assets Secured Parties, and credited and applied against the Fixed Assets
Obligations, whether matured or unmatured, in accordance with the terms of the
Credit Agreement; provided, however, that if
(a) the Pledgor has made payment to the Administrative Agent
for the ratable benefit of the Fixed Assets Secured Parties of all or
any part of the Fixed Assets Obligations, and
(b) the Fixed Assets Termination Date has occurred,
each Fixed Assets Secured Party agrees that, at the Pledgor's request, the
Administrative Agent, on behalf of the Fixed Assets Secured Parties, will
execute and deliver to the Pledgor appropriate documents (without recourse and
without representation or warranty) necessary to evidence the transfer by
subrogation to the Pledgor of an interest in the Fixed Assets Obligations
resulting from such payment by the Pledgor. In furtherance of the foregoing,
prior to the Fixed Assets Termination Date, the Pledgor shall refrain from
taking any action or commencing any proceeding against any other Obligor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this Pledge
Agreement to the Administrative Agent or any Fixed Assets Secured Party.
-6-
<PAGE> 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1. Warranties, etc. The Pledgor represents and warrants
unto each Fixed Assets Secured Party, as at the date of each pledge and delivery
hereunder (including each pledge and delivery of Pledged Shares) by the Pledgor
to the Administrative Agent of any Collateral, as set forth in this Article.
SECTION III.2. Organization, etc. The Pledgor is validly organized and
existing and in good standing under the laws of the state or jurisdiction of its
incorporation or organization, is duly qualified to do business and is in good
standing as a foreign entity in each jurisdiction where the nature of its
business requires such qualification (except where the failure to be so
qualified and in good standing which, when taken together with all other such
failures, could not reasonably be expected to have a Material Adverse Effect),
and has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Pledge Agreement (except for failures to hold such governmental licenses,
permits and other approvals which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect) and to own and hold
under lease its material property and to conduct its business substantially as
currently conducted by it.
SECTION III.3. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by the Pledgor of this Pledge Agreement is
within the Pledgor's powers, has been duly authorized by all necessary corporate
action, and does not
(a) contravene (i) the Pledgor's Organic Documents, (ii) any
material contract binding on or affecting the Pledgor, (iii) any court
decree or order binding on or affecting the Pledgor or (iv) any law or
governmental regulation binding on or affecting the Pledgor; or
(b) result in, or require the creation or imposition of, any
Lien on any property of the Pledgor (except as permitted by this Pledge
Agreement).
SECTION III.4. Ownership, No Liens, etc. The Pledgor is the legal and
beneficial owner of, and has good and valid title to (and has full right and
authority to pledge and assign) the Collateral, free and clear of all Liens or
claims other than the Lien granted pursuant hereto in favor of the
Administrative Agent and the second priority Lien granted to the trustee under
the Senior Secured Discount Notes Indenture.
SECTION III.5. Valid Security Interest. The execution and delivery of
this Pledge Agreement creates a valid first-priority security interest in the
Collateral and (a) in the case of the Pledged Shares, upon the delivery of such
Collateral to the Administrative Agent, such security interest will be a valid
first-priority, perfected security interest in such Collateral; and (b) in the
case of all other Collateral, upon the filing of the U.C.C. financing statements
(Form U.C.C.-1) delivered by the Grantor to the Administrative agent with
respect to all such other Collateral, such security interest will constitute a
valid first-priority, perfected security interest. The Grantor has filed all
U.C.C. financing statements (Form U.C.C.-1) referred to
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<PAGE> 8
above in the appropriate offices therefor (or has provided the Administrative
Agent with copies thereof suitable for filing in such offices) and has taken all
of the other actions referred to above necessary to create perfected and
first-priority security interests in the applicable Collateral.
SECTION III.6. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all such Pledged Shares are duly authorized and validly
issued, fully paid and non-assessable, and constitute all of the issued and
outstanding Capital Securities of each Pledged Share Issuer listed on Attachment
I hereto. The Pledgor has no Subsidiaries of which it directly owns any Capital
Securities other than the Pledged Share Issuers. All Pledged Shares are
certificated, and have been delivered to the Administrative Agent with stock
powers, accompanied by undated instruments of transfer duly executed in blank
and the Administrative Agent has "control" (as defined in the U.C.C.) of such
Pledged Shares.
SECTION III.7. Authorization, Approval, etc. No authorization or,
approval or other action by, and no notice to or filing with, any Governmental
Authority, regulatory body or other Person (other than those that have been, or
on the Effective Date will be, duly obtained or made and which are, or on the
Effective Date will be, in full force and effect) is required either
(a) for the pledge by the Pledgor of any Collateral pursuant
to this Pledge Agreement or for the execution, delivery and performance
of this Pledge Agreement by the Pledgor, or
(b) for the exercise by the Administrative Agent of the voting
or other rights provided for in this Pledge Agreement, or, except with
respect to any Pledged Shares as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering and
sale of securities generally, the remedies in respect of the Collateral
pursuant to this Pledge Agreement,
provided, however, that in order to exercise the voting and certain other rights
provided for in this Pledge Agreement, the Pledged Shares must be transferred
into the name of the Administrative Agent on the books and records of the
Pledged Share Issuer prior to the exercise of such voting or other rights.
SECTION III.8. Compliance with Laws. The Pledgor is in compliance with
the requirements of all applicable laws (including, the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could have a Material Adverse Effect or
adversely affect the value of the Collateral.
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<PAGE> 9
ARTICLE IV
COVENANTS
SECTION IV.1. Covenants. The Pledgor covenants and agrees that at all
times prior to the Fixed Assets Termination Date, it will perform, comply with
and be bound by all of the agreements, covenants and obligations contained in
Article VII of the Credit Agreement and this Article which are applicable to the
Pledgor or its properties, each such agreement, covenant and obligation
contained in such Article and all other terms of the Credit Agreement to which
reference is made herein, together with all related definitions and ancillary
provisions, being hereby incorporated into this Pledge Agreement by reference as
though specifically set forth in this Article.
SECTION IV.2. Maintenance of Existence; Compliance with Laws, etc. The
Pledgor will:tenance of Existence; Compliance with Laws, etc.
(a) preserve and maintain its legal existence; and
(b) comply in all material respects with all applicable laws,
rules, regulations and orders, including the payment (before the same
become delinquent) of all Taxes, assessments and governmental charges
imposed upon the Pledgor or upon its property except to the extent
being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP have been set aside
on the books of the Pledgor.
SECTION IV.3. Maintenance of Properties. The Pledgor will maintain,
preserve, protect and keep its respective properties in good repair, working
order and condition (ordinary wear and tear excepted), and make necessary
repairs, renewals and replacements so that the business carried on by the
Pledgor may be properly conducted at all times, unless the Pledgor determines in
good faith that the continued maintenance of such property is no longer
economically desirable.
SECTION IV.4. Insurance. The Pledgor will:ance
(a) maintain insurance on its property with financially sound
and reputable insurance companies against loss and damage in at least
the amounts (and with only those deductibles) customarily maintained,
and against such risks as are typically insured against in the same
general area, by Persons of comparable size engaged in the same or
similar business as the Pledgor; and
(b) all worker's compensation, employer's liability insurance
or similar insurance as may be required under the laws of any state or
jurisdiction in which it may be engaged in business.
SECTION IV.5. Business Activities. The Pledgor will not engage in any
business activity other than in connection with the Pledgor's continuing
ownership of the issued and outstanding Capital Securities of the Company and
the maintenance of the Senior Secured Discount Notes (and any refinancing
thereof on No Less Favorable Terms and Conditions), unless otherwise permitted
by the Credit Agreement or herein. Without limiting the generality
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<PAGE> 10
of the immediately preceding sentence, the Pledgor will not create, incur,
assume or suffer to exist any Indebtedness, create, assume or suffer to exist
any Lien upon or grant any options or other rights with respect to, any of its
revenues, property or other assets, whether now owned or hereafter acquired
(other than pursuant to the Loan Documents or the second priority Lien granted
to the trustee under the Senior Secured Discount Notes Indenture), wind-up,
liquidate or dissolve itself (or suffer to exist any of the foregoing), Merge
into or with any other Person, other than as contemplated by the Credit
Agreement or Dispose of all or any part of its assets, in one transaction or a
series of transactions, to any Person or Persons create, incur, assume or suffer
to exist any Investment in any Person other than in respect of any additional
equity Investments in the Borrowers or take any action that would result in a
Change in Control other than as contemplated in the Credit Agreement. The
Pledgor agrees not to commence or cause the commencement of any of the actions
described in clause (b), (c) or (d) of Section 8.1.9 of the Credit Agreement
with respect to any of its Subsidiaries. The Pledgor will not amend or modify
the Senior Secured Discount Notes Indenture or the Pledge Agreement, dated as of
August 21, 1996, between the trustee for the Senior Secured Discount Notes and
the Pledgor, in either case, in any way adverse to the interests of the Lenders.
SECTION IV.6. Protect Collateral; Further Assurances, etc. Except for
the second priority Lien in favor of the trustee under the Senior Secured
Discount Notes Indenture, the Pledgor will not sell, assign, transfer, pledge or
encumber in any other manner the Collateral (except in favor of the
Administrative Agent hereunder or as permitted under Section 7.2.3 of the Credit
Agreement). The Pledgor will warrant and defend the right and title herein
granted unto the Administrative Agent in and to the Collateral (and all right,
title and interest represented by the Collateral) against the claims and demands
of all Persons whomsoever. The Pledgor agrees that at any time, and from time to
time, at the expense of the Pledgor, the Pledgor will promptly execute and
deliver all further instruments, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may reasonably request,
in order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. The Pledgor will
not will permit any Pledged Share Issuer to issue any Capital Securities unless
the same are immediately delivered and pledged to the Administrative Agent
hereunder.
SECTION IV.7. Stock Powers, etc. The Pledgor agrees that all Pledged
Shares (and all other Capital Securities constituting Collateral) delivered by
the Pledgor pursuant to this Pledge Agreement will be accompanied by duly
executed, undated stock powers or other equivalent instruments of transfer
reasonably acceptable to the Administrative Agent. The Pledgor will, from time
to time upon the reasonable request of the Administrative Agent, promptly
deliver to the Administrative Agent such stock powers, instruments and similar
documents, reasonably satisfactory in form and substance to the Administrative
Agent, with respect to the Collateral as the Administrative Agent may reasonably
request and will, from time to time upon the request of the Administrative Agent
after the occurrence of any Event of Default, promptly cause the Pledged Share
Issuer to transfer any Pledged Shares or other
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<PAGE> 11
Capital Securities constituting Collateral into the name of any nominee
designated by the Administrative Agent.
SECTION IV.8. Continuous Pledge. Subject to Section 2.4, the Pledgor
will, at all times, keep pledged to the Administrative Agent pursuant hereto all
Pledged Shares and all other Capital Securities constituting Collateral, all
Dividends and Distributions with respect thereto, and all other Collateral and
other Capital Securities, instruments, proceeds and rights from time to time
received by or distributable to the Pledgor in respect of any Collateral. Any
Distributions on Pledged Shares consisting of Capital Securities will be
certificated.
SECTION IV.9. Voting Rights; Dividends, etc. The Pledgor agrees:
(a) if any Default of the nature referred to in Section 8.1.9
of the Credit Agreement or an Event of Default shall have occurred and
be continuing, promptly upon receipt thereof by the Pledgor and without
any request therefore by the Administrative Agent, to deliver (properly
endorsed where required hereby or requested by the Administrative
Agent) to the Administrative Agent all Dividends, Distributions and all
proceeds of the Collateral, all of which shall be held by the
Administrative Agent as additional Collateral for use in accordance
with Section 6.4; and
(b) if any Event of Default shall have occurred and be
continuing and the Administrative Agent shall have notified the Pledgor
of the Administrative Agent's intention to exercise its voting power
under this Section:
(i) the Administrative Agent may exercise (to the
exclusion of the Pledgor) the voting power and all other
incidental rights of ownership with respect to any Pledged
Shares or other Capital Securities constituting Collateral and
the Pledgor hereby grants the Administrative Agent an
irrevocable proxy, exercisable under such circumstances, to
vote the Pledged Shares and such other Collateral; and
(ii) promptly to deliver to the Administrative Agent
such additional proxies and other documents as may be
necessary to allow the Administrative Agent to exercise such
voting power.
All Dividends, Distributions and proceeds which may at any time and from time to
time be held by the Pledgor but which the Pledgor is then obligated to deliver
to the Administrative Agent, shall, until delivery to the Administrative Agent,
be held by the Pledgor separate and apart from its other property in trust for
the Administrative Agent. The Administrative Agent agrees that unless an Event
of Default shall have occurred and be continuing and the Administrative Agent
shall have given the notice referred to in this Section, the Pledgor shall have
the exclusive power to exercise all voting and other consensual rights with
respect to any Capital Securities (including any of the Pledged Shares)
constituting Collateral and the
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<PAGE> 12
Administrative Agent shall, upon the written request of the Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by the Pledgor which are necessary to allow the Pledgor to exercise
such powers with respect to any such Capital Securities (including any of the
Pledged Shares) constituting Collateral; provided, however, that no vote shall
be cast, or consent, waiver or ratification given, or action taken by the
Pledgor that would materially impair the value of any Collateral or be
inconsistent with or violate any provision of the Loan Documents.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION V.1. Administrative Agent Appointed Attorney-in-Fact. The
Pledgor hereby irrevocably appoints the Administrative Agent as the Pledgor's
attorney-in-fact, with full authority and in the name, place and stead of the
Pledgor or in its own name, from time to time in the Administrative Agent's
discretion, to take, upon the occurrence and during the continuance of any Event
of Default, any action and to execute any instrument which the Administrative
Agent may deem necessary or advisable to accomplish the purposes of this Pledge
Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise and
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent with respect to any of
the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION V.2. Administrative Agent May Perform. If the Pledgor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by the
Pledgor pursuant to Section 6.5.
SECTION V.3. Administrative Agent Has No Duty. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest (on behalf
of the Fixed Assets Secured Parties) in the Collateral and shall not impose any
duty on it to exercise any such powers. Except for reasonable care of any
Collateral in its possession and the accounting for
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<PAGE> 13
moneys actually received by it hereunder, the Administrative Agent shall have no
duty as to any Collateral or responsibility for
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Property, whether or not the Administrative Agent has or
is deemed to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.
SECTION V.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral if it takes such action for that purpose as the Pledgor
reasonably requests in writing from time to time, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care. If an Event of Default
has occurred and is continuing, the Administrative Agent shall not be required
to comply with any request of the Pledgor with respect to the matters described
in this Section.
ARTICLE VI
REMEDIES
SECTION VI.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may, without notice except
as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Administrative
Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Administrative Agent may
deem commercially reasonable. The Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten days' prior
notice to the Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefore, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) The Administrative Agent may
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<PAGE> 14
(i) transfer all or any part of the Collateral into
the name of the Administrative Agent or its nominee, with or
without disclosing that such Collateral is subject to the Lien
and security interest hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Administrative Agent of any
amount due or to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts or other writings in
the Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral
and
(vi) execute (in the name, place and stead of the
Pledgor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
SECTION VI.2. Securities Laws. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant to
Section 6.1, the Pledgor agrees that, upon request of the Administrative Agent,
the Pledgor will use commercially reasonable efforts to, at its own expense:
(a) execute and deliver, and cause each issuer of the
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Administrative Agent, advisable to
register such Collateral under the provisions of the Securities Act of
1933, as from time to time amended (the "Securities Act"), and to cause
the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to
the related prospectus which, in the opinion of the Administrative
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
the Administrative Agent;
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<PAGE> 15
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Administrative Agent or the Fixed Assets
Secured Parties by reason of the failure by the Pledgor to perform any of the
covenants contained in this Section and, consequently, agrees that, if the
Pledgor shall fail to perform any of such covenants, it shall pay, as liquidated
damages and not as a penalty, an amount equal to the value (as determined by the
Administrative Agent) of the Collateral on the date the Administrative Agent
shall demand compliance with this Section.
SECTION VI.3. Compliance with Restrictions. The Pledgor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority, and the Pledgor further
agrees that such compliance shall not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner, nor shall the
Administrative Agent be liable nor accountable to the Pledgor for any discount
allowed by reason of the fact that such Collateral is sold in compliance with
any such limitation or restriction.
SECTION VI.4. Application of Proceeds. All cash proceeds received by
the Administrative Agent in respect of any sale of, collection from or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section
10.4 of the Credit Agreement and Section 6.5 below) in whole or in part by the
Administrative Agent against, all or any part of the Fixed Assets Obligations in
such order as the Administrative Agent shall elect. Any surplus of such cash or
other proceeds held by the Administrative Agent and remaining after the Fixed
Assets Termination Date, shall be paid over to the Pledgor or to whomsoever may
be lawfully entitled to receive such surplus.
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<PAGE> 16
SECTION VI.5. Indemnity and Expenses. The Pledgor hereby indemnifies
and holds harmless the Administrative Agent from and against any and all claims,
losses and liabilities arising out of or resulting from this Pledge Agreement
(including enforcement of this Pledge Agreement), except claims, losses or
liabilities resulting from the Administrative Agent's gross negligence or wilful
misconduct, and will upon demand pay to the Administrative Agent the amount of
any and all reasonable expenses, including the reasonable fees and disbursements
of its counsel and of any experts and agents, which the Administrative Agent may
incur, in each case, in connection with:
(a) the administration of this Pledge Agreement;
(b) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the
Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by the Pledgor to perform or observe any of
the provisions hereof.
SECTION VI.6. No Recourse. The Pledgor shall not be liable for any
indebtedness, liabilities or Obligations (other than as set forth in this Pledge
Agreement) in connection with the Credit Agreement, this Pledge Agreement or any
of the other Loan Documents, and neither the Administrative Agent nor any Lender
shall have any recourse against the Pledgor or any of its assets or properties
(other than the Collateral to the extent of the Fixed Assets Obligations) to
satisfy any such indebtedness, liabilities or Obligations; provided, however,
that nothing herein shall constitute a waiver of the Administrative Agent's or
any Fixed Assets Lender's ability to exercise any right or remedy which any such
party may have against the Pledgor on account of any claim for fraud, deceit or
other material misrepresentation or omission by and relating to the Pledgor
(including its assets and operations, but excluding the Company, any Subsidiary
of the Company or any of their assets or operations).
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION VII.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION VII.2. Amendments, etc. No amendment to or waiver of any
provision of this Pledge Agreement nor consent to any departure by the Pledgor
here from shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent
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<PAGE> 17
(on behalf of the Lenders or the Required Lenders, as the case may be) and the
Pledgor, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.
SECTION VII.3. Protection of Collateral. The Administrative Agent may
from time to time, at its option, and at the expense of the Pledgor, perform any
act which the Pledgor agrees hereunder to perform and which the Pledgor shall
fail to perform after being requested in writing so to perform (it being
understood that no such request need be given after the occurrence and during
the continuance of an Event of Default) and the Administrative Agent may from
time to time take any other action which the Administrative Agent reasonably
deems necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION VII.4. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and addressed,
delivered or transmitted, if to the Pledgor, at the address or facsimile number
of the Company provided for in the Credit Agreement, and, if to the
Administrative Agent, at the address or facsimile number provided for in the
Credit Agreement, or as to any such party at such other address or facsimile
number as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. Any notice, (a)
(i) if mailed and properly addressed with postage prepaid or (ii) if properly
addressed and sent by pre-paid courier service, shall be deemed given when such
notice has been received or (b) if transmitted by facsimile, shall be deemed
given when transmitted (and telephonic confirmation of receipt thereof has been
received).
SECTION VII.5. Headings. The various headings of this Pledge Agreement
are inserted for convenience only, and shall not affect the meaning or
interpretation of this Pledge Agreement or any provisions hereof.
SECTION VII.6. Severability. Any provision of this Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Pledge Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION VII.7. Governing Law. THIS PLEDGE AGREEMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK, EXCLUDING THE LAW OF CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
SECTION VII.8. Counterparts. This Pledge Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original (whether such counterpart is originally executed or an electronic
copy of an original) and all of
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which shall constitute together but one and the same agreement. This Pledge
Agreement shall become effective and binding upon the Pledgor when a counterpart
hereof executed on behalf of the Pledgor shall have been received by the
Administrative Agent.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
STERLING CHEMICALS HOLDINGS, INC.
By:
------------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
------------------------------------
Title:
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<PAGE> 20
ATTACHMENT 1
to
Pledge Agreement
PLEDGOR: STERLING CHEMICAL HOLDINGS, INC.
<TABLE>
<CAPTION>
Capital Securities
Pledged Shares --------------------------------------------
-------------- Authorized Outstanding % of Shares
Pledged Share Issuer Shares Shares Pledged
- -------------------- ---------- ----------- -----------
<S> <C> <C> <C>
Sterling Chemicals, Inc. 1000 1000 100%
</TABLE>
<PAGE> 1
EXHIBIT 4.8
OBLIGOR PLEDGE AGREEMENT
THIS OBLIGOR PLEDGE AGREEMENT (as amended, supplemented, amended and
restated or otherwise modified from time to time, this "Pledge Agreement"),
dated as of July 23, 1999, among Sterling Chemicals, Inc., a Delaware
corporation (the "Company"), and each of the Persons (such capitalized term and
all other capitalized terms not otherwise defined herein shall have the meanings
provided for or incorporated by reference in Article I below) identified on the
signature pages hereto and each other Person that may from time to time become a
party to this Pledge Agreement (each a "Pledgor" and collectively the
"Pledgors"), and The CIT Group/Business Credit, Inc., as Administrative Agent
for each of the Fixed Assets Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of the date
hereof (together with all amendments, supplements, restatements and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), among the Company, Sterling Canada, Inc., a Delaware corporation,
Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling Pulp
Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation, (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston, as the Documentation Agent, and
the Administrative Agent, the Lenders and the Issuer have extended Commitments
to make Credit Extensions to the Borrowers;
WHEREAS, as a condition precedent to the making of any Credit Extension
under the Credit Agreement, the Pledgors are required to execute and deliver
this Pledge Agreement;
WHEREAS, each Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement; and
WHEREAS, it is in the best interests of the Pledgors to execute this
Pledge Agreement inasmuch as the Pledgors will derive substantial direct and
indirect benefits from the Credit Extensions made from time to time to the
Borrowers by the Lenders pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Fixed Assets Lenders to make
Fixed Assets Loans (including the initial Fixed Assets Loans) to the Borrowers
pursuant to the Credit
<PAGE> 2
Agreement, each of the Pledgors and the Administrative Agent, for the ratable
benefit of each Fixed Assets Secured Party, agrees as follows:
ARTICLE I
DEFINITIONS
SECTION I.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrowers" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Company" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends,
Capital Securities resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers or
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other Capital
Securities constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business, but shall not include liquidating dividends.
"Fixed Assets Termination Date" means the date on which all Fixed
Assets Obligations have been paid in full in cash, all Rate Protection
Agreements where the counterparty is a Fixed Assets Lender (or its Affiliate)
have been terminated and the Fixed Assets Loan Commitment shall have terminated.
"Lenders" is defined in the first recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Property" means all Pledged Shares, all other pledged Capital
Securities, all other equity securities, all assignments of any amounts due or
to become due with respect thereto and all other instruments which are now being
delivered by the Pledgor to the Administrative Agent or may from time to time
hereafter be delivered by the Pledgor to the Administrative Agent for the
purpose of pledge under this Pledge Agreement or any other Loan Document, and
all proceeds of any of the foregoing.
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"Pledged Share Issuer" means each Person identified in Attachment 1
hereto as the issuer of the Pledged Shares identified opposite the name of such
Person and each other Person whose Capital Securities are required to be pledged
hereunder and under the Credit Agreement from time to time.
"Pledged Shares" means the Capital Securities of any Pledged Share
Issuer in the amounts and percentages listed in Attachment 1 hereto.
"Pledgor" and "Pledgors" are defined in the preamble.
"Securities Act" is defined in clause (a) of Section 6.2.
SECTION I.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION I.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Credit Agreement or the context otherwise requires, terms for which meanings
are provided in the U.C.C. are used in this Pledge Agreement, including its
preamble and recitals, with such meanings.
ARTICLE II
PLEDGE
SECTION II.1. Grant of Security Interest. Each Pledgor hereby pledges,
hypothecates, assigns, charges, delivers and transfers to the Administrative
Agent, for the ratable benefit of each of the Fixed Assets Secured Parties, and
hereby grants to the Administrative Agent, for the ratable benefit of the Fixed
Assets Secured Parties, a continuing security interest in, all of the following
property (collectively, the "Collateral"):
(a) all issued and outstanding Pledged Shares of each Pledged
Share Issuer identified in Item A of Attachment 1 hereto;
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(b) all other Pledged Shares issued from time to time;
(c) all other Pledged Property, whether now or hereafter
delivered to the Administrative Agent in connection with this Pledge
Agreement;
(d) all Dividends, Distributions and other payments and rights
with respect to any Pledged Property; and
(e) all proceeds of any of the foregoing.
SECTION II.2. Security for Fixed Assets Obligations. This Pledge
Agreement secures the payment in full and in cash of all Fixed Assets
Obligations.
SECTION II.3. Delivery of Pledged Property. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares shall be delivered to and held by or on behalf of the Administrative
Agent pursuant hereto, shall be in suitable form for transfer by delivery and
shall be accompanied by all necessary instruments of transfer or assignment,
duly executed in blank.
SECTION II.4. Dividends on Pledged Shares. In the event that any
Dividend is to be paid on any Pledged Share at a time when (x) no Default of the
nature referred to in Section 8.1.9 of the Credit Agreement has occurred and is
continuing, and (y) no Event of Default has occurred and is continuing, such
Dividend may be paid directly to the applicable Pledgor. If any such Default or
Event of Default has occurred and is continuing, then any such Dividend shall be
paid directly to the Administrative Agent.
SECTION II.5. Continuing Security Interest. This Pledge Agreement shall
create a continuing security interest in the Collateral and shall:
(a) remain in full force and effect until the Fixed Assets
Termination Date;
(b) be binding upon each Pledgor and its successors,
transferees and assigns; and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Fixed Assets
Secured Parties.
Without limiting the foregoing clause (c), any Fixed Assets Lender may assign or
otherwise transfer (in whole or in part) any Fixed Assets Loan Commitment or any
Fixed Assets Loan held by it to any other Person or entity, and such other
Person or entity shall thereupon become vested with all the rights and benefits
in respect thereof granted to such Fixed Assets Lender under any Loan Document
(including this Pledge Agreement) or otherwise, subject, however, to any
contrary provisions in such assignment or transfer, and to the provisions of
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Section 10.11 of the Credit Agreement. The security interest granted herein
shall terminate and all rights to the Collateral shall revert to each Pledgor on
the Fixed Assets Termination Date. Upon any such termination or release of
Collateral, the Administrative Agent will, at each Pledgor's sole expense,
deliver to such Pledgor, without any representations, warranties or recourse of
any kind whatsoever, all certificates and instruments representing or evidencing
all Pledged Shares, together with all other Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Pledgor such
documents as such Pledgor shall reasonably request to evidence such termination
or release.
SECTION II.6. Security Interest Absolute. All rights of the
Administrative Agent and the Liens granted to the Administrative Agent
hereunder, and all obligations of each Pledgor hereunder, shall be absolute and
unconditional, irrespective of
(a) any lack of validity or enforceability of any Loan
Document,
(b) the failure of any Fixed Assets Secured Party
(i) to assert any claim or demand or to enforce any
right or remedy against any Pledgor, any other Obligor or any
other Person under the provisions of the Loan Documents or
otherwise, or
(ii) to exercise any right or remedy against any
guarantor of, or collateral securing, any Fixed Assets
Obligations of any Pledgor or any other Obligor,
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Fixed Assets Obligations or any
other extension, compromise or renewal of any Obligation of any Pledgor
or any other Obligor,
(d) any reduction, limitation, impairment or termination of
any Fixed Assets Obligation of any Pledgor or any other Obligor for any
reason (other than the repayment in full and in cash of all Fixed
Assets Obligations), including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and each Pledgor
hereby waives any right to or claim of) any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise or
unenforceability of, or any other event or occurrence affecting, any
Fixed Assets Obligation of any Pledgor, any other Obligor or otherwise,
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Loan Documents,
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or
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addition to or consent to departure from any guaranty, for any of the
Fixed Assets Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any
Pledgor, any other Obligor, any surety or any guarantor.
SECTION II.7. Postponement of Subrogation, etc. No Pledgor will
exercise any rights which it may acquire by reason of any payment made
hereunder, whether by way of subrogation, reimbursement or otherwise, until the
Fixed Assets Termination Date. Any amount paid to any Pledgor on account of any
payment made hereunder prior to the Fixed Assets Termination Date shall be held
in trust for the benefit of the Fixed Assets Secured Parties and shall
immediately be paid to the Administrative Agent, for the ratable benefit of the
Fixed Assets Secured Parties, and credited and applied against the Fixed Assets
Obligations, whether matured or unmatured, in accordance with the terms of the
Credit Agreement; provided, however, that if
(a) any Pledgor has made payment to the Administrative Agent
for the ratable benefit of the Fixed Assets Secured Parties of all or
any part of the Fixed Assets Obligations, and
(b) the Fixed Assets Termination Date has occurred,
each Fixed Assets Secured Party agrees that, at such Pledgor's request, the
Administrative Agent, on behalf of the Fixed Assets Secured Parties, will
execute and deliver to such Pledgor appropriate documents (without recourse and
without representation or warranty) necessary to evidence the transfer by
subrogation to such Pledgor of an interest in the Fixed Assets Obligations
resulting from such payment by such Pledgor. In furtherance of the foregoing,
prior to the Fixed Assets Termination Date, each Pledgor shall refrain from
taking any action or commencing any proceeding against any other Obligor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this Pledge
Agreement to the Administrative Agent or any other Fixed Assets Secured Party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1. Warranties, etc. Each Pledgor represents and warrants
unto each Fixed Assets Secured Party, as at the date of each pledge and delivery
hereunder (including each pledge and delivery of Pledged Shares) by such Pledgor
to the Administrative Agent of any Collateral, as set forth in this Article.
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<PAGE> 7
SECTION III.2. Ownership, No Liens, etc. Each Pledgor is the legal and
beneficial owner of, and has good and valid title to (and has full right and
authority to pledge and assign) the Collateral, free and clear of all Liens,
except any Lien granted pursuant hereto in favor of the Administrative Agent or
any Permitted Lien.
SECTION III.3. Valid Security Interest. The execution and delivery of
this Pledge Agreement creates a valid first-priority security interest in the
Collateral and (a) in the case of the Pledged Shares, upon the delivery of such
Collateral to the Administrative Agent, such security interest will be a valid
first-priority, perfected security interest; and (b) in the case of all other
Collateral, upon the filing of the U.C.C. financing statements (Form U.C.C.-1)
delivered by the Pledgors to the Administrative Agent with respect to such
Collateral, such security interest will be a valid first-priority, perfected
security interest. Each Pledgor has filed all U.C.C. financing statements (Form
U.C.C.-1) referred to above in the appropriate offices therefor (or has provided
the Administrative Agent with copies thereof suitable for filing in such
offices) and has taken all of the other actions referred to above necessary to
create perfected and first-priority security interests in the applicable
Collateral.
SECTION III.4. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all such Pledged Shares are duly authorized and validly
issued, fully paid and non-assessable, and constitute all of the issued and
outstanding Capital Securities of each Pledged Share Issuer. No Pledgor has any
Subsidiaries of which it directly owns any Capital Securities other than the
Pledged Share Issuers, Foreign Restricted Subsidiaries or Unrestricted
Subsidiaries. All Pledged Shares are certificated, have been delivered to the
Administrative Agent with stock powers, accompanied by undated instruments of
transfer duly executed in blank and the Administrative Agent has "control" (as
defined in the U.C.C.) of such Pledged Shares.
SECTION III.5. Authorization, Approval, etc. No authorization, approval
or other action by, and no notice to or filing with, any Governmental Authority,
regulatory body or other Person (other than those that have been, or on the
Effective Date will be, duly obtained or made and which are, or on the Effective
Date will be, in full force and effect) is required either
(a) for the pledge by such Pledgor of any Collateral pursuant
to this Pledge Agreement or for the execution, delivery and performance
of this Pledge Agreement by such Pledgor, or
(b) for the exercise by the Administrative Agent of the voting
or other rights provided for in this Pledge Agreement, or, except with
respect to any Pledged Shares as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering and
sale of securities generally, the remedies in respect of the Collateral
pursuant to this Pledge Agreement,
provided, however, that in order to exercise the voting and certain other rights
provided for in this Pledge Agreement, the Pledged Shares must be transferred
into the name of the Administrative Agent on the books and records of the
Pledged Share Issuer prior to the exercise of such voting or other rights.
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SECTION III.6. Compliance with Laws. Each Pledgor is in compliance with
the requirements of all applicable laws (including, the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could have a Material Adverse Effect or
adversely affect the value of the Collateral.
ARTICLE IV
COVENANTS
SECTION IV.1. Protect Collateral; Further Assurances, etc. Except for
the second priority Lien in favor of the Trustee on the Capital Securities of
each Borrower other than the Company and the second priority Lien in favor of
the trustee under the Senior Secured Discount Notes Indenture on the Capital
Securities of the Company, no Pledgor will sell, assign, transfer, pledge, or
encumber in any other manner the Collateral (except in favor of the
Administrative Agent hereunder or as permitted under Section 7.2.3 and 7.2.11 of
the Credit Agreement). Each Pledgor will warrant and defend the right and title
herein granted unto the Administrative Agent in and to the Collateral (and all
right, title and interest represented by the Collateral) against the claims and
demands of all Persons whomsoever. Each Pledgor agrees that at any time, and
from time to time, at the expense of such Pledgor, such Pledgor will promptly
execute and deliver all further instruments, and take all further action, that
may be necessary or desirable, or that the Administrative Agent may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Administrative Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral. No
Pledgor will permit any Pledged Share Issuer to issue any Capital Securities
unless the same are immediately delivered and pledged to the Administrative
Agent hereunder.
SECTION IV.2. Stock Powers, etc. Each Pledgor agrees that all Pledged
Shares (and all other Capital Securities constituting Collateral) delivered by
such Pledgor pursuant to this Pledge Agreement will be accompanied by duly
executed, undated stock powers or other equivalent instruments of transfer
reasonably acceptable to the Administrative Agent. Each Pledgor will, from time
to time upon the reasonable request of the Administrative Agent, promptly
deliver to the Administrative Agent such stock powers, instruments and similar
documents, reasonably satisfactory in form and substance to the Administrative
Agent, with respect to the Collateral as the Administrative Agent may reasonably
request and will, from time to time upon the request of the Administrative Agent
after the occurrence of any Event of Default, promptly cause each Pledged Share
Issuer to transfer any Pledged Shares or other Capital Securities constituting
Collateral into the name of any nominee designated by the Administrative Agent.
SECTION IV.3. Continuous Pledge. Subject to Section 2.4, each Pledgor
will, at all times, keep pledged to the Administrative Agent pursuant hereto all
Pledged Shares and all other Capital Securities constituting Collateral, all
Dividends and Distributions with respect thereto, and all other Collateral and
other Capital Securities, instruments, proceeds and rights from time
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to time received by or distributable to such Pledgor in respect of any
Collateral. Any Distributions on Pledged Shares consisting of Capital Securities
will be certificated.
SECTION IV.4. Voting Rights; Dividends, etc. Each Pledgor agrees:
(a) if any Default of the nature referred to in Section 8.1.9
of the Credit Agreement or an Event of Default shall have occurred and
be continuing, promptly upon receipt thereof by such Pledgor and
without any request therefore by the Administrative Agent, to deliver
(properly endorsed where required hereby or requested by the
Administrative Agent) to the Administrative Agent all Dividends,
Distributions and all proceeds of the Collateral, all of which shall be
held by the Administrative Agent as additional Collateral for use in
accordance with Section 6.4; and
(b) if any Event of Default shall have occurred and be
continuing and the Administrative Agent shall have notified such
Pledgor of the Administrative Agent's intention to exercise its voting
power under this Section:
(i) the Administrative Agent may exercise (to the
exclusion of such Pledgor) the voting power and all other
incidental rights of ownership with respect to any Pledged
Shares or other Capital Securities constituting Collateral and
such Pledgor hereby grants the Administrative Agent an
irrevocable proxy, exercisable under such circumstances, to
vote the Pledged Shares and such other Collateral; and
(ii) promptly to deliver to the Administrative Agent
such additional proxies and other documents as may be
necessary to allow the Administrative Agent to exercise such
voting power.
All Dividends, Distributions and proceeds which may at any time and from time to
time be held by any Pledgor but which such Pledgor is then obligated to deliver
to the Administrative Agent, shall, until delivery to the Administrative Agent,
be held by such Pledgor separate and apart from its other property in trust for
the Administrative Agent. The Administrative Agent agrees that unless an Event
of Default shall have occurred and be continuing and the Administrative Agent
shall have given the notice referred to in this Section, each Pledgor have the
exclusive power to exercise all voting and other consensual rights with respect
to any Capital Securities(including any of the Pledged Shares) constituting
Collateral and the Administrative Agent shall, upon the written request of such
Pledgor, promptly deliver such proxies and other documents, if any, as shall be
reasonably requested by such Pledgor which are necessary to allow such Pledgor
to exercise such powers with respect to any such share of Capital Securities
(including any of the Pledged Shares) constituting Collateral; provided,
however, that no vote shall be cast, or consent, waiver or ratification given,
or action taken by any Pledgor that would materially impair the value of any
Collateral or be inconsistent with or violate any provision of the Loan
Documents.
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ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION V.1. Administrative Agent Appointed Attorney-in-Fact. Each
Pledgor hereby irrevocably appoints the Administrative Agent as such Pledgor's
attorney-in-fact, with full authority and in the name, place and stead of the
Pledgor or in its own name, from time to time in the Administrative Agent's
discretion, to take, upon the occurrence and during the continuance of any Event
of Default, any action and to execute any instrument which the Administrative
Agent may deem necessary or advisable to accomplish the purposes of this Pledge
Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise and
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent with respect to any of
the Collateral.
Each Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION V.2. Administrative Agent May Perform. If any Pledgor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by such
Pledgor pursuant to Section 6.5.
SECTION V.3. Administrative Agent Has No Duty. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest (on behalf
of the Fixed Assets Secured Parties) in the Collateral and shall not impose any
duty on it to exercise any such powers. Except for reasonable care of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Administrative Agent shall have no duty as to any Collateral
or responsibility for
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Property, whether or not the Administrative Agent has or
is deemed to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.
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SECTION V.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as the relevant
Pledgor reasonably requests in writing from time to time, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care. If an Event of Default
has occurred and is continuing, the Administrative Agent shall not be required
to comply with any request of the Pledgor with respect to the matters described
in this Section.
ARTICLE VI
REMEDIES
SECTION VI.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may, without notice except
as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Administrative
Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Administrative Agent may
deem commercially reasonable. Each Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten days' prior
notice to such Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefore, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into
the name of the Administrative Agent or its nominee, with or
without disclosing that such Collateral is subject to the Lien
and security interest hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Administrative Agent of any
amount due or to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or
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renew for any period (whether or not longer than the original
period) any obligations of any nature of any party with
respect thereto,
(iv) endorse any checks, drafts or other writings in
each Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral
and
(vi) execute (in the name, place and stead of any
Pledgor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
SECTION VI.2. Securities Laws. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant to
Section 6.1, each Pledgor agrees that, upon request of the Administrative Agent,
such Pledgor will use commercially reasonable efforts to, at its own expense:
(a) execute and deliver, and cause each issuer of the
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Administrative Agent, advisable to
register such Collateral under the provisions of the Securities Act of
1933, as from time to time amended (the "Securities Act"), and to cause
the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to
the related prospectus which, in the opinion of the Administrative
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
the Administrative Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law.
Each Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Administrative Agent or the Fixed
Assets Secured Parties by reason of the failure by such Pledgor to perform any
of the covenants contained in this Section and,
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consequently, agrees that, if such Pledgor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value (as determined by the Administrative Agent) of the Collateral
on the date the Administrative Agent shall demand compliance with this Section.
SECTION VI.3. Compliance with Restrictions. Each Pledgor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority, and the Pledgor further
agrees that such compliance shall not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner, nor shall the
Administrative Agent be liable nor accountable to any Pledgor for any discount
allowed by reason of the fact that such Collateral is sold in compliance with
any such limitation or restriction.
SECTION VI.4. Application of Proceeds. All cash proceeds received by
the Administrative Agent in respect of any sale of, collection from or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section
10.4 of the Credit Agreement and Section 6.5 below) in whole or in part by the
Administrative Agent against, all or any part of the Fixed Assets Obligations in
such order as the Administrative Agent shall elect. Any surplus of such cash or
other proceeds held by the Administrative Agent and remaining after the Fixed
Assets Termination Date, shall be paid over to the applicable Pledgor or to
whomsoever may be lawfully entitled to receive such surplus. The Pledgors shall
remain liable on a joint and several basis for any deficiency.
SECTION VI.5. Indemnity and Expenses. Each Pledgor hereby jointly and
severally indemnifies and holds harmless the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or resulting
from this Pledge Agreement (including enforcement of this Pledge Agreement),
except claims, losses or liabilities resulting from the Administrative Agent's
gross negligence or wilful misconduct, and each Pledgor will pay to the
Administrative Agent the amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel and of any experts and
agents, which the Administrative Agent may incur, in each case, in connection
with:
(a) the administration of this Pledge Agreement;
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<PAGE> 14
(b) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the
Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by any Pledgor to perform or observe any of
the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION VII.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION VII.2. Amendments, etc. No amendment to or waiver of any
provision of this Pledge Agreement nor consent to any departure by any Pledgor
herefrom shall in any event be effective unless the same shall be in writing and
signed by the Administrative Agent (on behalf of the Lenders or the Required
Lenders, as the case may be) and each Pledgor, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it is given.
SECTION VII.3. Protection of Collateral. The Administrative Agent may
from time to time, at its option, and at the expense of the Pledgors, perform
any act which any Pledgor agrees hereunder to perform and which such Pledgor
shall fail to perform after being requested in writing so to perform (it being
understood that no such request need be given after the occurrence and during
the continuance of an Event of Default) and the Administrative Agent may from
time to time take any other action which the Administrative Agent reasonably
deems necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION VII.4. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and addressed,
delivered or transmitted, if to any Pledgor, at the address or facsimile number
of the Company provided for in the Credit Agreement, and, if to the
Administrative Agent, at the address or facsimile number provided for in the
Credit Agreement, or as to any such party at such other address or facsimile
number as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. Any notice,
(a)(i) if mailed and properly addressed with postage prepaid or (ii) if properly
addressed and sent by pre-paid courier service, shall be deemed given when such
notice has been received or (b) if transmitted by facsimile, shall be deemed
given when transmitted (and telephonic confirmation of receipt thereof has been
received).
-14-
<PAGE> 15
SECTION VII.5. Headings. The various headings of this Pledge Agreement
are inserted for convenience only, and shall not affect the meaning or
interpretation of this Pledge Agreement or any provisions hereof.
SECTION VII.6. Severability. Any provision of this Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability, without invalidating the remaining provisions
of this Pledge Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION VII.7. Governing Law. THIS PLEDGE AGREEMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK, EXCLUDING THE LAW OF CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
SECTION VII.8. Counterparts. This Pledge Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original (whether such counterpart is originally executed or an electronic
copy of an original) and all of which shall constitute together but one and the
same agreement. This Pledge Agreement shall become effective and binding upon
any Pledgor when a counterpart hereof executed on behalf of such Pledgor shall
have been received by the Administrative Agent.
SECTION VII.9. Additional Pledgors. Upon the execution and delivery by
any other Person of an instrument in the form of Annex I hereto, together with
the Schedule thereto, such Person shall become a "Pledgor" hereunder with the
same force and effect as if originally named as a Pledgor herein. The execution
and delivery of any such instrument shall not require the consent of any other
Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall
remain in full force and effect notwithstanding the addition of any new Pledgor
as a party to this Pledge Agreement.
-15-
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
STERLING CHEMICALS, INC.
By
--------------------------------------
Title:
STERLING CANADA, INC.
By
--------------------------------------
Title:
STERLING PULP CHEMICALS US, INC.
By
--------------------------------------
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Administrative Agent
By
--------------------------------------
Title:
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<PAGE> 17
ATTACHMENT 1
to
Pledge Agreement
[NAME OF PLEDGOR]
<TABLE>
<CAPTION>
Pledged Shares Capital Securities
- -------------- --------------------------------------------
Authorized Outstanding % of Shares
Pledged Share Issuer Shares Shares Pledged
- -------------------- ---------- ----------- -----------
<S> <C> <C> <C>
</TABLE>
<PAGE> 18
ANNEX I
to Obligor Pledge Agreement
SUPPLEMENT TO OBLIGOR PLEDGE AGREEMENT
This SUPPLEMENT NO. ___, dated as of ________ __, ____ (this
"Supplement"), to the Obligor Pledge Agreement, dated as of July __, 1999 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Pledge Agreement"), among the initial signatories thereto and each
other Person which from time to time thereafter became a party thereto pursuant
to Section 7.9 thereof (each, individually, a "Pledgor", and, collectively, the
"Pledgors"), in favor of THE CIT GROUP/BUSINESS CREDIT INC., as Administrative
Agent for each of the Fixed Assets Secured Parties (such term and all other
capitalized terms being used herein with the meanings provided, or incorporated
by reference, in the Pledge Agreement), is made by the undersigned.
W I T N E S S E T H:
WHEREAS, pursuant to a Revolving Credit Agreement, dated as of July __,
1999 (together with all amendments, supplements, restatements and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), among the Company, Sterling Canada, Inc., a Delaware corporation,
Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling Pulp
Chemicals, Inc., a Georgia corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Chemicals Energy, Inc., a Delaware corporation, and
Sterling Chemicals International, Inc., a Delaware corporation, (collectively,
the "Borrowers"), the various financial institutions as are, or may from time to
time become, parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Credit Suisse First Boston as the Documentation Agent and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Borrowers;
WHEREAS, as a condition precedent to the making and maintenance of
Fixed Assets Loans under the Credit Agreement, the undersigned is required to
execute and deliver this Supplement;
WHEREAS, the undersigned has duly authorized the execution, delivery
and performance of this Supplement and the Pledge Agreement;
WHEREAS, the Pledge Agreement provides that additional parties may
become Pledgors under the Pledge Agreement by execution and delivery of an
instrument in the form of this Supplement;
<PAGE> 19
WHEREAS, pursuant to the provisions of Section 7.9 of the Pledge
Agreement, the undersigned is becoming a Pledgor under the Pledge Agreement; and
WHEREAS, the undersigned desires to become a Pledgor under the Pledge
Agreement in order to induce the Fixed Assets Lenders to continue to make and
maintain Fixed Assets Loans under the Credit Agreement as consideration
therefor;
NOW, THEREFORE, the undersigned agrees, for the benefit of each Fixed
Assets Secured Party, as follows:
SECTION 1. In accordance with the Pledge Agreement, the undersigned by
its signature below becomes a Pledgor under the Pledge Agreement with the same
force and effect as if it were an original signatory thereto as a Pledgor and
Attachment I hereto shall be deemed to be part of Attachment I thereto. In
furtherance of the foregoing, each reference to a "Pledgor" in the Pledge
Agreement shall be deemed to include the undersigned.
SECTION 2. The undersigned hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by the undersigned
and constitutes a legal, valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and general equitable
principles.
SECTION 3. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect in accordance with its terms.
SECTION 4. In the event any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
SECTION 5. Without limiting the provisions of the Credit Agreement (or
any other Loan Document, including the Pledge Agreement), the undersigned agrees
to reimburse the Administrative Agent for its reasonable out-of-pocket expenses
in connection with this Supplement, including reasonable attorneys' fees and
expenses of the Administrative Agent.
SECTION 6. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE
-2-
<PAGE> 20
STATE OF NEW YORK, EXCLUDING THE LAW OF CONFLICTS BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
SECTION 7. This Supplement hereby incorporates by reference the
provisions of the Pledge Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Pledge
Agreement.
SECTION 8. This Supplement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original (whether
such counterpart is originally executed or an electronic copy of an original)
and all of which shall constitute together but one and the same agreement. This
Supplement shall become effective and binding upon the Pledgor when a
counterpart hereof executed on behalf of the Pledgor shall have been received by
the Administrative Agent.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
[NAME OF ADDITIONAL PLEDGOR]
By:
----------------------------------
Name:
Title:
ACKNOWLEDGED AND ACCEPTED BY:
THE CIT GROUP/BUSINESS CREDIT INC.,
as Administrative Agent
By:
---------------------------------
Name:
Title:
-3-
<PAGE> 21
ATTACHMENT 1
to
Supplement No. __
Pledge Agreement
[NAME OF PLEDGOR]
<TABLE>
<CAPTION>
Pledged Shares
--------------
Pledged Share Issuer Capital Securities
- -------------------- --------------------------------------------
Authorized Outstanding % of Shares
Shares Shares Pledged
---------- ----------- -----------
<S> <C> <C> <C>
</TABLE>
-4-
<PAGE> 1
EXHIBIT 4.9
STERLING CHEMICALS, INC.
as Issuer
STERLING CANADA, INC.
STERLING CHEMICALS ENERGY, INC.
STERLING CHEMICALS INTERNATIONAL, INC.
STERLING FIBERS, INC.
STERLING PULP CHEMICALS US, INC.
STERLING PULP CHEMICALS, INC.
as Guarantors
SERIES A AND SERIES B
12 3/8% SENIOR SECURED NOTES DUE 2006
------------------------------
INDENTURE
Dated as of July 23, 1999
------------------------------
Harris Trust Company of New York
as Trustee
------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1)............................................................. 7.10
(a)(2)............................................................. 7.10
(a)(3)............................................................. N.A.
(a)(4)............................................................. N.A.
(a)(5)............................................................. 7.10
(b)................................................................ 7.10
(c)................................................................ N.A.
311 (a)................................................................ 7.11
(b)................................................................ 7.11
(c)................................................................ N.A.
312 (a)................................................................ 2.05
(b)................................................................ 12.03
(c)................................................................ 12.03
313 (a)................................................................ 7.06
(b)(1)............................................................. 10.03
(b)(2)............................................................. 7.07
(c)................................................................ 7.06;12.02
(d)................................................................ 7.06
314 (a)................................................................ 4.03;12.02
(b)................................................................ 10.02
(c)(1)............................................................. 12.04
(c)(2)............................................................. 12.04
(c)(3)............................................................. N.A.
(d)................................................................ 10.03, 10.04, 10.05
(e)................................................................ 12.05
(f)................................................................ N.A.
315 (a)................................................................ 7.01
(b)................................................................ 7.05,12.02
(c)................................................................ 7.01
(d)................................................................ 7.01
(e)................................................................ 6.11
316 (a) (last sentence)................................................ 2.09
(a)(1)(A).......................................................... 6.05
(a)(1)(B).......................................................... 6.04
(a)(2)............................................................. N.A.
(b)................................................................ 6.07
(c)................................................................ 2.12
317 (a)(1)............................................................. 6.08
(a)(2)............................................................. 6.09
(b)................................................................ 2.04
318 (a)................................................................ 12.01
(b)................................................................ N.A.
(c)................................................................ 12.01
</TABLE>
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.........................................................................................1
Section 1.02. Other Definitions..................................................................................27
Section 1.03. Incorporation by Reference of Trust Indenture Act..................................................27
Section 1.04. Rules of Construction..............................................................................28
ARTICLE 2 THE NOTES
Section 2.01. Form and Dating....................................................................................28
Section 2.02. Execution and Authentication.......................................................................29
Section 2.03. Registrar and Paying Agent.........................................................................29
Section 2.04. Paying Agent to Hold Money in Trust................................................................30
Section 2.05. Holder Lists.......................................................................................30
Section 2.06. Transfer and Exchange..............................................................................30
Section 2.07. Replacement Notes..................................................................................42
Section 2.08. Outstanding Notes..................................................................................42
Section 2.09. Treasury Notes.....................................................................................42
Section 2.10. Temporary Notes....................................................................................42
Section 2.11. Cancellation.......................................................................................43
Section 2.12. Defaulted Interest.................................................................................43
ARTICLE 3 REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.................................................................................43
Section 3.02. Selection of Notes to Be Redeemed..................................................................43
Section 3.03. Notice of Redemption...............................................................................44
Section 3.04. Effect of Notice of Redemption.....................................................................44
Section 3.05. Deposit of Redemption Price........................................................................45
Section 3.06. Notes Redeemed in Part.............................................................................45
Section 3.07. Optional Redemption................................................................................45
Section 3.08. Mandatory Redemption...............................................................................46
Section 3.09. Offer to Purchase by Application of Excess Proceeds................................................46
ARTICLE 4 COVENANTS
Section 4.01. Payment of Notes...................................................................................47
Section 4.02. Maintenance of Office or Agency....................................................................48
Section 4.03. Reports............................................................................................48
Section 4.04. Compliance Certificate.............................................................................49
Section 4.05. Taxes..............................................................................................49
Section 4.06. Stay, Extension and Usury Laws.....................................................................49
Section 4.07. Limitation on Restricted Payments..................................................................49
Section 4.08. Limitation on Restrictions on Distributions from Restricted Subsidiaries...........................54
Section 4.09. Limitation on Debt.................................................................................55
Section 4.10. Asset Sales........................................................................................56
Section 4.11. Limitation on Transactions with Affiliates.........................................................58
Section 4.12. Liens..............................................................................................59
Section 4.13. Corporate Existence................................................................................59
Section 4.14. Offer to Repurchase Upon Change of Control.........................................................60
Section 4.15. Sale of Principal Properties.......................................................................61
Section 4.16. Transfer of the Fibers Business....................................................................62
Section 4.17. Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries.....................64
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
Section 4.18. No Amendment of Subordination Provisions...........................................................65
Section 4.19. Additional Note Guarantees.........................................................................65
ARTICLE 5 SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets............................................................65
Section 5.02. Successor Corporation Substituted..................................................................66
ARTICLE 6 DEFAULTS AND REMEDIES
Section 6.01. Events of Default..................................................................................66
Section 6.02. Acceleration.......................................................................................68
Section 6.03. Other Remedies.....................................................................................68
Section 6.04. Waiver of Past Defaults............................................................................68
Section 6.05. Control by Majority................................................................................69
Section 6.06. Limitation on Suits................................................................................69
Section 6.07. Rights of Holders of Notes to Receive Payment......................................................69
Section 6.08. Collection Suit by Trustee.........................................................................70
Section 6.09. Trustee May File Proofs of Claim...................................................................70
Section 6.10. Priorities.........................................................................................70
Section 6.11. Undertaking for Costs..............................................................................71
ARTICLE 7 TRUSTEE
Section 7.01. Duties of Trustee..................................................................................71
Section 7.02. Rights of Trustee..................................................................................72
Section 7.03. Individual Rights of Trustee.......................................................................72
Section 7.04. Trustee's Disclaimer...............................................................................73
Section 7.05. Notice of Defaults.................................................................................73
Section 7.06. Reports by Trustee to Holders of the Notes.........................................................73
Section 7.07. Compensation and Indemnity.........................................................................73
Section 7.08. Replacement of Trustee.............................................................................74
Section 7.09. Successor Trustee by Merger, etc...................................................................75
Section 7.10. Eligibility; Disqualification......................................................................75
Section 7.11. Preferential Collection of Claims Against Company..................................................75
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...........................................75
Section 8.02. Legal Defeasance and Discharge.....................................................................76
Section 8.03. Covenant Defeasance................................................................................76
Section 8.04. Conditions to Legal or Covenant Defeasance.........................................................76
Section 8.05. Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous
Provisions.........................................................................................78
Section 8.06. Repayment to Company...............................................................................78
Section 8.07. Reinstatement......................................................................................78
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes................................................................79
Section 9.02. With Consent of Holders of Notes...................................................................80
Section 9.03. Compliance with Trust Indenture Act................................................................81
Section 9.04. Revocation and Effect of Consents..................................................................81
Section 9.05. Notation on or Exchange of Notes...................................................................81
Section 9.06. Trustee to Sign Amendments, etc....................................................................82
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE 10 COLLATERAL AND SECURITY
Section 10.01. Security Agreements...............................................................................82
Section 10.02. Recording and Opinions............................................................................82
Section 10.03. Release of Collateral.............................................................................83
Section 10.04. Certificates of the Company.......................................................................84
Section 10.05. Certificates of the Trustee.......................................................................84
Section 10.06. Attornment........................................................................................84
Section 10.07. Authorization of Actions to Be Taken by the Trustee Under the Security Agreements.................85
Section 10.08. Authorization of Receipt of Funds by the Trustee Under the Security Agreements....................85
Section 10.09. Termination of Security Interest..................................................................85
ARTICLE 11 SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantees.............................................................................85
Section 11.02. Limitation on Subsidiary Guarantor Liability......................................................86
Section 11.03. Execution and Delivery of Subsidiary Guarantee....................................................87
Section 11.04. Subsidiary Guarantors May Consolidate, etc., on Certain Terms.....................................87
Section 11.05. Releases Following Sale of Assets.................................................................88
ARTICLE 12 MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls......................................................................89
Section 12.02. Notices...........................................................................................89
Section 12.03. Communication by Holders of Notes with Other Holders of Notes.....................................90
Section 12.04. Certificate and Opinion as to Conditions Precedent................................................90
Section 12.05. Statements Required in Certificate or Opinion.....................................................90
Section 12.06. Rules by Trustee and Agents.......................................................................91
Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders..........................91
Section 12.08. Governing Law.....................................................................................91
Section 12.09. No Adverse Interpretation of Other Agreements.....................................................91
Section 12.10. Successors........................................................................................91
Section 12.11. Severability......................................................................................91
Section 12.12. Counterpart Originals.............................................................................92
Section 12.13. Table of Contents, Headings, etc..................................................................92
</TABLE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF NOTATION OF GUARANTEE
Exhibit F SCHEDULE I SCHEDULE OF GUARANTORS
iii
<PAGE> 6
INDENTURE dated as of July 23, 1999 among Sterling Chemicals, Inc., a
Delaware corporation, Sterling Canada, Inc., a Delaware corporation, Sterling
Chemicals Energy, Inc., a Delaware corporation, Sterling Chemicals
International, Inc., a Delaware corporation, Sterling Fibers, Inc., a Delaware
corporation, Sterling Pulp Chemicals US, Inc., a Delaware corporation, Sterling
Pulp Chemicals, Inc., a Georgia corporation, and Harris Trust Company of New
York, as trustee.
The Company (as defined below), the Subsidiary Guarantors (as defined
below) and the Trustee (as defined below) agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders of the 123/8%
Series A Senior Secured Notes due 2006 (the "Series A Notes") and the 123/8%
Series B Senior Secured Notes due 2006 (the "Series B Notes" and, together with
the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions of Sections 4.10 and 4.11 only, "Affiliate" shall
also mean any beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of
rights or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the purposes
of this definition as a "disposition") by the Company or any of its Restricted
Subsidiaries, including any disposition by means of a merger, consolidation or
similar transaction, for gross proceeds in excess of $2.0 million, other than:
(1) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly Owned Subsidiary,
1
<PAGE> 7
(2) a disposition of property or assets (other than shares of Capital
Stock of a Restricted Subsidiary and which do not constitute all or
substantially all of the assets of any division or line of business of the
Company or any Restricted Subsidiary) at fair market value in the ordinary
course of business,
(3) for purposes of the provisions of Section 4.10 only, a disposition
that constitutes a Restricted Payment permitted or a Permitted Investment not
prohibited by the provisions of Section 4.07,
(4) the disposition of all or substantially all of the assets of the
Company permitted by the provisions of Section 5.01,
(5) the disposition of assets in exchange for other assets that
satisfy the requirements set forth in clause (2)(B) of Section 4.10,
(6) a Transfer of the Fibers Business made in accordance with the
terms of Section 4.16, and
(7) a Sale of a Principal Property made in accordance with the terms
of Section 4.15 hereof.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer
or exchange.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Notes, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale/Leaseback Transaction (including any period for which such lease has
been extended).
"Average Life" means, as of the date of determination, with respect to
any Debt or Preferred Stock, the quotient obtained by dividing:
(1) the sum of the products of numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Debt or redemption or similar payment with respect to such Preferred Stock
multiplied by the amount of such payment by
(2) the sum of all such payments.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Borrowers" means collectively, Sterling Chemicals, Inc., Sterling
Canada, Inc., Sterling Pulp Chemicals US, Inc., Sterling Pulp Chemicals, Inc.,
Sterling Fibers, Inc., Sterling Chemicals Energy, Inc. and Sterling Chemicals
International, Inc.
"Broker-Dealer" means any broker or dealer registered under the
Exchange Act.
2
<PAGE> 8
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a Person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such Person prepared in accordance with GAAP; the amount of
such obligation shall be the capitalized amount thereof, determined in
accordance with GAAP and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options or participations (or other equivalents
thereof) in such Person (however designated), including any Preferred Stock,
but excluding any debt securities convertible into or exchangeable for such
equity.
"Cedel" means Cedelbank.
"Change of Control" means:
(1) Any "Person" (as that term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more of the Permitted Holders, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act except that a Person will be deemed to have "beneficial ownership"
of all shares that any such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the Voting Stock of
Holdings; provided, however, that the Permitted Holders "beneficially own," as
defined above, directly or indirectly, in the aggregate a lesser percentage of
the total voting power of the Voting Stock of Holdings than such other Person
and do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of
Holdings. For the purposes of this clause (1):
(a) such other Person will be deemed to beneficially own any Voting
Stock of a corporation (the "specified corporation") held by any other
corporation (the "parent corporation"), if such other Person
"beneficially owns" (as defined above), directly or indirectly, more
than 35% of the voting power of the Voting Stock of such parent
corporation and the Permitted Holders "beneficially own" (as defined
above), directly or indirectly, in the aggregate a lesser percentage
of the voting power of the Voting Stock of such parent corporation and
do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board
of Directors of such parent corporation; and
(b) the Permitted Holders will be deemed to beneficially own any
Voting Stock of a specified corporation held by any parent corporation
so long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, in the aggregate a majority of the voting
power of the Voting Stock of the parent corporation).
(2) During any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Holdings or the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of Holdings or
the Company, as the case may be, was approved by a majority of the directors of
Holdings or the Company, as the case may be, then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any
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<PAGE> 9
reason to constitute a majority of the Board of Directors of Holdings or the
Company, as the case may be, then in office.
(3) The merger or consolidation of Holdings or the Company with or
into another Person or the merger of another Person (other than a Permitted
Holder) with or into Holdings or the Company, or the sale or transfer in one or
a series of transactions of all or substantially all of the assets of Holdings
or the Company to another Person (other than a Permitted Holder) and, in the
case only of any such merger or consolidation, the securities of Holdings or
the Company that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of the Voting Stock of
Holdings or the Company are changed into or exchanged for cash, securities or
property, unless pursuant to such transaction such securities are changed into
or exchanged for, in addition to any other consideration, securities of the
surviving corporation that represent, immediately after such transaction, at
least a majority of the aggregate voting power of the Voting Stock of the
surviving corporation.
(4) For so long as a holding company ownership structure is maintained
over the Company, Holdings holds less than a majority of the Capital Stock of
the Company (other than Preferred Stock of the Company issued in accordance
with the terms of this Indenture) or less than a majority of the Voting Stock
of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" shall have the meaning set forth in the Security
Agreements.
"Commission" means the Securities and Exchange Commission.
"Commodity Agreement" means any commodity future contract, commodity
option or other similar agreement or arrangement (limited in amount to
underlying exposure, and not for speculative purposes) entered into by the
Company or any Restricted Subsidiary that is designed to protect the Company or
a Restricted Subsidiary against fluctuations in the price of commodities used
by Sterling or a Restricted Subsidiary as raw materials in the ordinary course
of business.
"Company" means Sterling Chemicals, Inc., and any and all successors
thereto.
"Comparable Treasury Issue" means the United States Treasury security
selected by a Reference Treasury Dealer as having a maturity comparable to July
23, 2006 that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining life of the Notes.
"Comparable Treasury Price" means, with respect to any date of
redemption, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day preceding such date of redemption, as set forth in
the daily statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations
for U.S. Government Securities," or (ii) if such release (or any successor
release) is not published or does not contain such prices on such Business Day,
the average of the Reference Treasury Dealer Quotations.
"Consolidated EBITDA Coverage Ratio" as of any date of determination
means the ratio of:
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<PAGE> 10
(1) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date of
such determination to
(2) Consolidated Interest Expense for such four fiscal quarters;
provided, however, that
(a) if the Company or any Restricted Subsidiary has incurred any Debt
since the beginning of such period that remains outstanding or if the
transaction giving rise to the need to calculate the Consolidated
EBITDA Coverage Ratio is an Incurrence of Debt, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Debt as if such Debt
had been Incurred on the first day of such period and the discharge of
any other Debt repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Debt as if such discharge had occurred
on the first day of such period,
(b) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, EBITDA
for such period shall be reduced by an amount equal to EBITDA (if
positive) directly attributable to the assets which are the subject of
such Asset Disposition for such period, or increased by an amount
equal to EBITDA (if negative), directly attributable thereto for such
period, and Consolidated Interest Expense for such period shall be
reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Debt of the Company or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Dispositions for such period (or, if the
Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Debt of
such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Debt
after such sale),
(c) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto (including the Incurrence of any
Debt) as if such Investment or acquisition occurred on the first day
of such period, and
(d) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition or any Investment that
would have required an adjustment pursuant to clause (b) or (c) above
if made by the Company or a Restricted Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition or Investment occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto, and
the amount of Consolidated Interest Expense associated with any Debt Incurred
in connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting officer of the Company. If any
Debt bears a floating rate of interest and is being given pro forma effect, the
interest of such Debt shall be calculated as if the rate in effect on the date
of determination had been the applicable rate for the entire
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<PAGE> 11
period (taking into account any Interest Rate Agreement applicable to such Debt
if such Interest Rate Agreement has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
plus, to the extent not included in such interest expense:
(1) interest expense attributable to Capital Lease Obligations,
(2) amortization of debt discount and debt issuance cost,
(3) capitalized interest,
(4) noncash interest payments,
(5) commissions, discounts and other fees and charges owed with
respect to letters of credit and bakers' acceptance financing,
(6) net costs under Interest Rate Agreements (including amortization
of fees),
(7) Preferred Stock dividends in respect of all Redeemable Stock of
the Company and all Preferred Stock of Restricted Subsidiaries held by Persons
other than the Company or a Wholly Owned Subsidiary,
(8) interest incurred in connection with Investments in discontinued
operations,
(9) interest actually paid by the Company or any of its Restricted
Subsidiaries under any Guarantee of Debt or other obligation of any other
Person, and
(10) the cash contribution to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than the Company or any Restricted
Subsidiary) in connection with Debt Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(1) any net income of any Person if such Person is not a Restricted
Subsidiary, except that:
(a) subject to the exclusion contained in clause (4) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period
to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution
to a Restricted Subsidiary, to the limitations contained in clause (3)
below), and
(b) the Company's equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net Income
to the extent of any cash actually contributed by the Company or a
Restricted Subsidiary to such Person during such period,
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<PAGE> 12
(2) any net income (or loss) of any Person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition,
(3) any net income of any Restricted Subsidiary to the extent such
Restricted Subsidiary is subject to restrictions, directly or indirectly, on
the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that:
(a) subject to the exclusion contained in clause (4) below, the
Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such
Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution to another Restricted
Subsidiary, to the limitation contained in this clause), and
(b) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such
Consolidated Net Income,
(4) any gain or loss realized upon the sale or other disposition of
any assets of the Company or its consolidated Subsidiaries (including pursuant
to any sale-and-leaseback arrangement) which is not sold or otherwise disposed
of in the ordinary course of business and any gain or loss realized upon the
sale or other disposition of any Capital Stock of any Person,
(5) extraordinary gains or losses, and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of the provisions of Section
4.07 only, there shall be excluded from Consolidated Net Income any dividends,
repayments of loans or advances or other transfers of assets from Unrestricted
Subsidiaries to the Company or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted pursuant to clause (3)(E) of Section 4.07.
"Consolidated Net Worth" of any Person means the total of the amounts
shown on the balance sheet of such Person and its consolidated subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of
the most recent fiscal quarter of such Person ending at least 45 days prior to
the taking of any action for the purpose of which the determination is being
made, as
(1) the par or stated value of all outstanding Capital Stock of such
Person, plus
(2) paid-in capital or capital surplus relating to such Capital Stock,
plus
(3) any retained earnings or earned surplus,
less:
(1) any accumulated deficit,
(2) any amounts attributable to Redeemable Stock, and
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<PAGE> 13
(3) any amounts attributable to Exchangeable Stock.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means that certain Revolving Credit Agreement dated
as of July 23, 1999 (as amended, supplemented and restated or otherwise
modified from time to time) among the Borrowers, DLJ Capital Funding, Inc., as
Syndication Agent, The CIT Group/Business Credit, Inc., as Administrative
Agent, Credit Suisse First Boston, as Documentation Agent, and the other
lenders party thereto providing for the Fixed Assets Revolver and the Working
Capital Revolver.
"Currency Agreement" means with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement (limited
in amount to underlying exposure, and not for speculative purposes) to which
such Person is a party or a beneficiary.
"Custodian" means the Trustee, as custodian with respect to the Global
Notes, or any successor entity thereto.
"Debt" of any Person means, without duplication:
(1) the principal of and premium (if any) in respect of
(a) indebtedness of such Person for money borrowed and
(b) indebtedness evidenced by notes, debentures, bonds or other
similar instruments the payment of which such Person is responsible or
liable,
(2) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such Person,
(3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business),
(4) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing
obligations (other than obligations described in (1) through (3) above) entered
into in the ordinary course of business of such Person to the extent such
letters of credit are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed no later than the third Business Day following receipt by
such Person of a demand for reimbursement following payment on the letter of
credit),
(5) all Redeemable Stock of such Person and, with respect to any
Subsidiary of such Person, all Preferred Stock other than pay-in-kind dividends
in the form of Preferred Stock (the amount of Debt represented thereby shall
equal the greater of its liquidation preference and the redemption, repayment
or other repurchase obligations with respect thereto, not excluding any accrued
dividends),
(6) all Hedging Obligations of such Person,
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<PAGE> 14
(7) all obligations of the type referred to in clauses (1) through (4)
of other Persons and all dividends of other Persons the payment of which, in
either case, such Person is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including by means of any Guarantee, and
(8) all obligations of the type referred to in clauses (1) through (6)
of other Persons secured by any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured.
The amount of Debt of any Person at any date shall be the outstanding
balance on such date of all unconditional obligations as described above and
the maximum liability upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, however, that
the amount outstanding at any time of any Debt Incurred with original issue
discount is the face amount of such Debt less the remaining unamortized portion
of the original issue discount of such Debt at such time as determined in
conformity with GAAP.
"Default" means any event that is, or after notice or the passage of
time or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Discount Notes" means the 13 1/2% Senior Secured Discount Notes due
2008 of Holdings.
"EBITDA" for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense, plus the following to the extent deducted in
calculating such Consolidated Net Income:
(1) all income tax expense of the Company,
(2) depreciation expense,
(3) amortization expense,
(4) an amount equal to any extraordinary loss realized in connection
with an Asset Disposition, any Transfer of the Fibers Business or the sale or
other disposition of any Sale of a Principal Property and
(5) all other noncash items reducing such Consolidated Net Income
(excluding any noncash item to the extent it represents an accrual of, or
reserve for, cash disbursements for any subsequent period) less all noncash
items increasing such Consolidated Net Income (such amount calculated pursuant
to this clause (5) not to be less than zero), in each case for such period.
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<PAGE> 15
Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization of, a Subsidiary of
the Company shall be added to Consolidated Net Income to compute EBITDA only to
the extent (and in the same proportion) that the net income of such Subsidiary
was included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended or
otherwise paid to the Company by such Subsidiary without further approval,
pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Subsidiary or its stockholders.
"Equity Interests" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited);
(4) 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; and
(5) any options, warrants and other rights to acquire or purchase any
of the foregoing.
"Equity Private Placement" means the private placement of shares of
common stock of STX Acquisition Corp. consummated immediately prior to the
merger of STX Acquisition Corp. into Sterling Chemicals, Inc. on August 21,
1996, which shares were converted into shares of common stock of Holdings upon
consummation of such transaction.
"ESOP" means the Sterling Chemicals ESOP as in existence on the Issue
Date and as may be modified or amended from time to time in accordance with its
terms, provided that any such modifications or amendments are not adverse to
the Holders of the Notes, or as otherwise required by applicable law.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued by the Company in exchange for
the Notes upon consummation of the Exchange Offer pursuant to the Registration
Rights Agreement.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
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"Exchangeable Stock" means any Capital Stock which is exchangeable or
convertible into another security (other than Capital Stock of the Company or
any Wholly Owned Subsidiary which is neither Exchangeable Stock nor Redeemable
Stock).
"Existing Subordinated Notes" means $275,000,000 in original principal
amount of the Company's 11 3/4% Senior Subordinated Notes Due 2006 and
$150,000,000 in original principal amount of the Company's 11 1/4% Senior
Subordinated Notes Due 2007.
"Fibers Subsidiaries" means Sterling Chemicals International, Inc. and
Sterling Fibers, Inc. which collectively own the assets which constitute the
Santa Rosa County acrylic fibers facility.
"Fixed Assets Revolver" means the five year senior secured revolving
credit facility under the Credit Agreement pursuant to which the Borrowers may
borrow, repay and reborrow up to $70.0 million secured by first priority liens
on the Shared Collateral and a second priority lien on the accounts receivable,
inventory, related general intangibles and certain other assets of the Company
and the other Borrowers and any Refinancing Debt with respect thereto provided
that the Stated Maturity of such Refinancing Debt does not extend beyond the
Stated Maturity of the Fixed Assets Revolver.
"Foreign Assets Sale" means an Asset Disposition in respect of Capital
Stock or assets of a Non-U.S. Subsidiary or a Restricted Subsidiary of the type
described in Section 936 of the Code to the extent that the proceeds of such
Asset Disposition are received by a Person subject in respect of such proceeds
to the tax laws of a jurisdiction other than the United States or any state
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth:
(1) in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants,
(2) in statements and pronouncements of the Financial Accounting
Standards Board,
(3) in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, and
(4) in the rules and regulations of the Commission governing the
inclusion of financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the Commission.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
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<PAGE> 17
"Guarantee" means, with respect to any Person, any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing any
Debt or other obligation of any other Person and any obligation, direct or
indirect, contingent or otherwise of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) any Debt or other obligation of any other Person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise), or
(2) entered into for purposes of assuring in any other manner the
obligee of any Debt or other obligation of any other Person of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposits in the ordinary course of business or guarantees of
obligations of a Subsidiary in the ordinary course of business if such
obligations do not constitute Debt of such Subsidiary. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity
Agreement (limited in amount to underlying exposure, and not for speculative
purposes).
"Holder" means a Person in whose name a Note is registered on the
registrar's books.
"Holdings" means Sterling Chemicals Holdings, Inc., a Delaware
corporation and the sole stockholder of the Company.
"IAI Global Note" means the Global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold to Institutional Accredited
Investors.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Debt or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall be deemed the Incurrence
of Debt.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent Financial Advisor" means a reputable accounting,
appraisal or investment banking firm that, in the reasonable good faith
judgment of the Board of Directors of the Company, is qualified to perform the
task for which such firm has been engaged and is independent with respect to
the Company and its Affiliates.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.
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<PAGE> 18
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation and Credit Suisse First Boston Corporation.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement
(limited in amount to underlying exposure, and not for speculative purposes)
designed to protect the Company or any Restricted Subsidiary against
fluctuations in interest rates.
"Investment" means, with respect to any Person, any loan or advance
to, any acquisition of Capital Stock, equity interest, obligation or other
security of, or capital contribution or other investment in, or any other
credit extension to (including by way of Guarantee of any Debt of), any other
Person. For purposes of the definition of "Unrestricted Subsidiary," the
definition of "Restricted Payment" and the provisions of Section 4.07:
(1) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that if such
designation is made in connection with the acquisition of such Subsidiary or
the assets owned by such Subsidiary, the "Investment" in such Subsidiary shall
be deemed to be the consideration paid in connection with such acquisition; and
provided, further, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary equal to an amount (if
positive) equal to:
(a) the Company's "Investment" in such Subsidiary at the time of such
redesignation, less
(b) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation, and
(2) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in each
case as determined in good faith by the Board of Directors.
"Investment Grade Rating" means a rating of BBB- or higher by S&P and
Baa3 or higher by Moody's or the equivalent of such rating by S&P and Moody's
or by any other Rating Agencies selected as provided in the definition of
Rating Agency.
"Issue Date" means the date on which the Notes are originally issued.
"Joint Venture Contribution" means any transfer, assignment,
conveyance or contribution of the Capital Stock of the Fibers Subsidiaries or
all or substantially all of the assets of the Fibers Subsidiaries to a
corporation, partnership, limited liability company, joint venture or other
entity in which the Company and its Affiliates shall, immediately after giving
effect to such transaction, beneficially, own or hold any Equity Interest in
the Person to which such contribution is made, including
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<PAGE> 19
any such contribution made through any merger, consolidation or similar
transaction or any agreement to operate all or substantially all of the assets
of the Fibers Subsidiaries under any similar arrangement.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, in the city of the Corporate Trust Office
of the Trustee or at a place of payment are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue on such payment for the intervening
period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Net Available Cash" from an Asset Disposition, a Transfer of the
Fibers Business or a Sale of a Principal Property means cash payments received
therefrom (including, to the extent permitted, any cash payments received by
way of deferred payment of principal pursuant to a promissory note or
installment receivable of any Return of Capital or otherwise, but only as and
when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to
such properties or assets that are the subject of such Asset Disposition or
received in any other noncash form), in each case net of:
(1) all legal, title and recording expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a consequence
of such transaction,
(2) all payments made on any Debt which is secured by any assets
subject to such transaction, in accordance with the terms of any Lien upon or
other security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such transaction, or
by applicable law be repaid out of the proceeds from such transaction,
(3) all distributions and other payments required to be made to any
minority interest holders in Subsidiaries or joint ventures as a result of such
transaction, and
(4) the deduction of appropriate amounts provided by the sellers as a
reserve, in accordance with GAAP, against any liabilities associated with the
property or other assets disposed in such transaction and retained by the
Company or any Restricted Subsidiary after such transaction.
"Net Cash Proceeds" means, with respect to any issuance or sale of
Capital Stock, the cash proceeds of such issuance of sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultants' and other fees, and other costs and
expenses actually incurred in connection with such issuance or sale and net of
taxes paid or payable as a result thereof.
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<PAGE> 20
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible
Capital Stock of such corporation; provided, however, that Non-Convertible
Capital Stock shall not include any Redeemable Stock or Exchangeable Stock.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Non-U.S. Subsidiary" means a Restricted Subsidiary that is
incorporated in a jurisdiction other than the United States or a State thereof
or the District of Columbia and with respect to which more than 66 2/3% of any
of its sales, earnings or assets (determined on a consolidated basis in
accordance with GAAP) are located in, generated from or derived from operations
located in territories or jurisdictions outside the United States.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means the obligations and liabilities of the Company
under this Indenture and the Notes for principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate that meets the
requirements of Section 12.05 hereof signed on behalf of the Company by two
Officers of the Company, one of whom must be the principal executive officer,
the principal financial officer, the treasurer or the principal accounting
officer of the Company.
"Opinion of Counsel" means an opinion that meets the requirements of
Section 12.05 hereof from legal counsel, who may be an employee of or counsel
to the Company, any Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"Permitted Holders" means:
(1) each of Frank J. Hevrdejs, William C. Oehmig, J. Virgil Waggoner,
Robert W. Roten and Gordon Cain;
(2) any Permitted Transferee with respect to any Person covered by the
preceding clause (1);
(3) any savings or investment plan sponsored by the Company or
Holdings, including the ESOP;
(4) the purchasers in the Equity Private Placement; or
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(5) any Person who on August 21, 1996 was an officer, director,
stockholder, employee or consultant of The Sterling Group, Inc. or The Unicorn
Group, L.L.C.
"Permitted Investment" means an Investment by the Company of any
Restricted Subsidiary in:
(1) a Wholly Owned Subsidiary or a Person that will, upon the making
of such Investment, become a Wholly Owned Subsidiary;
(2) Temporary Cash Investments;
(3) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
(4) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments;
(5) any Person to the extent such Investment represents the noncash
portion of the consideration received for (A) an Asset Disposition as permitted
pursuant to Section 4.10, (B) a Sale of a Principal Property as permitted, and
other sales, transfers and dispositions as permitted, pursuant to Section 4.15
or (C) a Transfer of the Fibers Business as permitted pursuant to Section 4.16;
(6) Investments by the Company or a Restricted Subsidiary in a Person
to the extent the consideration for such Investment consists of shares of
Capital Stock of the Company or Holdings (other than Redeemable Stock of the
Company);
(7) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of business;
(8) loans or advances to employees or to a trust for the benefit of
such employees that are made in the ordinary course of business of the Company
or such Restricted Subsidiary;
(9) another Person if as a result of such Investment such Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all of its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is reasonably related to
the business of the Company and its Restricted Subsidiaries; and
(10) Investments in Unrestricted Subsidiaries or joint ventures
(whether in corporate or partnership form or otherwise), in either case in
entities engaged in businesses reasonably related to the business of the
Company and its Restricted Subsidiaries, in an aggregate amount not to exceed
$10.0 million outstanding at any time; provided, however, that the amount
available for Investments pursuant to this clause (10) shall be reduced in
accordance with clause (3)(G) of the first paragraph of Section 4.07.
"Permitted Liens" means:
(1) Liens existing on the Issue Date, including those that secure Debt
and other obligations under the Credit Agreement that this Indenture permitted
to be Incurred;
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(2) Liens for taxes, assessments or other governmental charges or
levies not yet due or that are being contested in good faith by appropriate
action or proceedings promptly instituted and diligently pursued to conclusion
and with respect to which adequate reserves in conformity with GAAP are being
maintained;
(3) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen, repairmen, workmen, crews, maritime liens and other
Liens imposed by law created in the ordinary course of business for amounts
that are not past due or that are being contested in good faith by appropriate
action or proceedings and with respect to which adequate reserves in accordance
with GAAP are being maintained;
(4) Liens incurred or deposits or pledges made in the ordinary course
of business in connection with workers' compensation, unemployment insurance
and other types of social security, old age or other similar obligations, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment
of borrowed money) incurred in the ordinary course of business;
(5) minor irregularities in title, boundaries, or other survey
defects, easements, rights-of-way, restrictions, servitudes, permits,
reservations, exceptions, zoning regulations, conditions, covenants, mineral or
royalty rights or reservations or oil, gas and mineral leases and rights of
others in any property of the Company or any Restricted Subsidiary for streets,
roads, bridges, pipes, pipe lines, railroads, electric transmission and
distribution lines, telegraph and telephone lines, the removal of oil, gas or
other minerals or other similar purposes, flood control, water rights, rights
of others with respect to navigable waters, sewage and drainage rights and
other similar charges or encumbrances existing as of the Issue Date (or granted
by the Company or any Restricted Subsidiary in the ordinary course of business)
that do not, in the aggregate, materially impair the value of the property of
the Company or any Restricted Subsidiary and the occupation, use and enjoyment
by the Company or any of its Restricted Subsidiaries of any of their respective
properties in the normal course of business;
(6) Liens securing Debt neither created, assumed nor guaranteed by the
Company or any Restricted Subsidiary upon lands over which easements or similar
rights are acquired by the Company or any Restricted Subsidiary in the ordinary
course of business of the Company or any Restricted Subsidiary;
(7) terminable or short term leases or permits for occupancy, which
leases or permits expressly grant to the Company or any Restricted Subsidiary
the right to terminate them at any time on not more than six months' notice and
which occupancy does not interfere with the operation of the business of the
Company or any Restricted Subsidiary;
(8) any Lien or privilege arising solely by operation of law and
vested in any lessor, licensor or permittor on personal property located on
premises leased by the Company or any Restricted Subsidiary, for rent to become
due or for other obligations or acts to be performed, the payment of which rent
or the performance of which other obligations or acts is required under leases,
subleases, licenses or permits;
(9) Liens or privileges of any employee of the Company or any
Restricted Subsidiary for salary or wages earned but not yet payable;
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(10) any obligations or duties affecting any of the property of the
Company or its Subsidiaries to any municipality or public authority with
respect to any franchise, grant, license or permit that do not materially
impair the use of such property for the purposes for which it is held;
(11) Liens upon property or assets other than as described in clause
(12) immediately below acquired by the Company after the Issue Date; provided,
however, that such Liens do not extend to any property or assets other than
such property or assets;
(12) Liens on property or shares of Capital Stock of another Person at
the time such other Person becomes a Restricted Subsidiary of such Person;
provided, however, that such Liens are in existence prior to the contemplation
of such Person becoming a Restricted Subsidiary and are not created, incurred
or assumed in connection with, or in contemplation of, such other Person
becoming such a Restricted Subsidiary and do not extend to any assets other
than those of the Person that becomes a Restricted Subsidiary;
(13) Liens resulting from operation of law with respect to any
judgments, awards or orders to the extent that such judgments, awards or orders
do not cause or constitute an Event of Default;
(14) Liens on any property in favor of domestic or foreign
governmental bodies to secure partial, progress, advance or other payments
pursuant to any contract or statute, not yet due and payable;
(15) Liens securing Debt incurred to finance the construction,
purchase or lease of, or repairs, improvements or additions to, property of
such Person used in the business of the Company, to the extent such Debt is
otherwise permitted by this Indenture;
(16) Liens with respect to the so called "greenbelt" or "buffer zone"
properties, for as long as those properties are used solely for "greenbelt" or
buffer zone" purposes;
(17) leases and ground leases of underutilized or vacant properties of
the Company or any Restricted Subsidiary to third parties with which the
Company has a production, co-production, co-generation, operating or other
arrangement or to third party providers of energy or raw materials in the
ordinary course of business of the Company or a Restricted Subsidiary, provided
such leases do not materially interfere with the operation of the business of
the Company or any Restricted Subsidiary or materially diminish the value of
the PP&E;
(18) easements, rights-of-way, restrictions and other similar charges
or encumbrances granted to others, in each case incidental to, and not
interfering with, the ordinary conduct of the business of the Company or any of
its Subsidiaries, provided that such Liens are not violated by the existing
PP&E and do not, in the aggregate, materially diminish the value of the PP&E;
(19) the burdens of any law or governmental regulation or permit
requiring the Company to maintain certain facilities or perform certain acts as
a condition of its occupancy of or interference with any public lands or any
river or stream or navigable waters;
(20) Liens on accounts receivable and inventory and other specified
assets of the type securing the Working Capital Revolver, in each case other
than assets constituting part of the Pledged Collateral, which Liens secure
either (a) extensions, renewals, modifications, replacements or increases of
the Working Capital Revolver in whole or in part from time to time or (b) any
revolving credit agreement of
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any Non-U.S. Subsidiary; provided, however, that in each case the Debt secured
by such Liens is permitted by the terms of this Indenture to be Incurred;
(21) extensions, renewals, modifications or replacements of any Lien
referred to in clauses (1) through (21) of this definition, provided that such
Lien is otherwise permitted by the terms hereof and, with respect to Liens
securing Debt, no extension or renewal Lien shall (A) secure more than the
amount of the Debt or other obligations secured by the Lien being so extended
or renewed, other than as permitted by clause (11) or (20) hereof, or (B)
extend to any property or assets not subject to the Lien being so extended or
renewed, other than as permitted by clause (11) or (20) hereof, or (C) with
respect to the Shared Collateral, relate to any Debt that has a Stated Maturity
that extends beyond the Stated Maturity of the Fixed Assets Revolver; and
(22) Liens incurred in the ordinary course of business of the Company
and its Restricted Subsidiaries that do not secure Debt and which have a value
that in the aggregate does not exceed $5.0 million at any one time outstanding.
"Permitted Transferee" means with respect to any Person:
(1) in the case of an entity, any Affiliate of such Person; and
(2) in the case of an individual, any person related by lineal or
collateral consanguinity to such individual or to the spouse of such individual
(adopted persons shall be considered the natural born child of their adoptive
parents).
Lineal consanguinity is that relationship that exists between persons of whom
one is descended (or ascended) in a direct line from the other, as between son,
father, grandfather and great-grandfather. Collateral consanguinity is that
relationship that exists between persons who have the same ancestors, but who
do not descend (or ascend) from the other, as between uncle and nephew, or
cousin and cousin, in each case to whom such Person has transferred common
stock of Holdings.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pledged Collateral" means any assets of the Company or any Subsidiary
Guarantor defined as Pledged Collateral in the Security Agreements.
"Preferred Stock" as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Principal Properties" means each of the chemical facilities at the
following locations:
(1) Texas City, Texas;
(2) Valdosta, Georgia;
(3) Buckingham, Quebec;
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(4) Vancouver, British Columbia;
(5) Thunder Bay, Ontario; and
(6) Grande Prairie, Alberta
"Principal Property Subsidiary" means each of Sterling Pulp Chemicals,
Inc., Sterling Pulp Chemicals, Ltd. and Sterling NRO, Ltd. and any other
Affiliate that may hereafter own any Principal Property.
"PP&E" means the real property, production facilities and certain
related general intangibles and other assets currently owned by the Company and
its Restricted Subsidiaries, a second priority lien on which will secure the
Notes and the Subsidiary Guarantees, as provided in the Security Agreements.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Public Equity Offering" means an underwritten primary public offering
of common stock of Holdings pursuant to an effective registration statement
under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Rating Agency" means S&P and Moody's, or if S&P or Moody's or both
shall not make a rating on the Notes publicly available, a nationally
recognized statistical rating agency or agencies, as the case may be, selected
by the Company (as certified by a resolution of the Board of Directors) which
shall be substituted for S&P or Moody's or both, as the case may be.
"Redeemable Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed on or prior to the Stated Maturity of the
Notes or is redeemable at the option of the Holder thereof without regard to
the occurrence of any contingency at any time on or prior to the Stated
Maturity of the Notes.
"Reference Treasury Dealer" means each of (1) Donaldson, Lufkin &
Jenrette Securities Corporation, or its successors, and Credit Suisse First
Boston Corporation, or its successors; provided, however, that if the foregoing
shall not be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer and (2) any Primary Treasury Dealer selected by the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer on any date of redemption, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such date of redemption.
"Refinance" means, in respect of any Debt, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other Debt
in exchange or replacement for, such Debt. "Refinanced" and "Refinancing" shall
have correlative meanings.
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"Refinancing Debt" means Debt that Refinances any Debt of the Company
or any Restricted Subsidiary existing on the Issue Date or Incurred in
compliance with this Indenture including Debt that Refinances Refinancing Debt;
provided, however that:
(1) such Refinancing Debt has a Stated Maturity no earlier than the
Stated Maturity of the Debt being Refinanced,
(2) such Refinancing, Debt has an Average Life at the time such
Refinancing Debt is Incurred that is equal to or greater than the Average Life
of the Debt being Refinanced,
(3) such Refinancing Debt has an aggregate principal amount (or if
incurred with original issue discount, an aggregate issue price) that is equal
to or less than the aggregate principal amount (or if Incurred with original
issue discount, the aggregate accreted value) then outstanding or committed
(plus fees and expenses, including any premium and defeasance costs) under the
Debt being Refinanced, and
(4) with respect to any Refinancing Debt of Debt other than Senior
Debt, such Refinancing Debt shall rank no more senior, and shall be at least as
subordinated, in right of payment to the Notes as the Debt being so extended,
renewed, refunded or refinanced; and
provided, further, however, that Refinancing Debt shall not include:
(1) Debt of a Subsidiary (other than a Wholly Owned Subsidiary which
is also a Subsidiary Guarantor) that Refinances Debt of the Company, or
(2) Debt of the Company or a Restricted Subsidiary that Refinances
Debt of an Unrestricted Subsidiary.
"Registration Rights Agreement" means the A/B Exchange Registration
Rights Agreement, dated as of July 23, 1999, by and among the Company, the
Subsidiary Guarantors and the Initial Purchasers, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Representative" means any trustee, agent or representative (if any)
for an issue of Senior Debt of the Company.
"Responsible Officer" means, when used with respect to the Trustee,
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
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"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Subsidiary" means any Subsidiary of the Company that is
not an Unrestricted Subsidiary.
"Return of Capital" means, with respect to any Equity Interest, any
sums paid on or in respect of such Equity Interest (1) as a return, in whole or
in part, of the capital of the issuer of such Equity Interest as constituted
immediately following the consummation of the Transfer of the Fibers Business
pursuant to which such Equity Interest was issued to the Company or either of
the Fibers Subsidiaries, (2) in redemption of, or in exchange for, such Equity
Interest or (3) in connection with a partial or total liquidation or
dissolution of the issuer of such Equity Interest.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"Sale of the Fibers Business" means any sale, transfer, assignment,
conveyance or other disposition of the Capital Stock of the Fibers Subsidiaries
or all or substantially all of the assets of the Fibers Subsidiaries (other
than pursuant to a Joint Venture Contribution), including, in either case, any
such sale, transfer, assignment, conveyance or disposition made through any
merger, consolidation or similar transaction.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person (other than the Company or a Wholly Owned
Subsidiary which is also a Subsidiary Guarantor) and the Company or a
Restricted Subsidiary leases it from such Person.
"Secured Debt" means any Debt of the Company secured by a Lien.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreements" means the security and pledge agreements and the
mortgages entered into by the Company and each of its Restricted Subsidiaries
that own any of the Pledged Collateral, dated as of the date of this Indenture,
to secure the obligations with respect to the Notes, and the Senior Debt
Intercreditor Agreement, dated as of the date hereof between the Trustee and
the CIT Group/Business Credit, Inc., as such agreements may be amended,
modified or supplemented from time to time.
"Senior Debt" means:
(1) all Debt of the Company or any Restricted Subsidiary outstanding
under the Credit Agreement;
(2) any other Debt of the Company or any Restricted Subsidiary
permitted to be incurred under the terms of this Indenture, unless the
instrument under which such Debt is incurred expressly provides that it is
subordinated in right of payment to the Notes or any Subsidiary Guarantee; and
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(3) all obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt shall
not include:
(1) any liability for federal, state, local or other taxes owed or
owing by the Company;
(2) any Debt of the Company to any of its Restricted Subsidiaries or
other Affiliates;
(3) any trade payables; or
(4) the portion of any Debt that is incurred in violation of this
Indenture.
"Senior Subordinated Debt" means the Existing Subordinated Notes and
any other Debt of the Company that specifically provides that such Debt is
subordinate to the Notes in right of payment and which is not subordinated by
its terms in right of payment to any Debt or other obligation of the Company
which is not Senior Debt.
"Series A Notes" has the meaning assigned to it in the preamble to
this Indenture.
"Series B Notes" has the meaning assigned to it in the preamble to
this Indenture.
"Shared Collateral" means the PP&E and the Capital Stock of all of the
Company's current U.S. Subsidiaries other than Sterling Chemicals Acquisitions,
Inc..
"Shelf Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" of the Company as such term is defined in Rule 1-02
of Regulation S-X, promulgated by the Commission.
"S&P" means Standard & Poor's Ratings Group.
"Special Adjusted Treasury Rate" means, with respect to any date of
redemption, the rate per annum equal to the semiannual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price equal to the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such date of redemption, plus 0.50%.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the principal of such
security or Debt is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the Holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Debt of the Company (whether
outstanding on the Issue Date or hereafter Incurred) which is subordinate or
junior in right of payment to the Notes.
"Subsidiary" means any corporation, association, partnership or other
business entity of which than more 50% of the total voting power of shares of
Capital Stock or other interests (including
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partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
at the time is owned or controlled, directly or indirectly, by:
(1) the Company,
(2) the Company and one or more Subsidiaries, or
(3) one or more Subsidiaries.
"Subsidiary Guarantees" means the guarantees of the Notes by the
Subsidiary Guarantors.
"Subsidiary Guarantors" means Sterling Canada, Inc., Sterling
Chemicals Energy, Inc., Sterling Fibers, Inc., Sterling Chemicals
International, Inc., Sterling Pulp Chemicals, Inc. and Sterling Pulp Chemicals
US, Inc., and any other entities that at any time guarantees the Company's
obligations, with respect to the Notes.
"Tangible Property" means all land, buildings, machinery and equipment
and leasehold interests and improvements which would be reflected on a balance
sheet of the Company prepared in accordance with GAAP, including:
(1) all rights, contracts and other intangible assets of any nature
whatsoever, and
(2) all inventories and other current assets.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of
America or any agency thereof or obligations Guaranteed by the United States of
America or any agency thereof,
(2) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 270 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50.0 million (or the
foreign currency equivalent thereof) and has outstanding debt which is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money market fund sponsored by a registered broker
dealer or mutual fund distributor,
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered into
with a bank meeting the qualifications described in clause (2) above,
(4) investments in commercial paper, maturing not more than 180 days
after the date of acquisition, issued by a corporation (other than an Affiliate
of the Company or Holdings) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any Investment therein is made
of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to
S&P,
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(5) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or "A"
by Moody's,
(6) participations (for a tenor of not more than 90 days) in loans to
Persons having short-term credit ratings of at least "A-1" and "P-1" by S&P and
Moody's, respectively,
(7) with respect to any Non-U.S. Subsidiary organized in Canada,
commercial paper of Canadian companies rated R-1 High or the equivalent thereof
by Dominion Bond Rating Services with maturities of less than one year, and
(8) with respect to Non-U.S. Subsidiaries not organized in Canada,
government obligations of another country whose debt securities are rated by
S&P and/or Moody's "A-1" or "P-1", or the equivalent thereof (if a short-term
debt rating is provided by either), or at least "AA" or "AA2", or the
equivalent thereof (if a long-term unsecured debt rating is provided by
either), in each case, with maturities of less than 12 months.
"Texas City Facility" means the petrochemicals production facility
that is located at Texas City, Texas and is a Principal Property.
"TIA" means the Trust Indenture Act of 1939 (15
U.S.C. Section 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"Transfer of the Fibers Business" means any Joint Venture Contribution
or any Sale of the Fibers Business or any combination thereof.
"Trustee" means Harris Trust Company of New York, as trustee
hereunder, until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors in the
manner provided below, and
(2) any Subsidiary of an Unrestricted 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 Capital
Stock or Debt of, or holds any Lien on any property of, the Company
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<PAGE> 31
or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either:
(1) the Subsidiary to be so designated has total assets of $1,000 or
less or
(2) if such Subsidiary has assets of greater than $1,000, such
designation would be permitted by Section 4.07 hereof,
and provided, further, however, that:
(1) no Subsidiary of the Company that is it Restricted Subsidiary on
the Issue Date (other than a Restricted Subsidiary with total assets of $1,000
or less on the Issue Date) may be designated an Unrestricted Subsidiary, and
(2) no Subsidiary holding, directly or indirectly, any assets (other
than assets totaling $1,000 or less which constituted the only assets of a
Restricted Subsidiary on the Issue Date) held by the Company or a Restricted
Subsidiary on the Issue Date may be designated an Unrestricted Subsidiary.
The Board of Directors may designate any Unrestricted Subsidiary to be
a Restricted Subsidiary; provided, however, that immediately after giving
effect to such designation:
(1) if such Unrestricted Subsidiary at such time has Debt, the Company
could Incur $1.00 of additional Debt under paragraph (a) of Section 4.09, and
(2) no Default shall have occurred and be continuing.
Any such designation by the Board of Directors shall be communicated
by the Company to the Trustee by promptly filing with the Trustee a copy of the
board resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
Notwithstanding the foregoing, any entity formed or in which an Equity
Interest is acquired as a result of a Transfer of the Fibers Business, and if
the Capital Stock of the Fibers Subsidiaries is transferred in connection with
such Transfer of the Fibers Business, each of the Fibers Subsidiaries, shall
automatically be an Unrestricted Subsidiary without complying with the
foregoing requirements; provided, however, that such Transfer of the Fibers
Business is made in accordance with the terms of the provisions of Section
4.16, unless the Board of Directors substantially contemporaneously with such
Transfer of the Fibers Business designates any such entity as a Restricted
Subsidiary.
As of the Issue Date, each of Sterling Chemicals Acquisitions, Inc.,
Sterling (Sask) Holdings Ltd., Sterling Pulp Chemicals (Sask) Ltd., 619220
Saskatchewan Ltd. and Sterling Pulp Chemicals Fuzhou Ltd. is an Unrestricted
Subsidiary.
"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.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
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"U.S. Subsidiary" means a Restricted Subsidiary that is incorporated
in a jurisdiction in the United States, or a state thereof or the District of
Columbia.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by
the Company and/or another Wholly Owned Subsidiary; provided, however, that a
Non-U.S. Subsidiary shall be a Wholly Owned Subsidiary if more than 90% of the
Capital Stock and Voting Stock thereof is owned by the Company and/or another
Wholly Owned Subsidiary.
"Working Capital Revolver" means the senior secured revolving credit
facility under the Credit Agreement pursuant to which the Company may borrow,
repay and reborrow up to $85.0 million, secured by a first priority lien on all
of the property and assets of the Company and the Subsidiary Guarantors except
for real property, fixtures, related general intangibles and equipment and any
Capital Stock owned by the Company or any Subsidiary Guarantor.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction"............................................................ 4.11
"Asset Sale Offer" ................................................................ 3.09
"Authentication Order"............................................................. 2.02
"Change of Control Offer".......................................................... 4.14
"Change of Control Payment"........................................................ 4.14
"Change of Control Payment Date"................................................... 4.14
"Covenant Defeasance".............................................................. 8.03
"Event of Default"................................................................. 6.01
"Legal Defeasance"................................................................. 8.02
"Make-Whole Amount"................................................................ 4.15
"Offer Amount"..................................................................... 3.09
"Offer Period"..................................................................... 3.09
"Paying Agent"..................................................................... 2.03
"Payment Default" ................................................................. 6.01
"Permitted Debt"................................................................... 4.09
"Purchase Date".................................................................... 3.09
"Registrar"........................................................................ 2.03
"Restricted Payments".............................................................. 4.07
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
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<PAGE> 33
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees means the Company
and the Subsidiary Guarantors, respectively, and any successor obligor upon the
Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the Commission from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound
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<PAGE> 34
thereby. However, to the extent any provision of any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibit A attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Notes issued in definitive form shall be substantially in
the form of Exhibit A attached hereto (but without the Global Note Legend
thereon and without the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedelbank"
and "Customer Handbook" of Cedelbank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedelbank.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and
may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional
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<PAGE> 35
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged
by the Company for Definitive Notes if (i) the Depositary notifies the Company
that it is unwilling or unable to continue to act as Depositary and a successor
Depositary is not appointed by the Company within 120 days after the date of
such notice from the Depositary or that the Depositary is no longer a clearing
agency registered under the Exchange Act, (ii) the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should
be exchanged for Definitive Notes and delivers a written notice to such effect
to the Trustee or (iii) there shall have occurred and be continuing a Default
or an Event of Default with respect to the Notes. Upon the occurrence of any of
the preceding events in
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<PAGE> 36
(i), (ii) or (iii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Trustee in accordance with its customary
procedures. In addition, beneficial interests in a Global Note may be exchanged
for Definitive Notes upon prior written notice given to the Trustee by or on
behalf of the Depositary in accordance with this Indenture. Global Notes also
may be exchanged or replaced, in whole or in part, as provided in Sections 2.07
and 2.10 hereof. Except as otherwise provided in this Section 2.06(a), every
Note authenticated and delivered in exchange for, or in lieu of, a Global Note
or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10
hereof, shall be authenticated and delivered in the form of, and shall be, a
Global Note and owners of interests in Global Notes will not have Notes
registered in their names, will not receive physical delivery of Definitive
Notes and will not be considered the registered owners or Holders thereof under
this Indenture for any purpose. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend;
provided, however, that prior to the expiration of the Restricted
Period, transfers of beneficial interests in the Regulation S Global
Note may not be made to a U.S. Person or for the account or benefit of
a U.S. Person (other than an Initial Purchaser). Beneficial interest
in any Unrestricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in an
Unrestricted Global note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above,
the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to
be credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and
(2) instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be
credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note
shall be registered to effect the transfer or exchange referred to in
(1) above. Upon consummation of an Exchange Offer by the Company in
accordance with Section 2.06(f) hereof, the requirements of this
Section 2.06(b)(ii)
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<PAGE> 37
shall be deemed to have been satisfied upon receipt by the Registrar
of the instructions contained in the Letter of Transmittal delivered
by the Holder of such beneficial interests in the Restricted Global
Notes. Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant
Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note.
A beneficial interest in any Restricted Global Note may be exchanged
by any holder thereof for a beneficial interest in an Unrestricted
Global Note or transferred to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note if
the exchange or transfer complies with the requirements of Section
2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted
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<PAGE> 38
Global Note, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(a)
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note,
a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the aggregate principal amount of beneficial
interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in
the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Note, then, subject to Section 2.06(a), upon
receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
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<PAGE> 39
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions
a Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in
such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct
the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section
2.06(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. Subject to Section 2.06(a), a holder of a beneficial
interest in a Restricted Global Note may exchange such beneficial
interest for an Unrestricted Definitive Note or may transfer such
beneficial interest to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
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<PAGE> 40
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item
(1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. Subject to Section 2.06(a), if any
holder of a beneficial interest in an Unrestricted Global Note
proposes to exchange such beneficial interest for a Definitive Note or
to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Note, then, upon satisfaction of
the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee
shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and
the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note
in the appropriate principal amount. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted Global
Note or to transfer such Restricted Definitive Note to a Person who
takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, subject to Section 2.06(a), upon receipt
by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred
to a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
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(C) if such Restricted Definitive Note is being transferred
to a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred
to an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred
to the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case
of clause (A) above, the appropriate Restricted Global Note, in the
case of clause (B) above, the 144A Global Note, in the case of clause
(C) above, the Regulation S Global Note, and in all other cases, the
IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Restricted Definitive Note to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Definitive Notes proposes
to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications in
item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive
Notes and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note at any time. Upon receipt of a request for
such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B),
(ii)(D) or (iii) above at a time when an Unrestricted Global Note has
not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the
Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of Definitive
Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of
transfer or exchange, the requesting Holder shall present or surrender to the
Registrar the Definitive Notes duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by its attorney, duly authorized in writing. In addition, the
requesting Holder shall provide any additional certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
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(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for
an Unrestricted Definitive Note or transferred to a Person or Persons
who take delivery thereof in the form of an Unrestricted Definitive
Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form
of Exhibit C hereto, including the certifications in item
(1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of an Unrestricted
Definitive Note, a certificate from such Holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
A Holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of
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an Unrestricted Definitive Note. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons
that certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the
Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the
Company, and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT
OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN
"IAI")), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE ISSUER OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE
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FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE OR ANY
INTEREST HEREIN WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear
the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to
or retained and canceled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged
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for or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note by
the Trustee or by the Depositary at the direction of the Trustee to reflect
such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10,
4.14, 4.15, 4.16 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes
for redemption under Section 3.02 hereof and ending at the close of
business on the day of selection, (B) to register the transfer of or
to exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part or
(C) to register the transfer of or to exchange a Note between a record
date and the next succeeding Interest Payment Date (as defined in
paragraph 1 of the Notes).
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent, and the Company may deem and treat
the Person in whose name any Note is registered as the absolute owner
of such Note for the purpose of receiving payment of principal of and
interest on such Notes and for all other purposes, and none of the
Trustee, any Agent, or the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be submitted
by facsimile.
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Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent, and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
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Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. 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. The Company shall fix or cause to be
fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the
principal amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed, or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes 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 in accordance with any other method the Trustee considers fair and
appropriate. In the event of partial redemption by lot, the particular Notes to
be redeemed shall be selected, unless otherwise provided herein, not less than
30 nor more than 60 days prior to the redemption date by the Trustee from the
outstanding Notes not previously called for redemption.
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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 principal amount thereof to be redeemed. Notes and portions of
Notes selected for redemption shall be in amounts of $1,000 or whole multiples
of $1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A
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notice of redemption may not be conditional. Failure to give notice to a Holder
of a Note or any defect in any notice shall not affect the validity of any
notice to any other Holder of a Note.
Section 3.05. Deposit of Redemption Price.
At least one Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent (or if the Company or a
Subsidiary is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. The Trustee or the Paying Agent shall promptly return
to the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of, and
accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to July 15, 2003. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 15 of the
years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003........................................................................... 106.188%
2004........................................................................... 103.094%
2005 and thereafter............................................................ 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time prior to July 15, 2002, the Company may on any one or more
occasions redeem Notes with the net proceeds of one or more Public Equity
Offerings at a redemption price equal to 112.375% of the aggregate principal
amount thereof plus accrued and unpaid Liquidated Damages thereon, if any;
provided that at least 65% in aggregate principal amount at maturity of the
Notes originally issued remain outstanding immediately after the occurrence of
such redemption (excluding Notes held by the Company and its Subsidiaries) and
that such redemption occurs within 60 days of the date of the closing of such
Public Equity Offering.
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(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may elect to have Notes purchased in integral multiples of
$1,000 only;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a depositary, if
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<PAGE> 52
appointed by the Company, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Notes tendered by such
Holder and accepted by the Company for purchase, and the Company shall promptly
issue a new Note, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not
so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale
Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in
the Notes. Principal, premium, if any, and interest shall be considered paid on
the date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, holds as of 11:00 a.m. Eastern Time on the due date money deposited by
the Company in immediately available funds and designated for payment of and
sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
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The Company shall, to the extent lawful, pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal at the then applicable interest rate on the Notes; it shall, the
extent lawful, pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest and Liquidated
Damages (without regard to any applicable grace period) at the same rate.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required 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 may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company, for so long as
it is permitted to do so, shall furnish to the Holders of 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 each case, within the time periods specified in the
Commission's rules and regulations. In addition, following consummation of the
Exchange Offer, whether or not required by the rules and regulations of the
Commission, the Company shall file a copy of all such information and reports
with the Commission for public availability within the time periods specified
in the Commission's rules and regulations (unless the Commission will not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request. The Company shall at all times
comply with TIA Section 314(a).
(b) For so long as any Notes remain outstanding, the Company and the
Subsidiary Guarantors shall 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.
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Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture and the Security
Agreements, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and the Security Agreements and is not in default in the performance
or observance of any of the terms, provisions and conditions of this Indenture
or the Security Agreements (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto.
(b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, within 30 days after the occurrence of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Subsidiary Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Subsidiary Guarantors (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
has been enacted.
Section 4.07. Limitation on Restricted Payments.
The Company shall not, and shall not permit any Restricted Subsidiary,
directly or indirectly, to:
(1) declare or pay any dividend or make any other payment or
distribution on or in respect of its or any of its Restricted Subsidiaries'
Capital Stock (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any Restricted Subsidiary)
or
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<PAGE> 55
similar payment to the direct or indirect holders of its Capital Stock (except
dividends or distributions payable solely in its Non-Convertible Capital Stock
or in options, warrants or other rights to purchase its Non-Convertible Capital
Stock and except dividends or distributions payable to the Company or a
Restricted Subsidiary), other than pro rata dividends or other distributions
made by a Restricted Subsidiary of the Company that is not a Wholly Owned
Subsidiary to minority shareholders (or owners of an equivalent interest in the
case of a Restricted Subsidiary that is an entity other than a corporation);
(2) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company, any direct or indirect parent of the Company or
any Restricted Subsidiary (other than any such Capital Stock owned by the
Company or any Wholly Owned Subsidiary);
(3) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligations (other than purchase,
repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition);
or
(4) make any Investment in any Person (other than a Permitted
Investment);
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Investment being herein referred to as a
"Restricted Payment") unless, at the time of and after giving effect to such
Restricted Payment:
(1) no Default shall have occurred and be continuing (or would result
therefrom); and
(2) the Company, 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 applicable four-quarter period, would be permitted to
Incur an additional $1.00 of Debt pursuant to clause (a) of Section 4.09; and
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date is less than the sum, without
duplication, of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of this Indenture to the end
of the Company's most recent fiscal quarter for which financial
statements are available at the time such Restricted Payment (or, in
case such Consolidated Net Income shall be a deficit, minus 100% of
such deficit); provided, however, that if the Notes achieve an
Investment Grade Rating during any fiscal quarter, the percentage for
such fiscal quarter (and for any other fiscal quarter where, on the
first day of such fiscal quarter, the Notes shall have an Investment
Grade Rating) shall be 100% of Consolidated Net Income during such
fiscal quarter; and provided, further, however, that if such
Restricted Payment is to be made in reliance upon an additional amount
permitted pursuant to the immediately preceding proviso, the Notes
must have an Investment Grade Rating at the time such Restricted
Payment is declared or, if not declared, made; plus
(B) the aggregate Net Cash Proceeds received by the Company from the
issue or sale of its Capital Stock (other than Redeemable Stock or
Exchangeable Stock) subsequent to the Issue
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<PAGE> 56
Date (other than an issuance or sale to a Subsidiary or an employee
stock ownership plan or similar trust); plus
(C) the aggregate Net Cash Proceeds received by the Company from the
issue or sale of its Capital Stock (other than Redeemable Stock or
Exchangeable Stock) to an employee stock ownership plan subsequent to
the Issue Date; provided, however, that if such employee stock
ownership plan issues any Debt, such aggregate amount shall be limited
to an amount equal to any increase in the Consolidated Net Worth of
the Company resulting from principal repayments made by such employee
stock ownership plan with respect to Debt issued by it to finance the
purchase of such Capital Stock; plus
(D) the amount by which Debt of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other than by
a Subsidiary) subsequent to the Issue Date, of any Debt of the Company
convertible or exchangeable for Capital Stock (other than Redeemable
Stock or Exchangeable Stock) of the Company (less the amount of any
cash, or other property, distributed by the Company upon such
conversion or exchange); plus
(E) an amount equal to the sum of:
(i) the net reduction in Investments in Unrestricted
Subsidiaries resulting from dividends, repayments of loans or advances
or other transfers of assets, in each case to the Company or any
Restricted Subsidiary from Unrestricted Subsidiaries, and
(ii) 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 Investments previously made
(and treated as a Restricted Payment) by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary; plus
(F) to the extent not covered in clauses (A) through (E) above, the
aggregate net cash proceeds received after the Issue Date by the
Company as capital contributions (other than from any of its
Restricted Subsidiaries); plus
(G) $5.0 million; provided, however, that, to the extent used, such
$5.0 million shall reduce the amount available for Investments
pursuant to clause (10) of the definition of "Permitted Investments;"
and provided, further, however, that the amounts available under this
clause (G) and under clause (10) of the definition of "Permitted
Investments" shall in no event exceed $10.0 million in the aggregate.
So long as no Default or Event of Default has occurred and is
continuing or would be caused thereby, the provisions of the foregoing
paragraph shall not prohibit:
(1) any purchase or redemption of any Subordinated Obligations of the
Company or any Subsidiary Guarantor or any Capital Stock of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Redeemable Stock or Exchangeable Stock
of the Company and other than Capital Stock of the Company issued or sold to a
Subsidiary or an employee stock ownership plan); provided, however, that:
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(A) such purchase or redemption shall be excluded in the calculation
of the amount of Restricted Payments; and
(B) the Net Cash Proceeds from such sale shall be excluded from
clauses (3)(B) and (3)(C) of the preceding paragraph;
(2) any purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Obligations of the Company or any
Subsidiary Guarantor made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Debt of the Company or a Subsidiary Guarantor
which is permitted to be incurred pursuant to Section 4.09; provided, however,
that such purchase, redemption, defeasance or other acquisition or retirement
for value shall be excluded in the calculation of the amount of Restricted
Payments;
(3) any purchase or redemption of Subordinated Obligations of the
Company or any Subsidiary Guarantor from Net Available Cash to the extent
permitted under Section 4.10 hereof; provided, however, that such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments;
(4) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied with
this provision; provided, however, that at the time of declaration of such
dividend, no other Default shall have occurred and be continuing (or would
result therefrom); and provided, further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(5) the declaration or payment of any dividend on shares of the
Company's common stock so long as:
(A) the Company would be permitted immediately after giving pro forma
effect to such declaration or payment to Incur an additional $1.00 of
Debt pursuant to clause (a) of Section 4.09;
(B) such declaration or payment is made immediately prior to a date on
which cash interest is required to be paid on the Discount Notes; and
(C) the full amount of such payment is applied by Holdings on such
date as payment of such cash interest on the Discount Notes; provided,
however, that such dividend shall be included in the calculation of
the amount of Restricted Payments;
(6) payments to the ESOP on behalf of the employees of Holdings or its
Subsidiaries; provided, however, that all such payments by the Company and its
Subsidiaries may not exceed, during any fiscal year, 10% of the aggregate
compensation expense during such fiscal year attributable to employees of
Holdings and its Subsidiaries who are eligible to participate in the ESOP;
provided, however, that such amount shall be excluded in the calculation of the
amount of Restricted Payments;
(7) a payment to Holdings to pay its operating and administrative
expenses including, without limitation, directors fees, legal and audit
expenses, Commission compliance expenses and corporate franchise and other
taxes, in an amount not to exceed the greater of $2.0 million per fiscal year
and 0.2% of revenues of the Company for the preceding fiscal year; provided,
however, that such amount shall be excluded in the calculation of the amount of
Restricted Payments;
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(8) a payment by the Company to Holdings or to the ESOP or directly by
the Company, to be used to repurchase shares of the common stock of Holdings
distributed to participants and beneficiaries of the ESOP as required by and in
accordance with the ESOP as in effect on the Issue Date and Section
409(h)(l)(B) of the Code and the regulations thereunder; provided, however,
that such amount shall be excluded in the calculation of the amount of
Restricted Payments;
(9) a payment by the Company to Holdings or the ESOP, or directly by
the Company, to be used to repurchase, redeem, acquire or retire for value any
Capital Stock of Holdings pursuant to any stockholder's agreement, management
equity subscription plan or agreement, stock option plan or agreement or
employee benefit plan in effect as of the Issue Date or such employee plan or
agreement or employee benefit plan as may be adopted by the Company or Holdings
from time to time; provided, however, that the aggregate price paid for all
Capital Stock repurchased, redeemed, acquired or retired by the Company or on
behalf of Holdings or the Company shall not exceed $5.0 million in any fiscal
year; and provided, further, however, that such amount, to the extent related
to the ESOP, shall be excluded in the calculation of Restricted Payments;
(10) a payment to Holdings pursuant to the tax sharing agreement as
the same may be amended from time to time in a manner not materially adverse to
the Company; provided, however, that such amount shall be excluded in the
calculation of the amount of Restricted Payments;
(11) a payment to Holdings to permit Holdings to comply with the terms
of the indenture relating to the Discount Notes relating to the application of
proceeds from an Asset Disposition (relating to the sale or disposition of
property by the Company) as defined in the indenture relating to the Discount
Notes; provided, however, that such amount shall be excluded in the calculation
of the amount of Restricted Payments;
(12) an investment made or received in connection with a Transfer of
the Fibers Business; provided, however, that such amount shall be excluded in
the calculation of Restricted Payments; and
(13) a loan to the ESOP; provided, however, that:
(A) the aggregate amount of any such loan does not exceed 5% of
the cash received subsequent to the Issue Date by the Company
or any Restricted Subsidiary as capital contributions from
the proceeds of a substantially contemporaneous issue or sale
of any Capital Stock of Holdings made in connection with or
to provide part of the consideration for a direct or indirect
acquisition by the Company or any Restricted Subsidiary of
all or substantially all of the Capital Stock or assets of a
Person that is not an Affiliate of the Company or any
business or division of a Person that is not an Affiliate of
the Company;
(B) in the case of an acquisition of Capital Stock, immediately
after giving effect to such acquisition, the Person whose
Capital Stock is acquired is a Restricted Subsidiary and, in
the case of an asset acquisition, such assets are acquired by
the Company or any Restricted Subsidiary; and
(C) any individuals that become employees of the Company or such
Restricted Subsidiary in connection with such acquisition, to
the extent eligible, are permitted to participate in the
ESOP;
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provided, however, that the amount of any such loan shall be included
in the calculation of the amount of Restricted Payments.
Section 4.08. Limitation on Restrictions on Distributions from Restricted
Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, create or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock
or pay any Debt or other obligation owed to the Company;
(2) make any loans or advances to the Company; or
(3) transfer any of its property or assets to the Company;
except:
(A) any encumbrance or restriction pursuant to the Credit Agreement or
any other agreement in effect on the Issue Date or pursuant to the issuance of
the Notes;
(B) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Debt Incurred by such
Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Debt Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by the Company) and outstanding on such date;
(C) any encumbrance or restriction pursuant to an agreement effecting
a Refinancing of Debt Incurred pursuant to an agreement referred to in clause
(A) or (B) above or contained in any amendment to an agreement referred to in
clause (A) or (B) above; provided, however, that the encumbrances and
restrictions contained in any such Refinancing agreement or amendment are no
less favorable to the Holders than encumbrances and restrictions with respect
to such Restricted Subsidiary contained in such agreements,
(D) any such encumbrance or restriction consisting of customary
non-assignment provisions in leases governing leasehold interests to the extent
such provisions restrict the transfer of the lease or other customary
non-assignment provisions in contracts (other than contracts that constitute
Debt) entered into the ordinary course of business to the extent such
provisions restrict the transfer of the assets subject to such contracts;
(E) in the case of clause (3) above, restrictions contained in
security agreements or mortgages securing Debt of a Restricted Subsidiary to
the extent such restrictions restrict the transfer of the property subject to
such security agreements or mortgages;
(F) encumbrances or restrictions imposed by operation of applicable
law; and
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(G) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition.
Section 4.09. Limitation on Debt.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, Incur any Debt unless the Consolidated
EBITDA Coverage Ratio at the date of such Incurrence exceeds 2.0 to 1.0.
(b) The preceding sentence shall not prohibit the Incurrence of any of
the following Debt (collectively, "Permitted Debt"):
(1) Debt Incurred by the Company and any Restricted Subsidiary
pursuant to the Credit Agreement or any other revolving credit
facility which, when taken together with all letters of credit and the
principal amount of all other outstanding Debt Incurred under this
clause (1), does not exceed the greater of $100 million and the sum
of:
(A) 65% of the gross book value of the inventory of the
Company and its Restricted Subsidiaries; and
(B) 85% of the gross book value of the accounts receivable of
the Company and its Restricted Subsidiaries;
(2) Debt of the Company owed to and held by a Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any
Capital Stock that results in such Wholly Owned Subsidiary ceasing to
be a Wholly Owned Subsidiary or any transfer of such Debt (other than
to a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the issuance of such Debt by the Company;
(3) Debt of a Restricted Subsidiary incurred and outstanding on or
prior to the date on which such Restricted Subsidiary:
(A) became a Restricted Subsidiary; or
(B) was acquired by the Company (other than Debt issued in
connection with, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was acquired by the Company);
(4) the incurrence by the Company and the Subsidiary Guarantors of
Debt represented by the Notes and the related Subsidiary Guarantees to
be issued on the date of the this Indenture and the Exchange Notes and
the related Subsidiary Guarantees to be issued pursuant to the
Registration Rights Agreement;
(5) Debt outstanding on the Issue Date (other than Debt described in
clause (1), (2), (3) or (4);
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(6) Refinancing Debt in respect of Debt Incurred pursuant to paragraph
(a), or pursuant to clause (4) or (5) or this clause (6);
(7) Hedging Obligations; provided, however, that with respect to
Interest Rate Agreements and Currency Agreements (if such Currency
Agreements relate to Debt), only to the extent directly related to
Debt permitted to be incurred by the Company pursuant to this
Indenture; and
(8) Debt in an aggregate principal amount which, together with all
other Debt of the Company and the Restricted Subsidiaries then
outstanding (other than Debt permitted by clauses (1) through (7) of
this paragraph) does not exceed $5.0 million.
For purposes of determining compliance with this Section 4.09, in the event
that an item of proposed Debt meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (8) above, or is
entitled to be Incurred, in whole or in part, pursuant to the first paragraph
of this Section 4.09, the Company shall be permitted to classify such item of
Debt on the date of its incurrence in any manner that complies with this
Section 4.09.
(c) Notwithstanding paragraphs (a) and (b), the Company and its
Restricted Subsidiaries shall not Incur any Debt if the proceeds thereof are
used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund
or refinance any Subordinated Obligations unless such Debt will be subordinated
to the Notes.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition, which
term does not include a Sale of a Principal Property or a Transfer of the
Fibers Business unless:
(1) the Company or the Restricted Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair market
value, as determined in good faith by the Board of Directors
(including as to the value of all noncash consideration), of the
shares and assets subject to such Asset Disposition and at least 85%
of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents; and
(2) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be):
(A) first, to the extent the Company elects (or is required
by the terms of any Senior Debt), to prepay, repay or purchase Senior
Debt or Senior Debt (other than any Redeemable Stock) of a Wholly
Owned Subsidiary (in each ease other than Debt owed to the Company or
an Affiliate of the Company or Holdings) within 180 days from the
later of the date of such Asset Disposition or the receipt of such Net
Available Cash;
(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with clause (A), at the
Company's election to the investment by the Company, any Wholly Owned
Subsidiary or the Restricted Subsidiary making such Asset Disposition
in assets to replace the assets that were the subject of such Asset
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Disposition or an asset that (as determined by the Board of Directors)
will be used in the business of the Company, any Wholly Owned
Subsidiary or the Restricted Subsidiary making such Asset Disposition
existing on the date of original issuance of the Notes or in
businesses reasonably related thereto, in each case within the later
of one year from the date of such Asset Disposition or the receipt of
such Net Available Cash;
(C) third, to the extent of the balance of such Net Available
Cash after application and in accordance with clauses (A) and (B), to
make an offer to purchase Notes (and any other Senior Debt of the
Company designated by the Company) pursuant to and subject to the
conditions contained in this Indenture; and
(D) fourth, to the extent of the balance of such Net
Available Cash after application in accordance with clauses (A), (B)
and (C) to:
(x) the acquisition by the Company, any Wholly Owned
Subsidiary or the Restricted Subsidiary making such Asset
Disposition of Tangible Property, or
(y) the prepayment, repayment or purchase of Debt
(other than any Redeemable Stock) of the Company or Debt of
any Restricted Subsidiary (in either case other than Debt
owed to the Company or an Affiliate of the Company), in each
case within one year from the later of the receipt of such
Net Available Cash and the date the offer described in clause
(C) above is consummated;
provided, however, that in connection with any prepayment, repayment or
purchase of Debt pursuant to clause (A), (C) or (D) above, the Company shall
cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this paragraph, the
Company and its Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this paragraph except to the extent that the
aggregate Net Available Cash from all Asset Dispositions which are not applied
in accordance with this paragraph exceeds $20.0 million. Pending application of
Net Available Cash pursuant to this paragraph, such Net Available Cash shall be
invested in Temporary Cash Investments.
For the purposes of this Section 4.10, the following are deemed to be
"cash equivalents":
(1) the express assumption of Debt of the Company or any Restricted
Subsidiary and the release of the Company or such Restricted Subsidiary from
all liability on such Debt; and
(2) securities received by the Company or any Restricted Subsidiary
that are converted by the Company or such Restricted Subsidiary into cash
within 90 days of the receipt of such securities.
The 85% limitation referred to in the previous paragraph shall not apply to any
Asset Disposition in which the cash portion of the consideration received
therefor, determined in accordance with the previous sentence, is equal to or
greater than what the after tax proceeds would have been had such Asset
Disposition complied with such 85% limitation.
In the event of an Asset Disposition that requires the purchase of the
Notes (and other Senior Debt) pursuant to clause (2)(C) above, the Company will
be required to purchase Notes tendered pursuant to an offer by the Company for
the Notes (and other Senior Debt) at a purchase price of 100% of their
principal amount (without premium) plus accrued but unpaid interest and
Liquidated Damages, if
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any (or, in respect of such other Senior Debt, such lesser price, if any, as
may be provided for by the terms of such Senior Debt), in accordance with the
procedures (including prorating in the event of oversubscription) set forth in
this Indenture. If the aggregate purchase price of Notes (and any other Senior
Debt) tendered pursuant to such offer is less than the Net Available Cash
allotted to the purchase thereof, the Company will be required to apply the
remaining Net Available Cash in accordance with clause (2)(D) above. The
Company shall not be required to make such an offer to purchase Notes (and
other Senior Debt) pursuant to this Section 4.10 if the Net Available Cash
available therefor is less than $10.0 million (which lesser amount shall be
carried forward for purposes of determining whether such an offer is required
with respect to any subsequent Asset Disposition).
To the extent that any or all of the Net Available Cash of any Foreign
Asset Sale is prohibited or delayed by applicable local law from being
repatriated to the United States, the portion of such Net Available Cash so
affected shall not be required to be applied at the time provided above, but
may be retained by the applicable Restricted Subsidiary (and invested in
accordance with the last sentence of the first paragraph of this Section 4.10)
so long, but only so long, as the applicable local law will not permit
repatriation to the United States. The Company will agree to cause the
applicable Restricted Subsidiary to promptly take all actions required by the
applicable local law to permit such repatriation. Once such repatriation of any
of such affected Net Available Cash is permitted under the applicable local
law, such repatriation shall be immediately effected and such repatriated Net
Available Cash will be applied in the manner as described in this Section 4.10.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.10. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.10, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this clause by virtue of such
conflict and compliance.
Section 4.11. Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary
to, conduct any business or enter into any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property
or the rendering of any service) with any Affiliate of Holdings or the Company
(an "Affiliate Transaction") unless:
(1) the terms of such Affiliate Transaction are:
(A) set forth in writing; and
(B) as favorable to the Company or such Restricted Subsidiary as terms
that would be obtainable at the time for a comparable transaction or
series of related transactions in arm's length dealings with an
unrelated third Person;
(2) if such Affiliate Transaction involves an amount in excess of $2.5
million, the disinterested members of the Board of Directors have, by
resolution, determined in good faith that such Affiliate Transaction meets the
criteria set forth in (1)(B) above; and
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(3) if such Affiliate Transaction involves an amount in excess of $7.5
million, such Affiliate Transaction is determined by an Independent Financial
Advisor to be fair from a financial standpoint to the Company or its Restricted
Subsidiary, as the case may be.
The foregoing requirements shall not be applicable to:
(1) contracts with Koch Capital Services, Inc. or its affiliates in
the ordinary course of business on terms as favorable to the Company or the
relevant Restricted Subsidiary as would be obtainable at the time for a
comparable transaction in arm's length dealings with an unrelated third Person;
(2) any purchase or supply contracts in the ordinary course of
business on terms as favorable to the Company or the relevant Restricted
Subsidiary as would be obtainable at the time for a comparable transaction in
arm's length dealings with an unrelated third Person; provided, however, that
the Board of Directors shall, not later than the 60th day after the end of each
six-month period following the Issue Date, have reviewed such contracts and
determined that such contracts meet the criteria set forth in this clause (2);
(3) any Restricted Payment permitted to be paid and any Permitted
Investment not prohibited pursuant to Section 4.07;
(4) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board of
Directors or the board of directors of the relevant Restricted Subsidiary;
(5) loans or advances to employees in the ordinary course of business,
but in any event not to exceed $2.0 million in the aggregate outstanding at any
one time;
(6) the payment of reasonable and customary fees to directors of the
Company and its Restricted Subsidiaries who are not employees of the Company or
its Restricted Subsidiaries;
(7) any transaction between the Company and a Wholly Owned Subsidiary
or between Wholly Owned Subsidiaries; and
(8) indemnification payments to directors and officers of the Company
in accordance with applicable state laws.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or suffer to exist or become effective
any Lien upon any of its other property or assets, now owned or hereafter
acquired, other than Permitted Liens.
Section 4.13. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (1) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Restricted
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Subsidiary and (2) the rights (charter and statutory), licenses and franchises
of the Company and its Restricted Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Restricted
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.
Section 4.14. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes
at a purchase price equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest thereon, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant record date to
receive interest and Liquidated Damages, if any, due on the relevant interest
payment date) (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's Notes at a purchase
price in cash equal to 101% of the principal amount of Notes repurchased plus
accrued and unpaid interest (if any) to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date); (2) the material circumstances and
facts regarding such Change of Control (including, without limitation,
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control); (3) the
repurchase date, which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date"); (4)
that any Note not tendered will continue to accrue interest; (5) that, unless
the Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date; (6) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (7) that Holders
will be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and (8) that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple thereof.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered 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 Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder
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of Notes so tendered payment in an amount equal to the purchase price for the
Notes, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered by such Holder, if any;
provided, that each such new Note shall be in a principal amount of $1,000 or
an integral multiple thereof. The Company shall publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.14. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.14, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this Section 4.14 by virtue of
such conflict and compliance.
Section 4.15 Sale of Principal Properties.
The Company shall not, and shall not permit any Restricted Subsidiary
(including each Principal Property Subsidiary) to, directly or indirectly,
consummate a sale, lease, transfer or other disposition (or series of related
sales, leases, transfers or other dispositions) of any Principal Property or
the Capital Stock of any Principal Property Subsidiary or any material part
thereof (each, a "Sale of a Principal Property"), except in compliance with the
following provisions:
(1) Upon the Sale of a Principal Property, the Company must apply an
amount equal to any Net Available Cash or Net Cash Proceeds, as applicable,
from such transaction remaining after complying with its obligations under the
Fixed Assets Revolver to offer to purchase outstanding Notes at a repurchase
price equal to the Make Whole Amount, according to the procedures set forth in
Section 4.14. "Make Whole Amount" means an amount equal to, as determined by an
Independent Investment Banker, the sum of the present values of the remaining
scheduled payments of principal of the Notes and the scheduled payment of
interest thereon to originally scheduled maturity, discounted to the repurchase
date (assuming a 360-day year consisting of twelve 30-day months) at the
Special Adjusted Treasury Rate, plus accrued and unpaid interest thereon and
Liquidated Damages, if any, to the repurchase date. If the aggregate principal
amount of Notes tendered into such offer to repurchase exceeds the amount of
any Net Available Cash or Net Cash Proceeds, as applicable, from such
transaction remaining after complying with applicable obligations under the
Fixed Assets Revolver, the Trustee shall select the Notes to be repurchased on
a pro rata basis based upon the principal amount of Notes tendered.
(2) With respect to the Texas City Facility, prior to consummating
such transaction, the Company must deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants that expresses their
opinion that the Net Available Cash or Net Cash Proceeds, as applicable, from
such transaction will be sufficient at the proposed repurchase date (a) to pay
all obligations, including principal, interest, premium, if any, and other
charges, under the Fixed Assets Revolver and (b) to purchase all of the Notes
at the Make Whole Amount plus accrued and unpaid interest thereon and
Liquidated Damages, if any, to the repurchase date.
(3) With respect to the Sale of a Principal Property other than the
Texas City Facility, prior to consummating such transaction, the Company must
either (a) deliver to the Trustee a certificate from a nationally recognized
firm of independent accountants that expresses their opinion that the Net
Available Cash or Net Cash Proceeds, as applicable, from such proposed
transaction, will be sufficient at the proposed repurchase date (1) to pay all
obligations, including principal, interest, premium, if any, and
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other charges under the Fixed Assets Revolver and (2) to purchase all of the
outstanding Notes at the Make Whole Amount plus accrued and unpaid interest
thereon and Liquidated Damages, if any, to the repurchase date; or (b) if such
certificate is not delivered:
(1) the consideration the Company or its Restricted
Subsidiary receives in such Sale of a Principal Property must consist
solely of cash; and
(2) the Company must deliver an opinion to the Trustee, in
form and substance reasonably satisfactory to the Trustee, as to the
fairness of the transaction to the Company from a financial point of
view issued by an Independent Financial Advisor.
(4) The Company or its Restricted Subsidiaries may sell, transfer or
dispose of any part of a Principal Property which is worn out or obsolete or no
longer used or useful in the business of the Company and its Subsidiaries,
provided, such sale, transfer or other disposition is consistent with past
practice, and does not significantly reduce the value or usefulness of any
Principal Property.
(5) With respect to any Sale of a Principal Property, subject to the
prior rights, if any, of the lenders under the Fixed Assets Revolver, an amount
equal to any Net Available Cash or Net Cash Proceeds, as applicable, from such
Sale of a Principal Property shall, concurrently with the closing of such sale,
be deposited with the Trustee, who will hold such amount pending its
application to satisfy obligations and the purchase of the Notes. To the extent
that funds remain after repayment of all obligations in connection with the
Fixed Assets Revolver and the purchase of the Notes, such excess amounts and
any interest thereon shall be returned to the Company. Pending such application
of such amounts or return of excess amounts to the Company, the Trustee shall
invest such amounts at the Company's direction in Temporary Cash Investments,
provided that the maturity of those investments is prior to the repurchase date
of the Notes.
Section 4.16 Transfer of the Fibers Business.
(a) Notwithstanding anything contained in this Indenture to the
contrary, the Company and the Fibers Subsidiaries shall be entitled at any
time, in a single transaction or series of related transactions, to make a
Transfer of the Fibers Business if each of the following conditions is
satisfied:
(1) no Default or Event of Default shall have occurred and be
continuing;
(2) the Transfer of the Fibers Business shall be in the best interests
of the Company and the consideration received by the Company and its
Restricted Subsidiaries from such Transfer of the Fibers Business
shall be at least equal to the fair market value of such transaction,
in each case, as determined by written resolution adopted in good
faith by the Board of Directors;
(3) if less than 85% of the consideration received in a Transfer of
the Fibers Business is in the form of cash or cash equivalents, the
Company must deliver an opinion to the Trustee, in form and substance
reasonably satisfactory to the Trustee, as to the fairness of the
transaction to the Company from a financial point of view, issued by
an Independent Financial Advisor;
(4) in the case of any Joint Venture Contribution, immediately after
giving effect to such transaction, the Company will be the beneficial
owner of 60% or less of the Equity Interests of the entity to which
such Joint Venture Contribution is made;
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(5) in the case of any Sale of the Fibers Business, the transferee in
such Transfer of the Fibers Business shall be a Person other than an
Affiliate of the Company;
(6) the Company (or, if applicable, the Fibers Subsidiaries) shall
legally and effectively grant the Trustee a second priority security
interest in any noncash proceeds received by the Company (or the
Fibers Subsidiaries) in such Transfer of the Fibers Business,
including any Equity Interest, as additional security for the
repayment of the Notes and deliver an Opinion of Counsel as to the
validity of the creation and the perfection of such security interest
in form and substance satisfactory to the Trustee; and
(7) all Net Available Cash received in such Transfer of the Fibers
Business shall be applied as provided in paragraph (b) below.
For the purposes of this Section 4.16, the following are deemed to be
"cash equivalents":
(1) the express assumption of Debt of the Company or any Restricted
Subsidiary and the release of the Company or such Restricted Subsidiary from
all liability on such Debt; and
(2) securities received by the Company or any Restricted Subsidiary
that are converted by the Company or such Restricted Subsidiary into cash
within 90 days of the receipt of such securities.
(b) Upon the receipt by the Company or any of its Subsidiaries of any
Net Available Cash or Net Cash Proceeds, as applicable, in connection with a
Transfer of the Fibers Business, the Company shall apply or cause to be applied
100% of such Net Available Cash or Net Cash Proceeds:
(i) first, to the extent that the Company elects, to prepay or repay
Debt under the Fixed Assets Revolver within 180 days after the later
of the consummation of the Transfer of the Fibers Business or the
receipt of such Net Available Cash or Net Cash Proceeds; provided,
however, that the Company causes the related loan commitment, if any,
to be permanently reduced in an amount equal to the principal amount
so prepaid or repaid;
(ii) second, to the extent that the Company elects, to the investment
by the Company or any Restricted Subsidiary in Tangible Property that
(as determined by the Board of Directors of the Company) will be used
or useful in the business of the Company or any of its Restricted
Subsidiaries as conducted on the Issue Date or in a business
reasonably related thereto, in each case, within one year from the
later of the consummation of such Transfer of the Fibers Business or
the receipt of such Net Available Cash or Net Cash Proceeds; provided,
however, that the Company or such Restricted Subsidiary legally and
effectively grants the Trustee a second priority security interest in
such assets (or the Trustee otherwise has a second priority security
interest in such assets) as additional security for the repayment of
the Notes and delivers to the Trustee an Opinion of Counsel as to the
validity of the creation and perfection of such security interest in
form and substance reasonably satisfactory to the Trustee; and
(iii) third, to the extent that at least $10.0 million in Net
Available Cash or Net Cash Proceeds remains after giving effect to
clauses (i) and (ii) above, to offer to purchase the Notes at a
purchase price equal to 100% of the principal amount thereof (without
premium), plus accrued and unpaid interest, according to the
procedures set forth in Section 4.14 hereof.
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To the extent that any Net Available Cash or Net Cash Proceeds remains after
giving effect to clauses (i), (ii) and (iii) above, such Net Available Cash or
Net Cash Proceeds shall cease to be subject to this Section 4.16 and the
Company shall be entitled to retain such Net Available Cash or Net Cash
Proceeds and use it for general corporate purposes.
(c) Upon any Transfer of the Fibers Business, (i) any security
interest in the assets of the Fibers Subsidiaries securing the repayment of the
Notes or the performance of the Company under this Indenture shall
automatically cease and terminate and (ii) if more than 50% of the Capital
Stock of the Fibers Subsidiaries is transferred by the Company in connection
with such Transfer of the Fibers Business, any security interest in such
Capital Stock and the Subsidiary Guarantees made by the Fibers Subsidiaries
shall immediately cease and terminate. Upon the receipt of written notice from
the Company of a proposed Transfer of the Fibers Business, the Trustee shall be
authorized and directed to execute and deliver to the Company, concurrently
with the closing of such Transfer of the Fibers Business, at the Company's
expense, such documents as the Company shall reasonably request to evidence
such release of liens and, if applicable, the termination of the Subsidiary
Guarantees made by the Fibers Subsidiaries.
(d) Unless a Default or an Event of Default shall have occurred and be
continuing, the Company (or, if applicable, the Fibers Subsidiaries) shall be
entitled to (i) receive cash interest payments on any deferred payment of
principal under any promissory note, installment receivable or other
arrangement received in connection with any Transfer of the Fibers Business and
use such payments for general corporate purposes, (ii) receive and use all
distributions in respect of any Equity Interest for general corporate purposes,
(iii) vote any Equity Interest and (iv) give consents, approvals, waivers and
ratifications in respect of any Equity Interest; provided, however, that (A)
the Company shall legally and effectively grant the Trustee a second priority
security interest in any distributions paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Equity Interest as
additional security for the Notes and deliver to the Trustee an Opinion of
Counsel as to the validity of the creation and perfection of such security
interest in form and substance satisfactory to the Trustee, (B) no vote shall
be cast or consent, approval, waiver or ratification given or action taken
which would have a material adverse effect on the value of any Equity Interest
or be inconsistent with or violate the provisions of this Indenture and (C) the
Company shall apply the proceeds of any distribution received as a Return of
Capital as provided in paragraph (b) above.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Securities Act of 1934, as amended, and
any other securities laws or regulations in connection with the repurchase of
any Notes pursuant to this Section 4.16. To the extent that the provisions of
any securities laws or regulations conflict with any of the provisions of this
Section 4.16, the Company shall comply with all applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.16 by virtue of such conflict and compliance.
Section 4.17 Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries.
The Company shall not sell or otherwise dispose of any shares of
Capital Stock of a Restricted Subsidiary, and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of
any shares of its Capital Stock except:
(1) to the Company or a Wholly Owned Subsidiary;
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(2) in connection with a Transfer of the Fibers Business;
(3) if, immediately after giving effect to such issuance, sale or
other disposition, such Restricted Subsidiary remains a Restricted Subsidiary;
or
(4) if all shares of Capital Stock of such Restricted Subsidiary are
sold or otherwise disposed of; provided, however, that in connection with any
sale pursuant to this clause (4), the Company may retain no more than 10% of
the outstanding Capital Stock of the Restricted Subsidiary being sold as a
portion of the purchase price in connection with such sale. In connection with
any such sale or disposition of Capital Stock, the Company or any such
Restricted Subsidiary shall comply with the provisions of Section 4.10 or 4.14,
as applicable.
Section 4.18 No Amendment of Subordination Provisions.
Without the consent of each Holder of the Notes outstanding, the
Company will not amend, modify or alter the indentures relating to the Existing
Subordinated Notes in any way that will (i) increase the rate of or change the
time for payment of interest on any of the Existing Subordinated Notes, (ii)
increase the principal of, advance the final maturity date of or shorten the
Average Life of any of the Existing Subordinated Notes, (iii) alter the
redemption provisions or the price or terms at which the Company is required to
offer to purchase any of the Existing Subordinated Notes in any manner adverse
to the Holders or (iv) amend the provisions of the indentures relating to the
Existing Subordinated Notes which relate to subordination in any manner adverse
to the Holders.
Section 4.19 Additional Note Guarantees.
If the Company or any of its Restricted Subsidiaries shall acquire or
create another Subsidiary after the date of this Indenture, or designate an
Unrestricted Subsidiary as a Restricted Subsidiary, then such newly acquired or
created or designated Subsidiary shall execute a supplemental indenture
pursuant to which such Subsidiary shall become a party to and be bound by the
terms of this Indenture, including Article 11 hereof, and deliver an Opinion of
Counsel, in accordance with the terms of this Indenture, provided, however,
that no such acquired or created Subsidiary (i) that is organized outside of
the United States and its territories or (ii) is an Unrestricted Subsidiary
that has properly been designated as such in accordance with this Indenture
shall be required to execute any such supplemental indenture.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets.
The Company shall not consolidate with or merge with or into, or
convey, transfer or lease, in one transaction or a series of related
transactions, all or substantially all its assets to, any Person unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") is a Person organized and existing under the laws of the United
States or any State thereof or the District of Columbia and the Successor
Company (if not the Company) expressly assumes by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under this Indenture and the Notes;
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(2) immediately after giving effect to such transaction (and treating
any Debt which becomes an obligation of the Successor Company or any Subsidiary
of the Successor Company as a result of such transaction as having been
Incurred by such Person at the time of such transaction), no Default shall have
occurred and be continuing;
(3) immediately after giving effect to such transaction the Successor
Company would be able to Incur an additional $1.00 of Debt pursuant to
paragraph (a) of Section 4.09;
(4) immediately after giving effect to such transaction, the Successor
Company has Consolidated Net Worth in an amount which is not less than the
Consolidated Net Worth of the Company immediately prior to such transaction
minus any costs incurred in connection with the transaction; and
(5) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or transfer
and such supplemental indenture (if any) comply with this Indenture.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of 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, lease, 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, lease,
conveyance or other disposition the provisions of this Indenture referring to
the "Company" shall refer instead to the successor corporation and not to the
Company), and may exercise every right and power of the Company under this
Indenture with the same effect as if such successor Person had been named as
the Company herein; provided, however, that the predecessor Person shall not be
relieved from the obligation to pay the principal of and interest on the Notes
except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" means:
(1) a default in any payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30 days;
(2) a default in the payment of the principal of any Note when the
same becomes due and payable at its Stated Maturity, upon redemption, upon
declaration, upon required repurchase or otherwise;
(3) the failure by the Company to comply with its obligations pursuant
to Section 5.01 hereof;
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(4) the failure by the Company to observe or perform any of its
obligations under Sections 4.10, 4.14 or 4.15 (in each case, other than a
failure to purchase Notes), or under Sections 4.03, 4.07, 4.08, 4.09 or 4.11,
of this Indenture for 30 days after notice to the Company by the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding voting as a single class;
(5) the failure by the Company to observe or perform any other
covenant, representation, warranty or other agreement in this Indenture or the
Notes for 60 days after notice to the Company by the Trustee or the Holders of
at least 25% in aggregate principal amount of the Notes then outstanding voting
as a single class;
(6) a default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any Debt for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is Guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Debt or Guarantee now exists, or is created after
the date hereof, which default:
(a) is caused by failure to pay principal of or premium, if any, or
interest on such Debt prior to the expiration of the grace period
provided in such Debt on the date of such default ("Payment Default");
or
(b) results in the acceleration of such Debt prior to its express
maturity; and, in each case, the principal amount of any such Debt,
together with the principal amount of any other such Debt under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more;
(7) any final non-appealable judgment or decree not covered by
insurance or as to which the insurance carrier has denied responsibility for
the payment of money in excess of $10.0 million is rendered against the Company
or any Significant Subsidiary and is not discharged and there is a period of 60
days following such judgment during which such judgment or decree is not
discharged, waived or the execution thereof stayed;
(8) The Company or any of its Significant Subsidiaries, pursuant to or
within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(9) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
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(i) is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case;
(ii) appoints a custodian of the Company or any of its Significant
Subsidiaries for all or substantially all of the property of the
Company or any of its Significant Subsidiaries; or
(iii) orders the liquidation of the Company or any of its Significant
Subsidiaries;
and the order or decree remains unstayed and in effect for 60 consecutive days.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (8) or (9) of Section 6.01 hereof with respect to the Company, or any of
its Significant Subsidiary occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the principal of and accrued but unpaid interest on the Notes to be due and
payable immediately. Upon any such declaration, the Notes shall become due and
payable. If an Event of Default specified in clause (8) or (9) of Section 6.01
hereof occurs with respect to the Company any of its Significant Subsidiaries,
the principal of and accrued but unpaid interest on all the Notes shall ipso
facto become and be immediately due and payable immediately without any
declaration or other act on the part of the Trustee or any Holders of the
Notes. The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
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, premium, if
any, and interest 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 of a Note 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.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that
the Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). 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
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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.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or if, subject to Section 7.01, the
Trustee reasonably determines that such action, if taken, would be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(1) such Holder has previously given the Trustee notice that an Event
of Default is continuing;
(2) Holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee to pursue the remedy;
(3) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity; and
(5) Holders of a majority in principal amount of the outstanding Notes
have not given the Trustee a direction inconsistent with such request within
such 60-day period. Subject to certain restrictions, the Holders of a majority
in principal amount of the outstanding Notes are given the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, and
interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder; provided that a
Holder shall not have the right to institute any such suit for the enforcement
of payment if and to the extent that the institution or prosecution thereof or
the entry of judgment therein would, under applicable law, result in the
surrender, impairment, waiver or loss of the Lien granted under the Security
Agreements upon any property subject to such Lien.
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Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
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 of the Notes 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,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. 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 7.07 hereof 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 that 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, 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, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, 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 of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and
Liquidated Damages, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
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, 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 of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If 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 its exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and 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, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, its own willful misconduct,
except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(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 6.05 hereof.
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(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document reasonably
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it reasonably believes to be authorized or within
the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as Trustee or resign. Any Agent may do
the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11 hereof.
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Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Notes are listed
on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
Trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or willful misconduct. The Trustee shall notify the Company promptly
of any claim for
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which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder except, solely as it
pertains to such claim, to the extent that the Company may be materially
prejudiced by such failure. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(8) or (9) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
Section 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company in writing. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in principal amount of the
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then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has, or is a direct or indirect subsidiary
Wholly-Owned Subsidiary of a bank holding company that has, a combined capital
and surplus of at least $100 million as set forth in its most recent published
annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
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Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Debt represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only
for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such 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: (a) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due, (b) the Company's obligations with respect to such Notes
under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article Eight. Subject to compliance with
this Article Eight, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the provisions of Sections 4.03, 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and 4.18 hereof and clause (3) and (4)
of Section 5.01 hereof with respect to the outstanding Notes on and after the
date the conditions set forth in Section 8.04 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
Sections, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes). For this purpose, 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 Section, whether directly or indirectly, by reason of any
reference elsewhere herein to any such Section or by reason of any reference in
any such Section 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 hereof, but, except as specified above, the remainder of
this Indenture and such Notes shall be unaffected thereby. In addition, upon
the Company's exercise under Section 8.01 hereof of the option applicable to
this Section 8.03 hereof, subject to the satisfaction of the conditions set
forth in Section 8.04 hereof, Sections 6.01(3) through 6.01(7) hereof or
Sections 6.01(8) or 6.01(9) (with respect only to Significant Subsidiary) shall
not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
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(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, U.S. Government
Obligations, or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
outstanding Notes on the stated date for payment thereof or on the applicable
redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Debt all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.01(8) or 6.01(9)
hereof is concerned and pertains to the Company, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that on
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable Bankruptcy Law;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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Section 8.05. Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof 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, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or U.S. Government
Obligations deposited pursuant to Section 8.04 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 Eight 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 8.04 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
8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06. 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 on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as Trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in 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 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or U.S. Government Obligations in accordance with Section 8.02 or 8.03
hereof, 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 Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of,
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premium, if any, or interest on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money held by the Trustee or Paying
Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Subsidiary Guarantors and the Trustee (or the Collateral Agent or other
representative of the Holders under any Security Agreement) may amend or
supplement this Indenture, the Notes (including any notation or endorsement
thereon) or any of the Security Agreements without the consent of any Holder of
a Note:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including
the related definitions) in a manner that does not materially adversely affect
any Holder;
(3) to provide for the assumption of the Company's or a Subsidiary
Guarantor's obligations to the Holders of the Notes by a successor to the
Company or a Subsidiary Guarantor pursuant to Article 5 or Article 11 hereof;
(4) to add to the covenants of the Company and its Subsidiaries
hereunder for the benefit of the Holders of the Notes or to surrender any right
or power conferred upon the Company;
(5) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Note;
(6) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA; or
(7) to allow any Subsidiary Guarantor to execute a supplemental
indenture with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental indenture or Security Agreement, and upon receipt by the Trustee
of the documents described in Section 9.06 hereof, the Trustee shall join with
the Company and the Subsidiary Guarantors in the execution of any amended or
supplemental indenture or Security Agreement authorized or permitted by the
terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture or Security
Agreement that affects its own rights, duties or immunities under this
Indenture or otherwise.
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Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture
(including Section 3.09, 4.10, 4.14, 4.15 and 4.16 hereof), the Notes or any of
the Security Agreements with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding voting as a single class
(including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Notes, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture, the Notes,
any Security Agreement or the Subsidiary Guarantees may be waived with the
consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes). Section 2.08 hereof shall determine which Notes are considered to be
"outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental indenture or Security Agreement, and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of the Holders
of Notes as aforesaid, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Company in
the execution of such amended or supplemental indenture or Security Agreement
unless such amended or supplemental indenture directly affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental indenture or Security Agreement.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section or Section
9.01 becomes effective, the Company shall mail to the Holders of Notes affected
thereby 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 such amended or
supplemental indenture or Security Agreement or waiver. Subject to Sections
6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount
of the Notes then outstanding voting as a single class may waive compliance in
a particular instance by the Company with any provision of this Indenture, the
Notes or any of the Security Agreements. However, without the consent of each
Holder affected, an amendment, supplement or waiver under this Section 9.02 may
not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the rate of or extend the time for payment of interest,
including default interest, on any Note;
(c) reduce the principal of or extend the Stated Maturity of any Note;
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(d) alter or waive any of the provisions with respect to the
redemption of the Notes except as provided above with respect to Sections 3.09,
4.10, 4.14, 4.15 and 4.16 hereof;
(e) make any Note payable in money other than that stated in the
Notes;
(f) impair the right of any Holder of the Notes to receive payment of
principal of and interest on such Holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such Holder's Notes;
(g) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
(h) make any change in Section 6.04 or 6.07 hereof or in this
sentence;
(i) release any Subsidiary Guarantor from any of its obligations under
its Subsidiary Guarantee or this Indenture, except in accordance with the terms
of this Indenture; or
(j) deprive any of the Holders of the benefit of the Liens created by
the Security Agreements except in accordance with the terms of the Security
Agreements.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment
becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
If an amendment or supplement changes the terms of a Note, the Trustee
may require the Holder of such Note to deliver such Note to the Trustee. The
Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated. The Company in exchange for all
Notes may issue and the Trustee shall, upon receipt of an Authentication Order,
authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
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Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental indenture or
Security Agreement authorized pursuant to this Article 9 if the amendment,
supplement or Security Agreement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not sign an amendment
or supplemental indenture or Security Agreement unless the Board of Directors
authorizes it. In executing any amended or supplemental indenture or Security
Agreement, the Trustee shall be entitled to receive and (subject to Section
7.01 hereof) shall be fully protected in relying upon an Officer's Certificate
and an Opinion of Counsel stating that the execution of such amended or
supplemental indenture or Security Agreement is authorized or permitted by this
Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Security Agreements.
The due and punctual payment of the principal of and interest and
Liquidated Damages, if any, on the Notes when and as the same shall be due and
payable, whether on an interest payment date, at maturity, by acceleration,
repurchase, redemption or otherwise, and interest on the overdue principal of
and interest and Liquidated Damages (to the extent permitted by law), if any,
on the Notes and performance of all other obligations of the Company to the
Holders of Notes or the Trustee under this Indenture and the Notes, according
to the terms hereunder or thereunder, shall be secured as provided in the
Security Agreements which the Company and certain of its Restricted
Subsidiaries have entered into simultaneously with the execution of this
Indenture. Each Holder of Notes, by its acceptance thereof, consents and agrees
to the terms of the Security Agreements (including, without limitation, the
provisions providing for foreclosure and release of Pledged Collateral) as the
same may be in effect or may be amended from time to time in accordance with
its terms and authorizes and directs the Collateral Agent to enter into the
Security Agreements and to perform its obligations and exercise its rights
thereunder in accordance therewith. The Company shall deliver to the Trustee
copies of all documents delivered to the Collateral Agent pursuant to the
Security Agreements, and shall do or cause to be done all such acts and things
as may be necessary or proper, or as may be required by the provisions of the
Security Agreements, to assure and confirm to the Trustee and the Collateral
Agent the security interest in the Pledged Collateral contemplated hereby, by
the Security Agreements or any part thereof, as from time to time constituted,
so as to render the same available for the security and benefit of this
Indenture and of the Notes secured hereby, according to the intent and purposes
herein expressed. The Company shall take, or shall cause its Restricted
Subsidiaries to take, upon request of the Trustee, any and all actions
reasonably required to cause the Security Agreements to create and maintain, as
security for the Obligations of the Company hereunder, a valid and enforceable
perfected first priority Lien or second priority Lien, as the case may be, in
and on all the Pledged Collateral, in favor of the Collateral Agent for the
benefit of the Holders of Notes, superior to and prior to the rights of all
third Persons and subject to no other Liens other than Permitted Liens.
Section 10.02. Recording and Opinions.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture a letter stating that it is entitled
to rely on an Opinion of Counsel stating that in the opinion of such counsel
all action has been taken with respect to the delivery of all financing
statements
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or other instruments necessary to make effective the Liens intended to be
created by the Security Agreements.
(b) The Company shall furnish to the Collateral Agent and the Trustee
on July 15 in each year beginning with July 15, 2000 a Opinion of Counsel,
dated as of such date, either (i) (A) stating that, in the opinion of such
counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain the Lien of the Security
Agreements and reciting with respect to the security interests in the Pledged
Collateral the details of such action or referring to prior Opinions of Counsel
in which such details are given, (B) stating that, based on relevant laws as in
effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders of Notes and the Collateral Agent and the Trustee hereunder and
under the Security Agreements with respect to the security interests in the
Pledged Collateral, or (ii) stating that, in the opinion of such counsel, no
such action is necessary to maintain such Lien and assignment.
(c) The Company shall otherwise comply with the provisions of TIA
Section 314(b).
Section 10.03. Release of Collateral.
(a) Subject to subsections (b), (c) and (d) of this Section 10.02,
Pledged Collateral may be released from the Lien and security interest created
by the Security Agreements at any time or from time to time in accordance with
the provisions of the Security Agreements or as provided hereby. In addition,
upon the request of the Company pursuant to an Officers' Certificate certifying
that all conditions precedent hereunder have been met and stating whether or
not such release is in connection with an Asset Disposition, a Sale of a
Principal Property or a Transfer of the Fibers Business, (at the sole cost and
expense of the Company) the Collateral Agent shall release (i) Pledged
Collateral that is sold, conveyed or disposed of in compliance with the
provisions of this Indenture; provided, that if such sale, conveyance or
disposition constitutes an Asset Disposition, a Sale of a Principal Property or
a Transfer of the Fibers Business, the Company shall comply with Section 4.10,
Section 4.15 or Section 4.16, as applicable. Upon receipt of such Officers'
Certificate the Collateral Agent shall execute, deliver or acknowledge any
necessary or proper instruments of termination, satisfaction or release to
evidence the release of any Pledged Collateral permitted to be released
pursuant to this Indenture or the Security Agreements.
(b) No Pledged Collateral shall be released from the Lien and security
interest created by the Security Agreements pursuant to the provisions of the
Security Agreements unless there shall have been delivered to the Collateral
Agent the certificate required by this Section 10.02.
(c) No release of Pledged Collateral pursuant to the provisions of the
Security Agreements shall be effective as against the Holders of Notes if such
release shall have been given at any time when a Default or Event of Default
shall have occurred and be continuing and the maturity of the Notes shall have
been accelerated (whether by declaration or otherwise) and the Trustee shall
have delivered a notice of acceleration to the Collateral Agent.
(d) The release of any Pledged Collateral from the terms of this
Indenture and the Security Agreements shall not be deemed to impair the
security under this Indenture in contravention of the
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provisions hereof if and to the extent the Pledged Collateral is released
pursuant to the terms of the Security Agreements. To the extent applicable, the
Company shall cause TIA Section 313(b), relating to reports, and TIA Section
314(d), relating to the release of property or securities from the Lien and
security interest of the Security Agreements and relating to the substitution
therefor of any property or securities to be subjected to the Lien and security
interest of the Security Agreements, to be complied with. Any certificate or
opinion required by TIA Section 314(d) may be made by an Officer of the Company
except in cases where TIA Section 314(d) requires that such certificate or
opinion be made by an independent Person, which Person shall be an independent
engineer, appraiser or other expert selected or approved by the Trustee and the
Collateral Agent in the exercise of reasonable care.
Section 10.04. Certificates of the Company.
The Company shall furnish to the Trustee and the Collateral Agent,
prior to each proposed release of Pledged Collateral pursuant to the Security
Agreements, (i) all documents required by TIA Section 314(d) and (ii) an
Opinion of Counsel, which may be rendered by internal counsel to the Company,
to the effect that such accompanying documents constitute all documents
required by TIA Section 314(d). The Trustee may, to the extent permitted by
Sections 7.01 and 7.02 hereof, accept as conclusive evidence of compliance with
the foregoing provisions the appropriate statements contained in such documents
and such Opinion of Counsel.
Section 10.05. Certificates of the Trustee.
In the event that the Company wishes to obtain a release of any
Pledged Collateral in accordance with the Security Agreements and has delivered
the certificates and documents required by the Security Agreements and Sections
10.02 and 10.03 hereof, the Trustee shall determine whether it has received all
documentation required by TIA Section 314(d) in connection with such release
and, based on such determination and the Opinion of Counsel delivered pursuant
to Section 10.03(b), shall deliver a certificate to the Collateral Agent
setting forth such determination.
Section 10.06 Attornment.
To the extent expressly required under the leases in existence on the
Issue Date, the Trustee, on behalf of the Holders of the Notes, hereby
acknowledges and agrees that the Liens granted pursuant to the Security
Agreements are subject to the rights of certain lessees under such leases (and
expressly required thereunder) and will be subject to the rights of lessees
under any leases entered into by the Company or any Subsidiary Guarantor after
the date hereof which are permitted pursuant to this Indenture (collectively,
the "Leases") subject to the express rights contained in the applicable lease.
The rights of the tenants under the leases to the leased premises shall not be
unreasonably affected by the exercise by the Trustee (or the Collateral Agent
or other representative of the Holders under any Security Agreement) of any of
their rights under this Indenture or any of the Security Agreements, nor shall
any such tenant be in any other way deprived of its rights under the applicable
lease except in accordance with the terms of such lease. In the event that the
Trustee (or any Collateral Agent or other representative of the Holders under
any Security Agreement) succeeds to the interest of the Company or any
Subsidiary Guarantor under a Lease, such lease shall not be terminated or
affected thereby except as set forth herein or therein, and any sale of the
applicable leased premises by the Trustee (or the Collateral Agent or other
representative of the Holders under any Security Agreement) under or pursuant
to the judgment of any court in an action to enforce the remedies provided for
in the Indenture or any of the Security Agreements shall be made subject to
such lease and the rights of such tenant expressly set forth thereunder. If the
Trustee (or the Collateral Agent or other representative of the Holders under
any
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Security Agreement) succeeds to the interests of the Company or Subsidiary
Guarantor in and to the applicable leased premises or under such lease or
enters into possession of such leased premises, the Trustee or such Collateral
Agent or other representative and such tenants shall be bound to each other
under all of the express terms, covenants and conditions of such lease, as if
the Trustee or such Collateral Agent or other representative was originally the
Company or such Subsidiary Guarantor as lessor thereunder.
Section 10.07. Authorization of Actions to Be Taken by the Trustee Under the
Security Agreements.
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee
may, in its sole discretion and without the consent of the Holders of Notes,
direct, on behalf of the Holders of Notes, the Collateral Agent to take all
actions it deems necessary or appropriate in order to (a) enforce any of the
terms of the Security Agreements and (b) collect and receive any and all
amounts payable in respect of the Obligations of the Company hereunder. The
Trustee shall have power to institute and maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Pledged Collateral by
any acts that may be unlawful or in violation of the Security Agreements or
this Indenture, and such suits and proceedings as the Trustee may deem
expedient to preserve or protect its interests and the interests of the Holders
of Notes in the Pledged Collateral (including power to institute and maintain
suits or proceedings to restrain the enforcement of or compliance with any
legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair the security interest
hereunder or be prejudicial to the interests of the Holders of Notes or of the
Trustee).
Section 10.08 Authorization of Receipt of Funds by the Trustee Under the
Security Agreements.
The Trustee is authorized to receive any funds for the benefit of the
Holders of Notes distributed under the Security Agreements, and to make further
distributions of such funds to the Holders of Notes according to the provisions
of this Indenture.
Section 10.09. Termination of Security Interest.
Upon the payment in full of all Obligations of the Company under this
Indenture and the Notes, or upon Legal Defeasance, the Trustee shall, at the
request of the Company, deliver a certificate to the Collateral Agent stating
that such Obligations have been paid in full, and instruct the Collateral Agent
to release the Liens pursuant to this Indenture and the Security Agreements.
ARTICLE 11
SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantees.
Subject to this Article 11, each of the Subsidiary Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of and interest on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder
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will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and
severally obligated to pay the same immediately. Each Subsidiary Guarantor
agrees that this is a guarantee of payment and not a guarantee of collection.
The Subsidiary Guarantors hereby agree that their obligations
hereunder shall be, to the extent permitted by law, unconditional, irrespective
of the validity, regularity or enforceability of the Notes or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. To the extent permitted by law, each
Subsidiary Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenant that this Subsidiary Guarantee
shall not be discharged except by complete performance of the obligations
contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company
or the Subsidiary Guarantors, any amount paid by either to the Trustee or such
Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Subsidiary Guarantor further agrees that, as between the Subsidiary
Guarantors, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the obligations guaranteed hereby may be accelerated
as provided in Article 6 hereof for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantors for the purpose
of this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to
seek contribution from any non-paying Subsidiary Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Subsidiary Guarantee.
Section 11.02. Limitation on Subsidiary Guarantor Liability.
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 Subsidiary Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to any Subsidiary Guarantee. To effectuate
the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors
hereby irrevocably agree that the obligations of such Subsidiary Guarantor
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of such
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Subsidiary Guarantor that are relevant under such laws, and after giving effect
to any collections from, rights to receive contribution from or payments made
by or on behalf of any other Subsidiary Guarantor in respect of the obligations
of such other Subsidiary Guarantor under this Article 11, result in the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer or conveyance.
Section 11.03. Execution and Delivery of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Subsidiary Guarantor on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Subsidiary
Guarantor by its President or one of its Vice Presidents.
Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 11.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
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.
In the event that the Company creates or acquires any new U.S.
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.19 hereof, the Company shall cause such U.S. Subsidiaries to execute
supplemental indentures to this Indenture and the notation on the Note
substantially in the form of Exhibit E to this Indenture in accordance with
Section 4.19 hereof and this Article 11, to the extent applicable.
Section 11.04. Subsidiary Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 11.05, no Subsidiary Guarantor
may sell or otherwise dispose of substantially all of its assets to, or
consolidate with or merge with or into (whether or not such Subsidiary
Guarantor is the surviving Person) another Person, other than the Company or
another Subsidiary Guarantor, unless immediately after giving effect to such
transaction, no Default or Event of Default exists and either:
(a) subject to Section 11.05 hereof, the Person acquiring the property
in any such sale or disposition or the Person formed by or surviving any such
consolidation or merger assumes all the obligations of that Subsidiary
Guarantor under this Indenture, its Subsidiary Guarantee and the Registration
Rights Agreement pursuant to a supplemental indenture and appropriate
collateral documents satisfactory to the Trustee; or
(b) if applicable, the Net Available Cash from such sale or other
disposition is applied in accordance with Section 4.10 hereof; or
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(c) if applicable, that transaction is made in accordance with the
terms of Section 4.15 hereof; or
(d) if applicable, that transaction is made in accordance with the
terms of Section 4.16 hereof.
In case of any such consolidation, merger, sale or conveyance (other
than pursuant to Section 4.15 or Section 4.16) and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee
endorsed upon the Notes and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Subsidiary
Guarantor, such successor Person shall succeed to and be substituted for the
Subsidiary Guarantor with the same effect as if it had been named herein as a
Subsidiary Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Subsidiary Guarantees so issued 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 of such Subsidiary Guarantees had been
issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture or in any of the Notes shall prevent any consolidation or merger
of a Subsidiary Guarantor with or into the Company or another Subsidiary
Guarantor, or shall prevent any sale or conveyance of the property of a
Subsidiary Guarantor as an entirety or substantially as an entirety to the
Company or another Subsidiary Guarantor.
Section 11.05. Releases Following Sale of Assets.
The Subsidiary Guarantee of a Subsidiary Guarantor will be released:
(1) with respect to any Subsidiary Guarantor other than a Principal
Property Subsidiary or a Fibers Subsidiary, in connection with any sale or
other disposition of all or substantially all of the assets of that Subsidiary
Guarantor (including by way of merger or consolidation) or any sale or other
disposition of all of the Capital Stock of that Subsidiary Guarantor to a
Person that is not (either before or after giving effect to such transaction) a
Subsidiary Guarantor or the Company, provided, that the Company must apply the
Net Available Cash or the Net Cash Proceeds, as applicable, from such sale or
other disposition in accordance with the provisions of Section 4.10 hereof;
(2) with respect to any Principal Property Subsidiary, in connection
with the sale or other disposition of any Principal Property owned by such
Principal Property Subsidiary, or a sale or other disposition of the Capital
Stock of such Principal Property Subsidiary, provided, that the Company must
apply the Net Available Cash or the Net Cash Proceeds, as applicable, from such
sale or other disposition in accordance with the terms of Section 4.15 hereof;
(3) with respect to the Fibers Subsidiaries, upon the consummation of
a Transfer of the Fibers Business made in accordance with the terms of Section
4.16 hereof.
Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.10 hereof, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Subsidiary Guarantor from its obligations under its Subsidiary Guarantee.
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Any Subsidiary Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of
and interest on the Notes and for the other obligations of any Subsidiary
Guarantor under this Indenture as provided in this Article 11.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Company, any Subsidiary Guarantor
or the Trustee to the others is duly given if in writing and delivered in
Person or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address:
If to the Company and/or any Subsidiary Guarantor:
Sterling Chemicals, Inc.
1200 Smith Street, Suite 1900
Houston, TX 77002
Telecopier No.: (713) 654-9551
Attention: General Counsel
With a copy to:
Andrews & Kurth, L.L.P.
600 Travis, Suite 4200
Houston, TX 77002-3090
Telecopier No.: (713) 220-4285
Attention: William Finnegan, Esq.
If to the Trustee:
Harris Trust Company of New York
Wall Street Plaza, 19th Floor
88 Pine Street
New York, NY 10005
Telecopier No.: (212) 701-7664
Attention: Peter Morse
The Company, any Subsidiary Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices
or communications.
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All notices and communications (other than those sent to Holders)
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 answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee, each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, any Agent and any other Person shall have the protection
of TIA Section 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
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(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 Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Subsidiary Guarantor, as such, shall have
any liability for any obligations of the Company or such Subsidiary Guarantor
under the Notes, the Subsidiary Guarantees, this Indenture or the Security
Agreements or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
Section 12.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES, THE SUBSIDIARY GUARANTEES AND THE SECURITY
AGREEMENTS WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
Section 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors. All agreements of each Subsidiary Guarantor in this Indenture
shall bind its successors, except as otherwise provided in Section 11.05.
Section 12.11. Severability.
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.
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Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 12.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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<PAGE> 98
SIGNATURES
STERLING CHEMICALS, INC.
By:
-------------------------------------
Name:
Title:
STERLING CHEMICALS ENERGY, INC.
By:
-------------------------------------
Name:
Title:
STERLING CHEMICALS INTERNATIONAL, INC.
By:
-------------------------------------
Name:
Title:
STERLING PULP CHEMICALS, INC.
By:
-------------------------------------
Name:
Title:
STERLING PULP CHEMICALS US, INC.
By:
-------------------------------------
Name:
Title:
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<PAGE> 99
STERLING FIBERS, INC.
By:
-------------------------------------
Name:
Title:
STERLING CANADA, INC.
By:
-------------------------------------
Name:
Title:
HARRIS TRUST COMPANY OF NEW YORK
By:
-------------------------------------
Name:
Title:
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<PAGE> 100
EXHIBIT A
FORM OF NOTE
A-1
<PAGE> 101
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Sterling Chemicals
1200 Smith Street, Suite 1900
Houston, TX 77002
Harris Trust Company of New York
Wall Street Plaza, 19th Floor
88 Pine Street
New York, NY 10005
Re: __% Senior Secured Notes due 2006
Reference is hereby made to the Indenture, dated as of July __, 1999
(the "Indenture"), between Sterling Chemicals, Inc., as issuer (the "Company"),
the Subsidiary Guarantors listed on Schedule I thereto and Harris Trust Company
of New York, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
___________________, (the "Transferor") owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto,
in the principal amount of $___________ in such Note[s] or interests (the
"Transfer"), to ___________________________ (the "Transferee"), as further
specified in Annex A hereto. In connection with the Transfer, the Transferor
hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.
The Transfer is being effected pursuant to and in accordance with Rule 144A
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Note is being transferred to a Person that
the Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A
and such Transfer is in compliance with any applicable blue sky securities laws
of any state of the United States. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note
and/or the Definitive Note and in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
REGULATION S. The Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the
B-1
<PAGE> 102
transaction was prearranged with a buyer in the United States, (ii) no directed
selling efforts have been made in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not
being made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Upon consummation of the proposed transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer
enumerated in the Private Placement Legend printed on the Regulation S Global
Note and/or the Definitive Note and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with
the prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or
Rule 904, and the Transferor hereby further certifies that it has not
engaged in any general solicitation within the meaning of Regulation D
under the Securities Act and the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global
Note or Restricted Definitive Notes and the requirements of the
exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount
of Notes at the time of transfer of less than $250,000, an Opinion of
Counsel provided by the Transferor or the Transferee (a copy of which
the Transferor has attached to this certification), to the effect that
such Transfer is in compliance with the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of
the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the
Private
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<PAGE> 103
Placement Legend printed on the IAI Global Note and/or the Definitive
Notes and in the Indenture and the Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
--------------------------------------------
[Insert Name of Transferor]
By:
-----------------------------------------
Name:
Title:
Dated:
-----------
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<PAGE> 104
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP 858903AF4), or
(ii) [ ] Regulation S Global Note (CUSIP U85908AA6), or
(iii) [ ] IAI Global Note (CUSIP 858903AG2); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP 858903AF4), or
(ii) [ ] Regulation S Global Note (CUSIP U85908AA6), or
(iii) [ ] IAI Global Note (CUSIP 858903AG2); or
(iv) [ ] Unrestricted Global Note (CUSIP 858903AH0); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE> 105
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Sterling Chemicals
1200 Smith Street, Suite 1900
Houston, TX 77002
Harris Trust Company of New York
Wall Street Plaza, 19th Floor
88 Pine Street
New York, NY 10005
Re: __% Senior Secured Notes due 2006
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of July __, 1999
(the "Indenture"), between Sterling Chemicals, Inc., as issuer (the "Company"),
the Subsidiary Guarantors listed on Schedule I thereto and Harris Trust Company
of New York, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
__________________________, (the "Owner") owns and proposes to
exchange the Note[s] or interest in such Note[s] specified herein, in the
principal amount of $____________ in such Note[s] or interests (the
"Exchange"). In connection with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.
In connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global Note
in an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Global Notes and pursuant to and in accordance with the
United States Securities Act of 1933, as amended (the "Securities Act"), (iii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest in an Unrestricted Global Note
is being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive
Note is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
C-1
<PAGE> 106
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in
an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest is
being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired for the
Owner's own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to Restricted Definitive
Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Definitive Note is being acquired in compliance with
any applicable blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Definitive Note and
in the Indenture and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the [CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note, [ ] IAI
Global Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any
applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the
Indenture, the beneficial interest issued will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the relevant
Restricted Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
--------------------------------------------
[Insert Name of Transferor]
By:
-----------------------------------------
Name:
Title:
Dated:
-----------
C-2
<PAGE> 107
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Sterling Chemicals
1200 Smith Street, Suite 1900
Houston, TX 77002
Harris Trust Company of New York
Wall Street Plaza, 19th Floor
88 Pine Street
New York, NY 10005
Re: __% Senior Secured Notes due 2006
Reference is hereby made to the Indenture, dated as of July __, 1999
(the "Indenture"), between Sterling Chemicals, Inc., as issuer (the "Company"),
the Subsidiary Guarantors listed on Schedule I thereto and Harris Trust Company
of New York, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which
we are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and
to the Company a signed letter substantially in the form of this letter and [,
if such transfer is in respect of a principal amount of Notes, at the time of
transfer of less than $250,000,] an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in compliance
with the Securities Act, (D) outside the United States in accordance with Rule
904 of Regulation S under the Securities Act, (E) pursuant to the provisions of
Rule 144(k) under the Securities Act or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing the Definitive Note or beneficial interest in
a Global Note from us in a
D-1
<PAGE> 108
transaction meeting the requirements of clauses (A) through (E) of this
paragraph a notice advising such purchaser that resales thereof are restricted
as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
--------------------------------------------
[Insert Name of Accredited Investor]
By:
-----------------------------------------
Name:
Title:
Dated:
-----------
D-2
<PAGE> 109
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Subsidiary Guarantor (which term includes
any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture dated as of July 23, 1999 (the
"Indenture") among Sterling Chemicals, Inc., the Subsidiary Guarantors listed
on Schedule I thereto and Harris Trust Company of New York, as trustee (the
"Trustee"), (a) the due and punctual payment of the principal of, premium, if
any, and interest on the Notes (as defined in the Indenture), whether at
maturity, by acceleration, redemption or otherwise, the due and punctual
payment of interest on overdue principal and premium, and, to the extent
permitted by law, interest, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in accordance with
the terms of the Indenture and (b) in case of any extension of time of payment
or renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Subsidiary Guarantors to the Holders of Notes and to the
Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Subsidiary Guarantee. Each Holder of a
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder,
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Debt evidenced by this Subsidiary Guarantee shall cease to be so subordinated
and subject in right of payment upon any defeasance of this Note in accordance
with the provisions of the Indenture.
[NAME OF SUBSIDIARY GUARANTOR]
By:
-----------------------------------------
Name:
Title:
E-1
<PAGE> 110
EXHIBIT F
SCHEDULE I
SCHEDULE OF GUARANTORS
The following schedule lists each Subsidiary Guarantor under the
Indenture as of the Issue Date:
Sterling Canada, Inc.
Sterling Chemicals Energy, Inc.
Sterling Chemicals International, Inc.
Sterling Fibers, Inc.
Sterling Pulp Chemicals, Inc.
Sterling Pulp Chemicals US, Inc.
F-1
<PAGE> 1
EXHIBIT 4.10
================================================================================
STERLING CHEMICALS, INC.,
Trustor,
to
John Dorris, an Individual
Trustee
for the benefit of
HARRIS TRUST COMPANY OF NEW YORK,
Beneficiary
-----------------------------------------------------
SECOND DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
-----------------------------------------------------
Dated as of July 23, 1999
This instrument affects certain real and personal property
located in Galveston County,
State of Texas.
================================================================================
Record and return to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Wylie S. Allen, Esq.
This instrument was prepared by the above-named attorney.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Page
ARTICLE I
COVENANTS AND AGREEMENTS OF THE TRUSTOR
Section 1.1. Payment of Obligations......................................................................4
Section 1.2. Title to Trust Premises, etc................................................................5
Section 1.3. Title Insurance.............................................................................5
Section 1.4. Recordation.................................................................................6
Section 1.5. Payment of Impositions, etc.................................................................6
Section 1.6. Insurance and Legal Requirements............................................................6
Section 1.7. Security Interests, etc.....................................................................7
Section 1.8. Permitted Contests..........................................................................7
Section 1.9. Leases......................................................................................8
Section 1.10. Compliance with Instruments.................................................................8
Section 1.11. Maintenance and Repair, etc.................................................................8
Section 1.12. Alterations, Additions, etc.................................................................8
Section 1.13. Acquired Property Subject to Lien...........................................................9
Section 1.14. Assignment of Rents, Proceeds, etc..........................................................9
Section 1.15. No Claims Against the Trustee or the Beneficiary...........................................10
Section 1.16. Indemnification............................................................................10
Section 1.17. No Credit for Payment of Taxes.............................................................11
Section 1.18. Intentionally Omitted......................................................................11
Section 1.19. No Transfer of the Property................................................................12
Section 1.20. Security Agreement.........................................................................12
Section 1.21. Representations and Warranties.............................................................13
Section 1.22. Trustor's Covenants........................................................................13
Section 1.23. Attornment.................................................................................13
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR taking, ETC.
Section 2.1. Insurance..................................................................................13
Section 2.2. Damage, Destruction or Taking; Trustor to Give Notice; Assignment of Awards................15
Section 2.3. Application of Proceeds and Awards.........................................................16
Section 2.4. Total Taking and Total Destruction.........................................................17
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
Section 3.1. Events of Default; Acceleration............................................................18
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 3.2. Legal Proceedings; Judicial Foreclosure....................................................18
Section 3.3. Power of Sale..............................................................................18
Section 3.4. Uniform Commercial Code Remedies...........................................................20
Section 3.5. Beneficiary Authorized to Execute Deeds, etc...............................................20
Section 3.6. Purchase of Trust Premises by Beneficiary..................................................20
Section 3.7. Receipt a Sufficient Discharge to Purchaser................................................21
Section 3.8. Waiver of Appraisement, Valuation, etc.....................................................21
Section 3.9. Sale a Bar Against Trustor.................................................................21
Section 3.10. Obligations to Become Due on Sale..........................................................21
Section 3.11. Application of Proceeds of Sale and Other Moneys...........................................21
Section 3.12. Appointment of Receiver....................................................................22
Section 3.13. Possession, Management and Income..........................................................22
Section 3.14. Right of Beneficiary to Perform Trustor's Covenants, etc...................................22
Section 3.15. Subrogation................................................................................23
Section 3.16. Remedies, etc., Cumulative.................................................................23
Section 3.17. Provisions Subject to Applicable Law.......................................................23
Section 3.18. No Waiver, etc.............................................................................23
Section 3.19. Compromise of Actions, etc.................................................................24
ARTICLE IV
DEFINITIONS
Section 4.1. Terms Defined in this Deed of Trust........................................................24
Section 4.2. Use of Defined Terms.......................................................................25
Section 4.3. Indenture Definitions......................................................................26
ARTICLE V
MISCELLANEOUS
Section 5.1. Further Assurances; Financing Statements...................................................26
Section 5.2. Additional Security........................................................................26
Section 5.3. Defeasance; Partial Release, etc...........................................................27
Section 5.4. Notices, etc...............................................................................27
Section 5.5. Waivers, Amendments, etc...................................................................27
Section 5.6. Cross-References...........................................................................27
Section 5.7. Headings...................................................................................27
Section 5.8. Currency...................................................................................27
Section 5.9. Governing Law..............................................................................28
Section 5.10. Successors and Assigns, etc................................................................28
Section 5.11. Concerning the Trustee.....................................................................28
Section 5.12. Waiver of Jury Trial; Submission to Jurisdiction...........................................30
Section 5.13. Severability; Conflicts....................................................................31
Section 5.14. Security Agreement.........................................................................31
Section 5.15. Usury Savings Clause.......................................................................31
Section 5.16. Entire Agreement...........................................................................32
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 5.17. Subordination to First Deed of Trust.......................................................32
</TABLE>
Exhibit A Legal Description of the Land
Exhibit B Permitted Encumbrances
iii
<PAGE> 5
SECOND DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
SECOND DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING, dated as of July 23, 1999 (this "Deed of Trust"),
made from STERLING CHEMICALS, INC., a Delaware corporation (the "Trustor"),
having an address at 1200 Smith, Suite 1900, Houston, Texas 77002-4312, to John
Dorris, a resident of Harris County, as trustee, having an address c/o First
American Title Insurance Company of Texas, as trustee (the "Trustee"), for the
benefit of HARRIS TRUST COMPANY OF NEW YORK, a New York corporation, as
collateral agent and indenture trustee for the benefit of itself and certain
other holders (collectively, the "Holders") of the 12 3/8% Senior Secured Notes
due 2006, having an address at Wall Street Plaza, 19th Floor, 88 Pine Street,
New York, New York 10005, as Beneficiary (together with its successors and
assigns from time to time, the "Beneficiary").
W I T N E S S E T H T H A T:
WHEREAS, the Trustor is on the date of delivery hereof the owner of
fee title (or easement or leasehold title if otherwise indicated on Exhibit A
hereto) to the parcels of land described in Exhibit A hereto (the "Land") and
of the Improvements (hereinafter defined);
WHEREAS, the Beneficiary, as collateral agent and indenture trustee,
and Trustor, as issuer ("Issuer") have entered into that certain Indenture,
dated as of the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the "Indenture"), pursuant to which the Issuer
issued $295 million in the aggregate principal amount of 12 3/8% Senior Secured
Notes due 2006 (the "Senior Secured Notes"); and
WHEREAS, Trustor has granted a first priority deed of trust (the
"First Deed of Trust") encumbering the Property pursuant to the terms of that
certain Revolving Credit Agreement (the "Credit Agreement"), by and among
Trustor, Sterling Canada, Inc., Sterling Pulp Chemicals US, Inc., Sterling Pulp
Chemicals, Inc., Sterling Fibers, Inc., Sterling Chemicals Energy, Inc. and
Sterling Chemicals International, Inc., as Borrowers (collectively,
"Borrowers"), various financial institutions, as lenders ("Lenders"), DLJ
Capital Funding, Inc., as syndication agent ("Syndication Agent"), The CIT
Group/Business Credit, Inc., as the administrative agent and collateral agent
(the "Administrative Agent"), and Credit Suisse First Boston, as the
documentation agent; and
WHEREAS, pursuant to the terms of the Credit Agreement, the Lenders
(as defined in the Credit Agreement) have agreed to make loans (the "Senior
Loan") to the Borrowers in the maximum original principal amount of Seventy
Million Dollars ($70,000,000), the payment of which is secured by, inter alia,
the First Deed of Trust encumbering the Trust Premises; and
WHEREAS, during the pendency of the Senior Loan and any refinancing
thereof, to the extent such refinancing is permitted under the Indenture, this
Deed of Trust shall be subordinate and inferior to the First Deed of Trust;
WHEREAS, the Trustor has duly authorized the execution, delivery and
performance of this Deed of Trust.
1
<PAGE> 6
GRANT:
NOW, THEREFORE, for and in consideration of the premises, and of the
mutual covenants herein contained, and in order to secure the full, timely and
proper payment and performance of and compliance with each and every one of the
Obligations (as hereinafter defined), the Trustor hereby irrevocably grants,
bargains, sells, mortgages, warrants, aliens, demises, releases, hypothecates,
pledges, assigns, transfers and conveys to the Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit of Beneficiary and its successors and assigns, forever,
all of the following (the "Trust Premises"):
(a) Real Estate. All of Trustor's right, title and interest in
and to all of the Land and all additional lands and estates therein now
owned by the Trustor for use or development with the Land or any
portion thereof, together with all and singular the tenements, rights,
easements, hereditaments, rights of way, privileges, liberties,
appendages and appurtenances now belonging or in any way pertaining to
the Land and such additional lands and estates therein (including,
without limitation, all rights relating to storm and sanitary sewer,
water, gas, electric, railway and telephone services); all development
rights, air rights, riparian rights, water, water rights, water stock,
all rights in, to and with respect to any and all oil, gas, coal,
minerals and other substances of any kind or character underlying or
relating to the Land and such additional lands and estates therein and
any interest therein; all estate, claim, demand, right, title or
interest of the Trustor in and to any street, road, highway or alley,
vacated or other, adjoining the Land or any part thereof and such
additional lands and estates therein; all strips and gores belonging,
adjacent or pertaining to the Land or such additional lands and estates
(herein collectively referred to as the "Real Estate");
(b) Improvements. All of Trustor's right, title and interest
in and to all buildings, structures and other improvements now existing
on the Land and any additions and alterations thereto or replacements
thereof, now or hereafter built, constructed or located upon the Real
Estate; and, to the extent that any of the following items of property
constitutes fixtures under applicable laws, all furnishings, fixtures,
fittings, appliances, apparatus, equipment, machinery, building and
construction materials and other articles of every kind and nature
whatsoever and all replacements thereof, now or hereafter affixed or
attached to, placed upon or used in any way in connection with the
complete and comfortable use, enjoyment, occupation, operation,
development and/or maintenance of the Real Estate or such buildings,
structures and other improvements, including, but not limited to,
partitions, furnaces, boilers, oil burners, radiators and piping,
plumbing and bathroom fixtures, refrigeration, heating, ventilating,
air conditioning and sprinkler systems, other fire prevention and
extinguishing apparatus and materials, vacuum cleaning systems, gas and
electric fixtures, incinerators, compactors, elevators, engines,
motors, generators and all other articles of property which are
considered fixtures under applicable law (such buildings, structures
and other improvements and such other property are herein collectively
referred to as the
2
<PAGE> 7
"Improvements"; the Real Estate and the Improvements are herein
collectively referred to as the "Property");
(c) Goods. All of Trustor's right, title and interest in and
to all building materials, construction materials, appliances
(including, without limitation, stoves, ranges, ovens, disposals,
refrigerators, water fountains and coolers, fans, heaters, dishwashers,
clothes washers and dryers, water heaters, hood and fan combinations,
kitchen equipment, laundry equipment, kitchen cabinets and other
similar equipment), stocks, supplies, blinds, window shades, drapes,
carpets, floor coverings, manufacturing equipment and machinery, office
equipment, growing plants and shrubberies, control devices, equipment
(including window cleaning, building cleaning, swimming pool,
recreational, monitoring, garbage, pest control and other equipment),
motor vehicles, tools, furnishings, furniture, lighting, non-structural
additions to the Real Estate and Improvements and all other tangible
property of any kind or character, together with all replacements
thereof, now or hereafter located on or in or used or useful in
connection with the complete and comfortable use, enjoyment,
occupation, operation, development and/or maintenance of the Property,
regardless of whether or not located on or in the Property or located
elsewhere for purposes of storage, fabrication or otherwise (herein
collectively referred to as the "Goods");
(d) Intentionally Deleted;
(e) Leases. All rights of the Trustor in, to and under all
leases, licenses, occupancy agreements, concessions and other
arrangements, oral or written, now existing or replacements thereof
hereafter entered into, whereby any Person agrees to pay money or any
other consideration for the use, possession or occupancy of, or any
estate in, the Property or any portion thereof or interest therein
(herein collectively referred to as the "Leases"), and the right,
subject to applicable law, upon the occurrence of any Event of Default
hereunder, to receive and collect the Rents (as hereinafter defined)
paid or payable thereunder;
(f) Plans. All rights of the Trustor in and to all plans and
specifications, designs, drawings and other information, materials and
matters heretofore or hereafter prepared relating to the Improvements
or any construction on the Real Estate (herein collectively referred to
as, the "Plans");
(g) Permits. All rights of the Trustor, to the extent
assignable, in, to and under all permits, franchises, licenses,
approvals and other authorizations respecting the use, occupation and
operation of the Property and every part thereof and respecting any
business or other activity conducted on or from the Property, and any
product or proceed thereof or therefrom, including, without limitation,
all building permits, certificates of occupancy and other licenses,
permits and approvals issued by governmental authorities having
jurisdiction (collectively, the "Permits");
(h) Contracts. All right, title and interest of the Trustor,
to the extent assignable, in and to all certificates, warranties,
appraisals, engineering, environmental, soils, insurance and other
reports and studies, books, records, correspondence, files and
3
<PAGE> 8
advertising materials, and other documents, now or hereafter obtained
or entered into, as the case may be, pertaining to the construction,
use, occupancy, possession, operation, management, leasing, maintenance
and/or ownership of the Property and all right, title and interest of
the Trustor therein (collectively, the "Contracts");
(i) Leases of Furniture, Furnishings and Equipment. All right,
title and interest of the Trustor as lessee in, to and under any leases
of furniture, furnishings, equipment and any other Goods now or
hereafter installed in or at any time used in connection with the
Property;
(j) Rents. All rents, issues, profits, royalties, avails,
income and other benefits derived or owned, directly or indirectly, by
the Trustor from the Property, including, without limitation, all rents
and other consideration payable by tenants, claims against guarantors,
and any cash or other securities deposited to secure performance by
tenants, under the Leases (herein collectively referred to as the
"Rents"); and
(k) Proceeds. All proceeds of the conversion, voluntary or
involuntary of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards (herein collectively referred to as the "Proceeds");
provided however, the Trust Premises shall not include any general
intangibles or other rights arising under any contracts, instruments,
licenses, or other documents as to which the grant of a lien and/or
security interest would constitute a violation of a valid and
enforceable restriction in favor of a third party on such grant, unless
and until any required consents shall have been obtained; and further
provided, however, in no event shall the Trust Premises hereunder
include any item or classes of "Collateral" as defined in the Current
Assets Security Agreement (as defined in the Credit Agreement) and
provided further, that the Trust Premises shall only include after
acquired property in any of the classes or categories of Collateral to
the extent, and only to the extent, that such after acquired property
is in replacement or substitution of Collateral existing as of the date
hereof.
AND, without limiting any of the other provisions of this Deed of Trust
the Trustor expressly grants to the Beneficiary, as secured party, a security
interest in all of those portions of the Trust Premises which are or may be
subject to the State Uniform Commercial Code provisions applicable to secured
transactions, subject, however, to the Permitted Encumbrances;
TO HAVE AND TO HOLD the Trust Premises unto the Trustee and the
successors, successors in trust and assigns of the Trustee for the benefit of
the Beneficiary, its successors and assigns, forever, subject, however, to the
Permitted Encumbrances.
FURTHER to secure the full, timely and proper payment and performance
of the Obligations, the Trustor hereby covenants and agrees with and warrants to
the Trustee and the Beneficiary as follows:
4
<PAGE> 9
ARTICLE I
COVENANTS AND AGREEMENTS OF THE TRUSTOR
SECTION 1.1. Payment of Obligations. (i) The Trustor agrees that:
(a) it will duly and punctually pay and perform or cause to be
paid and performed each of the Obligations at the time and in
accordance with the terms of the Indenture and the Senior Secured
Notes, and
(b) when and as due and payable from time to time in
accordance with the terms hereof or of any Security Agreement executed
pursuant to the Indenture, pay and perform, or cause to be paid and
performed, all other Obligations.
SECTION 1.2. Title to Trust Premises, etc. The Trustor represents and
warrants to and covenants with the Beneficiary that:
(a) except as otherwise permitted by the terms of the
Indenture, as of the date hereof and at all times hereafter while this
Deed of Trust is outstanding, the Trustor (1) is and shall be the
absolute owner of the legal and beneficial title to the applicable
interest in the Property and to all other property included in the
Trust Premises, and (2) has and shall have good and indefeasible title
in fee simple absolute, or good and sufficient easement or leasehold
title, as currently represented in the granting clause as of the date
hereof, to the Property; provided, however, that the portion of the
Land described on Part III of Exhibit A is hereby excluded from this
covenant, subject in each case only to this Deed of Trust, the
Permitted Liens and the encumbrances set forth in Exhibit B hereto
(collectively, the "Permitted Encumbrances");
(b) the Trustor has good and lawful right, power and authority
to execute this Deed of Trust and to convey, transfer, assign, mortgage
and grant a security interest in the Trust Premises, all as provided
herein;
(c) this Deed of Trust has been duly executed, acknowledged
and delivered on behalf of the Trustor, all consents and other actions
required to be taken by the officers, directors, shareholders and
partners, as the case may be, of the Trustor have been duly and fully
given and performed and this Deed of Trust constitutes the legal, valid
and binding obligation of the Trustor, enforceable against the Trustor
in accordance with its terms; and
(d) the Trustor, at its expense, will warrant and defend the
Trustee and the Beneficiary and any purchaser under the power of sale
herein or at any foreclosure sale such title to the Trust Premises and
the second deed of trust lien and second perfected security interest of
this Deed of Trust thereon and therein against all claims and demands
and will maintain, preserve and protect such lien and security interest
and will keep this Deed of Trust a valid, direct deed of trust lien of
record on the Property and a second perfected security interest in the
Trust Premises other than the Property, subject only to the Permitted
Encumbrances.
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SECTION 1.3. Title Insurance.
SECTION 1.3.1. Title Insurance Policy. Concurrently with the execution
and delivery of this Deed of Trust, the Trustor, at its expense, has obtained
and delivered to the Beneficiary a loan policy or policies of title insurance in
an amount, and in form and substance, reasonably satisfactory to the Beneficiary
naming the Beneficiary as the insured, insuring the title to and the second deed
of trust lien of this Deed of Trust on the portion of the Land described on Part
I of Exhibit A with endorsements reasonably requested by the Beneficiary. The
Trustor has duly paid in full all premiums and other charges due in connection
with the issuance of such policy or policies of title insurance.
SECTION 1.3.2. Title Insurance Proceeds. All proceeds received by and
payable to the Beneficiary for any loss under the loan policy or policies of
title insurance delivered to the Beneficiary pursuant to Section 1.3.1, or under
any policy or policies of title insurance delivered to the Beneficiary in
substitution therefor or replacement thereof, shall be the property of the
Beneficiary and shall be applied by the Beneficiary in accordance with the
provisions of Section 2.3.
SECTION 1.4. Recordation. The Trustor, at its expense, will at all
times cause this Deed of Trust and any instruments amendatory hereof or
supplemental hereto and any instruments of assignment hereof or thereof (and any
appropriate financing statements or other instruments and continuations
thereof), and each other instrument delivered in connection with the Indenture,
the Senior Secured Notes or any Security Agreements executed pursuant to the
Indenture and intended thereunder to be recorded, registered and filed, to be
kept recorded, registered and filed, in such manner and in such places, and will
pay all such recording, registration, filing fees, taxes and other charges, and
will comply with all such statutes and regulations as may be required by law in
order to establish, preserve, perfect and protect the lien and security interest
of this Deed of Trust as a valid, direct deed of trust lien on the Property and
perfected security interest in the Trust Premises other than the Property,
subject only to the Permitted Encumbrances. The Trustor will pay or cause to be
paid, and will indemnify the Trustee and the Beneficiary in respect of, all
taxes (including interest and penalties) at any time payable in connection with
the filing and recording of this Deed of Trust and any and all supplements and
amendments hereto.
SECTION 1.5. Payment of Impositions, etc. Subject to Section 1.8
(relating to permitted contests), the Trustor will pay or cause to be paid
before the same would become delinquent and before any fine, penalty, interest
or cost may be added for non-payment, all taxes, assessments, water and sewer
rates, charges, license fees, inspection fees and other governmental levies or
payments, of every kind and nature whatsoever, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, which at any time may be
assessed, levied, confirmed, imposed or which may become a lien upon the Trust
Premises, or any portion thereof, or which are payable with respect thereto, or
upon the rents, issues, income or profits thereof, or on the occupancy,
operation, use, possession or activities thereof, whether any or all of the same
be levied directly or indirectly or as excise taxes or as income taxes, and all
taxes, assessments or charges which may be levied on the Obligations, or the
interest thereon (collectively, the "Impositions"). The Trustor will deliver to
the Beneficiary, upon request, copies of official receipts or other satisfactory
proof evidencing such payments.
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SECTION 1.6. Insurance and Legal Requirements. Subject to Section 1.8
(relating to permitted contests), the Trustor, at its expense, will comply in
all material respects, or cause compliance in all material respects with
(a) all provisions of any insurance policy covering or
applicable to the Trust Premises or any part thereof, all requirements
of the issuer of any such policy, and all orders, rules, regulations
and other requirements of the National Board of Fire Underwriters (or
any other body exercising similar functions) applicable to or affecting
the Trust Premises or any part thereof or any use or condition of the
Trust Premises or any part thereof (collectively, the "Insurance
Requirements"); and
(b) all laws, including Environmental Laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements of all governments, departments, commissions, boards,
courts, authorities, agencies, officials and officers, foreseen or
unforeseen, ordinary or extraordinary, which now or at any time
hereafter may be applicable to the Trust Premises or any part thereof,
or any of the adjoining sidewalks, curbs, vaults and vault space, if
any, streets or ways, or any use or condition of the Trust Premises or
any part thereof (collectively, the "Legal Requirements");
noncompliance of which could reasonably be expected to cause a Material Adverse
Effect (as defined in the Credit Agreement) whether or not compliance therewith
shall require structural changes in or interference with the use and enjoyment
of the Trust Premises or any part thereof.
SECTION 1.7. Security Interests, etc. The Trustor will not directly or
indirectly create or permit or suffer to be created or to remain, and will
promptly discharge or cause to be discharged, any deed of trust, mortgage,
encumbrance or charge on, pledge of, security interest in or conditional sale or
other title retention agreement with respect to or any other lien on or in the
Trust Premises or any part thereof or the interest of the Trustor or the
Beneficiary therein, or any Proceeds thereof or Rents or other sums arising
therefrom, other than (a) Permitted Encumbrances, and (b) liens of mechanics,
materialmen, suppliers or vendors or rights thereto incurred in the ordinary
course of the business of the Trustor for sums not yet due or any such liens or
rights thereto which are at the time being contested as permitted by Section
1.8. The Trustor will not postpone the payment of any sums for which liens of
mechanics, materialmen, suppliers or vendors or rights thereto have been
incurred (unless such liens or rights thereto are at the time being contested as
permitted by Section 1.8), for more than 60 days after the completion of the
action giving rise to such liens or rights thereto.
SECTION 1.8. Permitted Contests. The Trustor at its expense may
contest, or cause to be contested, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount or validity or application, in
whole or in part, of any Imposition, Legal Requirement or Insurance Requirement
or lien of a mechanic, materialman, supplier or vendor, provided that, (a) in
the case of an unpaid Imposition, lien, encumbrance or charge, such proceedings
shall suspend the collection thereof from the Trustor, the Beneficiary, and the
Trust Premises (including any rent or other income therefrom) and shall not
materially interfere with the payment of any such rent or income, (b) neither
the Trust Premises nor any rent or other income therefrom nor any part thereof
or interest therein would be in any material danger of being sold,
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forfeited, lost, impaired or interfered with, (c) in the case of a Legal
Requirement, neither the Trustor nor the Beneficiary would be in material danger
of any civil or criminal liability for failure to comply therewith, (d) the
Trustor shall have furnished such security, if any, as may be required in the
proceedings or as may be reasonably requested by the Beneficiary, (e) the
non-payment of the whole or any part of any Imposition will not result in the
delivery of a tax deed to the Trust Premises or any part thereof because of such
non-payment, (f) the payment of any sums required to be paid with respect to the
Senior Secured Notes or under this Deed of Trust (other than any unpaid
Imposition, lien, encumbrance or charge at the time being contested in
accordance with this Section 1.8) shall not be interfered with or otherwise
affected, (g) in the case of any Insurance Requirement, the failure of the
Trustor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Trustor under Section 2.1, and (h) that
adequate reserves, determined in accordance with GAAP, shall have been set aside
on the Trustor's books.
SECTION 1.9. Leases. The Trustor represents and warrants to the Trustee
and the Beneficiary that, as of the date hereof, there are no written or oral
leases or other agreements of any kind or nature, other than the Permitted
Encumbrances, relating to the occupancy of any portion of the Property by any
Person other than the Trustor. Except as is permitted by the Indenture and any
Security Agreements executed pursuant to the Indenture, the Trustor will not
enter into any such written or oral lease or other agreement with respect to any
portion of the Property without first obtaining the written consent of the
Beneficiary.
SECTION 1.10. Compliance with Instruments. The Trustor at its expense
will promptly comply in all material respects with all rights of way or use,
privileges, franchises, servitudes, licenses, easements, tenements,
hereditaments and appurtenances forming a part of the Property and all
instruments creating or evidencing the same, in each case, to the extent
compliance therewith is required of the Trustor under the terms thereof. Except
as is permitted by the Indenture and any Security Agreements executed pursuant
to the Indenture, the Trustor will not take any action which may result in a
forfeiture or termination of the rights afforded to the Trustor under any such
instruments, and will not, without the prior written consent of the Beneficiary,
amend any of such instruments in any manner adverse to the Beneficiary and the
Holders in any material respect.
SECTION 1.11. Maintenance and Repair, etc. Subject to the provisions of
Section 1.12, the Trustor will keep or cause to be kept all presently and
subsequently erected or acquired Improvements and the sidewalks, curbs, vaults
and vault space, if any, located on or adjoining the same, and the streets and
the ways adjoining the same, in good and substantial order and repair and in
such a fashion that neither the value nor utility of the Trust Premises will be
diminished, and, at its sole cost and expense, will promptly make or cause to be
made all necessary and appropriate repairs, replacements and renewals thereof,
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen, so that its business carried on in
connection therewith may be properly conducted at all times. The Trustor at its
expense will do or cause to be done all shoring of foundations and walls of any
building or other Improvements on the Property and (to the extent permitted by
law) of the ground adjacent thereto, and every other act necessary or
appropriate for the preservation and safety of the Property by reason of or in
connection with any excavation or other building operation upon the
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Property and upon any adjoining property, whether or not the Trustor shall, by
any Legal Requirement, be required to take such action or be liable for failure
to do so.
SECTION 1.12. Alterations, Additions, etc. So long as no Event of
Default shall have occurred and be continuing, the Trustor shall have the right
at any time and from time to time to make or cause to be made reasonable
alterations of and additions to the Property or any part thereof, provided that
any alteration or addition: (a) shall not change the general character or the
use of the Property or reduce the fair market value thereof below its value
immediately before such alteration or addition, or impair the usefulness of the
Property; (b) is effected with due diligence, in a good and workmanlike manner
and in compliance in all material respects with all Legal Requirements and
Insurance Requirements; (c) subject to Section 1.8 is promptly and fully paid
for, or caused to be paid for, by the Trustor; and (d) is made, in case the
estimated cost of such alteration or addition exceeds U.S. $1,000,000, under the
supervision of a qualified architect or engineer or another professional.
SECTION 1.13. Acquired Property Subject to Lien. Subject to the
Permitted Encumbrances and except as otherwise permitted by the Indenture, all
property at any time acquired by the Trustor and provided or required by this
Deed of Trust to be or become subject to the lien and security interest hereof,
whether such property is acquired by exchange, purchase, construction or
otherwise, shall forthwith become subject to the lien and security interest of
this Deed of Trust without further action on the part of the Trustor or the
Beneficiary. The Trustor, at its expense, will execute and deliver to the
Beneficiary (and will record and file as provided in Section 1.4) an instrument
supplemental to this Deed of Trust reasonably satisfactory in substance and form
to the Beneficiary, whenever such an instrument is necessary under applicable
law to subject to the lien and security interest of this Deed of Trust all
right, title and interest of the Trustor in and to all property provided or
required by this Deed of Trust to be subject to the lien and security interest
hereof.
SECTION 1.14. Assignment of Rents, Proceeds, etc. The assignment, grant
and conveyance of the Leases, Rents, Proceeds and other rents, income, proceeds
and benefits of the Trust Premises contained in the Granting Clause of this Deed
of Trust shall constitute an absolute, present and irrevocable assignment, grant
and conveyance, provided, however, that permission is hereby given to the
Trustor, so long as no Event of Default has occurred and be continuing
hereunder, to collect, receive and apply such Rents, Proceeds and other rents,
income, proceeds and benefits as they become due and payable, but not further in
advance thereof than is customary, and in accordance with all of the other
terms, conditions and provisions hereof, of the Indenture and of the Security
Agreements executed pursuant to the Indenture, and of the Leases, contracts,
agreements and other instruments with respect to which such payments are made or
such other benefits are conferred. Upon the occurrence and continuance of an
Event of Default, such permission shall terminate immediately and automatically,
without notice to the Trustor or any other Person except as required by law, and
shall not be reinstated upon a cure of such Event of Default without the express
written consent of the Beneficiary. Such assignment shall be fully effective
without any further action on the part of the Trustor, the Trustee, or the
Beneficiary, and the Beneficiary shall be entitled, at its option, upon the
occurrence and continuance of an Event of Default hereunder, to collect, receive
and apply all Rents, Proceeds and all other rents, income, proceeds and benefits
from the Trust Premises, including all right, title and interest of the Trustor
in any escrowed sums or deposits or any portion thereof or interest therein,
whether
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or not the Trustee or the Beneficiary takes possession of the Trust Premises or
any part thereof. The Trustor further grants to the Beneficiary the right, at
the Beneficiary's option, upon the occurrence and continuance of an Event of
Default hereunder, to:
(a) enter upon and take possession of the Property for the
purpose of collecting Rents, Proceeds and said rents, income, proceeds
and other benefits;
(b) dispossess by the customary summary proceedings any
tenant, purchaser or other Person defaulting in the payment of any
amount when and as due and payable, or in the performance of any other
obligation, under any Lease, contract or other instrument to which said
Rents, Proceeds or other rents, income, proceeds or benefits relate;
(c) let or convey the Trust Premises or any portion thereof or
any interest therein; and
(d) apply Rents, Proceeds and such rents, income, proceeds and
other benefits, after the payment of all necessary fees, charges and
expenses, on account of the Obligations in accordance with Section
3.11.
SECTION 1.15. No Claims Against the Trustee or the Beneficiary. Nothing
contained in this Deed of Trust shall constitute any consent or request by the
Trustee or the Beneficiary, express or implied, for the performance of any labor
or the furnishing of any materials or other property in respect of the Property
or any part thereof, or be construed to permit the making of any claim against
the Trustee or the Beneficiary in respect of labor or services or the furnishing
of any materials or other property or any claim that any lien based on the
performance of such labor or the furnishing of any such materials or other
property is prior to the lien and security interest of this Deed of Trust. ALL
CONTRACTORS SUBCONTRACTORS, VENDORS AND OTHER PERSONS DEALING WITH THE PROPERTY,
OR WITH ANY PERSONS INTERESTED THEREIN, ARE HEREBY ADVISED TO TAKE NOTICE OF THE
PROVISIONS OF THIS SECTION.
SECTION 1.16. Indemnification. The Trustor will protect, indemnify,
save harmless and defend the Trustee, the Beneficiary, and each of their
respective officers, directors, shareholders, employees, representatives and
agents (collectively, the "Indemnified Parties" and individually, an
"Indemnified Party"), from and against any and all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) imposed upon or
incurred by or asserted against any Indemnified Party by reason of (a) ownership
of an interest in this Deed of Trust, the Indenture, the Senior Secured Notes,
the Security Agreements executed pursuant to the Indenture or the Property, (b)
any accident, injury to or death of persons or loss of or damage to or loss of
the use of property occurring on or about the Property or any part thereof or
the adjoining sidewalks, curbs, vaults and vault spaces, if any, streets, alleys
or ways, (c) any use, non-use or condition of the Property or any part thereof
or the adjoining sidewalks, curbs, vaults and vault spaces, if any, streets,
alleys or ways, (d) any failure on the part of the Trustor to perform or comply
with any of the terms of this Deed of Trust, the Indenture, the Senior Secured
Notes, or the Security Agreements executed pursuant to the Indenture, (e)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Trust Premises or any part thereof made or suffered
to be made by or on behalf of the Trustor, (f) any negligence or tortious act on
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the part of the Trustor or any of its agents, contractors, lessees, licensees or
invitees, (g) any work in connection with any alterations, changes, new
construction or demolition of or additions to the Property, or (h) (i) any
Hazardous Material on, in, under or affecting all or any portion of the
Property, the groundwater, or any surrounding areas, (ii) any misrepresentation,
inaccuracy or breach of any warranty, covenant or agreement contained or
referred to in Sections 1.21 and 1.22, (iii) any violation or claim of violation
by the Trustor of any Environmental Laws, or (iv) the imposition of any lien for
damages caused by or the recovery of any costs for the cleanup, release or
threatened release of any Hazardous Material, except to the extent that any of
the matters described in subsections (a)-(h) arise out of the gross negligence,
unlawful acts or willful misconduct of any Indemnified Party. THE TRUSTEE SHALL
NOT BE LIABLE FOR ANY ACT OR OMISSION OR ERROR OF JUDGMENT ION CONNECTION WITH
THIS DEED OF TRUST, IT BEING THE INTENT OF THE PARTIES HERETO THAT THE TRUSTEE
SHALL NOT BE LIABLE FOR THE TRUSTEE'S SOLE OR CONTRIBUTORY NEGLIGENCE. TRUSTOR
SHALL AND DOES INDEMNIFY THE TRUSTOR AGAINST ALL LOSSES, DAMAGES, LIABILITIES,
CLAIMS, CAUSES OF ACTION, JUDGMENTS, COURT COSTS, ATTORNEY'S FEES AND EXPENSES
THAT THE TRUSTEE MAY INCUR IN THE PERFORMANCE OF THE TRUSTEE'S DUTIES HEREUNDER
OR OTHERWISE IN CONNECTION WITH THIS DEED OF TRUST WHETHER OR NOT THE SAME
RESULT FROM THE SALE OR CONTRIBUTORY NEGLIGENCE OF THE TRUSTEE. THE FOREGOING
SHALL ALSO APPLY TO ANY SUBSTITUTE TRUSTEE HEREUNDER. If any action or
proceeding be commenced, to which action or proceeding any Indemnified Party is
made a party by reason of the execution of this Deed of Trust, the Indenture,
the Senior Secured Notes, or the Security Agreements executed pursuant to the
Indenture, or in which it becomes necessary to defend or uphold the lien of this
Deed of Trust, all sums paid by the Indemnified Parties, for the expense of any
litigation to prosecute or defend the rights and lien created hereby or
otherwise, shall be paid by the Trustor to such Indemnified Parties, as the case
may be, as hereinafter provided. The Trustor will pay and save the Indemnified
Parties harmless against any and all liability with respect to any intangible
personal property tax or similar imposition of the State or any subdivision or
authority thereof now or hereafter in effect, to the extent that the same may be
payable by the Indemnified Parties in respect of this Deed of Trust, the
Indenture, the Senior Secured Notes or any other Obligation. All amounts payable
to the Indemnified Parties under this Section 1.16 shall be deemed indebtedness
secured by this Deed of Trust and any such amounts which are not paid within ten
(10) days after written demand therefor by any Indemnified Party shall bear
interest at the rate provided for in the Indenture and the Senior Secured Notes
from the date of such demand. In case any action, suit or proceeding is brought
against any Indemnified Party by reason of any such occurrence, the Trustor,
upon request of such Indemnified Party, will, at the Trustor's expense, resist
and defend such action, suit or proceeding or cause the same to be resisted or
defended by counsel designated by the Trustor and approved by such Indemnified
Party. The obligations of the Trustor under this Section 1.16 shall survive any
discharge or reconveyance of this Deed of Trust and payment in full of the
Obligations.
SECTION 1.17. No Credit for Payment of Taxes. The Trustor shall not be
entitled to any credit against the Obligations by reason of the payment of any
tax on the Property or any part thereof or by reason of the payment of any other
Imposition, and shall not apply for or claim any deduction from the taxable
value of the Property or any part thereof by reason of this Deed of Trust.
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SECTION 1.18. Intentionally Omitted
SECTION 1.19. No Transfer of the Property. Except as is provided in the
Indenture and other Security Agreements executed pursuant to the Indenture, and
except for the Permitted Encumbrances, the Trustor shall not, without the prior
written consent of the Beneficiary, which consent may be granted or withheld in
the sole and absolute discretion of the Beneficiary (i) sell, convey, assign or
otherwise transfer the Property or any portion of the Trustor's interest therein
or (ii) further encumber the Property or permit the Property to become
encumbered by any lien, claim, security interest or other indebtedness of any
kind or nature other than the Permitted Encumbrances.
SECTION 1.20. Security Agreement. With respect to the items of personal
property and fixtures referred to and described in the Granting Clause of this
Deed of Trust and included as part of the Trust Premises, this Deed of Trust is
hereby made and declared to be a security agreement encumbering each and every
item of personal property and fixtures now or hereafter owned by Trustor and
included herein as a part of the Trust Premises, in compliance with the
provisions of the Uniform Commercial Code as enacted in the State. In this
respect (and notwithstanding the conveyance to the Trustee rather than directly
to the Beneficiary as provided in this Deed of Trust, Trustor, as "Debtor",
expressly grants to Beneficiary, as "Secured Party", a security interest in and
to all of the property now or hereafter owned by Trustor which constitutes the
personal property and fixtures hereinabove referred to and described in this
Deed of Trust, including all extensions, accessions, additions, improvements,
betterments, renewals, replacements and substitutions thereof or thereto, and
all proceeds from the sale or other disposition thereof. Trustor agrees that
Beneficiary may file this Deed of Trust, or a reproduction thereof, in the real
estate records or other appropriate index, as, and this Deed of Trust shall be
deemed to be, a financing statement filed as a fixture filing in accordance with
the laws of the State. Any reproduction of this Deed of Trust or of any other
security agreement or financing statement executed by Trustor shall be
sufficient as a financing statement. In addition, Trustor agrees to execute and
deliver to Beneficiary, upon Beneficiary's request, any other security agreement
and financing statements, as well as extensions, renewals, and amendments
thereof, and reproductions of this Deed of Trust, in such form as Beneficiary
may reasonably require to perfect a security interest with respect to said
items. Trustor shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all
reasonable costs and expenses of any record searches for financing statements
Beneficiary may reasonably require. Except as is provided in the Indenture and
other Security Agreements executed pursuant to the Indenture, and except for the
Permitted Encumbrances, without the prior written consent of Beneficiary,
Trustor shall not create or suffer to be created pursuant to the Uniform
Commercial Code any other security interest in the above-described personal
property and fixtures, including any replacements and additions thereto. Upon
the occurrence and continuance of an Event of Default under this Deed of Trust,
the Beneficiary shall have and shall be entitled to exercise any and all of the
rights and remedies (i) as prescribed in this Deed of Trust, or (ii) as
prescribed by general law, or (iii) as prescribed by the specific statutory
provisions now or hereafter enacted and specified in said Uniform Commercial
Code, all at Beneficiary's sole election. Trustor and Beneficiary agree that the
filing of any financing statements in the records normally having to do with
personal property shall not in any way affect the agreement of Trustor and
Beneficiary that everything located in, on or about, or used or intended to be
used with or in connection with the use, operation or enjoyment of, the Trust
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Premises, which is described or reflected as a fixture in this Deed of Trust,
is, and at all times and for all purposes and in all proceedings, both legal and
equitable, shall be, regarded as part of the Real Estate conveyed hereby.
Trustor warrants that Trustor's name, identity and address are as set forth
herein. The mailing address of the Beneficiary from which information may be
obtained concerning the security interest created herein is also set forth
herein. This information hereof is provided in order that this Deed of Trust
shall comply with the requirements of the Uniform Commercial Code as enacted in
the State for instruments to be filed as financing statements. In accordance
with the laws of the State, this Deed of Trust shall remain effective as a
fixture filing until this Deed of Trust is released or satisfied of record or
its effectiveness otherwise terminates as to the Trust Premises.
SECTION 1.21. Representations and Warranties. In order to induce the
Beneficiary to enter into this Deed of Trust, the Indenture and the other
Security Agreements, the Trustor agrees that all of the representations and
warranties of Trustor set forth in the Indenture are incorporated into this Deed
of Trust by reference as if fully set forth herein.
SECTION 1.22. Trustor's Covenants. In order to induce the Beneficiary
to enter into this Deed of Trust, the Indenture and the other Security
Agreements, the Trustor agrees that all of the covenants of Trustor set forth in
the Indenture are incorporated into this Deed of Trust by reference as if fully
set forth herein.
SECTION 1.23. Attornment. Beneficiary hereby acknowledges and agrees
that the liens granted herein are subject to the rights of certain lessees under
the leases as set forth in the Credit Agreement and will be subject to the
rights of lessees under any Leases entered into by Trustor after the date hereof
which are permitted as Permitted Real Estate Liens pursuant to the Credit
Agreement, subject to the express rights contained in the applicable Lease. The
rights of the tenants under the Leases to the leased premises shall not be
adversely affected by the exercise by Beneficiary of any of its rights
hereunder, nor shall any such tenant be in any way deprived of its rights under
the applicable Lease except in accordance with the terms of such Lease. In the
event that Beneficiary succeeds to the interest of Trustor under a Lease, such
Lease shall not be terminated or affected thereby except as set forth therein,
and any sale of the applicable leased premises by Beneficiary or pursuant to the
judgment of any court in an action to enforce the remedies provided for in this
Deed of Trust shall be made subject to such Lease and the rights of such tenant
expressly set forth thereunder. If Beneficiary succeeds to the interests of
Trustor in and to the applicable leased premises or under such Lease or enters
into possession of such leased premises, the Beneficiary, and such tenants,
shall be bound to each other under all of the express terms, covenants and
conditions of such Lease, as if the Beneficiary was originally the Trustor as
lessor thereunder.
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR taking, ETC.
SECTION 2.1. Insurance.
SECTION 2.1.1. Risks to be Insured. The Trustor will, at its expense,
maintain or cause to be maintained with insurance carriers approved by the
Beneficiary (a) insurance with
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respect to the Improvements against loss or damage by fire, lightning and such
other risks as are included in standard "all-risk" policies, in amounts
sufficient to prevent the Trustor and the Beneficiary from becoming a co-insurer
of any partial loss under the applicable policies, but in any event in amounts
not less than the then full insurable value (actual replacement value) of the
Improvements, as determined by the Trustor in accordance with generally accepted
insurance practice and approved by the Beneficiary or, at the request of the
Beneficiary, as determined at the Trustor's expense by the insurer or insurers
or by an expert approved by the Beneficiary, (b) comprehensive public liability,
including bodily injury and product liability and property damage, insurance,
with personal injury endorsements, applicable to the Property in such amounts as
are customarily carried by Persons operating similar properties in the same
general locality, but in any event with a combined single limit of not less than
Twenty Million Dollars ($20,000,000) per occurrence, (c) explosion insurance in
respect of any steam and pressure boilers and similar apparatus located in the
Property in such amounts as are usually carried by persons operating similar
properties in the same general locality, but in any event in an amount not less
than Twenty Million Dollars ($20,000,000), (d) business interruption insurance
(including added expense coverage) against all insurable perils for a period of
not fewer than twelve (12) months (subject to a reasonable aggregate deductible
not exceeding ten (10) days per any occurence), (e) worker's compensation
insurance to the full extent required by applicable law for all employees of the
Trustor engaged in any work on or about the Property and employer's liability
insurance with a limit of not less than Ten Million Dollars ($10,000,000) for
each occurrence, (f) all-risk, builders' risk insurance with respect to the
Property during any period during which there is any construction work being
performed, against loss or damage by fire or other risks, including vandalism,
malicious mischief and sprinkler leakage, as are included in so-called "extended
coverage" clauses at the time available and (g) such other insurance with
respect to the Property in such amounts and against such insurable hazards as
the Beneficiary from time to time may reasonably require by written notice to
the Trustor.
SECTION 2.1.2. Policy Provisions. All insurance maintained by the
Trustor pursuant to Section 2.1.1 shall (a) (except for worker's compensation
insurance) list the Trustor and the Beneficiary, as additional insureds as their
respective interests may appear, (b) (except for worker's compensation and
public liability insurance) provide that the proceeds for any losses shall be
adjusted by the Trustor subject to the approval of the Beneficiary in the event
the proceeds shall exceed $1,000,000, and shall be payable to the Beneficiary,
to be held and applied as provided in Section 2.3, (c) include effective waivers
by the insurer of all rights of subrogation against any named insured, the
indebtedness secured by this Deed of Trust and the Property and all claims for
insurance premiums against the Beneficiary, (d) (except for worker's
compensation and public liability insurance) provide that any losses shall be
payable notwithstanding (i) any act, failure to act or negligence of or
violation of warranties, declarations or conditions contained in such policy by
any named insured, (ii) the occupation or use of the Property for purposes more
hazardous than permitted by the terms thereof, (iii) any foreclosure or other
action or proceeding taken by the Beneficiary pursuant to any provision of this
Deed of Trust, or (iv) any change in title or ownership of the Property, (e)
provide that no cancellation, reduction in amount or material change in coverage
thereof or any portion thereof shall be effective until at least thirty (30)
days after receipt by the Beneficiary of written notice thereof, (f) provide
that any notice under such policies shall be simultaneously delivered to the
Beneficiary, and (g) be satisfactory in all other reasonable respects to the
Beneficiary. Any insurance maintained pursuant to this Section 2.1 may be
evidenced by blanket insurance policies covering the Property and other
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properties or assets of the Trustor, provided that any such policy shall specify
the portion, if less than all, of the total coverage of such policy that is
allocated to the Property and shall in all other respects comply with the
requirements of this Section 2.1.
SECTION 2.1.3. Delivery of Certificates, etc. The Trustor will deliver
to the Beneficiary, promptly upon request, (a) certificates of all policies
evidencing all insurance required to be maintained under Section 2.1.1 (or, in
the case of blanket policies, certificates thereof by the insurers together with
a counterpart of each blanket policy), and (b) evidence as to the payment of all
premiums due thereon (with respect to public liability insurance policies, all
installments for the current year due thereon to such date), provided that the
Beneficiary shall not be deemed by reason of its custody of such certificates to
have knowledge of the contents thereof or of the applicable policies. The
Trustor will also deliver to the Beneficiary prior to the expiration of any
policy a binder or certificate of the insurer evidencing the replacement thereof
and when the new policy is issued a certificate of such new policy (or, in the
case of a replacement blanket policy, a certificate thereof of the insurer
together with a counterpart of the blanket policy). In the event the Trustor
shall fail to effect or maintain any insurance required to be effected or
maintained pursuant to the provisions of this Section 2.1, the Trustor will
indemnify the Beneficiary against damage, loss or liability resulting from all
risks for which such insurance should have been effected or maintained.
SECTION 2.1.4. Separate Insurance. The Trustor will not take out
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained pursuant to this Section 2.1.
SECTION 2.2. Damage, Destruction or Taking; Trustor to Give Notice;
Assignment of Awards. In case of
(a) any material damage to or destruction of the Trust
Premises or any material part thereof, or
(b) any taking, whether for permanent or temporary use, of all
or any material part of the Trust Premises or any material interest
therein or material right accruing thereto, as the result of the
exercise of the right of condemnation or eminent domain, or a change of
grade affecting the Trust Premises or any portion thereof (a "Taking"),
or the commencement of any proceedings or negotiations which may result
in a Taking,
the Trustor will promptly give written notice thereof to the Beneficiary,
generally describing the nature and extent of such damage or destruction and the
Trustor's best estimate of the cost of restoring the Trust Premises, or the
nature of such proceedings or negotiations and the nature and extent of the
Taking which might result therefrom, as the case may be. The Beneficiary shall
be entitled to all insurance proceeds payable on account of such damage or
destruction and to all awards or payments allocable to the Trust Premises on
account of such Taking up to the amount of the Obligations, and the Trustor
hereby irrevocably assigns, transfers and sets over to the Beneficiary all
rights of the Trustor to any such proceeds, awards or payments and irrevocably
authorizes and empowers the Beneficiary, at its option, in the name of the
Trustor or otherwise, to file and prosecute what would otherwise be the
Trustor's claim for any such proceeds, award or payment and to collect, receipt
for and retain the same for disposition in accordance with
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Section 2.3. The Trustor will pay all reasonable costs and expenses incurred by
the Beneficiary in connection with any such damage, destruction or Taking and
seeking and obtaining any insurance proceeds, awards or payments in respect
thereof.
SECTION 2.3. Application of Proceeds and Awards. The Beneficiary may,
at its option, apply all amounts recovered under any insurance policy required
to be maintained by the Trustor hereunder and all awards received by it on
account of any Taking in any one or more of the following ways:
(a) to the payment of the reasonable costs and expenses
incurred by the Beneficiary in obtaining any such insurance proceeds or
awards, including the fees and expenses of attorneys and insurance and
other experts and consultants, the costs of litigation, arbitration,
mediation, investigations and other judicial, administrative or other
proceedings and all other out-of-pocket expenses;
(b) to the payment of the principal of the Senior Secured
Notes and any interest (including post-petition interest payable in any
proceedings for bankruptcy under applicable law ("Post-Petition
Interest") to the extent such interest is an Obligation) accrued and
unpaid thereon, without regard to whether any portion or all of such
amounts shall be matured or unmatured, and, in case such amount shall
be insufficient to pay in full all such amounts, then such amount shall
be applied, first, to the payment of all amounts of interest (including
Post-Petition Interest to the extent such interest is an Obligation)
accrued on the Senior Secured Notes and unpaid, second, to the payment
of all amounts of principal at the time outstanding;
(c) to the payment of, or the application to, any Obligation
(other than as provided in clause (b) above);
(d) to fulfill any of the other covenants contained herein, in
the Indenture, Senior Secured Notes, or Security Agreements executed
pursuant to the Indenture, as the Beneficiary may determine in its sole
discretion;
(e) to the Trustor for application to the cost of restoring
the Trust Premises and the replacement of Goods destroyed, damaged or
taken; or
(f) to the Trustor.
Notwithstanding the foregoing provisions of this Section 2.3 to the contrary
(but subject to the provisions of Section 2.4), and if each of the following
conditions is satisfied, the Beneficiary, upon request of the Trustor, shall
apply insurance proceeds or condemnation awards received by it to the
restoration or replacement of the Trust Premises, to the extent necessary for
the restoration or replacement thereof:
(i) there shall then exist no uncured Event of
Default;
(ii) the Trustor shall furnish to the Beneficiary a
certificate of an architect or engineer reasonably acceptable
to the Beneficiary stating (x) that the Trust Premises is
capable of being restored, prior to the maturity of the
Indenture, to substantially the same condition as existed
prior to the casualty or Taking, (y)
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the aggregate estimated direct and indirect costs of such
restoration and (z) as to any Taking, that the property taken
in such Taking, or sold under threat thereof, is not necessary
to the Trustor's customary use or occupancy of the Property or
Trustor otherwise provides Beneficiary adequate assurance that
the Trust Premises can be restored or is not necessary to
Trustor's customary use or occupancy of the Property; and
(iii) in the event that the estimated cost of
restoration set forth in the certificate of such architect or
engineer (and such revisions to such estimate as are from time
to time made) exceeds the net insurance proceeds or
condemnation awards actually received from time to time, the
Trustor shall deposit the amount of such excess with the
Beneficiary.
In the event that such insurance proceeds or condemnation awards are to
be utilized in the restoration of the Trust Premises, the Beneficiary shall
disburse such Proceeds and the additional amounts deposited by the Trustor for
such restoration after receipt of a written request for disbursement, on not
fewer than five (5) nor more than twelve (12) Business Days notice and, to the
extent applicable, in accordance with the Beneficiary's customary construction
loan procedures and conditions. In the event that such insurance or condemnation
awards are to be utilized to replace the Trust Premises so destroyed or taken,
the Beneficiary shall disburse such Proceeds after receipt of a written request
for disbursement, on not fewer than five (5) Business Days nor more than twelve
(12) Business Days notice simultaneously with the acquisition of such
replacement property by the Trustor. In the event that, after the restoration or
replacement of the Trust Premises, any insurance or condemnation awards shall
remain, such amount shall be paid to the Trustor. Insurance proceeds and
condemnation awards shall be invested in the manner reasonably requested by the
Trustor and approved by the Beneficiary, and all interest earned thereon shall
be applied as provided in this Section 2.3. If, prior to the receipt by the
Beneficiary of such insurance proceeds or condemnation awards, the Trust
Premises shall have been sold on foreclosure, the Beneficiary shall have the
right to receive said insurance proceeds or condemnation awards to the extent of
any deficiency found to be due upon such sale, with legal interest thereon,
whether or not a deficiency judgment shall have been sought or recovered or
denied, and the reasonable attorneys' fees, costs and disbursements incurred by
the Beneficiary in connection with the collection of such award or payment.
SECTION 2.4. Total Taking and Total Destruction. In the event of a
Total Destruction or a Total Taking, the Beneficiary shall apply all amounts
recovered under any insurance policy referred to in Section 2.1.1 and all awards
received by it on account of any such Taking as follows:
(a) first, to the payment of the reasonable costs and expenses
incurred by the Beneficiary in obtaining any such insurance proceeds or
awards, including the fees and expenses of attorneys and insurance and
other experts and consultants, the costs of litigation, arbitration,
mediation, investigations and other judicial, administrative or other
proceedings and all other out-of-pocket expenses;
(b) second, to the payment of the principal of the Senior
Secured Notes and any interest (including Post-Petition Interest to the
extent such interest is an Obligation)
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accrued and unpaid thereon, without regard to whether any portion or
all of such amounts shall be matured or unmatured, and, in case such
amount shall be insufficient to pay in full all such amounts, then such
amount shall be applied, first, to the payment of all amounts of
interest (including Post-Petition Interest to the extent such interest
is an Obligation) accrued on the Senior Secured Notes and unpaid, and
second, to the payment of all amounts of principal at the time
outstanding;
(c) third, to the payment of, or the application to, any
Obligation (other than as provided in clause (b) above);
(d) fourth, to fulfill any of the other covenants contained
herein as the Beneficiary may determine; and
(e) fifth, the balance, if any, to the Trustor.
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration. If an "Event of Default"
(pursuant to and as defined in the Indenture) shall have occurred and be
continuing, then and in any such event the Beneficiary may at any time
thereafter (unless all Events of Default shall theretofore have been remedied
and all costs and expenses, including, without limitation, attorneys' fees and
expenses incurred by or on behalf of the Beneficiary, shall have been paid in
full by the Trustor) declare, by written notice to the Trustor, the Senior
Secured Notes and all other Obligations to be due and payable immediately or on
a date specified in such notice, and on such date the same shall be and become
due and payable, together with interest accrued thereon, without presentment,
demand, protest or notice, all of which the Trustor hereby waives. The Trustor
will pay on demand all costs and expenses, including, without limitation,
attorneys' fees and expenses, incurred by or on behalf of the Beneficiary in
enforcing this Deed of Trust, the Indenture, the Senior Secured Notes, or the
Security Agreements or occasioned by any default hereunder or thereunder.
SECTION 3.2. Legal Proceedings; Judicial Foreclosure. If an Event of
Default shall have occurred and be continuing, the Beneficiary at any time may,
at its election, proceed at law or in equity or otherwise to enforce the payment
and performance of the Obligations in accordance with the terms hereof and
thereof and to foreclose the lien of this Deed of Trust as against all or any
part of the Trust Premises and to have the same sold under the judgment or
decree of a court of competent jurisdiction. The Beneficiary shall be entitled
to recover in such proceedings all costs incident thereto, including attorneys'
fees and expenses in such amounts as may be fixed by the court.
SECTION 3.3. Power of Sale. If an Event of Default shall have occurred
and be continuing, the Beneficiary may sell or offer for sale the Trust Premises
in such portions, order and parcels as the Beneficiary may determine, with or
without having first taken possession of the same, to the highest bidder for
cash at public auction. Such sale shall be made at the courthouse of the county
wherein the Land (or any of that portion thereof to be sold) is situated
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(whether the parts or parcels thereof, if any, in different counties are
contiguous or not, and without the necessity of having any personal property
hereby mortgaged present at such sale) on the first Tuesday of any month between
the hours of 10:00 a.m. and 4:00 p.m. after posting a written or printed notice
or notices of the place, the earliest time at which the sale will begin and
terms of the sale of the Trust Premises for twenty-one (21) days prior to the
date of the sale at the courthouse door of the county in which the sale is to be
made and at the courthouse door of any other county in which a portion of the
Trust Premises may be situated and filing a copy of such notice(s) in the office
of the county clerk in each of such counties, and by serving written notice of
the proposed sale at least twenty-one (21) days preceding the date of sale by
certified mail on each debtor obligated to pay the Obligations according to the
records of the Beneficiary. Service of such notice shall be completed upon
deposit of the notice, enclosed in a postpaid wrapper, properly stamped and
addressed to such debtor at the most recent address as shown by the records of
the Beneficiary, in a post office or official depository under the care and
custody of the United States. It is agreed that the posting and transmittal of
notices may be performed by the Trustee, Beneficiary, or by any person acting
for them. In lieu of the foregoing, the sale may be accomplished by following
the procedures permitted or required by Section 51.002 of the Texas Property
Code, as same may be amended from time to time, relating to the sale of real
estate and/or by the Texas Uniform Commercial Code-Secured Transactions (same
being Chapter 9 of the Texas Business and Commerce Code) relating to the sale of
personal property collateral after default by a debtor (as said Section and
Chapter may now exist or may hereafter be amended or succeeded), or by any other
present or subsequent articles or enactments relating to the same. Nothing
contained in this Section shall be construed to limit in any way the Trustee s
rights to sell the Trust Premises by private sale if, and to the extent, that
such private sale is permitted under the laws of the State or by public or
private sale after entry of judgment by any court of competent jurisdiction
ordering the same. At any such sale (i) whether made under power herein
contained, Section 51.002 of the Texas Property Code, the Texas Uniform
Commercial Code-Secured Transactions, any other legal requirement or by virtue
of any judicial procedure or any other legal right, remedy or recourse, it shall
not be necessary for the Trustee to have physically present, or to have
constructive possession of, the Trust Premises (Trustor hereby covenanting and
agreeing to deliver to the Trustee any portion of the Trust Premises not
actually or constructively possessed by the Trustee immediately upon demand by
the Trustee), and the title to and right of possession of any such property
shall pass to the purchaser thereof as completely as if the same had been
actually present and delivered to purchaser at such sale, (ii) each instrument
of conveyance executed by the Trustee shall contain a special warranty of title,
binding upon Trustor, (iii) each and every recital contained in any instrument
of conveyance made by the Trustee shall conclusively establish the truth and
accuracy of the matters recited therein, including, without limitation,
nonpayment of the Obligations, advertisement and conduct of such sale in the
manner provided herein and otherwise by law and appointment of any successor to
the Trustee hereunder, (iv) any and all prerequisites to the validity thereof
shall be conclusively presumed to have been performed, (v) the receipt of the
Trustee or of such other party or officer making the sale shall be a sufficient
discharge to the purchaser or purchasers for his or their purchase money and no
such purchaser or purchasers, or his or their assigns or personal
representatives, shall thereafter be obligated to see to the application of such
purchase money or be in any way answerable for any loss, misapplication or
nonapplication thereof, (vi) to the fullest extent permitted by law, Trustor
shall be completely and irrevocably divested of all of its right, title,
interest, claim and demand whatsoever, either at law or in equity, in and to the
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property sold and such sale shall be a perpetual bar, both at law and in equity,
against Trustor, and against any and all other persons claiming or to claim the
property sold or any part thereof, by, through or under Trustor, and (vii) to
the extent and under such circumstances as are permitted by law, Beneficiary may
be a purchaser at any such sale. The Trust Premises may be sold in one or more
parcels and in such manner and order as Trustee, in its sole discretion, may
elect, it being expressly understood and agreed that the right of sale arising
out of any Event of Default shall not be exhausted by any one or more sales but
other and successive sales may be made until all of the Trust Premises have been
sold or until the Obligations has been fully satisfied. In case Beneficiary
shall have proceeded to invoke any right, remedy or recourse permitted under
this Deed of Trust and shall thereafter elect to discontinue or abandon the same
for any reason, Beneficiary shall have the unqualified right so to do and, in
such event, Trustor and Beneficiary shall be restored to their former positions
with respect to the Obligations, the Trust Premises and otherwise, and the
rights, remedies, recourses and powers of Beneficiary shall continue as if same
had never been invoked.
SECTION 3.4. Uniform Commercial Code Remedies. If an Event of Default
shall have occurred and be continuing, the Beneficiary may exercise from time to
time and at any time any rights and remedies available to it under applicable
law upon default in the payment of indebtedness, including, without limitation,
any right or remedy available to it as a secured party under the Uniform
Commercial Code of the State. The Trustor shall, promptly upon request by the
Beneficiary, assemble the Trust Premises, or any portion thereof generally
described in such request, and make it available to the Beneficiary at such
place or places designated by the Beneficiary and reasonably convenient to the
Beneficiary or the Trustor. If the Beneficiary elects to proceed under the
Uniform Commercial Code of the State to dispose of portions of the Trust
Premises, the Beneficiary, at its option, may give the Trustor notice of the
time and place of any public sale of any such property, or of the date after
which any private sale or other disposition thereof is to be made, by sending
notice by registered or certified first class mail, postage prepaid, to the
Trustor at least ten (10) days before the time of the sale or other disposition.
If any notice of any proposed sale, assignment or transfer by the Beneficiary of
any portion of the Trust Premises or any interest therein is required by law,
the Trustor conclusively agrees that ten (10) days notice to the Trustor of the
date, time and place (and, in the case of a private sale, the terms) thereof is
reasonable.
SECTION 3.5. Beneficiary Authorized to Execute Deeds, etc. The Trustor
irrevocably appoints the Trustee and the Beneficiary (which appointment is
coupled with an interest) the true and lawful attorney of the Trustor, in its
name and stead and on its behalf, for the purpose of effectuating any sale,
assignment, transfer or delivery for the enforcement hereof, whether pursuant to
power of sale, foreclosure or otherwise, to execute and deliver all such deeds,
bills of sale, assignments, releases and other instruments as may be designated
in any such request.
SECTION 3.6. Purchase of Trust Premises by Beneficiary. The Beneficiary
may be a purchaser of the Trust Premises or of any part thereof or of any
interest therein at any sale thereof, whether pursuant to power of sale,
foreclosure or otherwise, and the Beneficiary may apply upon the purchase price
thereof the indebtedness secured hereby owing to the Beneficiary.
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Such purchaser shall, upon any such purchase, acquire good title to the
properties so purchased, free of the security interest and lien of this Deed of
Trust and free of all rights of redemption in the Trustor.
SECTION 3.7. Receipt a Sufficient Discharge to Purchaser. Upon any sale
of the Trust Premises or any part thereof or any interest therein, whether
pursuant to power of sale, foreclosure or otherwise, the receipt of the
Beneficiary or the officer making the sale under judicial proceedings shall be a
sufficient discharge to the purchaser for the purchase money, and such purchaser
shall not be obliged to see to the application thereof.
SECTION 3.8. Waiver of Appraisement, Valuation, etc. The Trustor hereby
waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter in
force and all rights of marshaling in the event of any sale of the Trust
Premises or any part thereof or any interest therein.
SECTION 3.9. Sale a Bar Against Trustor. Any sale of the Trust Premises
or any part thereof or any interest therein under or by virtue of this Deed of
Trust, whether pursuant to power of sale, foreclosure or otherwise, shall
forever be a bar against the Trustor.
SECTION 3.10. Obligations to Become Due on Sale. Except as otherwise
provided in the Indenture or herein, upon any sale of the Trust Premises or any
portion thereof or interest therein by virtue of the exercise of any remedy by
the Beneficiary under or by virtue of this Deed of Trust, whether pursuant to
power of sale, foreclosure or otherwise in accordance with this Deed of Trust or
by virtue of any other remedy available at law or in equity or by statute or
otherwise, at the option of the Beneficiary, any sums or monies due and payable
pursuant to the Indenture or Security Agreements and in connection with the
Obligations shall, if not previously declared due and payable, immediately
become due and payable, together with interest accrued thereon, and all other
indebtedness which this Deed of Trust by its terms secures.
SECTION 3.11. Application of Proceeds of Sale and Other Moneys. Except
as otherwise provided in the Indenture or herein, the proceeds of any sale of
the Trust Premises or any part thereof or any interest therein under or by
virtue of this Deed of Trust, whether pursuant to power of sale, foreclosure or
otherwise, and all other moneys at any time held by the Beneficiary as part of
the Trust Premises, shall be applied in such order of priority as the
Beneficiary shall determine in its sole and absolute discretion including,
without limitation, as follows:
(a) first, to the payment of the reasonable costs and expenses
of such sale (including, without limitation, the cost of evidence of
title and the costs and expenses, if any, of taking possession of,
retaining custody over, repairing, managing, operating, maintaining and
preserving the Trust Premises or any part thereof prior to such sale),
all reasonable costs and expenses incurred by the Beneficiary or any
other Person in obtaining or collecting any insurance proceeds,
condemnation awards or other amounts received by the Beneficiary, all
reasonable costs and expenses of any receiver of the Trust Premises or
any part thereof, and any Impositions or other charges or expenses
prior to the security interest or lien of this Deed of Trust, which the
Beneficiary may consider it necessary or desirable to pay;
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(b) second, to the payment of any Obligation (other than those
set forth in Section 3.11(c) below);
(c) third, to the payment of all amounts of principal of and
interest (including Post-Petition Interest to the extent such interest
is an Obligation) at the time due and payable under the Indenture at
the time outstanding (whether due by reason of maturity or by reason of
any prepayment requirement or by declaration or acceleration or
otherwise), including interest at the rate provided for in the
Indenture on any overdue principal and (to the extent permitted under
applicable law) on any overdue interest; and, in case such moneys shall
be insufficient to pay in full such principal and interest, then,
first, to the payment of all amounts of interest (including
Post-Petition Interest to the extent such interest is an Obligation) at
the time due and payable and, second, to the payment of all amounts of
principal at the time due and payable under the Senior Secured Notes;
and
(d) fourth, the balance, if any, held by the Beneficiary after
payment in full of all amounts referred to in subdivisions Sections
3.11(a), (b) and (c) above, shall, unless a court of competent
jurisdiction may otherwise direct by final order not subject to appeal,
be paid to or upon the direction of the Trustor.
SECTION 3.12. Appointment of Receiver. If an Event of Default shall
have occurred and be continuing, the Beneficiary shall, as a matter of right,
without notice, and without regard to the adequacy of any security for the
indebtedness secured hereby or the solvency of the Trustor, be entitled to the
appointment of a receiver for all or any part of the Trust Premises, whether
such receivership be incidental to a proposed sale of the Trust Premises or
otherwise, and the Trustor hereby consents to the appointment of such a receiver
and will not oppose any such appointment.
SECTION 3.13. Possession, Management and Income. If an Event of Default
shall have occurred and be continuing, in addition to, and not in limitation of,
the rights and remedies provided in Section 1.14, the Trustee and the
Beneficiary, upon five (5) days written notice to the Trustor, may enter upon
and take possession of the Trust Premises or any part thereof by force, summary
proceeding, ejectment or otherwise and may remove the Trustor and all other
Persons and any and all property therefrom and may hold, operate, maintain,
repair, preserve and manage the same and receive all earnings, income, Rents,
issues and Proceeds accruing with respect thereto or any part thereof. The
Trustee and the Beneficiary shall be under no liability for or by reason of any
such taking of possession, entry, removal or holding, operation or management,
except that any amounts so received by the Trustee and the Beneficiary shall be
applied to pay all costs and expenses of so entering upon, taking possession of,
holding, operating, maintaining, repairing, preserving and managing the Trust
Premises or any part thereof, and any Impositions or other charges prior to the
lien and security interest of this Deed of Trust which the Trustee and the
Beneficiary may consider it necessary or desirable to pay, and any balance of
such amounts shall be applied as provided in Section 3.11.
SECTION 3.14. Right of Beneficiary to Perform Trustor's Covenants, etc.
If the Trustor shall fail to make any payment or perform any act required to be
made or performed hereunder or under the Indenture or the Senior Secured Notes,
the Beneficiary, without notice to or demand upon the Trustor and without
waiving or releasing any obligation or Event of Default,
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may (but shall be under no obligation to) at any time thereafter make such
payment or perform such act for the account and at the expense of the Trustor,
and may enter upon the Trust Premises for such purpose and take all such action
thereon as, in the Beneficiary's opinion, may be necessary or appropriate
therefor. No such entry and no such action shall be deemed an eviction of any
lessee of the Property or any part thereof. All sums so paid by the Beneficiary
and all costs and expenses (including, without limitation, attorneys' fees and
expenses) so incurred, together with interest thereon at the rate provided in
the Indenture from the date of payment or incurring, shall constitute additional
indebtedness under the Indenture secured by this Deed of Trust and shall be paid
by the Trustor to the Trustee or the Beneficiary, as the case may be, on demand.
SECTION 3.15. Subrogation. To the extent that the Beneficiary, on or
after the date hereof, pays any sum due under any provision of any Legal
Requirement or any instrument creating any lien prior or superior to the lien of
this Deed of Trust, or the Trustor or any other Person pays any such sum with
the proceeds of the Senior Secured Notes, the Beneficiary shall have and be
entitled to a lien on the Trust Premises equal in priority to the lien
discharged, and the Beneficiary shall be subrogated to, and receive and enjoy
all rights and liens possessed, held or enjoyed by, the holder of such lien,
which shall remain in existence and benefit the Beneficiary in securing the
Obligations.
SECTION 3.16. Remedies, etc., Cumulative. Each right, power and remedy
of the Beneficiary provided for in this Deed of Trust, the Indenture and in the
Senior Secured Notes or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power or remedy provided for in this Deed of Trust, the
Indenture, the Senior Secured Notes or the Security Agreements or now or
hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by the Beneficiary of any one or more of
the rights, powers or remedies provided for in this Deed of Trust, the
Indenture, the Senior Secured Notes, or the Security Agreements or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Beneficiary of any or all
such other rights, powers or remedies.
SECTION 3.17. Provisions Subject to Applicable Law. All rights, powers
and remedies provided in this Deed of Trust may be exercised only to the extent
that the exercise thereof does not violate any applicable provisions of law and
are intended to be limited to the extent necessary so that they will not render
this Deed of Trust invalid, unenforceable or not entitled to be recorded,
registered or filed under the provisions of any applicable law. If any term of
this Deed of Trust or any application thereof shall be invalid or unenforceable,
the remainder of this Deed of Trust and any other application of such term shall
not be affected thereby.
SECTION 3.18. No Waiver, etc. No failure by the Trustee or the
Beneficiary to insist upon the strict performance of any term hereof or of the
Indenture, the Senior Secured Notes, or the Security Agreements or to exercise
any right, power or remedy consequent upon a breach hereof or thereof, shall
constitute a waiver of any such term or of any such breach. No waiver of any
breach shall affect or alter this Deed of Trust, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
By accepting payment or
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performance of any amount or other Obligations secured hereby before or after
its due date, neither the Trustee nor the Beneficiary shall be deemed to have
waived its right either to require prompt payment or performance when due of all
other amounts and Obligations payable hereunder or to declare a default for
failure to effect such prompt payment.
SECTION 3.19. Compromise of Actions, etc. Any action, suit or
proceeding brought by the Beneficiary pursuant to any of the terms of this Deed
of Trust, the Indenture, the Senior Secured Notes, or the Security Agreements,
or otherwise, and any claim made by the Beneficiary hereunder or thereunder, may
be compromised, withdrawn or otherwise dealt with by the Beneficiary without any
notice to or approval of the Trustor.
ARTICLE IV
DEFINITIONS
SECTION 4.1. Terms Defined in this Deed of Trust. When used herein the
following terms have the following meanings:
"Beneficiary" shall have the meaning set forth in the preamble.
"Borrowers" shall have the meaning set forth in the second recital.
"Contracts" shall have the meaning set forth in clause (h) of the
granting clause.
"Credit Agreement" shall have the meaning set forth in the third
recital.
"Deed of Trust" shall have the meaning set forth in the preamble.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time, or both, would constitute an Event of Default.
"First Deed of Trust Default" means a Default (as defined in the First
Deed of Trust).
"Goods" shall have the meaning set forth in clause (c) of the granting
clause.
"herein", "hereof", "hereto", and "hereunder" and similar terms refer
to this Deed of Trust and not to any particular Section, paragraph or provision
of this Deed of Trust.
"Highest Lawful Rate" shall have the meaning set forth in Section 5.15.
"Impositions" shall have the meaning set forth in Section 1.5.
"Improvements" shall have the meaning set forth in clause (b) of the
granting clause.
"Indemnified Parties" shall have the meaning set forth in Section 1.16.
"Insurance Requirements" shall have the meaning set forth in paragraph
(a) of Section 1.6.
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"Land" shall have the meaning set forth in the first recital.
"Leases" shall have the meaning set forth in clause (e) of the granting
clause.
"Legal Requirements" shall have the meaning set forth in paragraph (b)
of Section 1.6.
"Trustor" shall have the meaning set forth in the preamble.
"Obligations" means the Obligations under the Indenture and the Senior
Secured Notes.
"Permits" shall have the meaning set forth in clause (g) of the
granting clause.
"Permitted Encumbrances" shall have the meaning set forth in Section
1.2.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency or officer.
"Plans" shall have the meaning set forth in clause (f) of the granting
clause.
"Post-Petition Interest" shall have the meaning set forth in Section
2.3.
"Proceeds" shall have the meaning set forth in clause (k) of the
granting clause.
"Property" shall have the meaning set forth in clause (b) of the
granting clause.
"Real Estate" shall have the meaning set forth in clause (a) of the
granting clause.
"Rents" shall have the meaning set forth in clause (j) of the granting
clause.
"State" means the State of Texas.
"Total Destruction" means any damage to or destruction of the
Improvements or any part thereof which, in the reasonable estimation of the
Beneficiary shall require the expenditure of an amount in excess of Forty
Million Dollars ($40,000,000) to restore the Improvements to substantially the
same condition of the Improvements immediately prior to such damage or
destruction.
"Total Taking" means a Taking, whether permanent or for temporary use,
which, in the reasonable judgment of the Beneficiary, shall substantially
interfere with and adversely affect the normal operation of the Property by the
Trustor to such an extent as would reasonably be anticipated to cause a Material
Adverse Effect (as defined in the Credit Agreement).
"Trust Premises" shall have the meaning set forth in the granting
clause.
SECTION 4.2. Use of Defined Terms. Terms for which meanings are
provided in this Deed of Trust shall, unless otherwise defined or the context
otherwise requires, have such
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meanings when used in any certificate and any opinion, notice or other
communication delivered from time to time in connection with this Deed of Trust
or pursuant hereto.
SECTION 4.3. Indenture Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Deed of Trust, including
its preamble and recitals, have the meanings provided in the Indenture.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements.
SECTION 5.1.1. Further Assurances. The Trustor, at its expense, will
execute, acknowledge and deliver all such instruments and take all such other
action as the Beneficiary from time to time may reasonably request:
(a) to better subject to the lien and security interest of
this Deed of Trust all or any portion of the Trust Premises,
(b) to perfect, publish notice or protect the validity of the
lien and security interest of this Deed of Trust,
(c) to preserve and defend the title to the Trust Premises and
the rights of the Beneficiary therein against the claims of all Persons
as long as this Deed of Trust shall remain undischarged,
(d) to better subject to the lien and security interest of
this Deed of Trust or to maintain or preserve the lien and security
interest of this Deed of Trust with respect to any replacement or
substitution for any Trust Premises or any other after-acquired
property except as provided in the Indenture, or
(e) in order to further effectuate the purposes of this Deed
of Trust and to carry out the terms hereof and to better assure and
confirm to the Beneficiary its rights, powers and remedies hereunder.
SECTION 5.1.2. Financing Statements. Notwithstanding any other
provision of this Deed of Trust, the Trustor hereby agrees that, without notice
to or the consent of the Trustor, the Beneficiary may file with the appropriate
public officials such financing statements, continuation statements, amendments
and similar documents as are or may become necessary to perfect, preserve or
protect the security interest granted by this Deed of Trust.
SECTION 5.2. Additional Security. Without notice to or consent of the
Trustor, and without impairment of the security interest and lien and rights
created by this Deed of Trust, the Trustee and the Beneficiary or the Holders
may accept from the Trustor or any other Person additional security for the
Obligations. Neither the giving of this Deed of Trust nor the acceptance of any
such additional security shall prevent the Beneficiary or Trustor from
resorting, first, to such additional security, or, first, to the security
created by this Deed of Trust,
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or concurrently to both, in any case without affecting the Beneficiary's lien
and rights under this Deed of Trust.
SECTION 5.3. Defeasance; Partial Release, etc.
SECTION 5.3.1. Defeasance. If the Senior Secured Notes and all other
amounts owing pursuant to the Indenture and the Security Agreements shall be
repaid in full in accordance with the terms thereof, and if the Trustor shall
pay, in full, the principal of and premium, if any, and interest on the
Obligations in accordance with the terms thereof and hereof and all other sums
payable hereunder by the Trustor and shall comply with all the terms, conditions
and requirements hereof and of the Obligations, or otherwise as may be provided
in the Indenture, then on such date, the Beneficiary shall, upon the request of
the Trustor and at the Trustor's sole cost and expense, execute and deliver such
instruments, in form and substance reasonably satisfactory to the Beneficiary,
as may be necessary to effectively reconvey, release and discharge this Deed of
Trust.
SECTION 5.3.2. Partial Release, etc. The Beneficiary may, at any time
and from time to time, without liability therefor, and without prior notice to
the Trustor, release or reconvey any part of the Trust Premises, consent to the
making of any map or plat of the Property, join in granting any easement thereon
or join in any extension agreement or agreement subordinating the lien of this
Deed of Trust.
SECTION 5.4. Notices, etc. All notices and other communications
provided to any of the parties hereto shall be in writing and addressed,
delivered or transmitted to such party as set forth in the Indenture.
SECTION 5.5. Waivers, Amendments, etc. The provisions of this Deed of
Trust may be amended, discharged or terminated and the observance or performance
of any provision of this Deed of Trust may be waived, either generally or in a
particular instance and either retroactively or prospectively, only by an
instrument in writing executed by the Trustor and the Beneficiary.
SECTION 5.6. Cross-References. References in this Deed of Trust and
in each instrument executed pursuant hereto to any Section or Article are,
unless otherwise specified, to such Section or Article of this Deed of Trust or
such instrument, as the case may be, and references in any Section, Article or
definition to any clause are, unless otherwise specified, to such clause of such
Section, Article or definition.
SECTION 5.7. Headings. The various headings of this Deed of Trust and
of each instrument executed pursuant hereto are inserted for convenience only
and shall not affect the meaning or interpretation of this Deed of Trust or such
instrument or any provisions hereof or thereof.
SECTION 5.8. Currency. Unless otherwise expressly stated, all
references to any currency or money, or any dollar amount, or amounts
denominated in "Dollars" herein will be deemed to refer to the lawful currency
of the United States.
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SECTION 5.9. Governing Law. THIS MORTGAGE SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE.
SECTION 5.10. Successors and Assigns, etc. This Deed of Trust shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
SECTION 5.11. Concerning the Trustee
Acceptance of Trusts; Certain Terms the Trusts. The Trustee, for itself
and its successors, hereby accepts the trusts of this Deed of Trust, but only
upon the terms herein set forth, including the following:
(a) The recitals in this Deed of Trust and in any supplement hereto
which may hereafter be executed by the Trustor and the Trustee shall be
taken as the statements of the Trustor and shall not be considered as
made by, or imposing any obligation or liability upon, the Trustee.
(b) The Trustee may execute any of the trusts or powers hereof and
perform any duty hereunder either directly or through its agents or
attorneys, and the Trustee shall not be responsible for the acts of any
agent or attorney appointed by it in good faith and without negligence.
(c) The Trustee may, at the expense of the Trustor, consult with legal
counsel to be selected by it, and the Trustee shall not be liable for
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the advice of counsel.
(d) The Trustor will pay to the Trustee from time to time, on demand,
compensation for all services rendered hereunder (which shall not be
limited to the compensation of trustees of any express trust as
provided by law) and also all reasonable expenses, charges, counsel
fees and other disbursements and those of its agents and attorneys,
made or incurred in the administration of the trusts hereby created and
any other duties hereby imposed. The Trustor agrees to indemnify and
save harmless the Trustee against and from any liability or damages
which it may incur or sustain, in good faith, in the exercise and
performance of any of its powers and duties hereunder.
(e) The Trustee shall not be liable, in case of taking possession of
the Trust Premises, for debts contracted or liability or damages
incurred in the management or operation of the Trust Premises, for the
salaries of employees of the Trustor or for nonfulfillment of contracts
by the Trustor.
(f) The Trustee shall be protected in acting upon any notice,
resolution, request, consent, order, certificate, report, opinion,
statement, obligation, appraisal or other document believed by it to be
genuine and to have been signed by the proper party or parties or by a
person or persons authorized to act on his or their behalf.
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(g) The Trustee shall not be responsible for the validity or
genuineness of any securities, personal property, notes or deeds of
trust at any time pledged and deposited hereunder.
SECTION 5.11.2. Duties and Responsibility of Trustee; In Case of
Default; Prior to Default; When Acting Under Direction of Beneficiary. If an
Event of Default shall have occurred and shall be continuing to the actual
knowledge of the Trustee, or if the Trustee shall have received notice thereof
from the Beneficiary, the Trustee, only if so directed by the Beneficiary, shall
exercise such of the rights and powers vested in it by this Deed of Trust, and
in so doing shall use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. None of the provisions of this Deed of Trust shall be construed as
relieving the Trustee from liability for its own negligent action, own negligent
failure to act, or own willful misconduct, except that,
(a) so long as no Event of Default shall have occurred and be
continuing,
(1) the Trustee shall not be liable except for the
performance of such duties as are specifically set forth in
this Deed of Trust, and no implied covenants or obligations
shall be read into this Deed of Trust against the Trustee,
whose duties and obligations shall be determined solely by the
express provisions of this Deed of Trust, and
(2) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of opinions expressed
therein, upon certificates or opinions conforming to the
requirements of this Deed of Trust;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by an officer or officers of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts;
(c) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with provisions
of applicable law and the direction of the Beneficiary, relating to the
time, method, and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred
upon the Trustee under this Deed of Trust;
(d) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Deed of Trust;
(e) if an Event of Default shall have occurred and shall be continuing,
the Trustee shall not exercise any of the powers granted to it
hereunder unless and until specifically requested to do so by the
Beneficiary; and
(f) none of the provisions contained in this Deed of Trust shall
require the Trustee to advance or use its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers.
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SECTION 5.11.3. Notice of Default. The Trustee shall, within ten days
after it has actual knowledge thereof, give to the Beneficiary notice of any
Default.
SECTION 5.11.4. Resignation and Removal; Appointment of Successor
Trustee.
(a) The Trustee may resign and be discharged from the trusts hereby
created by giving written notice thereof to the Trustor and to the
Beneficiary. Such resignation shall become effective upon the
appointment of its successor and such successor's acceptance of such
appointment, provided that, if a successor Trustee has not been so
appointed, or, if so appointed, has not accepted the appointment within
thirty (30) days after the date of such written notice of resignation,
the Trustee may apply to any court of competent jurisdiction for the
appointment of a successor Trustee.
(b) The Trustee may be removed at any time by an instrument or
instruments signed by the Beneficiary and filed with the Trustor and
the Trustee.
(c) The Beneficiary may appoint a successor Trustee at any time by
filing for record in the office of the Register of Deeds of the County
in which the Property is located a substitution of Trustee. From the
time the substitution is filed for record, the successor Trustee shall
succeed to all of the powers, duties, authority and title of the
Trustee without the necessity of any conveyance from the Trustee
originally herein named or any successor. Each such substitution shall
be executed and acknowledged, and notice thereof shall be given and
proof thereof made in accordance with applicable law. The Trustor
agrees to accept and confirm any such successor Trustee hereunder by
executing and delivering a supplemental Deed of Trust and security
agreement or other appropriate agreement.
SECTION 5.12. Waiver of Jury Trial; Submission to Jurisdiction.
(a) EACH OF THE TRUSTOR AND THE BENEFICIARY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS MORTGAGE, THE INDENTURE, THE SENIOR
SECURED NOTES, THE SECURITY AGREEMENTS OR ANY OTHER RELATED INSTRUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN), OR ACTIONS OF THE TRUSTOR OR THE BENEFICIARY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BENEFICIARY AND THE HOLDERS
TO ENTER INTO THE TRANSACTIONS PROVIDED FOR IN THE INDENTURE.
(b) FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INVOLVING THIS
MORTGAGE, THE INDENTURE, THE SENIOR SECURED NOTES, OR THE SECURITY
AGREEMENTS, THE TRUSTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ALL FEDERAL AND STATE COURTS LOCATED IN
THE STATE AND CONSENTS THAT IT MAY BE SERVED WITH ANY PROCESS OR PAPER
BY REGISTERED
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MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE IN ACCORDANCE
WITH APPLICABLE LAW, PROVIDED A REASONABLE TIME FOR APPEARANCE IS
ALLOWED. THE TRUSTOR AND BENEFICIARY EACH EXPRESSLY WAIVES, TO THE
EXTENT IT MAY LAWFULLY DO SO, ANY OBJECTION, CLAIM OR DEFENSE WHICH IT
MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF THIS MORTGAGE, THE INDENTURE, THE SENIOR
SECURED NOTES, OR THE SECURITY AGREEMENTS IN ANY SUCH COURT,
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND
FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO ANY
SUCH CLAIM, SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT
SUCH COURT DOES NOT HAVE JURISDICTION OVER THE PERSON OF THE TRUSTOR.
NOTHING CONTAINED HEREIN WILL BE DEEMED TO PRECLUDE THE BENEFICIARY
FROM BRINGING AN ACTION AGAINST THE TRUSTOR IN ANY OTHER JURISDICTION.
SECTION 5.13. Severability; Conflicts. Any provision of this Deed of
Trust, the Indenture, the Senior Secured Notes, or the Security Agreements which
is prohibited or unenforceable in any jurisdiction shall as to such provision
and such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Deed of
Trust, the Indenture, the Senior Secured Notes, or the Security Agreements or
affecting the validity or enforceability of such provision in any other
jurisdiction. In the event of any conflict between the terms of this Deed of
Trust and the terms of the Indenture, the terms of the Indenture shall control.
SECTION 5.14. Security Agreement. This Deed of Trust is a Loan Document
executed pursuant to the Indenture and, unless otherwise expressly indicated
herein, shall be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 5.15. Usury Savings Clause.In no event shall any provision of
this instrument, the Indenture, the Senior Secured Notes, or any other
instrument evidencing or securing the Obligations ever obligate Trustor, to pay
or allow Beneficiary to collect interest on the Senior Secured Notes or any
other Obligations secured hereby at a rate greater than the maximum non-usurious
rate permitted by applicable law (herein referred to as the "Highest Lawful
Rate"), or obligate Trustor to pay any amounts that would be held or deemed to
constitute interest under applicable law which, when added to the interest
payable on the Senior Secured Notes, would be held to constitute the payment by
Trustor of interest at a rate greater than the Highest Lawful Rate; and this
provision shall control over any provision to the contrary. To the extent the
Highest Lawful Rate is determined by reference to the laws of the State of
Texas, same shall be determined by reference to the indicated rate ceiling (as
defined and described in Chapter 303 of the Texas Finance Code, as amended) at
the applicable time in effect.
Without limiting the generality of the foregoing, in the event the
maturity of all or any part of the principal amount of the Obligations shall be
accelerated for any reason, then such
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principal amount so accelerated shall be credited with any interest theretofore
paid thereon in advance and remaining unearned at the time of such acceleration.
If, pursuant to the terms of this Deed of Trust or the Senior Secured Notes, any
funds are applied to the payment of any part of the principal amount of the
Obligations prior to the maturity thereof, then (a) any interest which would
otherwise thereafter accrue on the principal amount so paid by such application
shall be canceled, and (b) the Obligations remaining unpaid after such
application shall be credited with the amount of all interest, if any,
theretofore collected on the principal amount so paid by such application and
remaining unearned at the date of said application; and if the funds so applied
shall be sufficient to pay in full all the Obligations, then Beneficiary shall
refund to Trustor all interest theretofore paid thereon in advance and remaining
unearned at the time of such acceleration. Regardless of any other provision in
this instrument, or in any of the written evidences of the Obligations, Trustor
shall never be required to pay any unearned interest on the Obligations or any
portion thereof, and shall never be required to pay interest thereon at a rate
in excess of the Highest Lawful Rate construed by courts having competent
jurisdiction thereof.
It is the intention of the Trustor and the Beneficiary to conform
strictly to the usury laws governing the Indenture and the Security Agreements,
and any interest payable under the Indenture and the Security Agreements
executed pursuant to the Indenture shall be subject to reduction to the amount
not in excess of the maximum non-usurious amount allowed under such laws, as
construed by the courts having jurisdiction over such matters. In the event the
maturity of the Obligations is accelerated by reason of any provision of the
Indenture and the Security Agreements executed pursuant to the Indenture, or by
reason of an election by the Beneficiary resulting from an Event of Default,
then earned interest may never include more than the maximum amount permitted by
law, computed from the dates of each advance of loan proceeds under the
Indenture until payment, and any interest in excess of the maximum amount
permitted by law shall be canceled automatically or, if theretofore paid, at the
option of the Beneficiary, shall be rebated to the Trustor, or shall be credited
on the principal amount of the Obligations or, if all principal has been repaid,
then the excess shall be rebated to the Trustor. If any interest is canceled,
credited against principal or rebated to the Trustor in accordance with the
foregoing sentence and, if thereafter the interest payable hereunder is less
than the maximum amount permitted by applicable law, the rate hereunder shall
automatically be increased to the maximum extent possible to permit repayment to
the Beneficiary and the Lenders as soon as possible of any interest in excess of
the maximum amount permitted by law which was earlier canceled, credited against
principal or rebated to the Trustor pursuant to the provisions of the foregoing
sentence.
SECTION 5.16. Entire Agreement.THIS WRITTEN SECURITY AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 5.17. Subordination to First Deed of Trust.
(a) The lien of this Deed of Trust shall be subject and
subordinate only to the lien of the First Deed of Trust and Permitted
Encumbrances. Notwithstanding anything to the contrary contained in
this Deed of Trust, this Deed of Trust shall not be subordinate to
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any increases in the aggregate principal amount that may be borrowed
(i) under the First Deed of Trust or other documents executed in
connection therewith, or (ii) under any amendment, modifications,
renewals, replacements or consolidations thereof, made without the
prior written consent of Beneficiary, to an amount in excess of
$70,000,000.
(b) Trustor represents and warrants that (i) the First Deed of
Trust is in full force and effect, and (ii) all principal, interest and
other amounts payable under the terms, covenants, conditions and
provisions of the First Deed of Trust and the other documents executed
in connection therewith have been and shall be paid in accordance with
the terms, covenants, conditions and provisions thereof.
(c) Trustor covenants and agrees that Trustor shall: (i)
promptly and faithfully observe, perform and comply with all the terms,
covenants, conditions and provisions of the First Deed of Trust and
other documents executed in connection therewith; (ii) not modify, or
amend, or in any way alter or permit the alteration of any of the
terms, covenants, conditions or provisions of the First Deed of Trust
or the other documents executed in connection therewith in a manner
that will increase the aggregate principal amount of indebtedness that
may be borrowed under the First Deed of Trust and the other documents
executed in connection therewith the repayment of which is secured by
the First Deed of Trust to an amount in excess of $70,000,000; (iii)
promptly deliver to Beneficiary a copy of each notice of a First Deed
of Trust Default received or delivered by Trustor in connection with
the First Deed of Trust; and (iv) furnish to Beneficiary copies of such
additional information and evidence as Beneficiary reasonably may
require concerning Trustor's due observance, performance and compliance
with the terms, covenants, conditions, and provisions of the First Deed
of Trust and the other documents executed in connection therewith
(including, but without limiting the generality of the foregoing,
evidence, reasonably satisfactory to Beneficiary, of the payment by
Trustor of principal, interest and other amounts required by the terms,
covenants, conditions and provisions of the First Deed of Trust and the
other documents executed in connection therewith).
(d) Upon the occurrence and during the continuance of a First
Deed of Trust Default, in addition to any other rights and remedies
that may be available to Beneficiary, Beneficiary may, but shall not be
obligated to, cure such First Deed of Trust Default and Beneficiary
shall be subrogated to the rights of the holder of the First Deed of
Trust against Trustor and the Premises. To the extent Beneficiary makes
any payment of any installment of interest or any payment of principal
or other sum due under the First Deed of Trust and/or any note secured
thereby, such payment (i) shall be deemed to be indebtedness secured
hereby, (ii) shall be a lien on the Premises prior to any right or
title to, interest in, or claim upon the Premises subordinate to the
lien of this Deed of Trust, and (iii) shall accrue interest at a rate
equal to the lower of (a) eighteen percent (18%) per annum or (b) the
maximum rate permitted by law.
(e) If for any reason the indebtedness secured by the First
Deed of Trust is accelerated, or the Premises or any part thereof is
sold, or attempted to be sold, pursuant to the First Deed of Trust,
whether by power of sale, judicial action or otherwise, or any other
remedial action or proceeding is taken or instituted in respect of the
Premises or any
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part thereof under the First Deed of Trust, Trustor will indemnify and
hold Beneficiary harmless from any loss, cost or expense incurred by
Beneficiary, including reasonable attorneys' fees, in contesting any
such action taken or instituted, or incurred by Beneficiary on account
of the acceleration of the indebtedness secured by the First Deed of
Trust, the sale of the Premises pursuant thereto or Beneficiary's
purchase or payment of the First Deed of Trust.
(f) Trustor does herewith irrevocably appoint and constitute
Beneficiary as its true and lawful attorney-in-fact in its name, place
and stead to, upon the occurrence and during the continuance of a First
Deed of Trust Default, perform and comply with all obligations of
Trustor under the First Deed of Trust, to do and take, without any
obligation to do so, any action as Beneficiary deems necessary or
desirable to cure any First Deed of Trust Default. Trustor shall,
within five (5) days after written request is made therefor by
Beneficiary, execute and deliver to Beneficiary or to any person which
Beneficiary shall designate, such further instruments, agreements,
powers, deeds, conveyances or the like as may be necessary to complete
or perfect the interest, rights or powers of Beneficiary pursuant to
this paragraph.
(g) Upon receipt by Beneficiary of any notice of a First Deed
of Trust Default, Beneficiary may rely thereon and take any such
reasonable action as Beneficiary shall reasonably deem necessary,
irrespective of whether the existence of such First Deed of Trust
Default or the nature thereof be questioned or denied by or on behalf
of Trustor.
Notwithstanding anything to the contrary contained in this Deed of
Trust, and each of the terms, conditions and provisions hereof, and
Beneficiary's rights and remedies hereunder, is, and at all times shall be
subject and subordinate to the First Deed of Trust. The parties hereto agree to
execute a subordination agreement if requested by Lender or any lender under any
refinancing of the indebtedness secured by the First Deed of Trust.
IN WITNESS WHEREOF, the undersigned, by its duly elected officers and
pursuant to proper authority of its board of directors has duly executed,
sealed, acknowledged and delivered this instrument as of the day and year first
above written.
34
<PAGE> 39
TRUSTOR:
STERLING CHEMICALS, INC.,
a Delaware corporation
By:
-----------------------------------------
Name:
------------------------------------
Title: President
DRAFTED BY:
Latham & Watkins
885 Third Avenue
New York, New York 10022-4802
Attention: Wylie S. Allen, Esq.
35
<PAGE> 40
[CORPORATE NOTARY PAGE]
MULTI-STATE CORPORATE ACKNOWLEDGMENT
State of New York
County of New York
On this _______________ day of July, 1999, before me, the undersigned officer,
personally appeared
___________________________, with a residence at _____________________,
personally known and acknowledged himself/herself/themselves to me, or produced
_________________________________ as identification, to be the
_______________ President
of ______________________________, (hereinafter, the "Corporation")
and that as such officer(s), being duly authorized to do so pursuant to its
bylaws or a resolution of its board of directors, executed, subscribed and
acknowledged the foregoing instrument for the purposes therein contained, by
signing the name of the Corporation by himself/herself/ themselves in their
authorized capacities as such officer(s) as his/her/their free and voluntary act
and deed and the free and voluntary act and deed of said Corporation.
In Witness Whereof, I hereunto set my hand and official seal.
-------------------------------------
Notary Public
Notarial Seal My Commission Expires:
36
<PAGE> 41
SCHEDULE 1
Legal Description of the Land
[ ]
<PAGE> 42
SCHEDULE 2
Permitted Encumbrances
[ ]
[ ]
<PAGE> 1
EXHIBIT 4.11
===============================================================================
STERLING FIBERS, INC.,
Mortgagor,
to
HARRIS TRUST COMPANY OF NEW YORK,
Mortgagee
--------------------------------------------------
SECOND MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
--------------------------------------------------
Dated as of July 23, 1999
This instrument affects certain real and personal property
located in Santa Rosa County,
State of Florida.
===============================================================================
Record and return to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Wylie S. Allen, Esq.
Notwithstanding anything to the contrary contained herein, the maximum
principal indebtedness secured under any contingency by this instrument
shall in no event exceed $295,000,000.
Pursuant to the procedure set forth in Florida Department of Revenue
Regulation 12B-4.053(32) (c) the documentary stamp tax due on the
indebtedness secured hereby is $59,381.00, which is based upon a value
of the Florida property secured hereby in the amount of
$16,966,000.000.
Based on the valuations of the collateral as a ratio as set forth in
Florida Department of Revenue Regulation 12C-2.004(2) the intangible
tax due on the indebtedness secured and allocated to Florida real
estate is $6,996.36. This is based upon a total value for all Florida
Real Estate of $14, 530,000.00 and the value of all collateral in the
amount of $1,225,309,000.00.
CALCULATIONS:
$14,530,000.00 X $295,000,000.00 = $ 3,498,178.83
----------------- --------------
$1,225,309,000.00
$ 3,498, 178.83 X .002 = $6,996.36
---------
The calculations used for computing documentary stamp taxes and
intangible taxes are based upon present valuations as agreed by the
parties and in no way limit the Mortgagee's right or ability to fully
recover on the indebtedness secured hereby.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
COVENANTS AND AGREEMENTS OF THE MORTGAGOR
<S> <C>
SECTION 1.1. Payment of Obligations......................................................................4
SECTION 1.2. Title to Collateral, etc....................................................................5
SECTION 1.3. Title Insurance.............................................................................5
SECTION 1.4. Recordation.................................................................................6
SECTION 1.5. Payment of Impositions, etc.................................................................6
SECTION 1.6. Insurance and Legal Requirements............................................................6
SECTION 1.7. Security Interests, etc.....................................................................7
SECTION 1.8. Permitted Contests..........................................................................7
SECTION 1.9. Leases......................................................................................8
SECTION 1.10. Compliance with Instruments.................................................................8
SECTION 1.11. Maintenance and Repair, etc.................................................................8
SECTION 1.12. Alterations, Additions, etc.................................................................8
SECTION 1.13. Intentionally Omitted.......................................................................9
SECTION 1.14. Assignment of Rents, Proceeds, etc..........................................................9
SECTION 1.15. No Claims Against the Mortgagee.............................................................9
SECTION 1.16. Indemnification............................................................................10
SECTION 1.17. No Credit for Payment of Taxes.............................................................11
SECTION 1.18. Intentionally Omitted......................................................................11
SECTION 1.19. No Transfer of the Property................................................................11
SECTION 1.20. Security Agreement.........................................................................11
SECTION 1.21. Representations and Warranties.............................................................12
SECTION 1.22. Mortgagor's Covenants......................................................................12
SECTION 1.23. Attornment.................................................................................12
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR taking, ETC.
SECTION 2.1. Insurance..................................................................................13
SECTION 2.2. Damage, Destruction or Taking; Mortgagor to Give Notice; Assignment of Awards..............14
SECTION 2.3. Application of Proceeds and Awards.........................................................15
SECTION 2.4. Total Taking and Total Destruction.........................................................17
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration............................................................17
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 3.2. Legal Proceedings; Judicial Foreclosure....................................................18
SECTION 3.3. Power of Sale..............................................................................18
SECTION 3.4. Uniform Commercial Code Remedies...........................................................18
SECTION 3.5. Mortgagee Authorized to Execute Deeds, etc.................................................19
SECTION 3.6. Purchase of Collateral by Mortgagee........................................................19
SECTION 3.7. Receipt a Sufficient Discharge to Purchaser................................................19
SECTION 3.8. Waiver of Appraisement, Valuation, etc.....................................................19
SECTION 3.9. Sale a Bar Against Mortgagor...............................................................19
SECTION 3.10. Obligations to Become Due on Sale..........................................................19
SECTION 3.11. Application of Proceeds of Sale and Other Moneys...........................................20
SECTION 3.12. Appointment of Receiver....................................................................20
SECTION 3.13. Possession, Management and Income..........................................................20
SECTION 3.14. Right of Mortgagee to Perform Mortgagor's Covenants, etc...................................21
SECTION 3.15. Subrogation................................................................................21
SECTION 3.16. Remedies, etc., Cumulative.................................................................21
SECTION 3.17. Provisions Subject to Applicable Law.......................................................22
SECTION 3.18. No Waiver, etc.............................................................................22
SECTION 3.19. Compromise of Actions, etc.................................................................22
ARTICLE IV
DEFINITIONS
SECTION 4.1. Terms Defined in this Mortgage.............................................................22
SECTION 4.2. Use of Defined Terms.......................................................................24
SECTION 4.3. Indenture Definitions......................................................................24
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements...................................................24
SECTION 5.2. Additional Security........................................................................25
SECTION 5.3. Defeasance; Partial Release, etc...........................................................25
SECTION 5.4. Notices, etc...............................................................................25
SECTION 5.5. Waivers, Amendments, etc...................................................................25
SECTION 5.6. Cross-References...........................................................................25
SECTION 5.7. Headings...................................................................................25
SECTION 5.8. Currency...................................................................................26
SECTION 5.9. Governing Law..............................................................................26
SECTION 5.10. Successors and Assigns, etc................................................................26
SECTION 5.11. Waiver of Jury Trial; Submission to Jurisdiction...........................................26
SECTION 5.12. Severability; Conflicts....................................................................27
SECTION 5.13. Security Agreement.........................................................................27
SECTION 5.14. Usury Savings Clause.......................................................................27
SECTION 5.15. Future Advances............................................................................27
SECTION 5.16. Subordination to First Mortgage............................................................28
Exhibit A Legal Description of the Land
Exhibit B Permitted Encumbrances
</TABLE>
ii
<PAGE> 4
SECOND MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
SECOND MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING, dated as of July 23, 1999 (this "Mortgage"), made by STERLING
FIBERS, INC., a Delaware corporation (the "Mortgagor"), having an address at
1200 Smith, Suite 1900, Houston, Texas 77002-4312, to HARRIS TRUST COMPANY OF
NEW YORK, a New York corporation, as collateral agent and indenture trustee for
the benefit of itself and certain other holders (collectively, the "Holders") of
the 12 3/8% Senior Secured Notes due 2006, having an address at Wall Street
Plaza, 19th Floor, 88 Pine Street, New York, New York 10005, as mortgagee
(together with its successors and assigns from time to time, the "Mortgagee").
All capitalized terms used but not otherwise defined herein shall have the
meaning ascribed thereto in the Indenture.
WITNESSETH THAT:
WHEREAS, the Mortgagor is on the date of delivery hereof the owner of
fee title (or easement or leasehold title if otherwise indicated on Exhibit A
hereto) to the parcels of land described in Exhibit A hereto (the "Land") and of
the Improvements (hereinafter defined);
WHEREAS, the Mortgagee, as collateral agent and indenture trustee, and
Sterling Chemicals, Inc., a Delaware corporation, as issuer ("Issuer") have
entered into that certain Indenture, dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which the Issuer issued $295 million in the aggregate
principal amount of 12 3/8% Senior Secured Notes due 2006 (the "Senior Secured
Notes"); and
WHEREAS, Mortgagor has granted a first priority mortgage (the "First
Mortgage") encumbering the Collateral pursuant to that certain Revolving Credit
Agreement (the "Credit Agreement"), by and among Sterling Chemicals, Inc.,
Sterling Canada, Inc., Sterling Pulp Chemicals US, Inc., Sterling Pulp
Chemicals, Inc., Mortgagor, Sterling Chemicals Energy, Inc. and Sterling
Chemicals International, Inc., as Borrowers (collectively, "Borrowers"), various
financial institutions, as lenders ("Lenders"), DLJ Capital Funding, Inc., as
syndication agent ("Syndication Agent"), The CIT Group/Business Credit, Inc., as
the administrative agent and collateral agent (the "Administrative Agent"), and
Credit Suisse First Boston, as the documentation agent; and
WHEREAS, pursuant to the terms of the Credit Agreement, the Lenders (as
defined in the Credit Agreement) have agreed to make Fixed Assets Loans (as
defined in the Credit Agreement) (the "Senior Loan") to the Borrowers in the
maximum original principal amount of Seventy Million Dollars ($70,000,000), the
payment of which is secured by, inter alia, the First Mortgage encumbering the
Collateral; and
WHEREAS, during the pendency of the Senior Loan and any refinancing
thereof to the extent permitted hereunder, this Mortgage shall be subordinate
and inferior to the First Mortgage; and
1
<PAGE> 5
WHEREAS, the Mortgagor has duly authorized the execution, delivery and
performance of this Mortgage.
GRANT:
NOW, THEREFORE, for and in consideration of the premises, and of the
mutual covenants herein contained, and in order to secure the full, timely and
proper payment and performance of and compliance with each and every one of the
Obligations (as hereinafter defined), the Mortgagor hereby irrevocably grants,
bargains, sells, mortgages, warrants, aliens, demises, releases, hypothecates,
pledges, assigns, transfers and conveys to the Mortgagee and its successors and
assigns, forever, all of the following (the "Collateral"):
(a) Real Estate. All of Mortgagor's right, title and interest
in and to all of the Land and all additional lands and estates therein
now owned by the Mortgagor for use or development with the Land or any
portion thereof, together with all and singular the tenements, rights,
easements, hereditaments, rights of way, privileges, liberties,
appendages and appurtenances now or hereafter belonging or in any way
pertaining to the Land and such additional lands and estates therein
(including, without limitation, all rights relating to storm and
sanitary sewer, water, gas, electric, railway and telephone services);
all development rights, air rights, riparian rights, water, water
rights, water stock, all rights in, to and with respect to any and all
oil, gas, coal, minerals and other substances of any kind or character
underlying or relating to the Land and such additional lands and
estates therein and any interest therein; all estate, claim, demand,
right, title or interest of the Mortgagor in and to any street, road,
highway or alley, vacated or other, adjoining the Land or any part
thereof and such additional lands and estates therein; all strips and
gores belonging, adjacent or pertaining to the Land or such additional
lands and estates (herein collectively referred to as the "Real
Estate");
(b) Improvements. All of Mortgagor's right, title and interest
in and to all buildings, structures and other improvements now existing
and any additions and alterations thereto or replacements thereof, now
or hereafter built, constructed or located upon the Real Estate; and,
to the extent that any of the following items of property constitutes
fixtures under applicable laws, all furnishings, fixtures, fittings,
appliances, apparatus, equipment, machinery, building and construction
materials and other articles of every kind and nature whatsoever and
all replacements thereof, now affixed or attached to, placed upon or
used in any way in connection with the complete and comfortable use,
enjoyment, occupation, operation, development and/or maintenance of the
Real Estate or such buildings, structures and other improvements,
including, but not limited to, partitions, furnaces, boilers, oil
burners, radiators and piping, plumbing and bathroom fixtures,
refrigeration, heating, ventilating, air conditioning and sprinkler
systems, other fire prevention and extinguishing apparatus and
materials, vacuum cleaning systems, gas and electric fixtures,
incinerators, compactors, elevators, engines, motors, generators and
all other articles of property which are considered fixtures under
applicable law (such buildings, structures and other improvements and
such other property are herein collectively referred to as the
"Improvements"; the Real Estate and the Improvements are herein
collectively referred to as the "Property");
2
<PAGE> 6
(c) Goods. All of Mortgagor's right, title and interest in and
to all building materials, construction materials, appliances
(including, without limitation, stoves, ranges, ovens, disposals,
refrigerators, water fountains and coolers, fans, heaters, dishwashers,
clothes washers and dryers, water heaters, hood and fan combinations,
kitchen equipment, laundry equipment, kitchen cabinets and other
similar equipment), stocks, supplies, blinds, window shades, drapes,
carpets, floor coverings, manufacturing equipment and machinery, office
equipment, growing plants and shrubberies, control devices, equipment
(including window cleaning, building cleaning, swimming pool,
recreational, monitoring, garbage, pest control and other equipment),
motor vehicles, tools, furnishings, furniture, lighting, non-structural
additions to the Real Estate and Improvements and all other tangible
property of any kind or character, together with all replacements
thereof, now located on or in or used or useful in connection with the
complete and comfortable use, enjoyment, occupation, operation,
development and/or maintenance of the Property, regardless of whether
or not located on or in the Property or located elsewhere for purposes
of storage, fabrication or otherwise (herein collectively referred to
as the "Goods");
(d) Leases. All rights of the Mortgagor in, to and under all
leases, licenses, occupancy agreements, concessions and other
arrangements, oral or written, and now existing or replacements thereof
hereafter existing, whereby any Person agrees to pay money or any
other consideration for the use, possession or occupancy of, or any
estate in, the Property or any portion thereof or interest therein
(herein collectively referred to as the "Leases"), and the right,
subject to applicable law, upon the occurrence of any Event of Default
hereunder, to receive and collect the Rents (as hereinafter defined)
paid or payable thereunder;
(e) Intentionally Omitted.
(f) Plans. All rights of the Mortgagor in and to all plans and
specifications, designs, drawings and other information, materials and
matters heretofore prepared relating to the Improvements or any
construction on the Real Estate (herein collectively referred to as the
"Plans");
(g) Permits. All rights of the Mortgagor, to the extent
assignable, in, to and under all permits, franchises, licenses,
approvals and other authorizations respecting the use, occupation and
operation of the Property and every part thereof and respecting any
business or other activity conducted on or from the Property, and any
product or proceed thereof or therefrom, including, without limitation,
all building permits, certificates of occupancy and other licenses,
permits and approvals issued by governmental authorities having
jurisdiction (collectively, the "Permits");
(h) Contracts. All right, title and interest of the Mortgagor,
to the extent assignable, in and to all certificates, warranties,
appraisals, engineering, environmental, soils, insurance and other
reports and studies, books, records, correspondence, files and
advertising materials, and other documents, now or hereafter obtained
or entered into, as the case may be, pertaining to the construction,
use, occupancy, possession, operation,
3
<PAGE> 7
management, leasing, maintenance and/or ownership of the Property and
all right, title and interest of the Mortgagor therein (collectively,
the "Contracts");
(i) Leases of Furniture, Furnishings and Equipment. All right,
title and interest of the Mortgagor as lessee in, to and under any
leases of furniture, furnishings, equipment and any other Goods now or
hereafter installed in or at any time used in connection with the
Property;
(j) Rents. All rents, issues, profits, royalties, avails,
income and other benefits derived or owned, directly or indirectly, by
the Mortgagor from the Property, including, without limitation, all
rents and other consideration payable by tenants, claims against
guarantors, and any cash or other securities deposited to secure
performance by tenants, under the Leases (herein collectively referred
to as the "Rents"); and
(k) Proceeds. All proceeds of the conversion, voluntary or
involuntary of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards (herein collectively referred to as the "Proceeds"); provided
however, the Collateral shall not include any general intangibles or
other rights arising under any contracts, instruments, licenses, or
other documents as to which the grant of a lien and/or security
interest would constitute a violation of a valid and enforceable
restriction in favor of a third party on such grant, unless and until
any required consents shall have been obtained; and further provided,
however, in no event shall the Collateral hereunder include any item or
classes of "Collateral" as defined in the Current Assets Security
Agreement (as defined in the Credit Agreement) and provided further,
that the Collateral shall include after acquired property to the
extent, and only to the extent, that such after acquired property is in
replacement or substitution of Collateral existing as of the date
hereof.
AND, without limiting any of the other provisions of this Mortgage, the
Mortgagor expressly grants to the Mortgagee, as secured party, a security
interest in all of those portions of the Collateral which are or may be subject
to the State Uniform Commercial Code provisions applicable to secured
transactions, subject, however, to the Permitted Encumbrances;
TO HAVE AND TO HOLD the Collateral unto the Mortgagee, its successors
and assigns, forever, subject, however, to the Permitted Encumbrances.
FURTHER to secure the full, timely and proper payment and performance
of the Obligations, the Mortgagor hereby covenants and agrees with and warrants
to the Mortgagee as follows:
ARTICLE I
COVENANTS AND AGREEMENTS OF THE MORTGAGOR
SECTION 1.1 Payment of Obligations. (i) The Mortgagor agrees that:
4
<PAGE> 8
(a) it will duly and punctually pay and perform or cause to be
paid and performed each of its liabilities, duties and obligations
pursuant to its Subsidiary Guarantees under the Indenture at the time
and in accordance with the terms thereof, and
(b) when and as due and payable from time to time in
accordance with the terms hereof, pay and perform, or cause to be paid
and performed, all other Obligations.
SECTION 1.2 Title to Collateral, etc. The Mortgagor represents and
warrants to and covenants with the Mortgagee that:
(a) except as otherwise permitted by the terms of the
Indenture, as of the date hereof and at all times hereafter while this
Mortgage is outstanding, the Mortgagor (1) is and shall be the absolute
owner of the legal and beneficial title to the applicable interest in
the Property and to all other property included in the Collateral, and
(2) has and shall have good and marketable title in fee simple
absolute, or good and sufficient easement or leasehold title, as
currently represented in the granting clause as of the date hereof, to
the Property, subject in each case only to this Mortgage, the Permitted
Liens, the First Mortgage and the encumbrances set forth in Exhibit B
(collectively, the "Permitted Encumbrances");
(b) the Mortgagor has good and lawful right, power and
authority to execute this Mortgage and to convey, transfer, assign,
mortgage and grant a security interest in the Collateral, all as
provided herein;
(c) this Mortgage has been duly executed, acknowledged and
delivered on behalf of the Mortgagor, all consents and other actions
required to be taken by the officers, directors, shareholders and
partners, as the case may be, of the Mortgagor have been duly and fully
given and performed and this Mortgage constitutes the legal, valid and
binding obligation of the Mortgagor, enforceable against the Mortgagor
in accordance with its terms; and
(d) the Mortgagor, at its expense, will warrant and defend to
the Mortgagee and any purchaser under the power of sale herein or at
any foreclosure sale such title to the Collateral and the mortgage lien
and perfected security interest of this Mortgage thereon and therein
against all claims and demands and will maintain, preserve and protect
such lien and security interest and will keep this Mortgage a valid,
direct mortgage lien of record on the Property and a perfected security
interest in the Collateral other than the Property, subject only to the
Permitted Encumbrances.
SECTION 1.3. Title Insurance.
SECTION 1.3.1. Title Insurance Policy. Concurrently with the execution
and delivery of this Mortgage, the Mortgagor, at its expense, has obtained and
delivered to the Mortgagee a loan policy or policies of title insurance in an
amount, and in form and substance, reasonably satisfactory to the Mortgagee
naming the Mortgagee as the insured, insuring the title to and the mortgage lien
of this Mortgage on the Property, with endorsements reasonably requested by the
Mortgagee. The Mortgagor has duly paid in full all premiums and other charges
due in connection with the issuance of such policy or policies of title
insurance.
5
<PAGE> 9
SECTION 1.3.2. Title Insurance Proceeds. All proceeds received by and
payable to the Mortgagee for any loss under the loan policy or policies of title
insurance delivered to the Mortgagee pursuant to Section 1.3.1, or under any
policy or policies of title insurance delivered to the Mortgagee in substitution
therefor or replacement thereof, shall be the property of the Mortgagee and
shall be applied by the Mortgagee in accordance with the provisions of Section
2.3.
SECTION 1.4. Recordation. The Mortgagor, at its expense, will at all
times cause this Mortgage and any instruments amendatory hereof or supplemental
hereto and any instruments of assignment hereof or thereof (and any appropriate
financing statements or other instruments and continuations thereof), and each
other instrument delivered in connection with the Indenture, the Senior Secured
Notes or any other Security Agreement made pursuant to the terms of the
Indenture and intended thereunder to be recorded, registered and filed, to be
kept recorded, registered and filed, in such manner and in such places, and will
pay all such recording, registration, filing fees, taxes and other charges, and
will comply with all such statutes and regulations as may be required by law in
order to establish, preserve, perfect and protect the lien and security interest
of this Mortgage as a valid, direct second mortgage lien on the Property and
second priority perfected security interest in the Collateral other than the
Property, subject only to the Permitted Encumbrances. The Mortgagor will pay or
cause to be paid, and will indemnify the Mortgagee in respect of, all taxes
(including interest and penalties) at any time payable in connection with the
filing and recording of this Mortgage and any and all supplements and amendments
hereto.
SECTION 1.5. Payment of Impositions, etc. Subject to Section 1.8
(relating to permitted contests), the Mortgagor will pay or cause to be paid
before the same would become delinquent and before any fine, penalty, interest
or cost may be added for non-payment, all taxes, assessments, water and sewer
rates, charges, license fees, inspection fees and other governmental levies or
payments, of every kind and nature whatsoever, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, which at any time may be
assessed, levied, confirmed, imposed or which may become a lien upon the
Collateral, or any portion thereof, or which are payable with respect thereto,
or upon the rents, issues, income or profits thereof, or on the occupancy,
operation, use, possession or activities thereof, whether any or all of the same
be levied directly or indirectly or as excise taxes or as income taxes, and all
taxes, assessments or charges which may be levied on the Obligations, or the
interest thereon (collectively, the "Impositions"). The Mortgagor will deliver
to the Mortgagee, upon request, copies of official receipts or other
satisfactory proof evidencing such payments.
SECTION 1.6. Insurance and Legal Requirements. Subject to Section 1.8
(relating to permitted contests), the Mortgagor, at its expense, will comply in
all material respects, or cause compliance in all material respects with
(a) all provisions of any insurance policy covering or
applicable to the Collateral or any part thereof, all requirements of
the issuer of any such policy, and all orders, rules, regulations and
other requirements of the National Board of Fire Underwriters (or any
other body exercising similar functions) applicable to or affecting the
Collateral or any part thereof or any use or condition of the
Collateral or any part thereof (collectively, the "Insurance
Requirements"); and
6
<PAGE> 10
(b) all laws, including Environmental Laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements of all governments, departments, commissions, boards,
courts, authorities, agencies, officials and officers, foreseen or
unforeseen, ordinary or extraordinary, which now or at any time
hereafter may be applicable to the Collateral or any part thereof, or
any of the adjoining sidewalks, curbs, vaults and vault space, if any,
streets or ways, or any use or condition of the Collateral or any part
thereof (collectively, the "Legal Requirements");
noncompliance of which could reasonably be expected to cause a Material Adverse
Effect (as defined in the Credit Agreement) whether or not compliance therewith
shall require structural changes in or interference with the use and enjoyment
of the Collateral or any part thereof.
SECTION 1.7. Security Interests, etc. The Mortgagor will not directly
or indirectly create or permit or suffer to be created or to remain, and will
promptly discharge or cause to be discharged, any deed of trust, mortgage,
encumbrance or charge on, pledge of, security interest in or conditional sale or
other title retention agreement with respect to or any other lien on or in the
Collateral or any part thereof or the interest of the Mortgagor or the Mortgagee
therein, or any Proceeds thereof or Rents or other sums arising therefrom, other
than (a) Permitted Encumbrances, and (b) liens of mechanics, materialmen,
suppliers or vendors or rights thereto incurred in the ordinary course of the
business of the Mortgagor for sums not yet due or any such liens or rights
thereto which are at the time being contested as permitted by Section 1.8. The
Mortgagor will not postpone the payment of any sums for which liens of
mechanics, materialmen, suppliers or vendors or rights thereto have been
incurred (unless such liens or rights thereto are at the time being contested as
permitted by Section 1.8), for more than 60 days after the completion of the
action giving rise to such liens or rights thereto.
SECTION 1.8. Permitted Contests. The Mortgagor at its expense may
contest, or cause to be contested, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount or validity or application, in
whole or in part, of any Imposition, Legal Requirement or Insurance Requirement
or lien of a mechanic, materialman, supplier or vendor, provided that, (a) in
the case of an unpaid Imposition, lien, encumbrance or charge, such proceedings
shall suspend the collection thereof from the Mortgagor, the Mortgagee, and the
Collateral (including any rent or other income therefrom) and shall not
materially interfere with the payment of any such rent or income, (b) neither
the Collateral nor any rent or other income therefrom nor any part thereof or
interest therein would be in any material danger of being sold, forfeited, lost,
impaired or interfered with, (c) in the case of a Legal Requirement, neither the
Mortgagor nor the Mortgagee would be in material danger of any civil or criminal
liability for failure to comply therewith, (d) the Mortgagor shall have
furnished such security, if any, as may be required in the proceedings or as may
be reasonably requested by the Mortgagee, (e) the non-payment of the whole or
any part of any Imposition will not result in the delivery of a tax deed to the
Collateral or any part thereof because of such non-payment, (f) the payment of
any sums required to be paid with respect to any of the Senior Secured Notes or
under this Mortgage (other than any unpaid Imposition, lien, encumbrance or
charge at the time being contested in accordance with this Section 1.8) shall
not be interfered with or otherwise affected, (g) in the case of any Insurance
Requirement, the failure of the Mortgagor to comply therewith shall not affect
the validity of any insurance required to be maintained by the Mortgagor under
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Section 2.1, and (h) that adequate reserves, determined in accordance with GAAP,
shall have been set aside on the Mortgagor's books.
SECTION 1.9. Leases. The Mortgagor represents and warrants to the
Mortgagee that, as of the date hereof, there are no written or oral leases or
other agreements of any kind or nature, other than the Permitted Encumbrances,
relating to the occupancy of any portion of the Property by any Person other
than the Mortgagor. Except as is permitted by the Indenture and any Security
Agreements executed pursuant to the Indenture, the Mortgagor will not enter into
any such written or oral lease or other agreement with respect to any portion of
the Property without first obtaining the written consent of the Mortgagee.
SECTION 1.10. Compliance with Instruments. The Mortgagor at its expense
will promptly comply in all material respects with all rights of way or use,
privileges, franchises, servitudes, licenses, easements, tenements,
hereditaments and appurtenances forming a part of the Property and all
instruments creating or evidencing the same, in each case, to the extent
compliance therewith is required of the Mortgagor under the terms thereof.
Except as is permitted by the Indenture and any Security Agreements executed
pursuant to the Indenture, the Mortgagor will not take any action which may
result in a forfeiture or termination of the rights afforded to the Mortgagor
under any such instruments, and will not, without the prior written consent of
the Mortgagee, amend any of such instruments in any manner adverse to the
Holders in any material respect.
SECTION 1.11. Maintenance and Repair, etc. Subject to the provisions of
Section 1.12, the Mortgagor will keep or cause to be kept all presently and
subsequently erected or acquired Improvements and the sidewalks, curbs, vaults
and vault space, if any, located on or adjoining the same, and the streets and
the ways adjoining the same, in good and substantial order and repair and in
such a fashion that neither the value nor utility of the Collateral will be
diminished, and, at its sole cost and expense, will promptly make or cause to be
made all necessary and appropriate repairs, replacements and renewals thereof,
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen, so that its business carried on in
connection therewith may be properly conducted at all times. The Mortgagor at
its expense will do or cause to be done all shoring of foundations and walls of
any building or other Improvements on the Property and (to the extent permitted
by law) of the ground adjacent thereto, and every other act necessary or
appropriate for the preservation and safety of the Property by reason of or in
connection with any excavation or other building operation upon the Property and
upon any adjoining property, whether or not the Mortgagor shall, by any Legal
Requirement, be required to take such action or be liable for failure to do so.
SECTION 1.12. Alterations, Additions, etc. So long as no Event of
Default shall have occurred and be continuing, the Mortgagor shall have the
right at any time and from time to time to make or cause to be made reasonable
alterations of and additions to the Property or any part thereof, provided that
any alteration or addition: (a) shall not change the general character or the
use of the Property or reduce the fair market value thereof below its value
immediately before such alteration or addition, or impair the usefulness of the
Property; (b) is effected with due diligence, in a good and workmanlike manner
and in compliance in all material respects with all Legal Requirements and
Insurance Requirements; (c) subject to Section 1.8 is promptly and fully paid
for, or caused to be paid for, by the Mortgagor; and (d) is made, in case the
estimated
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cost of such alteration or addition exceeds U.S. $1,000,000, under the
supervision of a qualified architect or engineer or another professional.
SECTION 1.13. Intentionally Omitted.
SECTION 1.14. Assignment of Rents, Proceeds, etc. The assignment, grant
and conveyance of the Leases, Rents, Proceeds and other rents, income, proceeds
and benefits of the Collateral contained in the Granting Clause of this Mortgage
shall constitute an absolute, present and irrevocable assignment, grant and
conveyance, provided, however, that permission is hereby given to the Mortgagor,
so long as no Event of Default has occurred and be continuing hereunder, to
collect, receive and apply such Rents, Proceeds and other rents, income,
proceeds and benefits as they become due and payable, but not further in advance
thereof than is customary, and in accordance with all of the other terms,
conditions and provisions hereof, of the Indenture, the Senior Secured Notes and
the Security Agreements made pursuant to the terms of the Indenture, and of the
Leases, contracts, agreements and other instruments with respect to which such
payments are made or such other benefits are conferred. Upon the occurrence and
continuance of an Event of Default, such permission shall terminate immediately
and automatically, without notice to the Mortgagor or any other Person except as
required by law, and shall not be reinstated upon a cure of such Event of
Default without the express written consent of the Mortgagee. Such assignment
shall be fully effective without any further action on the part of the Mortgagor
or the Mortgagee and the Mortgagee shall be entitled, at its option, upon the
occurrence and continuance of an Event of Default hereunder, to collect, receive
and apply all Rents, Proceeds and all other rents, income, proceeds and benefits
from the Collateral, including all right, title and interest of the Mortgagor in
any escrowed sums or deposits or any portion thereof or interest therein,
whether or not the Mortgagee takes possession of the Collateral or any part
thereof. The Mortgagor further grants to the Mortgagee the right, at the
Mortgagee's option, upon the occurrence and continuance of an Event of Default
hereunder, to:
(a) enter upon and take possession of the Property for the
purpose of collecting Rents, Proceeds and said rents, income, proceeds
and other benefits;
(b) dispossess by the customary summary proceedings any
tenant, purchaser or other Person defaulting in the payment of any
amount when and as due and payable, or in the performance of any other
obligation, under any Lease, contract or other instrument to which said
Rents, Proceeds or other rents, income, proceeds or benefits relate;
(c) let or convey the Collateral or any portion thereof or any
interest therein; and
(d) apply Rents, Proceeds and such rents, income, proceeds and
other benefits, after the payment of all necessary fees, charges and
expenses, on account of the Obligations in accordance with Section
3.11.
SECTION 1.15. No Claims Against the Mortgagee. Nothing contained in
this Mortgage shall constitute any consent or request by the Mortgagee, express
or implied, for the performance of any labor or the furnishing of any materials
or other property in respect of the Property or any part thereof, or be
construed to permit the making of any claim against the Mortgagee in respect of
labor or services or the furnishing of any materials or other property or
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any claim that any lien based on the performance of such labor or the furnishing
of any such materials or other property is prior to the lien and security
interest of this Mortgage. ALL CONTRACTORS SUBCONTRACTORS, VENDORS AND OTHER
PERSONS DEALING WITH THE PROPERTY, OR WITH ANY PERSONS INTERESTED THEREIN, ARE
HEREBY REQUIRED TO TAKE NOTICE OF THE PROVISIONS OF THIS SECTION.
SECTION 1.16. Indemnification. The Mortgagor will protect, indemnify,
save harmless and defend the Holders, the Mortgagee, and each of its respective
officers, directors, shareholders, employees, representatives and agents
(collectively, the "Indemnified Parties" and individually, an "Indemnified
Party"), from and against any and all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted
against any Indemnified Party by reason of (a) ownership of an interest in this
Mortgage, the Indenture, the Senior Secured Notes, any Security Agreement
executed pursuant to the Indenture made pursuant to the terms of the Indenture
or the Property, (b) any accident, injury to or death of persons or loss of or
damage to or loss of the use of property occurring on or about the Property or
any part thereof or the adjoining sidewalks, curbs, vaults and vault spaces, if
any, streets, alleys or ways, (c) any use, non-use or condition of the Property
or any part thereof or the adjoining sidewalks, curbs, vaults and vault spaces,
if any, streets, alleys or ways, (d) any failure on the part of the Mortgagor to
perform or comply with any of the terms of this Mortgage, the Indenture, the
Senior Secured Notes, or any Security Agreement made pursuant to the terms of
the Indenture, (e) performance of any labor or services or the furnishing of any
materials or other property in respect of the Collateral or any part thereof
made or suffered to be made by or on behalf of the Mortgagor, (f) any negligence
or tortious act on the part of the Mortgagor or any of its agents, contractors,
lessees, licensees or invitees, (g) any work in connection with any alterations,
changes, new construction or demolition of or additions to the Property, or (h)
(i) any Hazardous Material on, in, under or affecting all or any portion of the
Property, the groundwater, or any surrounding areas, (ii) any misrepresentation,
inaccuracy or breach of any warranty, covenant or agreement contained or
referred to in Sections 1.21 and 1.22, (iii) any violation or claim of violation
by the Mortgagor of any Environmental Laws, or (iv) the imposition of any lien
for damages caused by or the recovery of any costs for the cleanup, release or
threatened release of any Hazardous Material, except to the extent that any of
the matters described in subsections (a)-(h) arise out of the gross negligence
or willful misconduct of any Indemnified Party. If any action or proceeding be
commenced, to which action or proceeding any Indemnified Party is made a party
by reason of the execution of this Mortgage, the Indenture, the Senior Secured
Notes or any Security Agreement executed pursuant to the Indenture, or in which
it becomes necessary to defend or uphold the lien of this Mortgage, all sums
paid by the Indemnified Parties, for the expense of any litigation to prosecute
or defend the rights and lien created hereby or otherwise, shall be paid by the
Mortgagor to such Indemnified Parties, as the case may be, as hereinafter
provided. The Mortgagor will pay and save the Indemnified Parties harmless
against any and all liability with respect to any intangible personal property
tax or similar imposition of the State or any subdivision or authority thereof
now or hereafter in effect, to the extent that the same may be payable by the
Indemnified Parties in respect of this Mortgage, the Indenture, the Senior
Secured Notes, any Security Agreement executed pursuant to the Indenture or any
other Obligation. All amounts payable to the Indemnified Parties under this
Section 1.16 shall be deemed indebtedness secured by this Mortgage and any such
amounts which are not paid within ten (10) days after written demand therefor by
any Indemnified Party
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shall bear interest at the rate provided for in the Indenture and the Senior
Secured Notes from the date of such demand. In case any action, suit or
proceeding is brought against any Indemnified Party by reason of any such
occurrence, the Mortgagor, upon request of such Indemnified Party, will, at the
Mortgagor's expense, resist and defend such action, suit or proceeding or cause
the same to be resisted or defended by counsel designated by the Mortgagor and
approved by such Indemnified Party. The obligations of the Mortgagor under this
Section 1.16 shall survive any discharge or reconveyance of this Mortgage and
payment in full of the Obligations.
SECTION 1.17. No Credit for Payment of Taxes. The Mortgagor shall not
be entitled to any credit against the Obligations by reason of the payment of
any tax on the Property or any part thereof or by reason of the payment of any
other Imposition, and shall not apply for or claim any deduction from the
taxable value of the Property or any part thereof by reason of this Mortgage.
SECTION 1.18. Intentionally Omitted
SECTION 1.19. No Transfer of the Property. Except as is provided in the
Indenture and other Security Agreements executed pursuant to the Indenture, and
except for the Permitted Encumbrances, the Mortgagor shall not, without the
prior written consent of the Mortgagee, which consent may be granted or withheld
in the sole and absolute discretion of the Mortgagee (i) sell, convey, assign or
otherwise transfer the Property or any portion of the Mortgagor's interest
therein or (ii) further encumber the Property or permit the Property to become
encumbered by any lien, claim, security interest or other indebtedness of any
kind or nature other than the Permitted Encumbrances.
SECTION 1.20. Security Agreement. With respect to the items of personal
property and fixtures referred to and described in the Granting Clause of this
Mortgage and included as part of the Collateral, this Mortgage is hereby made
and declared to be a security agreement encumbering each and every item of
personal property and fixtures now or hereafter owned by Mortgagor and included
herein as a part of the Collateral, in compliance with the provisions of the
Uniform Commercial Code as enacted in the State. In this respect, Mortgagor, as
"Debtor", expressly grants to Mortgagee, as "Secured Party", a security interest
in and to all of the property now or hereafter owned by Mortgagor which
constitutes the personal property and fixtures hereinabove referred to and
described in this Mortgage, including all extensions, accessions, additions,
improvements, betterments, renewals, replacements and substitutions thereof or
thereto, and all proceeds from the sale or other disposition thereof. Mortgagor
agrees that Mortgagee may file this Mortgage, or a reproduction thereof, in the
real estate records or other appropriate index, as, and this Mortgage shall be
deemed to be, a financing statement filed as a fixture filing in accordance with
the laws of the State. Any reproduction of this Mortgage or of any other
security agreement or financing statement executed by Mortgagor shall be
sufficient as a financing statement. In addition, Mortgagor agrees to execute
and deliver to Mortgagee, upon Mortgagee's request, any other security agreement
and financing statements, as well as extensions, renewals, and amendments
thereof, and reproductions of this Mortgage, in such form as Mortgagee may
reasonably require to perfect a security interest with respect to said items.
Mortgagor shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all
reasonable costs and expenses of any record searches for financing statements
Mortgagee may reasonably require. Except as is provided in
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the Indenture and other Security Agreements, and except for the Permitted
Encumbrances, without the prior written consent of Mortgagee, Mortgagor shall
not create or suffer to be created pursuant to the Uniform Commercial Code any
other security interest in the above-described personal property and fixtures,
including any replacements and additions thereto. Upon the occurrence and
continuance of an Event of Default under this Mortgage, the Mortgagee shall have
and shall be entitled to exercise any and all of the rights and remedies (i) as
prescribed in this Mortgage, or (ii) as prescribed by general law, or (iii) as
prescribed by the specific statutory provisions now or hereafter enacted and
specified in said Uniform Commercial Code, all at Mortgagee's sole election.
Mortgagor and Mortgagee agree that the filing of any financing statements in the
records normally having to do with personal property shall not in any way affect
the agreement of Mortgagor and Mortgagee that everything located in, on or
about, or used or intended to be used with or in connection with the use,
operation or enjoyment of, the Collateral, which is described or reflected as a
fixture in this Mortgage, is, and at all times and for all purposes and in all
proceedings, both legal and equitable, shall be, regarded as part of the Real
Estate conveyed hereby. Mortgagor warrants that Mortgagor's name, identity and
address are as set forth herein. The mailing address of the Mortgagee from which
information may be obtained concerning the security interest created herein is
also set forth herein. This information hereof is provided in order that this
Mortgage shall comply with the requirements of the Uniform Commercial Code as
enacted in the State for instruments to be filed as financing statements. In
accordance with the laws of the State, this Mortgage shall remain effective as a
fixture filing until this Mortgage is released or satisfied of record or its
effectiveness otherwise terminates as to the Collateral.
SECTION 1.21. Representations and Warranties. In order to induce the
Mortgagee to enter into this Mortgage, the Indenture and the other Security
Agreements, the Mortgagor agrees that all of the representations and warranties
of Mortgagor set forth in the Indenture and the Security Agreements made
pursuant to the terms of the Indenture are incorporated into this Mortgage by
reference as if fully set forth herein.
SECTION 1.22. Mortgagor's Covenants. In order to induce the Mortgagee
to enter into this Mortgage, the Indenture and the other Security Agreements,
the Mortgagor agrees that all of the covenants of Mortgagor set forth in the
Indenture are incorporated into this Mortgage by reference as if fully set forth
herein.
SECTION 1.23. Attornment. Mortgagee hereby acknowledges and agrees that
the liens granted herein are subject to the rights of certain lessees under the
leases as disclosed in the Credit Agreement set forth on and will be subject to
the rights of lessees under any Leases entered into by Mortgagor after the date
hereof which are permitted as Permitted Liens pursuant to the Credit Agreement,
subject to the express rights contained in the applicable Lease. The rights of
the tenants under the Leases to the leased premises shall not be adversely
affected by the exercise by Mortgagee of any of its rights hereunder, nor shall
any such tenant be in any way deprived of its rights under the applicable Lease
except in accordance with the terms of such Lease. In the event that Mortgagee
succeeds to the interest of Mortgagor under a Lease, such Lease shall not be
terminated or affected thereby except as set forth therein, and any sale of the
applicable leased premises by Mortgagee or pursuant to the judgment of any court
in an action to enforce the remedies provided for in this Mortgage shall be made
subject to such Lease and the rights of such tenant expressly set forth
thereunder. If Mortgagee succeeds to the interests of
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Mortgagor in and to the applicable leased premises or under such Lease or enters
into possession of such leased premises, the Mortgagee, and such tenants, shall
be bound to each other under all of the express terms, covenants and conditions
of such Lease, as if the Mortgagee was originally the Mortgagor as lessor
thereunder.
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
SECTION 2.1. Insurance.
SECTION 2.1.1. Risks to be Insured. The Mortgagor will, at its expense,
maintain or cause to be maintained with insurance carriers approved by the
Mortgagee (a) insurance with respect to the Improvements against loss or damage
by fire, lightning and such other risks as are included in standard "all-risk"
policies, in amounts sufficient to prevent the Mortgagor and the Mortgagee from
becoming a co-insurer of any partial loss under the applicable policies, but in
any event in amounts not less than the then full insurable value (actual
replacement value) of the Improvements, as determined by the Mortgagor in
accordance with generally accepted insurance practice and approved by the
Mortgagee or, at the request of the Mortgagee, as determined at the Mortgagor's
expense by the insurer or insurers or by an expert approved by the Mortgagee,
(b) comprehensive public liability, including bodily injury and product
liability and property damage, insurance, with personal injury endorsements,
applicable to the Property in such amounts as are customarily carried by Persons
operating similar properties in the same general locality, but in any event with
a combined single limit of not less than Twenty Million Dollars ($20,000,000)
per occurrence, (c) explosion insurance in respect of any steam and pressure
boilers and similar apparatus located in the Property in such amounts as are
usually carried by persons operating similar properties in the same general
locality, but in any event in an amount not less than Twenty Million Dollars
($20,000,000), (d) business interruption insurance (including added expense
coverage) against all insurable perils for a period of not fewer than twelve
(12) months (subject to a reasonable aggregate deductible not exceeding ten (10)
days per any occurrence), (e) worker's compensation insurance to the full extent
required by applicable law for all employees of the Mortgagor engaged in any
work on or about the Property and employer's liability insurance with a limit of
not less than Ten Million Dollars ($10,000,000) for each occurrence, (f)
all-risk, builders' risk insurance with respect to the Property during any
period during which there is any construction work being performed, against loss
or damage by fire or other risks, including vandalism, malicious mischief and
sprinkler leakage, as are included in so-called "extended coverage" clauses at
the time available and (g) such other insurance with respect to the Property in
such amounts and against such insurable hazards as the Mortgagee from time to
time may reasonably require by written notice to the Mortgagor.
SECTION 2.1.2. Policy Provisions. All insurance maintained by the
Mortgagor pursuant to Section 2.1.1 shall (a) (except for worker's compensation
insurance) list the Mortgagee, as additional insureds as its interests may
appear, (b) (except for worker's compensation and public liability insurance)
provide that the proceeds for any losses shall be adjusted by the Mortgagor
subject to the approval of the Mortgagee in the event the proceeds shall exceed
$1,000,000, and shall be payable to the Mortgagee, to be held and applied as
provided in Section 2.3, (c) include effective waivers by the insurer of all
rights of subrogation
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against any named insured, the indebtedness secured by this Mortgage and the
Property and all claims for insurance premiums against the Mortgagee, (d)
(except for worker's compensation and public liability insurance) provide that
any losses shall be payable notwithstanding (i) any act, failure to act or
negligence of or violation of warranties, declarations or conditions contained
in such policy by any named insured, (ii) the occupation or use of the Property
for purposes more hazardous than permitted by the terms thereof, (iii) any
foreclosure or other action or proceeding taken by the Mortgagee pursuant to any
provision of this Mortgage, or (iv) any change in title or ownership of the
Property, (e) provide that no cancellation, reduction in amount or material
change in coverage thereof or any portion thereof shall be effective until at
least thirty (30) days after receipt by the Mortgagee of written notice thereof,
(f) provide that any notice under such policies shall be simultaneously
delivered to the Mortgagee, and (g) be satisfactory in all other reasonable
respects to the Mortgagee. Any insurance maintained pursuant to this Section 2.1
may be evidenced by blanket insurance policies covering the Property and other
properties or assets of the Mortgagor, provided that any such policy shall
specify the portion, if less than all, of the total coverage of such policy that
is allocated to the Property and shall in all other respects comply with the
requirements of this Section 2.1.
SECTION 2.1.3. Delivery of Policies, etc. The Mortgagor will deliver to
the Mortgagee, promptly upon request, (a) certificates of all policies
evidencing all insurance required to be maintained under Section 2.1.1 (or, in
the case of blanket policies, certificates thereof by the insurers together with
a counterpart of each blanket policy), and (b) evidence as to the payment of all
premiums due thereon (with respect to public liability insurance policies, all
installments for the current year due thereon to such date), provided that the
Mortgagee shall not be deemed by reason of its custody of such certificates to
have knowledge of the contents thereof or the applicable policies. The Mortgagor
will also deliver to the Mortgagee prior to the expiration of any policy a
binder or certificate of the insurer evidencing the replacement thereof and when
the new policy is issued a certificate of such new policy (or, in the case of a
replacement blanket policy, a certificate thereof of the insurer together with a
counterpart of the blanket policy). In the event the Mortgagor shall fail to
effect or maintain any insurance required to be effected or maintained pursuant
to the provisions of this Section 2.1, the Mortgagor will indemnify the
Mortgagee against damage, loss or liability resulting from all risks for which
such insurance should have been effected or maintained.
SECTION 2.1.4. Separate Insurance. The Mortgagor will not take out
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained pursuant to this Section 2.1.
SECTION 2.2. Damage, Destruction or Taking; Mortgagor to Give Notice;
Assignment of Awards. In case of
(a) any material damage to or destruction of the Collateral or
any material part thereof, or
(b) any taking, whether for permanent or temporary use, of all
or any material part of the Collateral or any material interest therein
or material right accruing thereto, as the result of the exercise of
the right of condemnation or eminent domain, or a change of
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grade affecting the Collateral or any portion thereof (a "Taking"), or
the commencement of any proceedings or negotiations which may result in
a Taking,
the Mortgagor will promptly give written notice thereof to the Mortgagee,
generally describing the nature and extent of such damage or destruction and the
Mortgagor's best estimate of the cost of restoring the Collateral, or the nature
of such proceedings or negotiations and the nature and extent of the Taking
which might result therefrom, as the case may be. The Mortgagee shall be
entitled to all insurance proceeds payable on account of such damage or
destruction and to all awards or payments allocable to the Collateral on account
of such Taking up to the amount of the Obligations, and the Mortgagor hereby
irrevocably assigns, transfers and sets over to the Mortgagee all rights of the
Mortgagor to any such proceeds, awards or payments and irrevocably authorizes
and empowers the Mortgagee, at its option, in the name of the Mortgagor or
otherwise, to file and prosecute what would otherwise be the Mortgagor's claim
for any such proceeds, award or payment and to collect, receipt for and retain
the same for disposition in accordance with Section 2.3. The Mortgagor will pay
all reasonable costs and expenses incurred by the Mortgagee in connection with
any such damage, destruction or Taking and seeking and obtaining any insurance
proceeds, awards or payments in respect thereof.
SECTION 2.3. Application of Proceeds and Awards. The Mortgagee may, at
its option, apply all amounts recovered under any insurance policy required to
be maintained by the Mortgagor hereunder and all awards received by it on
account of any Taking in any one or more of the following ways:
(a) to the payment of the reasonable costs and expenses
incurred by the Mortgagee in obtaining any such insurance proceeds or
awards, including the fees and expenses of attorneys and insurance and
other experts and consultants, the costs of litigation, arbitration,
mediation, investigations and other judicial, administrative or other
proceedings and all other out-of-pocket expenses;
(b) to the payment of the principal of the Senior Secured
Notes and any interest (including post-petition interest payable in any
proceedings for bankruptcy under applicable law ("Post-Petition
Interest") to the extent such interest is an Obligation) accrued and
unpaid thereon, without regard to whether any portion or all of such
amounts shall be matured or unmatured, and, in case such amount shall
be insufficient to pay in full all such amounts, then such amount shall
be applied, first, to the payment of all amounts of interest (including
Post-Petition Interest to the extent such interest is an Obligation)
accrued on the Senior Secured Notes and unpaid, second, to the payment
of all amounts of principal at the time outstanding;
(c) to the payment of, or the application to, any Obligation
(other than as provided in clause (b) above);
(d) to fulfill any of the other covenants contained herein, in
the Indenture, the Senior Secured Notes, or Security Agreements
executed pursuant to the Indenture, as the Mortgagee may determine in
its sole discretion;
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(e) to the Mortgagor for application to the cost of restoring
the Collateral and the replacement of Goods destroyed, damaged or
taken; or
(f) to the Mortgagor.
Notwithstanding the foregoing provisions of this Section 2.3 to the contrary
(but subject to the provisions of Section 2.4), and if each of the following
conditions is satisfied, the Mortgagee, upon request of the Mortgagor, shall
apply insurance proceeds or condemnation awards received by it to the
restoration or replacement of the Collateral, to the extent necessary for the
restoration or replacement thereof:
(i) there shall then exist no uncured Event of
Default;
(ii) the Mortgagor shall furnish to the Mortgagee a
certificate of an architect or engineer reasonably acceptable
to the Mortgagee stating (x) that the Collateral is capable of
being restored, prior to the maturity of the Indenture, to
substantially the same condition as existed prior to the
casualty or Taking, (y) the aggregate estimated direct and
indirect costs of such restoration and (z) as to any Taking,
that the property taken in such Taking, or sold under threat
thereof, is not necessary to the Mortgagor's customary use or
occupancy of the Property or Mortgagor otherwise provides
Mortgagee adequate assurance that the Collateral can be
restored or is not necessary to the Mortgagor's customary use
or occupancy of the Property; and
(iii) in the event that the estimated cost of
restoration set forth in the certificate of such architect or
engineer (and such revisions to such estimate as are from time
to time made) exceeds the net insurance proceeds or
condemnation awards actually received from time to time, the
Mortgagor shall deposit the amount of such excess with the
Mortgagee.
In the event that such insurance proceeds or condemnation awards are to
be utilized in the restoration of the Collateral, the Mortgagee shall disburse
such Proceeds and the additional amounts deposited by the Mortgagor for such
restoration after receipt of a written request for disbursement, on not fewer
than five (5) nor more than twelve (12) Business Days notice and, to the extent
applicable, in accordance with the Mortgagee's customary construction loan
procedures and conditions. In the event that such insurance or condemnation
awards are to be utilized to replace the Collateral so destroyed or taken, the
Mortgagee shall disburse such Proceeds after receipt of a written request for
disbursement, on not fewer than five (5) Business Days nor more than twelve (12)
Business Days notice simultaneously with the acquisition of such replacement
property by the Mortgagor. In the event that, after the restoration or
replacement of the Collateral, any insurance or condemnation awards shall
remain, such amount shall be paid to the Mortgagor. Insurance proceeds and
condemnation awards shall be invested in the manner reasonably requested by the
Mortgagor and approved by the Mortgagee, and all interest earned thereon shall
be applied as provided in this Section 2.3. If, prior to the receipt by the
Mortgagee of such insurance proceeds or condemnation awards, the Collateral
shall have been sold on foreclosure, the Mortgagee shall have the right to
receive said insurance proceeds or condemnation awards to the extent of any
deficiency found to be due upon such sale, with legal interest thereon, whether
or not a deficiency judgment shall have been sought or recovered or
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denied, and the reasonable attorneys' fees, costs and disbursements incurred by
the Mortgagee in connection with the collection of such award or payment.
SECTION 2.4. Total Taking and Total Destruction. In the event of a
Total Destruction or a Total Taking, the Mortgagee shall apply all amounts
recovered under any insurance policy referred to in Section 2.1.1 and all awards
received by it on account of any such Taking as follows:
(a) first, to the payment of the reasonable costs and expenses
incurred by the Mortgagee in obtaining any such insurance proceeds or
awards, including the fees and expenses of attorneys and insurance and
other experts and consultants, the costs of litigation, arbitration,
mediation, investigations and other judicial, administrative or other
proceedings and all other out-of-pocket expenses;
(b) second, to the payment of the principal of the Senior
Secured Notes and any interest (including Post-Petition Interest to the
extent such interest is an Obligation) accrued and unpaid thereon,
without regard to whether any portion or all of such amounts shall be
matured or unmatured, and, in case such amount shall be insufficient to
pay in full all such amounts, then such amount shall be applied, first,
to the payment of all amounts of interest (including Post-Petition
Interest to the extent such interest is an Obligation) accrued on the
Senior Secured Notes and unpaid, and second, to the payment of all
amounts of principal at the time outstanding;
(c) third, to the payment of, or the application to, any
Obligation (other than as provided in clause (b) above);
(d) fourth, to fulfill any of the other covenants contained
herein as the Mortgagee may determine; and
(e) fifth, the balance, if any, to the Mortgagor.
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration. If an "Event of Default"
(pursuant to and as defined in the Indenture) shall have occurred and be
continuing, then and in any such event the Mortgagee may at any time thereafter
(unless all Events of Default shall theretofore have been remedied and all costs
and expenses, including, without limitation, attorneys' fees and expenses
incurred by or on behalf of the Mortgagee, shall have been paid in full by the
Mortgagor) declare, by written notice to the Mortgagor, the Senior Secured Notes
and all other Obligations to be due and payable immediately or on a date
specified in such notice, and on such date the same shall be and become due and
payable, together with interest accrued thereon, without presentment, demand,
protest or notice, all of which the Mortgagor hereby waives. The Mortgagor will
pay on demand all costs and expenses, including, without limitation, attorneys'
fees and expenses, incurred by or on behalf of the Mortgagee in enforcing this
Mortgage, the Indenture, the Senior Secured Notes, or the Security Agreements
executed pursuant to the Indenture or occasioned by any default hereunder or
thereunder.
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SECTION 3.2. Legal Proceedings; Judicial Foreclosure. If an Event of
Default shall have occurred and be continuing, the Mortgagee at any time may, at
its election, proceed at law or in equity or otherwise to enforce the payment
and performance of the Obligations in accordance with the terms hereof and
thereof and to foreclose the lien of this Mortgage as against all or any part of
the Collateral and to have the same sold under the judgment or decree of a court
of competent jurisdiction. The Mortgagee shall be entitled to recover in such
proceedings all costs incident thereto, including attorneys' fees and expenses
in such amounts as may be fixed by the court.
SECTION 3.3. Power of Sale. If an Event of Default shall have occurred
and be continuing, the Mortgagee may grant, bargain, sell, assign, transfer,
convey and deliver the whole or, from time to time, any part of the Collateral,
or any interest in any part thereof, at any private sale or at public auction,
with or without demand, advertisement or notice, for cash, on credit or for
other property, for immediate or future delivery, and for such price or prices
and on such terms as the Mortgagee in its sole discretion may determine, or as
may be required by law, and upon such sale the Mortgagee may execute and deliver
to the purchaser(s) instruments of conveyance pursuant to the terms hereof and
to applicable laws. Without limiting the authority granted in this Section 3.3,
the Mortgagee shall, without demand on the Mortgagor, after the lapse of such
time as may then be required by law, and notice of default and notice of sale
having been given as then required by law, sell the Collateral on the date and
at the time and place designated in the notice of sale, either as a whole or in
separate parcels and in such order as the Mortgagee may determine, but subject
to any statutory right of the Mortgagor to direct the order in which such
property, if consisting of several known lots, parcels or interests, shall be
sold, at public auction to the highest bidder, the purchase price payable in
lawful money of the United States at the time of sale. The Person conducting the
sale may, for any cause deemed expedient, postpone the sale from time to time
until it shall be completed and, in every such case, notice of postponement
shall be given by public declaration thereof by such Person at the time and
place last appointed for the sale; provided that, if the sale is postponed for
longer than one (1) day beyond the day designated in the notice of sale, notice
of sale and notice of the time, date and place of sale shall be given in the
same manner as the original notice of sale. The Mortgagee shall execute and
deliver to the purchaser at any such sale a mortgagee's deed conveying the
property so sold, but without any covenant or warranty, express or implied. The
recitals in such mortgagee's deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any Person, including the Mortgagee, may bid
at the sale.
SECTION 3.4. Uniform Commercial Code Remedies. If an Event of Default
shall have occurred and be continuing, the Mortgagee may exercise from time to
time and at any time any rights and remedies available to it under applicable
law upon default in the payment of indebtedness, including, without limitation,
any right or remedy available to it as a secured party under the Uniform
Commercial Code of the State. The Mortgagor shall, promptly upon request by the
Mortgagee, assemble the Collateral, or any portion thereof generally described
in such request, and make it available to the Mortgagee at such place or places
designated by the Mortgagee and reasonably convenient to the Mortgagee or the
Mortgagor. If the Mortgagee elects to proceed under the Uniform Commercial Code
of the State to dispose of portions of the Collateral, the Mortgagee, at its
option, may give the Mortgagor notice of the time and place of any public sale
of any such property, or of the date after which any private sale or other
disposition thereof is to be made, by sending notice by registered or certified
first class mail,
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postage prepaid, to the Mortgagor at least ten (10) days before the time of the
sale or other disposition. If any notice of any proposed sale, assignment or
transfer by the Mortgagee of any portion of the Collateral or any interest
therein is required by law, the Mortgagor conclusively agrees that ten (10) days
notice to the Mortgagor of the date, time and place (and, in the case of a
private sale, the terms) thereof is reasonable.
SECTION 3.5. Mortgagee Authorized to Execute Deeds, etc. The Mortgagor
irrevocably appoints the Mortgagee (which appointment is coupled with an
interest) the true and lawful attorney of the Mortgagor, in its name and stead
and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery for the enforcement hereof, whether pursuant to power of
sale, foreclosure or otherwise, to execute and deliver all such deeds, bills of
sale, assignments, releases and other instruments as may be designated in any
such request.
SECTION 3.6. Purchase of Collateral by Mortgagee. The Mortgagee may be
a purchaser of the Collateral or of any part thereof or of any interest therein
at any sale thereof, whether pursuant to power of sale, foreclosure or
otherwise, and the Mortgagee may apply upon the purchase price thereof the
indebtedness secured hereby owing to the Mortgagee. Such purchaser shall, upon
any such purchase, acquire good title to the properties so purchased, free of
the security interest and lien of this Mortgage and free of all rights of
redemption in the Mortgagor.
SECTION 3.7. Receipt a Sufficient Discharge to Purchaser. Upon any sale
of the Collateral or any part thereof or any interest therein, whether pursuant
to power of sale, foreclosure or otherwise, the receipt of the Mortgagee or the
officer making the sale under judicial proceedings shall be a sufficient
discharge to the purchaser for the purchase money, and such purchaser shall not
be obliged to see to the application thereof.
SECTION 3.8. Waiver of Appraisement, Valuation, etc. The Mortgagor
hereby waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter in
force and all rights of marshaling in the event of any sale of the Collateral or
any part thereof or any interest therein.
SECTION 3.9. Sale a Bar Against Mortgagor. Any sale of the Collateral
or any part thereof or any interest therein under or by virtue of this Mortgage,
whether pursuant to power of sale, foreclosure or otherwise, shall forever be a
bar against the Mortgagor.
SECTION 3.10. Obligations to Become Due on Sale. Except as otherwise
provided in the Indenture, upon any sale of the Collateral or any portion
thereof or interest therein by virtue of the exercise of any remedy by the
Mortgagee under or by virtue of this Mortgage, whether pursuant to power of
sale, foreclosure or otherwise in accordance with this Mortgage or by virtue of
any other remedy available at law or in equity or by statute or otherwise, at
the option of the Mortgagee, any sums or monies due and payable pursuant to the
Indenture, the Senior Secured Notes or Security Agreements executed pursuant to
the Indenture and in connection with the Obligations shall, if not previously
declared due and payable, immediately become due and payable, together with
interest accrued thereon, and all other indebtedness which this Mortgage by its
terms secures.
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SECTION 3.11. Application of Proceeds of Sale and Other Moneys. Except
as otherwise provided in the Indenture or herein, the proceeds of any sale of
the Collateral or any part thereof or any interest therein under or by virtue of
this Mortgage, whether pursuant to power of sale, foreclosure or otherwise, and
all other moneys at any time held by the Mortgagee as part of the Collateral,
shall be applied in such order of priority as the Mortgagee shall determine in
its sole and absolute discretion including, without limitation, as follows:
(a) first, to the payment of the reasonable costs and expenses
of such sale (including, without limitation, the cost of evidence of
title and the costs and expenses, if any, of taking possession of,
retaining custody over, repairing, managing, operating, maintaining and
preserving the Collateral or any part thereof prior to such sale), all
reasonable costs and expenses incurred by the Mortgagee or any other
Person in obtaining or collecting any insurance proceeds, condemnation
awards or other amounts received by the Mortgagee, all reasonable costs
and expenses of any receiver of the Collateral or any part thereof, and
any Impositions or other charges or expenses prior to the security
interest or lien of this Mortgage, which the Mortgagee may consider it
necessary or desirable to pay;
(b) second, to the payment of any Obligation (other than those
set forth in Section 3.11(c) below);
(c) third, to the payment of all amounts of principal of and
interest (including Post-Petition Interest to the extent such interest
is an Obligation) at the time due and payable under the Indenture at
the time outstanding (whether due by reason of maturity or by reason of
any prepayment requirement or by declaration or acceleration or
otherwise), including interest at the rate provided for in the
Indenture on any overdue principal and (to the extent permitted under
applicable law) on any overdue interest; and, in case such moneys shall
be insufficient to pay in full such principal and interest, then,
first, to the payment of all amounts of interest (including
Post-Petition Interest to the extent such interest is an Obligation) at
the time due and payable and, second, to the payment of all amounts of
principal at the time due and payable under the Senior Secured Notes;
and
(d) fourth, the balance, if any, held by the Mortgagee after
payment in full of all amounts referred to in subdivisions Sections
3.11(a), (b) and (c) above, shall, unless a court of competent
jurisdiction may otherwise direct by final order not subject to appeal,
be paid to or upon the direction of the Mortgagor.
SECTION 3.12. Appointment of Receiver. If an Event of Default shall
have occurred and be continuing, the Mortgagee shall, as a matter of right,
without notice, and without regard to the adequacy of any security for the
indebtedness secured hereby or the solvency of the Mortgagor, be entitled to the
appointment of a receiver for all or any part of the Collateral, whether such
receivership be incidental to a proposed sale of the Collateral or otherwise,
and the Mortgagor hereby consents to the appointment of such a receiver and will
not oppose any such appointment.
SECTION 3.13. Possession, Management and Income. If an Event of Default
shall have occurred and be continuing, in addition to, and not in limitation of,
the rights and remedies
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provided in Section 1.14, the Mortgagee, upon five (5) days written notice to
the Mortgagor, may enter upon and take possession of the Collateral or any part
thereof by force, summary proceeding, ejectment or otherwise and may remove the
Mortgagor and all other Persons and any and all property therefrom and may hold,
operate, maintain, repair, preserve and manage the same and receive all
earnings, income, Rents, issues and Proceeds accruing with respect thereto or
any part thereof. The Mortgagee shall be under no liability for or by reason of
any such taking of possession, entry, removal or holding, operation or
management, except that any amounts so received by the Mortgagee shall be
applied to pay all costs and expenses of so entering upon, taking possession of,
holding, operating, maintaining, repairing, preserving and managing the
Collateral or any part thereof, and any Impositions or other charges prior to
the lien and security interest of this Mortgage which the Mortgagee may consider
it necessary or desirable to pay, and any balance of such amounts shall be
applied as provided in Section 3.11.
SECTION 3.14. Right of Mortgagee to Perform Mortgagor's Covenants, etc.
If the Mortgagor shall fail to make any payment or perform any act required to
be made or performed hereunder or under the Indenture, the Senior Secured Notes,
or the Security Agreements executed pursuant to the Indenture, the Mortgagee,
without notice to or demand upon the Mortgagor and without waiving or releasing
any obligation or Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for the account and at
the expense of the Mortgagor, and may enter upon the Collateral for such purpose
and take all such action thereon as, in the Mortgagee's opinion, may be
necessary or appropriate therefor. No such entry and no such action shall be
deemed an eviction of any lessee of the Property or any part thereof. All sums
so paid by the Mortgagee and all costs and expenses (including, without
limitation, attorneys' fees and expenses) so incurred, together with interest
thereon at the rate provided for in the Indenture from the date of payment or
incurring, shall constitute additional indebtedness under the Indenture secured
by this Mortgage and shall be paid by the Mortgagor to the Mortgagee on demand.
SECTION 3.15. Subrogation. To the extent that the Mortgagee, on or
after the date hereof, pays any sum due under any provision of any Legal
Requirement or any instrument creating any lien prior or superior to the lien of
this Mortgage, or the Mortgagor or any other Person pays any such sum with the
proceeds of the Senior Secured Notes, the Mortgagee shall have and be entitled
to a lien on the Collateral equal in priority to the lien discharged, and the
Mortgagee shall be subrogated to, and receive and enjoy all rights and liens
possessed, held or enjoyed by, the holder of such lien, which shall remain in
existence and benefit the Mortgagee in securing the Obligations.
SECTION 3.16. Remedies, etc., Cumulative. Each right, power and remedy
of the Mortgagee provided for in this Mortgage, the Indenture, the Senior
Secured Notes, or the Security Agreements executed pursuant to the Indenture or
now or hereafter existing at law or in equity or by statute or otherwise shall
be cumulative and concurrent and shall be in addition to every other right,
power or remedy provided for in this Mortgage, the Indenture, the Senior Secured
Notes or the Security Agreements executed pursuant to the Indenture or now or
hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by the Mortgagee of any one or more of the
rights, powers or remedies provided for in this Mortgage, the Indenture, the
Senior Secured Notes, or the Security Agreements executed pursuant to the
Indenture or now or hereafter existing at law or in equity or by statute or
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otherwise shall not preclude the simultaneous or later exercise by the Mortgagee
of any or all such other rights, powers or remedies.
SECTION 3.17. Provisions Subject to Applicable Law. All rights, powers
and remedies provided in this Mortgage may be exercised only to the extent that
the exercise thereof does not violate any applicable provisions of law and are
intended to be limited to the extent necessary so that they will not render this
Mortgage invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any applicable law. If any term of this Mortgage
or any application thereof shall be invalid or unenforceable, the remainder of
this Mortgage and any other application of such term shall not be affected
thereby.
SECTION 3.18. No Waiver, etc. No failure by the Mortgagee to insist
upon the strict performance of any term hereof or of the Indenture, the Senior
Secured Notes, or the Security Agreements executed pursuant to the Indenture or
to exercise any right, power or remedy consequent upon a breach hereof or
thereof, shall constitute a waiver of any such term or of any such breach. No
waiver of any breach shall affect or alter this Mortgage, which shall continue
in full force and effect with respect to any other then existing or subsequent
breach. By accepting payment or performance of any amount or other Obligations
secured hereby before or after its due date, the Mortgagee shall not be deemed
to have waived its right either to require prompt payment or performance when
due of all other amounts and Obligations payable hereunder or to declare a
default for failure to effect such prompt payment.
SECTION 3.19. Compromise of Actions, etc. Any action, suit or
proceeding brought by the Mortgagee pursuant to any of the terms of this
Mortgage, the Indenture, the Senior Secured Notes, or the Security Agreements,
or otherwise, and any claim made by the Mortgagee hereunder or thereunder, may
be compromised, withdrawn or otherwise dealt with by the Mortgagee without any
notice to or approval of the Mortgagor.
ARTICLE IV
DEFINITIONS
SECTION 4.1. Terms Defined in this Mortgage. When used herein the
following terms have the following meanings:
"Borrowers" shall have the meaning set forth in the third recital.
"Collateral" shall have the meaning set forth in the granting clause.
"Contracts" shall have the meaning set forth in clause (g) of the
granting clause.
"Credit Agreement" shall have the meaning set forth in the third
recital.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time, or both, would constitute an Event of Default.
"First Mortgage Default" means a Default (as defined in the First
Mortgage).
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"Goods" shall have the meaning set forth in clause (c) of the granting
clause.
"herein", "hereof", "hereto", and "hereunder" and similar terms refer
to this Mortgage and not to any particular Section, paragraph or provision of
this Mortgage.
"Impositions" shall have the meaning set forth in Section 1.5.
"Improvements" shall have the meaning set forth in clause (b) of the
granting clause.
"Indemnified Parties" shall have the meaning set forth in Section 1.16.
"Insurance Requirements" shall have the meaning set forth in paragraph
(a) of Section 1.6.
"Land" shall have the meaning set forth in the first recital.
"Leases" shall have the meaning set forth in clause (d) of the granting
clause.
"Legal Requirements" shall have the meaning set forth in paragraph (b)
of Section 1.6.
"Mortgage" shall have the meaning set forth in the preamble.
"Mortgagee" shall have the meaning set forth in the preamble.
"Mortgagor" shall have the meaning set forth in the preamble.
"Obligations" means all liabilities, duties and obligations of the
Mortgagor as the Subsidiary Guarantor under the Indenture, all advances, if any,
made by Mortgagee pursuant to the terms of this Mortgage, and all duties and
obligations of Mortgagor under this Mortgage[, and the Security Agreements
executed pursuant to the terms of the Indenture].
"Permits" shall have the meaning set forth in clause (g) of the
granting clause.
"Permitted Encumbrances" shall have the meaning set forth in Section
1.2.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency or officer.
"Plans" shall have the meaning set forth in clause (f) of the granting
clause.
"Post-Petition Interest" shall have the meaning set forth in Section
2.3.
"Proceeds" shall have the meaning set forth in clause (k) of the
granting clause.
"Property" shall have the meaning set forth in clause (b) of the
granting clause.
"Real Estate" shall have the meaning set forth in clause (a) of the
granting clause.
"Rents" shall have the meaning set forth in clause (j) of the granting
clause.
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"State" means the State of Florida.
"Total Destruction" means any damage to or destruction of the
Improvements or any part thereof which, in the reasonable estimation of the
Mortgagee shall require the expenditure of an amount in excess of Ten Million
Dollars ($10,000,000) to restore the Improvements to substantially the same
condition of the Improvements immediately prior to such damage or destruction.
"Total Taking" means a Taking, whether permanent or for temporary use,
which, in the reasonable judgment of the Mortgagee, shall substantially
interfere with and adversely affect the normal operation of the Property by the
Mortgagor to such an extent as would reasonably be anticipated to cause a
Material Adverse Effect (as defined in the Credit Agreement).
SECTION 4.2. Use of Defined Terms. Terms for which meanings are
provided in this Mortgage shall, unless otherwise defined or the context
otherwise requires, have such meanings when used in any certificate and any
opinion, notice or other communication delivered from time to time in connection
with this Mortgage or pursuant hereto.
SECTION 4.3. Indenture Definitions. Unless otherwise defined herein or
the context otherwise requires, capitalized terms used in this Mortgage,
including its preamble and recitals, have the meanings provided in the
Indenture.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements.
SECTION 5.1.1. Further Assurances. The Mortgagor, at its expense, will
execute, acknowledge and deliver all such instruments and take all such other
action as the Mortgagee from time to time may reasonably request:
(a) to better subject to the lien and security interest of
this Mortgage all or any portion of the Collateral,
(b) to perfect, publish notice or protect the validity of the
lien and security interest of this Mortgage,
(c) to preserve and defend the title to the Collateral and the
rights of the Mortgagee therein against the claims of all Persons as
long as this Mortgage shall remain undischarged,
(d) in order to further effectuate the purposes of this
Mortgage and to carry out the terms hereof and to better assure and
confirm to the Mortgagee its rights, powers and remedies hereunder.
SECTION 5.1.2. Financing Statements. Notwithstanding any other
provision of this Mortgage, the Mortgagor hereby agrees that, without notice to
or the consent of the Mortgagor,
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the Mortgagee may file with the appropriate public officials such financing
statements, continuation statements, amendments and similar documents as are or
may become necessary to perfect, preserve or protect the security interest
granted by this Mortgage.
SECTION 5.2. Additional Security. Without notice to or consent of the
Mortgagor, and without impairment of the security interest and lien and rights
created by this Mortgage, the Mortgagee and the Lenders may accept from the
Mortgagor or any other Person additional security for the Obligations. Neither
the giving of this Mortgage nor the acceptance of any such additional security
shall prevent the Mortgagee from resorting, first, to such additional security,
or, first, to the security created by this Mortgage, or concurrently to both, in
any case without affecting the Mortgagee's lien and rights under this Mortgage.
SECTION 5.3. Defeasance; Partial Release, etc.
SECTION 5.3.1. Defeasance. If the Senior Secured Notes and all other
amounts owing pursuant to the Indenture and the Security Agreements shall be
repaid in full in accordance with the terms thereof, and if the Mortgagor shall
pay, in full, the principal of and premium, if any, and interest on the
Obligations in accordance with the terms thereof and hereof and all other sums
payable hereunder by the Mortgagor and shall comply with all the terms,
conditions and requirements hereof and of the Obligations, or otherwise as may
be provided in the Indenture, then on such date, the Mortgagee shall, upon the
request of the Mortgagor and at the Mortgagor's sole cost and expense, execute
and deliver such instruments, in form and substance reasonably satisfactory to
the Mortgagee, as may be necessary to effectively reconvey, release and
discharge this Mortgage.
SECTION 5.3.2. Partial Release, etc. The Mortgagee may, at any time and
from time to time, without liability therefor, and without prior notice to the
Mortgagor, release or reconvey any part of the Collateral, consent to the making
of any map or plat of the Property, join in granting any easement thereon or
join in any extension agreement or agreement subordinating the lien of this
Mortgage.
SECTION 5.4. Notices, etc. All notices and other communications
provided to any of the parties hereto shall be in writing and addressed,
delivered or transmitted to such party as set forth in the Indenture.
SECTION 5.5. Waivers, Amendments, etc. The provisions of this Mortgage
may be amended, discharged or terminated and the observance or performance of
any provision of this Mortgage may be waived, either generally or in a
particular instance and either retroactively or prospectively, only by an
instrument in writing executed by the Mortgagor and the Mortgagee.
SECTION 5.6. Cross-References. References in this Mortgage and in each
instrument executed pursuant hereto to any Section or Article are, unless
otherwise specified, to such Section or Article of this Mortgage or such
instrument, as the case may be, and references in any Section, Article or
definition to any clause are, unless otherwise specified, to such clause of such
Section, Article or definition.
SECTION 5.7. Headings. The various headings of this Mortgage and of
each instrument executed pursuant hereto are inserted for convenience only and
shall not affect the
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meaning or interpretation of this Mortgage or such instrument or any provisions
hereof or thereof.
SECTION 5.8. Currency. Unless otherwise expressly stated, all
references to any currency or money, or any dollar amount, or amounts
denominated in "Dollars" herein will be deemed to refer to the lawful currency
of the United States.
SECTION 5.9. Governing Law. THIS MORTGAGE SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE.
SECTION 5.10. Successors and Assigns, etc. This Mortgage shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
SECTION 5.11. Waiver of Jury Trial; Submission to Jurisdiction.
(a) EACH OF THE MORTGAGOR AND THE MORTGAGEE HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS MORTGAGE, THE INDENTURE, THE SENIOR
SECURED NOTES, THE SECURITY AGREEMENTS OR ANY OTHER RELATED INSTRUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN), OR ACTIONS OF THE MORTGAGOR OR THE MORTGAGEE. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE MORTGAGEE AND THE HOLDERS TO
ENTER INTO THE TRANSACTIONS PROVIDED FOR IN THE INDENTURE.
(b) FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INVOLVING THIS
MORTGAGE, THE INDENTURE, THE SENIOR SECURED NOTES, OR THE SECURITY
AGREEMENTS, THE MORTGAGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ALL FEDERAL AND STATE COURTS LOCATED
IN THE STATE AND CONSENTS THAT IT MAY BE SERVED WITH ANY PROCESS OR
PAPER BY REGISTERED MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE IN ACCORDANCE WITH APPLICABLE LAW, PROVIDED A REASONABLE TIME FOR
APPEARANCE IS ALLOWED. THE MORTGAGOR AND MORTGAGEE EACH EXPRESSLY
WAIVES, TO THE EXTENT IT MAY LAWFULLY DO SO, ANY OBJECTION, CLAIM OR
DEFENSE WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY
ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS MORTGAGE, THE INDENTURE,
THE SENIOR SECURED NOTES, OR THE SECURITY AGREEMENTS IN ANY SUCH COURT,
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND
FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO ANY
SUCH CLAIM, SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT
SUCH COURT DOES NOT HAVE JURISDICTION OVER THE PERSON OF THE MORTGAGOR.
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<PAGE> 30
NOTHING CONTAINED HEREIN WILL BE DEEMED TO PRECLUDE THE MORTGAGEE FROM
BRINGING AN ACTION AGAINST THE MORTGAGOR IN ANY OTHER JURISDICTION.
SECTION 5.12. Severability; Conflicts. Any provision of this Mortgage,
the Indenture, the Senior Secured Notes, or the Security Agreements which is
prohibited or unenforceable in any jurisdiction shall as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Mortgage,
the Indenture, the Senior Secured Notes, or the Security Agreements or affecting
the validity or enforceability of such provision in any other jurisdiction. In
the event of any conflict between the terms of this Mortgage and the terms of
the Indenture, the terms of the Indenture shall control.
SECTION 5.13. Security Agreement. This Mortgage is a Security Agreement
executed pursuant to the Indenture and, unless otherwise expressly indicated
herein, shall be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 5.14. Usury Savings Clause. It is the intention of the
Mortgagor and the Mortgagee to conform strictly to the usury laws governing the
Indenture, the Senior Secured Notes and the Security Agreements made pursuant to
the Indenture, and any interest payable under the Indenture, the Senior Secured
Notes and the Security Agreements shall be subject to reduction to the amount
not in excess of the maximum non-usurious amount allowed under such laws, as
construed by the courts having jurisdiction over such matters. In the event the
maturity of the Obligations is accelerated by reason of any provision of the
Indenture, the Senior Secured Notes and the Security Agreements made pursuant to
the Indenture, or by reason of an election by the Mortgagee resulting from an
Event of Default, then earned interest may never include more than the maximum
amount permitted by law, computed from the dates of each advance of loan
proceeds under the Indenture until payment, and any interest in excess of the
maximum amount permitted by law shall be canceled automatically or, if
theretofore paid, at the option of the Mortgagee, shall be rebated to the
Mortgagor, or shall be credited on the principal amount of the Obligations or,
if all principal has been repaid, then the excess shall be rebated to the
Mortgagor. If any interest is canceled, credited against principal or rebated to
the Mortgagor in accordance with the foregoing sentence and, if thereafter the
interest payable hereunder is less than the maximum amount permitted by
applicable law, the rate hereunder shall automatically be increased to the
maximum extent possible to permit repayment to the Mortgagee and the Lenders as
soon as possible of any interest in excess of the maximum amount permitted by
law which was earlier canceled, credited against principal or rebated to the
Mortgagor pursuant to the provisions of the foregoing sentence.
SECTION 5.15. Future Advances. This Mortgage is a "Future Advance
Mortgage" under the laws of the State. Any and all future advances under this
Mortgage made within a period not to exceed twenty years and in an amount not to
exceed Four Hundred and Fifty Million Dollars ($450,000,000) and the Indenture
and Security Agreements shall have the same priority as if the future advance
was made on the date that this Mortgage was recorded. This Mortgage shall secure
the Obligations, whenever incurred, such Obligations to be due at the times
provided in the Indenture and Security Agreements. Notice is hereby given that
the Obligations may increase as a result of any defaults hereunder by Mortgagor
due to, for example,
27
<PAGE> 31
and without limitation, unpaid interest or late charges, unpaid taxes or
insurance premiums which the Mortgagee elects to advance, defaults under leases
that the Mortgagee elects to cure, attorney fees or costs incurred in enforcing
the Indenture and Security Agreements or other expenses incurred by the
Mortgagee in protecting the Collateral, the security of this Mortgage or the
Mortgagee's rights and interests.
SECTION 5.16. Subordination to First Mortgage.
(a) The lien of this Mortgage shall be subject and subordinate
only to the lien of the First Mortgage and Permitted Encumbrances.
Notwithstanding anything to the contrary contained in this Mortgage,
this Mortgage shall not be subordinate to any increases in the
aggregate principal amount that may be borrowed (i) under the First
Mortgage or other documents executed in connection therewith, or (ii)
under any amendment, modifications, renewals, replacements or
consolidations thereof, made without the prior written consent of
Mortgagee, to an amount in excess of $70,000,000.
(b) Mortgagor represents and warrants that (i) the First
Mortgage is in full force and effect, and (ii) all principal, interest
and other amounts payable under the terms, covenants, conditions and
provisions of the First Mortgage and the other documents executed in
connection therewith have been and shall be paid in accordance with the
terms, covenants, conditions and provisions thereof.
(c) Mortgagor covenants and agrees that Mortgagor shall: (i)
promptly and faithfully observe, perform and comply with all the terms,
covenants, conditions and provisions of the First Mortgage and other
documents executed in connection therewith; (ii) not modify, or amend,
or in any way alter or permit the alteration of any of the terms,
covenants, conditions or provisions of the First Mortgage or the other
documents executed in connection therewith in a manner that will
increase the aggregate principal amount of indebtedness that may be
borrowed under the First Mortgage and the other documents executed in
connection therewith the repayment of which is secured by the First
Mortgage to an amount in excess of $70,000,000; (iii) promptly deliver
to Mortgagee a copy of each notice of a First Mortgage Default received
or delivered by Mortgagor in connection with the First Mortgage; and
(iv) furnish to Mortgagee copies of such additional information and
evidence as Mortgagee reasonably may require concerning Mortgagor's due
observance, performance and compliance with the terms, covenants,
conditions, and provisions of the First Mortgage and the other
documents executed in connection therewith (including, but without
limiting the generality of the foregoing, evidence, reasonably
satisfactory to Mortgagee, of the payment by Mortgagor of principal,
interest and other amounts required by the terms, covenants, conditions
and provisions of the First Mortgage and the other documents executed
in connection therewith).
(d) Upon the occurrence and during the continuance of a First
Mortgage Default, in addition to any other rights and remedies that may
be available to Mortgagee, Mortgagee may, but shall not be obligated
to, cure such First Mortgage Default and Mortgagee shall be subrogated
to the rights of the holder of the First Mortgage against Mortgagor and
the Property. To the extent Mortgagee makes any payment of any
28
<PAGE> 32
installment of interest or any payment of principal or other sum due
under the First Mortgage and/or any note secured thereby, such payment
(i) shall be deemed to be an Obligation secured hereby, (ii) shall be a
lien on the Property prior to any right or title to, interest in, or
claim upon the Property subordinate to the lien of this Mortgage, and
(iii) shall accrue interest at a rate equal to the lower of (a)
eighteen percent (18%) per annum or (b) the maximum rate permitted by
law.
(e) If for any reason the indebtedness secured by the First
Mortgage is accelerated, or the Property or any part thereof is sold,
or attempted to be sold, pursuant to the First Mortgage, whether by
power of sale, judicial action or otherwise, or any other remedial
action or proceeding is taken or instituted in respect of the Property
or any part thereof under the First Mortgage, Mortgagor will indemnify
and hold Mortgagee harmless from any loss, cost or expense incurred by
Mortgagee, including reasonable attorneys' fees, in contesting any such
action taken or instituted, or incurred by Mortgagee on account of the
acceleration of the indebtedness secured by the First Mortgage, the
sale of the Property pursuant thereto or Mortgagee's purchase or
payment of the First Mortgage.
(f) Mortgagor does herewith irrevocably appoint and constitute
Mortgagee as its true and lawful attorney-in-fact in its name, place
and stead to, upon the occurrence and during the continuance of a First
Mortgage Default, perform and comply with all obligations of Mortgagor
under the First Mortgage, to do and take, without any obligation to do
so, any action as Mortgagee deems necessary or desirable to cure any
First Mortgage Default. Mortgagor shall, within five (5) days after
written request is made therefor by Mortgagee, execute and deliver to
Mortgagee or to any person which Mortgagee shall designate, such
further instruments, agreements, powers, deeds, conveyances or the like
as may be reasonably necessary to complete or perfect the interest,
rights or powers of Mortgagee pursuant to this paragraph.
(g) Upon receipt by Mortgagee of any notice of a First
Mortgage Default, Mortgagee may rely thereon and take any such
reasonable action as Mortgagee shall reasonably deem necessary ,
irrespective of whether the existence of such First Mortgage Default or
the nature thereof be questioned or denied by or on behalf of
Mortgagor.
Notwithstanding anything to the contrary contained in this Mortgage,
and each of the terms, conditions and provisions hereof, the Mortgagee's rights
and remedies hereunder are and at all times shall be subject and subordinate to
the First Mortgage and shall be subject to the terms of the Senior Debt
Intercreditor Agreement. The Mortgagee agrees to execute a subordination
agreement if requested by Senior Lender or any lender under any refinancing of
the indebtedness secured by the First Mortgage.
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<PAGE> 33
IN WITNESS WHEREOF, the undersigned, by its duly elected officers and
pursuant to proper authority of its board of directors has duly executed,
sealed, acknowledged and delivered this instrument as of the day and year first
above written.
MORTGAGOR:
STERLING FIBERS, INC.,
a Delaware corporation
By:
-------------------------------------------
Name:
--------------------------------------
Title:
Witnessed and acknowledged in the presence of:
---------------------------------------------
Name:
---------------------------------------------
Name:
DRAFTED BY:
Latham & Watkins
885 Third Avenue
New York, New York 10022-4802
Attention: Wylie S. Allen, Esq.
30
<PAGE> 34
[CORPORATE NOTARY PAGE]
MULTI-STATE CORPORATE ACKNOWLEDGMENT
State of New York
County of New York
On this _______________ day of July, 1999, before me, the undersigned officer,
personally appeared
______________________________, with a residence at _____________________,
personally known and acknowledged himself/herself/themselves to me, or produced
_________________________________ as identification, to be the
_______________ President
of ______________________________, (hereinafter, the "Corporation")
and that as such officer(s), being duly authorized to do so pursuant to its
bylaws or a resolution of its board of directors, executed, subscribed and
acknowledged the foregoing instrument for the purposes therein contained, by
signing the name of the Corporation by himself/herself/ themselves in their
authorized capacities as such officer(s) as his/her/their free and voluntary act
and deed and the free and voluntary act and deed of said Corporation.
In Witness Whereof, I hereunto set my hand and official seal.
------------------------------------
Notary Public
Notarial Seal My Commission Expires:
31
<PAGE> 35
EXHIBIT A
Legal Description of the Land
<PAGE> 36
EXHIBIT B
Permitted Encumbrances
[ ]
<PAGE> 1
Record and return to: EXHIBIT 4.12
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Wylie S. Allen, Esq.
STERLING PULP CHEMICALS, INC.,
Grantor,
to
HARRIS TRUST COMPANY OF NEW YORK, as collateral agent for the benefit of
itself and certain other holders (collectively, the "Holders") of the 12
3/8% Senior Secured Notes due July 15, 2006 (together with its successors
and assigns from time to time acting as the collateral agent
under the Indenture referred to below, the "Collateral Agent"),
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Georgia co-agent (together with its successors and assigns from
time to time acting as Georgia co-agent, the "Georgia Agent," the
Collateral Agent and the Georgia Agent herein collectively
referred to as "Grantee")
---------------------------------------------------
SECOND LEASEHOLD DEED TO SECURE DEBT, ASSIGNMENT AND
SECURITY AGREEMENT
---------------------------------------------------
Dated as of July 23, 1999
This instrument affects certain real and personal property
located in Lowndes County,
State of Georgia.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
COVENANTS AND AGREEMENTS OF THE GRANTOR
SECTION 1.1 Payment of Obligations........................................................5
SECTION 1.2 Title to Collateral, etc......................................................5
SECTION 1.3 Title Insurance...............................................................5
SECTION 1.4 Recordation...................................................................6
SECTION 1.5 Payment of Impositions, etc...................................................6
SECTION 1.6 Insurance and Legal Requirements..............................................6
SECTION 1.7 Security Interests, etc.......................................................7
SECTION 1.8 Permitted Contests............................................................7
SECTION 1.9 Leases........................................................................7
SECTION 1.10 Compliance with Instruments...................................................7
SECTION 1.11 Maintenance and Repair, etc...................................................8
SECTION 1.12 Alterations, Additions, etc...................................................8
SECTION 1.13 Acquired Property Subject to Security Title/Security Interest.................8
SECTION 1.14 Assignment of Rents, Proceeds, etc............................................8
SECTION 1.15 No Claims Against the Grantee.................................................9
SECTION 1.16 Indemnification...............................................................9
SECTION 1.17 No Credit for Payment of Taxes...............................................10
SECTION 1.18 Intentionally Omitted........................................................10
SECTION 1.19 No Transfer of the Property..................................................10
SECTION 1.20 Security Agreement...........................................................10
SECTION 1.21 Representations and Warranties...............................................11
SECTION 1.22 Grantor's Covenants..........................................................11
SECTION 1.23 Attornment...................................................................11
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC
SECTION 2.1 Insurance.....................................................................12
SECTION 2.2 Damage, Destruction or Taking; Grantor to Give Notice; Assignment of Awards...13
SECTION 2.3 Application of Proceeds and Awards............................................14
SECTION 2.4 Total Taking and Total Destruction............................................15
ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC
SECTION 3.1 Events of Default; Acceleration...............................................16
SECTION 3.2 Legal Proceedings; Judicial Foreclosure.......................................16
SECTION 3.3 Power of Sale.................................................................16
SECTION 3.4 Uniform Commercial Code Remedies..............................................17
SECTION 3.5 Grantee Authorized Go Execute Deeds, etc......................................17
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 3.6 Purchase of Collateral by Grantee.............................................17
SECTION 3.7 Receipt a Sufficient Discharge to Purchaser...................................17
SECTION 3.8 Waiver of Appraisement, Valuation, etc........................................17
SECTION 3.9 Sale a Bar Against Grantor....................................................17
SECTION 3.10 Obligations to Become Due on Sale.............................................18
SECTION 3.11 Application of Proceeds of Sale and Other Moneys..............................18
SECTION 3.12 Appointment of Receiver.......................................................18
SECTION 3.13 Possession, Management and Income.............................................19
SECTION 3.14 Right of Grantee to Perform Grantor's Covenants, etc..........................19
SECTION 3.15 Subrogation...................................................................19
SECTION 3.16 Remedies, etc., Cumulative....................................................19
SECTION 3.17 Provisions Subject to Applicable Law..........................................19
SECTION 3.18 No Waiver, etc................................................................20
SECTION 3.19 Compromise of Actions, etc....................................................20
SECTION 3.20 Foreclosure - Authority Lease.................................................20
ARTICLE IV
DEFINITIONS
SECTION 4.1 Terms Defined in this Deed.....................................................20
SECTION 4.2 Use of Defined Terms...........................................................22
SECTION 4.3 Indenture Definitions..........................................................22
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Further Assurances; Financing Statements......................................22
SECTION 5.2 Additional Security...........................................................22
SECTION 5.3 Satisfaction; Partial Release, etc............................................23
SECTION 5.4 Notices, etc..................................................................23
SECTION 5.5 Waivers, Amendments, etc......................................................23
SECTION 5.6 Cross-References..............................................................23
SECTION 5.7 Headings......................................................................23
SECTION 5.8 Currency......................................................................23
SECTION 5.9 Governing Law.................................................................23
SECTION 5.10 Successors and Assigns, etc...................................................23
SECTION 5.11 Waiver of Jury Trial; Submission to Jurisdiction..............................23
SECTION 5.12 Severability; Conflicts.......................................................24
SECTION 5.13 Security Agreements...........................................................24
SECTION 5.14 Usury Savings Clause..........................................................24
SECTION 5.15 Future Advances...............................................................25
SECTION 5.16 Georgia Agent.................................................................25
SECTION 5.17 Subordination to First Deed...................................................25
SCHEDULE 1 Legal Description of the Land
SCHEDULE 2 Permitted Encumbrances
</TABLE>
ii
<PAGE> 4
SECOND LEASEHOLD DEED TO SECURE DEBT,
ASSIGNMENT AND SECURITY AGREEMENT
THIS SECOND LEASEHOLD DEED TO SECURE DEBT, ASSIGNMENT AND SECURITY
AGREEMENT, dated as of July 23 1999 (this "Deed"), made by STERLING PULP
CHEMICALS, INC., a Georgia corporation (the "Grantor"), having an address at
1200 Smith, Suite 1900, Houston, Texas 77002-4312, to HARRIS TRUST COMPANY OF
NEW YORK, a New York corporation ("Harris Trust"), as collateral agent for the
benefit of itself and certain other holders (collectively, the "Holders") of
the 12 3/8% Senior Secured Notes due July 15, 2006, having an address at Wall
Street Plaza, 19th Floor, 88 Pine Street, New York, New York 10005 (together
with its successors and assigns from time to time acting as collateral agent
under the Indenture referred to below, the "Collateral Agent"), and U.S. BANK
TRUST NATIONAL ASSOCIATION, a banking association, having an address at GAAT
3384, 3384 Peachtree Road, NE, Suite 200, Atlanta, Georgia 30326, as Georgia
co-agent (together with its successors and assigns from time to time acting as
Georgia co-agent, the "Georgia Agent," with the Collateral Agent and the
Georgia Agent herein collectively referred to as "Grantee").
W I T N E S S E T H T H A T:
WHEREAS, the Grantor is on the date of delivery hereof the owner of fee
title (or easement or leasehold estate if otherwise indicated herein or on
Schedule 1 hereto) to the parcel of land described in Schedule 1 hereto (the
"Land") and of the Improvements (hereinafter defined);
WHEREAS, the Collateral Agent, as collateral agent and indenture trustee,
and Sterling Chemicals, Inc., a Delaware corporation, as issuer ("Issuer") have
entered into that certain Indenture, dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which the Issuer issued Two Hundred Ninety Five
Million and NO/100 Dollars ($295,000,000) in the aggregate principal amount of
12 3/8% Senior Secured Notes due July 15, 2006 (the "Senior Secured Notes");
and
WHEREAS, Grantor has granted a first priority Leasehold Deed to Secure
Debt, Assignment and Security Agreement (the "First Deed") encumbering the
Collateral pursuant to that certain Revolving Credit Agreement (the "Credit
Agreement"), by and among Sterling Chemicals, Inc., Sterling Canada, Inc.,
Sterling Pulp Chemicals US, Inc., Grantor, Sterling Chemicals Energy, Inc. and
Sterling Chemicals
<PAGE> 5
International, Inc., as Borrowers (collectively, "Borrowers"), various
financial institutions, as lenders ("Lenders"), DLJ Capital Funding, Inc., as
syndication agent ("Syndication Agent"), The CIT Group/Business Credit, Inc.,
as the administrative agent and collateral agent (the "Administrative Agent"),
and Credit Suisse First Boston, as the documentation agent; and
WHEREAS, pursuant to the terms of the Credit Agreement, the Lenders (as
defined in the Credit Agreement) have agreed to make Fixed Assets Loans (as
defined in the Credit Agreement) (the "Senior Loan") to the Borrowers (as
defined in the Credit Agreement) in the maximum original principal amount of
Seventy Million Dollars ($70,000,000), the payment of which is secured by,
inter alia, the First Deed encumbering the Property; and
WHEREAS, during the pendency of the Senior Loan, this Deed shall be
subordinate and inferior to the First Deed; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Deed.
GRANT:
NOW, THEREFORE, for and in consideration of the premises, and of the
mutual covenants herein contained, and in order to induce the Holders to
purchase the Senior Secured Notes, and to secure the full, timely and proper
payment and performance of and compliance with each and every one of the
Obligations (as hereinafter defined), the Grantor hereby irrevocably grants,
bargains, sells, sets over, warrants, aliens, demises, releases, hypothecates,
pledges, assigns, transfers and conveys to the Grantee and its successors,
successors in title and assigns, forever, all of the following (the
"Collateral"):
(a) Real Estate. All of Grantor's estate, interest, rights,
privileges and benefits (including, without limitation, any option to
purchase fee simple title) existing under or created by that certain
Indenture of Lease by and between Valdosta-Lowndes County Industrial
Authority (as Lessor) and Sterling Pulp Chemicals US, Inc. (as Lessee)
dated October 1, 1995, and recorded in Deed Book 1331, Page 27, Lowndes
County, Georgia Records, with a Memorandum of Lease Agreement dated as of
October 1, 1995, being recorded in Deed Book 1240, page 1, aforesaid
records, as assigned by Sterling Pulp Chemicals US, Inc. to Grantor by
instrument dated August 6, 1996, and recorded in Deed Book 1333, Page 123,
and rerecorded in Deed Book 1349, Page 83, aforesaid records
(collectively, the "Authority Lease") covering and affecting the Land, and
all of Grantor's interest in and to all of the Land and all additional
lands and estates therein now owned or hereafter-acquired by the Grantor
for use or development with the Land or any portion thereof, together with
all and singular the tenements, rights, easements, hereditaments, rights
of way, privileges, liberties, appendages and appurtenances now or
hereafter belonging or in any way pertaining to the Land and such
additional lands and estates therein (including, without limitation, all
rights relating to storm and sanitary sewer, water, gas, electric, railway
and telephone services); all development rights, air rights, riparian
rights, water, water rights, water stock, all rights in, to and with
respect to any and all oil, gas, coal, minerals and other substances of
any kind or character underlying or relating to the Land and such
additional lands and estates therein and any interest therein; all estate,
claim, demand, right, title or interest of the Grantor in and to any
street, road, highway or alley, vacated or other, adjoining the Land or
any part thereof and such additional lands and estates therein; all strips
and gores belonging, adjacent or pertaining to the Land or such additional
lands and estates (herein collectively referred to as the "Real Estate");
2
<PAGE> 6
(b) Improvements. All of Grantor's right, title and interest in and
to all buildings, structures and other improvements now existing on the
Land and any additions and alterations thereto or replacements thereof,
now or hereafter built, constructed or located upon the Real Estate; and,
to the extent that any of the following items of property constitutes
fixtures under applicable laws, all furnishings, fixtures, fittings,
appliances, apparatus, equipment, machinery, building and construction
materials and other articles of every kind and nature whatsoever and all
replacements thereof, now or hereafter affixed or attached to, placed upon
or used in any way in connection with the complete and comfortable use,
enjoyment, occupation, operation, development and/or maintenance of the
Real Estate or such buildings, structures and other improvements,
including, but not limited to, partitions, furnaces, boilers, oil burners,
radiators and piping, plumbing and bathroom fixtures, refrigeration,
heating, ventilating, air conditioning and sprinkler systems, other fire
prevention and extinguishing apparatus and materials, vacuum cleaning
systems, gas and electric fixtures, incinerators, compactors, elevators,
engines, motors, generators and all other articles of property which are
considered fixtures under applicable law (such buildings, structures and
other improvements and such other property are herein collectively
referred to as the "Improvements"; the Real Estate and the Improvements
are herein collectively referred to as the "Property");
(c) Goods. All of Grantor's right, title and interest in and to all
building materials, construction materials, appliances (including, without
limitation, stoves, ranges, ovens, disposals, refrigerators, water
fountains and coolers, fans, heaters, dishwashers, clothes washers and
dryers, water heaters, hood and fan combinations, kitchen equipment,
laundry equipment, kitchen cabinets and other similar equipment), stocks,
supplies, blinds, window shades, drapes, carpets, floor coverings,
manufacturing equipment and machinery, office equipment, growing plants
and shrubberies, control devices, equipment (including window cleaning,
building cleaning, swimming pool, recreational, monitoring, garbage, pest
control and other equipment), motor vehicles, tools, furnishings,
furniture, lighting, non-structural additions to the Real Estate and
Improvements and all other tangible property of any kind or character,
together with all replacements thereof, now or hereafter located on or in
or used or useful in connection with the complete and comfortable use,
enjoyment, occupation, operation, development and/or maintenance of the
Property, regardless of whether or not located on or in the Property or
located elsewhere for purposes of storage, fabrication or otherwise
(herein collectively referred to as the "Goods");
(d) Leases. All rights of the Grantor in, to and under all leases
(other than the Authority Lease), licenses, occupancy agreements,
concessions and other arrangements, oral or written, now existing or
replacements thereof hereafter entered into, whereby any Person agrees to
pay money or any other consideration for the use, possession or occupancy
of, or any estate in, the Property or any portion thereof or interest
therein (herein collectively referred to as the "Leases"), and the right,
subject to applicable law, upon the occurrence of any Event of Default
hereunder, to receive and collect the Rents (as hereinafter defined) paid
or payable thereunder;
(e) Plans. All rights of the Grantor in and to all plans and
specifications, designs, drawings and other information, materials and
matters heretofore or hereafter prepared relating to the Improvements or
any construction on the Real Estate (herein collectively referred to as
the "Plans");
(f) Permits. All rights of the Grantor, to the extent assignable, in,
to and under all permits, franchises, licenses, approvals and other
authorizations respecting the use, occupation and operation of the
Property and every part thereof and respecting any business or other
activity conducted on or from the Property, and any product or proceed
thereof or therefrom, including,
3
<PAGE> 7
without limitation, all building permits, certificates of occupancy and
other licenses, permits and approvals issued by governmental authorities
having jurisdiction (herein collectively referred to as the "Permits");
(g) Contracts. All right, title and interest of the Grantor, to the
extent assignable, in and to all certificates, warranties, appraisals,
engineering, environmental, soils, insurance and other reports and
studies, books, records, correspondence, files and advertising materials,
and other documents, now or hereafter obtained or entered into, as the
case may be, pertaining to the construction, use, occupancy, possession,
operation, management, leasing, maintenance and/or ownership of the
Property and all right, title and interest of the Grantor therein (herein
collectively referred to as the "Contracts");
(h) Leases of Furniture, Furnishings and Equipment. All right, title
and interest of the Grantor as lessee in, to and under any leases of
furniture, furnishings, equipment and any other Goods now or hereafter
installed in or at any time used in connection with the Property;
(i) Rents. All rents, issues, profits, royalties, avails, income and
other benefits derived or owned, directly or indirectly, by the Grantor
from the Property, including, without limitation, all rents and other
consideration payable by tenants, claims against guarantors, and any cash
or other securities deposited to secure performance by tenants, under the
Leases (herein collectively referred to as "Rents"); and
(j) Proceeds. All proceeds of the conversion, voluntary or
involuntary of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards (herein collectively referred to as "Proceeds"), provided however,
the Collateral shall not include any general intangibles or other rights
arising under any contracts, instruments, licenses, or other documents as
to which the grant of a lien and/or security interest would constitute a
violation of a valid and enforceable restriction in favor of a third party
on such grant, unless and until any required consents shall have been
obtained; and further provided, however, in no event shall the Collateral
hereunder include any item or classes of "Collateral" as defined in the
Current Assets Security Agreement (as defined in the Credit Agreement) and
provided further, that the Collateral shall include after acquired
property to the extent, and only to the extent, that such after acquired
property is in replacement or substitution of Collateral existing as of
the date hereof.
AND, without limiting any of the other provisions of this Deed, the
Grantor expressly grants to the Grantee, as secured party, a security interest
in all of those portions of the Collateral which are or may be subject to the
State Uniform Commercial Code provisions applicable to secured transactions;
TO HAVE AND TO HOLD the Collateral to the use, benefit and behoof of the
Grantee, its successors, successors-in-title, and assigns, forever. This Deed
is intended to operate and is to be construed as a deed passing the title to
the Collateral to Grantee and is made under those provisions of the existing
laws of the State relating to deeds to secure debt and not as a mortgage, and
is given to secure the payment of the Obligations.
FURTHER to secure the full, timely and proper payment and performance of
the Obligations, the Grantor hereby covenants and agrees with and warrants to
the Grantee as follows:
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ARTICLE I
COVENANTS AND AGREEMENTS OF THE GRANTOR
SECTION 1.1. Payment of Obligations. (i) The Grantor agrees that:
(a) Grantor will duly and punctually pay and perform or cause to be
paid and performed each of its liabilities, duties and obligations
pursuant to its Subsidiary Guarantees under the Indenture at the time and
in accordance with the terms thereof, and
(b) when and as due and payable from time to time in accordance with
the terms hereof, pay and perform, or cause to be paid and performed, all
other Obligations.
SECTION 1.2. Title to Collateral, etc. The Grantor represents and warrants
to and covenants with the Grantee that:
(a) except as otherwise permitted by the terms of the Indenture, as
of the date hereof and at all times hereafter while this Deed is
outstanding, the Grantor (1) is and shall be the absolute owner of the
legal and beneficial title to the applicable interest in the Property and
to all other property included in the Collateral, and (2) has and shall
have good and marketable title in fee simple absolute, or easement or
leasehold estate, as currently represented in the granting clause as of
the date hereof, to the Property, subject in each case only to this Deed,
the liens expressly permitted pursuant to the terms of the Indenture and
the encumbrances set forth in Schedule 2 hereto (collectively, the
"Permitted Encumbrances");
(b) the Grantor has good and lawful right, power and authority to
execute this Deed and to convey, transfer, assign, set over and grant the
security title to and a security interest in the Collateral, all as
provided herein;
(c) this Deed has been duly executed, acknowledged and delivered on
behalf of the Grantor, all consents and other actions required to be taken
by the officers, directors, shareholders and partners, as the case may be,
of the Grantor have been duly and fully given and performed and this Deed
constitutes the legal, valid and binding obligation of the Grantor,
enforceable against the Grantor in accordance with its terms; and
(d) the Grantor, at its expense, will warrant and defend to the
Grantee and any purchaser under the power of sale herein or at any
foreclosure sale such title to the Collateral and the second security
title and second priority perfected security interest of this Deed thereon
and therein against all claims and demands and will maintain, preserve and
protect such security title and security interest and will keep this Deed
a valid, direct second security title of record on the Property and a
second priority perfected security interest in the Collateral other than
the Property, subject only to the Permitted Encumbrances.
SECTION 1.3. Title Insurance.
SECTION 1.3.1. Title Insurance Policy. Concurrently with the execution and
delivery of this Deed, the Grantor, at its expense, has obtained and delivered
to the Grantee a loan policy or policies of title insurance in an amount, and
in form and substance, reasonably satisfactory to the Grantee naming the
Grantee as the insured, insuring the title to and the second security title of
this Deed on the Property, with endorsements reasonably requested by the
Grantee. The Grantor has duly paid in full all premiums and other charges due
in connection with the issuance of such policy or policies of title insurance.
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Section 1.3.2. Title Insurance Proceeds. All proceeds received by and
payable to the Grantee for any loss under the loan policy or policies of title
insurance delivered to the Grantee pursuant to Section 1.3.1, or under any
policy or policies of title insurance delivered to the Grantee in substitution
therefor or replacement thereof, shall be the property of the Grantee and shall
be applied by the Grantee in accordance with the provisions of Section 2.3.
Section 1.4. Recordation. The Grantor, at its expense, will at all times
cause this Deed and any instruments amendatory hereof or supplemental hereto
and any instruments of assignment hereof or thereof (and any appropriate
financing statements or other instruments and continuations thereof), and each
other instrument delivered in connection with the Indenture, the Senior Secured
Notes or any other Security Agreements executed pursuant to the Indenture and
intended thereunder to be recorded, registered and filed, to be kept recorded,
registered and filed, in such manner and in such places, and will pay all such
recording, registration, filing fees, taxes and other charges, and will comply
with all such statutes and regulations as may be required by law in order to
establish, preserve, perfect and protect the security title and security
interest of this Deed as a valid, direct second security title on the Property
and second priority perfected security interest in the Collateral other than
the Property, subject only to the Permitted Encumbrances. The Grantor will pay
or cause to be paid, and will indemnify the Grantee in respect of, all taxes
(including interest and penalties) at any time payable in connection with the
filing and recording of this Deed and any and all supplements and amendments
hereto.
Section 1.5. Payment of Impositions, etc. Subject to Section 1.8 (relating
to permitted contests), the Grantor will pay or cause to be paid before the
same would become delinquent and before any fine, penalty, interest or cost may
be added for non-payment, all taxes, assessments, water and sewer rates,
charges, license fees, inspection fees and other governmental levies or
payments, of every kind and nature whatsoever, general and special, ordinary
and extraordinary, unforeseen as well as foreseen, which at any time may be
assessed, levied, confirmed, imposed or which may become a lien upon the
Collateral, or any portion thereof, or which are payable with respect thereto,
or upon the rents, issues, income or profits thereof, or on the occupancy,
operation, use, possession or activities thereof, whether any or all of the
same be levied directly or indirectly or as excise taxes or as income taxes,
and all taxes, assessments or charges which may be levied on the Obligations,
or the interest thereon (collectively, the "Impositions"). The Grantor will
deliver to the Grantee, upon request, copies of official receipts or other
satisfactory proof evidencing such payments.
Section 1.6. Insurance and Legal Requirements. Subject to Section 1.8
(relating to permitted contests), the Grantor, at its expense, will comply in
all material respects, or cause compliance in all material respects with
(a) all provisions of any insurance policy covering or applicable to
the Collateral or any part thereof, all requirements of the issuer of any
such policy, and all orders, rules, regulations and other requirements of
the National Board of Fire Underwriters (or any other body exercising
similar functions) applicable to or affecting the Collateral or any part
thereof or any use or condition of the Collateral or any part thereof
(collectively, the "Insurance Requirements"); and
(b) all laws, including Environmental Laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements of all
governments, departments, commissions, boards, courts, authorities,
agencies, officials and officers, foreseen or unforeseen, ordinary or
extraordinary, which now or at any time hereafter may be applicable to the
Collateral or any part thereof, or any of the adjoining sidewalks, curbs,
vaults and vault space, if any, streets or ways, or any use or condition
of the Collateral or any part thereof (collectively, the "Legal
Requirements");
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noncompliance of which could reasonably be expected to cause a Material Adverse
Effect (as defined in the Credit Agreement) whether or not compliance therewith
shall require structural changes in or interference with the use and enjoyment
of the Collateral or any part thereof.
SECTION 1.7. Security Interests, etc. The Grantor will not directly or
indirectly create or permit or suffer to be created or to remain, and will
promptly discharge or cause to be discharged, any deed to secure debt, deed of
trust, mortgage, encumbrance or charge on, pledge of, security interest in or
conditional sale or other title retention agreement with respect to or any
other lien or security interest or security title on or in the Collateral or
any part thereof or the interest of the Grantor or the Grantee therein, or any
Proceeds thereof or Rents or other sums arising therefrom, other than (a)
Permitted Encumbrances, and (b) liens of mechanics, materialmen, suppliers or
vendors or rights thereto incurred in the ordinary course of the business of
the Grantor for sums not yet due or any such liens or rights thereto which are
at the time being contested as permitted by Section 1.8. The Grantor will not
postpone the payment of any sums for which liens of mechanics, materialmen,
suppliers or vendors or rights thereto have been incurred (unless such liens or
rights thereto are at the time being contested as permitted by Section 1.8),
for more than 60 days after the completion of the action giving rise to such
liens or rights thereto.
SECTION 1.8. Permitted Contests. The Grantor at its expense may contest,
or cause to be contested, by appropriate legal proceedings conducted in good
faith and with due diligence, the amount or validity or application, in whole
or in part, of any Imposition, Legal Requirement or Insurance Requirement or
lien of a mechanic, materialman, supplier or vendor, provided that, (a) in the
case of an unpaid Imposition, lien, encumbrance or charge, such proceedings
shall suspend the collection thereof from the Grantor, the Grantee, and the
Collateral (including any rent or other income therefrom) and shall not
materially interfere with the payment of any such rent or income, (b) neither
the Collateral nor any rent or other income therefrom nor any part thereof or
interest therein would be in any material danger of being sold, forfeited,
lost, impaired or interfered with, (c) in the case of a Legal Requirement,
neither the Grantor nor the Grantee would be in material danger of any civil or
criminal liability for failure to comply therewith, (d) the Grantor shall have
furnished such security, if any, as may be required in the proceedings or as
may be reasonably requested by the Grantee, (e) the non-payment of the whole or
any part of any Imposition will not result in the delivery of a tax deed to the
Collateral or any part thereof because of such non-payment, (f) the payment of
any sums required to be paid with respect to any of the Senior Secured Notes or
under this Deed (other than any unpaid Imposition, lien, encumbrance or charge
at the time being contested in accordance with this Section 1.8) shall not be
interfered with or otherwise affected, (g) in the case of any Insurance
Requirement, the failure of the Grantor to comply therewith shall not affect
the validity of any insurance required to be maintained by the Grantor under
Section 2.1, and (h) that adequate reserves, determined in accordance with
GAAP, shall have been set aside on the Grantor's books.
SECTION 1.9. Leases. The Grantor represents and warrants to the Grantee
that, as of the date hereof, there are no written or oral leases or other
agreements of any kind or nature relating to the occupancy of any portion of
the Property by any Person other than the Grantor other than the Permitted
Encumbrances. Except as is permitted by the Indenture, the Grantor will not
enter into any such written or oral lease or other agreement with respect to
any portion of the Property without first obtaining the written consent of the
Grantee.
SECTION 1.10. Compliance with Instruments. The Grantor at its expense will
promptly comply in all material respects with all rights of way or use,
privileges, franchises, servitudes, licenses, easements, tenements,
hereditaments and appurtenances forming a part of the Property and all
instruments creating or evidencing the same, in each case, to the extent
compliance therewith is required of the Grantor under the terms thereof. Except
as is permitted by the Indenture, the Grantor will not take any
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which action which may result in a forfeiture or termination of the rights
afforded to the Grantor under any such instruments and will not, without the
prior written consent of the Grantee, amend any of such instruments in any
manner adverse to the Holders in any material respect.
SECTION 1.11. Maintenance and Repair, etc. Subject to the provisions of
Section 1.12, the Grantor will keep or cause to be kept all presently and
subsequently erected or acquired Improvements and the sidewalks, curbs, vaults
and vault space, if any, located on or adjoining the same, and the streets and
the ways adjoining the same, in good and substantial order and repair and in
such a fashion that neither the value nor utility of the Collateral will be
diminished, and, at its sole cost and expense, will promptly make or cause to
be made all necessary and appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen, so that its business carried on in
connection therewith may be properly conducted at all times. The Grantor at its
expense will do or cause to be done all shoring of foundations and walls of any
building or other Improvements on the Property and (to the extent permitted by
law) of the ground adjacent thereto, and every other act necessary or
appropriate for the preservation and safety of the Property by reason of or in
connection with any excavation or other building operation upon the Property
and upon any adjoining property, whether or not the Grantor shall, by any Legal
Requirement, be required to take such action or be liable for failure to do so.
SECTION 1.12. Alterations, Additions, etc. So long as no Event of Default
shall have occurred and be continuing, the Grantor shall have the right at any
time and from time to time to make or cause to be made reasonable alterations
of and additions to the Property or any part thereof, provided that any
alteration or addition: (a) shall not change the general character or the use
of the Property or reduce the fair market value thereof below its value
immediately before such alteration or addition, or impair the usefulness of the
Property; (b) is effected with due diligence, in a good and workmanlike manner
and in compliance in all material respects with all Legal Requirements and
Insurance Requirements; (c) subject to Section 1.8 is promptly and fully paid
for, or caused to be paid for, by the Grantor; and (d) is made, in case the
estimated cost of such alteration or addition exceeds U.S. $1,000,000, under
the supervision of a qualified architect or engineer or another professional.
SECTION 1.13. Acquired Property Subject to Security Title/Security
Interest. Subject to the Permitted Encumbrances and except as otherwise
permitted by the Indenture, all property at any time acquired by the Grantor
and provided or required by this Deed to be or become subject to the security
title and security interest hereof, whether such property is acquired by
exchange, purchase, construction or otherwise, shall forthwith become subject
to the security title and security interest of this Deed without further action
on the part of the Grantor or the Grantee. The Grantor, at its expense, will
execute and deliver to the Grantee (and will record and file as provided in
Section 1.4) an instrument supplemental to this Deed reasonably satisfactory in
substance and form to the Grantee, whenever such an instrument is necessary
under applicable law to subject to the security title and security interest of
this Deed all right, title and interest of the Grantor in and to all property
provided or required by this Deed to be subject to the security title and
security interest hereof.
SECTION 1.14. Assignment of Rents, Proceeds, etc. The assignment, grant
and conveyance of the Leases, Rents, Proceeds and other rents, income, proceeds
and benefits of the Collateral contained in the granting clause of this Deed
constitutes an absolute, present and irrevocable assignment, grant and
conveyance, provided, however, that a revocable license is hereby given to the
Grantor, so long as no Event of Default has occurred and be continuing
hereunder, to collect, receive and apply such Rents, Proceeds and other rents,
income, proceeds and benefits as they become due and payable, but not further
in advance thereof than is customary, and in accordance with all of the other
terms, conditions and provisions hereof, of the Indenture, the Senior Secured
Notes and Security Agreements executed pursuant to the Indenture, and of the
Leases, contracts, agreements and other instruments with respect to
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such payments are made or such other benefits are conferred. Upon the occurrence
and continuance of an Event of Default, such license shall terminate immediately
and automatically, without notice to the Grantor or any other Person except as
required by law, and shall not be reinstated upon a cure of such Event of
Default without the express written consent of the Grantee. Such assignment
shall be fully effective without any further action on the part of the Grantor
or the Grantee and the Grantee shall be entitled, at its option, upon the
occurrence and continuance of an Event of Default hereunder, to collect, receive
and apply all Rents, Proceeds and all other rents, income, proceeds and benefits
from the Collateral, including all right, title and interest of the Grantor in
any escrowed sums or deposits or any portion thereof or interest therein,
whether or not the Grantee takes possession of the Collateral or any part
thereof. The Grantor further grants to the Grantee the right, at the Grantee's
option, upon the occurrence and continuance of an Event of Default hereunder,
to:
(a) enter upon and take possession of the Property for the purpose of
collecting Rents, Proceeds and said rents, income, proceeds and other
benefits;
(b) dispossess by the customary summary proceedings any tenant,
purchaser or other Person defaulting in the payment of any amount when and
as due and payable, or in the performance of any other obligation, under
any Lease, contract or other instrument to which said Rents, Proceeds or
other rents, income, proceeds or benefits relate;
(c) let or convey the Collateral or any portion thereof or any
interest therein; and
(d) apply Rents, Proceeds and such rents, income, proceeds and other
benefits, after the payment of all necessary fees, charges and expenses,
on account of the Obligations in accordance with Section 3.11.
SECTION 1.15. No Claims Against the Grantee. Nothing contained in this
Deed shall constitute any consent or request by the Grantee, express or
implied, for the performance of any labor or the furnishing of any materials or
other property in respect of the Property or any part thereof, or be construed
to permit the making of any claim against the Grantee in respect of labor or
services or the furnishing of any materials or other property or any claim that
any lien based on the performance of such labor or the furnishing of any such
materials or other property is prior to the security title and security
interest of this Deed. ALL CONTRACTORS, SUBCONTRACTORS, VENDORS AND OTHER
PERSONS DEALING WITH THE PROPERTY, OR WITH ANY PERSONS INTERESTED THEREIN, ARE
HEREBY REQUIRED TO TAKE NOTICE OF THE PROVISIONS OF THIS SECTION.
SECTION 1.16. Indemnification. The Grantor will protect, indemnify, save
harmless and defend the Grantee, the Holders of the Senior Secured Notes, and
each of their respective officers, directors, shareholders, employees,
representatives and agents (collectively, the "Indemnified Parties" and
individually, an "Indemnified Party"), from and against any and all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses) imposed upon or incurred by or asserted against any Indemnified Party
by reason of (a) ownership of an interest in this Deed, the Senior Secured
Notes or the Property, (b) any accident, injury to or death of persons or loss
of or damage to or loss of the use of property occurring on or about the
Property or any part thereof or the adjoining sidewalks, curbs, vaults and
vault spaces, if any, streets, alleys or ways, (c) any use, non-use or
condition of the Property or any part thereof or the adjoining sidewalks,
curbs, vaults and vault spaces, if any, streets, alleys or ways, (d) any
failure on the part of the Grantor to perform or comply with any of the terms
of this Deed, the Indenture, the Senior Secured Notes or the Security
Agreements executed pursuant to the Indenture, (e) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Collateral or any part thereof made or suffered to be made by or on behalf of
the Grantor, (f) any negligence or tortuous act
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on the part of the Grantor or any of its agents, contractors, lessees,
licensees or invitees, (g) any work in connection with any alterations,
changes, new construction or demolition of or additions to the Property, or (h)
(i) any Hazardous Material (as defined in the Credit Agreement) on, in, under
or affecting all or any portion of the Property, the groundwater, or any
surrounding areas, (ii) any misrepresentation, inaccuracy or breach of any
warranty, covenant or agreement contained or referred to in Sections 1.21 and
1.22, (iii) any violation or claim of violation by the Grantor of any
Environmental Laws (as defined in the Credit Agreement), or (iv) the imposition
of any lien for damages caused by or the recovery of any costs for the cleanup,
release or threatened release of any Hazardous Material, except to the extent
that any of the matters described in subsections (a)-(h) arise out of the gross
negligence or willful misconduct of any Indemnified Party. If any action or
proceeding be commenced, to which action or proceeding any Indemnified Party is
made a party by reason of the execution of this Deed or any other Security
Agreements executed pursuant to the Indenture, or in which it becomes necessary
to defend or uphold the lien of this Deed, all sums paid by the Indemnified
Parties, for the expense of any litigation to prosecute or defend the rights
and lien created hereby or otherwise, shall be paid by the Grantor to such
Indemnified Parties, as the case may be, as hereinafter provided. The Grantor
will pay and save the Indemnified Parties harmless against any and all
liability with respect to any intangible personal property tax or similar
imposition of the State or any subdivision or authority thereof now or
hereafter in effect, to the extent that the same may be payable by the
Indemnified Parties in respect of this Deed, any Indenture, Senior Secured
Notes and Security Agreements executed pursuant to the Indenture or any Secured
Obligation. All amounts payable to the Indemnified Parties under this Section
1.16 shall be deemed indebtedness secured by this Deed and any such amounts
which are not paid within ten (10) days after written demand therefor by any
Indemnified Party shall bear interest at the rate provided for in Section 3.2.2
of the Indenture from the date of such demand. In case any action, suit or
proceeding is brought against any Indemnified Party by reason of any such
occurrence, the Grantor, upon request of such Indemnified Party, will, at the
Grantor's expense, resist and defend such action, suit or proceeding or cause
the same to be resisted or defended by counsel designated by the Grantor and
approved by such Indemnified Party. The obligations of the Grantor under this
Section 1.16 shall survive any cancellation and surrender of this Deed.
SECTION 1.17. No Credit for Payment of Taxes. The Grantor shall not be
entitled to any credit against the Obligations by reason of the payment of any
tax on the Property or any part thereof or by reason of the payment of any
other Imposition, and shall not apply for or claim any deduction from the
taxable value of the Property or any part thereof by reason of this Deed.
SECTION 1.18. Intentionally Omitted
SECTION 1.19. No Transfer of the Property. Except as is provided in the
Indenture, and except for the Permitted Encumbrances, the Grantor shall not,
without the prior written consent of the Grantee, which consent may be granted
or withheld in the sole and absolute discretion of the Grantee (i) sell,
convey, assign or otherwise transfer the Property or any portion of the
Grantor's interest therein or (ii) further encumber the Property or permit the
Property to become encumbered by any lien, claim, security title, security
interest or other indebtedness of any kind or nature other than the Permitted
Encumbrances.
SECTION 1.20. Security Agreement. With respect to the items of personal
property and fixtures referred to and described in the granting clause of this
Deed and included as part of the Collateral, this Deed is hereby made and
declared to be a security agreement encumbering each and every item of personal
property and fixtures now or hereafter owned by Grantor and included herein as
a part of the Collateral, in compliance with the provisions of the Uniform
Commercial Code as enacted in the State. In this respect, Grantor, as "Debtor",
expressly grants to Grantee, as "Secured Party", a security interest in and to
all of the property now or hereafter owned by Grantor which constitutes the
personal property and fixtures hereinabove referred to and described in this
Deed, including all extensions, accessions,
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additions, improvements, betterments, renewals, replacements and substitutions
thereof or thereto, and all proceeds from the sale or other disposition
thereof. Grantor agrees to execute and deliver to Grantee, upon Grantee's
request, any other security agreement and financing statements, as well as
extensions, renewals, and amendments thereof, in such form as Grantee may
require to perfect a security interest with respect to said items. Grantor
shall pay all costs of filing such financing statements and any extensions,
renewals, amendments and releases thereof, and shall pay all reasonable costs
and expenses of any record searches for financing statements Grantee may
reasonably require. Except as is provided in the Indenture, and except for the
Permitted Encumbrances, without the prior written consent of Grantee, Grantor
shall not create or suffer to be created pursuant to the Uniform Commercial
Code any other security interest in the above-described personal property and
fixtures, including any replacements and additions thereto. Upon the occurrence
and continuance of an Event of Default under this Deed, the Grantee shall have
and shall be entitled to exercise any and all of the rights and remedies (i) as
prescribed in this Deed, or (ii) as prescribed by general law, or (iii) as
prescribed by the specific statutory provisions now or hereafter enacted and
specified in said Uniform Commercial Code, all at Grantee's sole election.
Grantor and Grantee agree that the filing of any financing statements in the
records normally having to do with personal property shall not in any way
affect the agreement of Grantor and Grantee that everything located in, on or
about, or used or intended to be used with or in connection with the use,
operation or enjoyment of, the Collateral, which is described or reflected as a
fixture in this Deed, is, and at all times and for all purposes and in all
proceedings, both legal and equitable, shall be, regarded as part of the Real
Estate conveyed hereby. Grantor warrants that Grantor's name, identity and
address are as set forth herein. The mailing address of the Grantee from which
information may be obtained concerning the security interest created herein is
also set forth herein.
SECTION 1.21. Representations and Warranties. In order to induce the
Grantee to enter into this Deed, the Indenture and the other Senior Secured
Notes and Security Agreements executed pursuant to the Indenture as applicable,
the Grantor agrees that all of the representations and warranties of Grantor
set forth in the Senior Secured Notes and Security Agreements executed pursuant
to the Indenture are incorporated into this Deed by reference as if fully set
forth herein.
SECTION 1.22. Grantor's Covenants
In order to induce the Grantee to enter into this Deed, the Indenture and
the other Senior Secured Notes and Security Agreements as applicable, the
Grantor agrees that all of the covenants of Grantor set forth in the Indenture
are incorporated into this Deed by reference as if fully set forth herein.
SECTION 1.23. Attornment.
Grantee hereby acknowledges and agrees that the security and security
interest granted herein are subject to the rights of certain lessees under the
leases as set forth in the Credit Agreement and will be subject to the rights
of lessees under any Leases entered into by the Grantor after the date hereof
which are permitted as Permitted Liens pursuant to the Indenture, subject to
the express rights contained in the applicable Lease. The rights of the tenants
under the Leases to the leased premises shall not be adversely affected by the
exercise by Grantee of any of its rights hereunder, nor shall any such tenant
be in any way deprived of its rights under the applicable Lease except in
accordance with the terms of such Lease. In the event that the Grantee succeeds
to the interest of the Grantor under a Lease, such Lease shall not be
terminated or affected thereby except as set forth therein, and any sale of the
applicable leased premises by Grantee or pursuant to the judgment of any court
in an action to enforce the remedies provided for in this Deed shall be made
subject to such Lease and the rights of such tenant expressly set forth
thereunder. If Grantee succeeds to the interests of the Grantor in and to the
applicable leased premises or under such Lease or enters into possession of
such leased premises, the Grantee, and such tenants, shall be bound to
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each other under all of the express terms, covenants and conditions of such
Lease, as if the Grantee was originally the Grantor as lessor thereunder.
ARTICLE II
INSURANCE; DAMAGE, DESTRUCTION OR TAKING, ETC.
SECTION 2.1. Insurance.
SECTION 2.1.1. Risks to be Insured. The Grantor will, at its expense,
maintain or cause to be maintained with insurance carriers approved by the
Grantee (a) insurance with respect to the Improvements against loss or damage
by fire, lightning and such other risks as are included in standard "all-risk"
policies, in amounts sufficient to prevent the Grantor and the Grantee from
becoming a co-insurer of any partial loss under the applicable policies, but in
any event in amounts not less than the then full insurable value (actual
replacement value) of the Improvements, as determined by the Grantor in
accordance with generally accepted insurance practice and approved by the
Grantee or, at the request of the Grantee, as determined at the Grantor's
expense by the insurer or insurers or by an expert approved by the Grantee, (b)
comprehensive public liability, including bodily injury and product liability
and property damage, insurance, with personal injury endorsements, applicable
to the Property in such amounts as are customarily carried by Persons operating
similar properties in the same general locality, but in any event with a
combined single limit of not less than Twenty Million Dollars ($20,000,000) per
occurrence, (c) explosion insurance in respect of any steam and pressure
boilers and similar apparatus located in the Property in such amounts as are
usually carried by persons operating similar properties in the same general
locality, but in any event in an amount not less than Twenty Million Dollars
($20,000,000), (d) business interruption insurance (including added expense
coverage) against all insurable perils for a period of not fewer than twelve
(12) months (subject to a reasonable aggregate deductible not exceeding ten
(10) days per occurence), (e) worker's compensation insurance to the full
extent required by applicable law for all employees of the Grantor engaged in
any work on or about the Property and employer's liability insurance with a
limit of not less than Ten Million Dollars ($10,000,000) for each occurrence,
(f) all-risk, builders' risk insurance with respect to the Property during any
period during which there is any construction work being performed, against
loss or damage by fire or other risks, including vandalism, malicious mischief
and sprinkler leakage, as are included in so-called "extended coverage" clauses
at the time available and (g) such other insurance with respect to the Property
in such amounts and against such insurable hazards as the Grantee from time to
time may reasonably require by written notice to the Grantor.
SECTION 2.1.2. Policy Provisions. All insurance maintained by the Grantor
pursuant to Section 2.1.1 shall (a) (except for worker's compensation
insurance) list the Grantee as an additional insured as its interests may
appear, (b) (except for worker's compensation and public liability insurance)
provide that the proceeds for any losses shall be adjusted by the Grantor
subject to the approval of the Grantee in the event the proceeds shall exceed
$1,000,000, and shall be payable to the Grantee, to be held and applied as
provided in Section 2.3, (c) include effective waivers by the insurer of all
rights of subrogation against any named insured, the indebtedness secured by
this Deed and the Property and all claims for insurance premiums against the
Grantee, (d) (except for worker's compensation and public liability insurance)
provide that any losses shall be payable notwithstanding (i) any act, failure
to act or negligence of or violation of warranties, declarations or conditions
contained in such policy by any named insured, (ii) the occupation or use of
the Property for purposes more hazardous than permitted by the terms thereof,
(iii) any foreclosure or other action or proceeding taken by the Grantee
pursuant to any provision of this Deed, or (iv) any change in title or
ownership of the Property, (e) provide that no cancellation, reduction in
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amount or material change in coverage thereof or any portion thereof shall be
effective until at least thirty (30) days after receipt by the Grantee of
written notice thereof, (f) provide that any notice under such policies shall
be simultaneously delivered to the Grantee, and (g) be satisfactory in all
other reasonable respects to the Grantee. Any insurance maintained pursuant to
this Section 2.1 may be evidenced by blanket insurance policies covering the
Property and other properties or assets of the Grantor, provided that any such
policy shall specify the portion, if less than all, of the total coverage of
such policy that is allocated to the Property and shall in all other respects
comply with the requirements of this Section 2.1.
SECTION 2.1.3. Delivery of Policies, etc. The Grantor will deliver to the
Grantee, promptly upon request, (a) certificates of all policies evidencing all
insurance required to be maintained under Section 2.1.1 (or, in the case of
blanket policies, certificates thereof by the insurers together with a
counterpart of each blanket policy), and (b) evidence as to the payment of all
premiums due thereon (with respect to public liability insurance policies, all
installments for the current year due thereon to such date), provided that the
Grantee shall not be deemed by reason of its custody of such certificates to
have knowledge of the contents thereof or of the applicable policies. The
Grantor will also deliver to the Grantee prior to the expiration of any policy
a binder or certificate of the insurer evidencing the replacement thereof and
when the new policy is issued a certificate of such new policy (or, in the case
of a replacement blanket policy, a certificate thereof of the insurer together
with a counterpart of the blanket policy). In the event the Grantor shall fail
to effect or maintain any insurance required to be effected or maintained
pursuant to the provisions of this Section 2.1, the Grantor will indemnify the
Grantee against damage, loss or liability resulting from all risks for which
such insurance should have been effected or maintained.
SECTION 2.1.4. Separate Insurance. The Grantor will not take out separate
insurance concurrent in form or contributing in the event of loss with that
required to be maintained pursuant to this Section 2.1.
SECTION 2.2. Damage, Destruction or Taking; Grantor to Give Notice;
Assignment of Awards. In case of
(a) any material damage to or destruction of the Collateral or any
material part thereof, or
(b) any taking, whether for permanent or temporary use, of all or any
material part of the Collateral or any material interest therein or
material right accruing thereto, as the result of the exercise of the
right of condemnation or eminent domain, or a change of grade affecting
the Collateral or any portion thereof (a "Taking"), or the commencement of
any proceedings or negotiations which may result in a Taking,
the Grantor will promptly give written notice thereof to the Grantee, generally
describing the nature and extent of such damage or destruction and the
Grantor's best estimate of the cost of restoring the Collateral, or the nature
of such proceedings or negotiations and the nature and extent of the Taking
which might result therefrom, as the case may be. The Grantee shall be entitled
to all insurance proceeds payable on account of such damage or destruction and
to all awards or payments allocable to the Collateral on account of such Taking
up to the amount of the Obligations, and the Grantor hereby irrevocably
assigns, transfers and sets over to the Grantee all rights of the Grantor to
any such proceeds, awards or payments and irrevocably authorizes and empowers
the Grantee, at its option, in the name of the Grantor or otherwise, to file
and prosecute what would otherwise be the Grantor's claim for any such
proceeds, award or payment and to collect, receipt for and retain the same for
disposition in accordance with Section 2.3. The Grantor will pay all reasonable
costs and expenses incurred by the Grantee in
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connection with any such damage, destruction or Taking and seeking and
obtaining any insurance proceeds, awards or payments in respect thereof.
SECTION 2.3. Application of Proceeds and Awards. The Grantee may, at its
option, apply all amounts recovered under any insurance policy required to be
maintained by the Grantor hereunder and all awards received by it on account of
any Taking in any one or more of the following ways:
(a) to the payment of the reasonable costs and expenses incurred by
the Grantee in obtaining any such insurance proceeds or awards, including
the fees and expenses of attorneys and insurance and other experts and
consultants, the costs of litigation, arbitration, mediation,
investigations and other judicial, administrative or other proceedings and
all other out-of-pocket expenses;
(b) to the payment of the principal of the Obligations and any
interest (including post-petition interest payable in any proceedings for
bankruptcy under applicable law ("Post-Petition Interest") to the extent
such interest is an Obligation) accrued and unpaid thereon, without regard
to whether any portion or all of such amounts shall be matured or
unmatured, and, in case such amount shall be insufficient to pay in full
all such amounts, then such amount shall be applied, first, to the payment
of all amounts of interest (including Post-Petition Interest to the extent
such interest is an Obligation) accrued on the Obligations and unpaid,
second, to the payment of all amounts of principal at the time outstanding
thereon;
(c) to the payment of, or the application to, any Obligation (other
than as provided in clause (b) above);
(d) to fulfill any of the other covenants contained herein, in the
Indenture, Senior Secured Notes and Security Agreements as the Grantee may
determine in its sole discretion;
(e) to the Grantor for application to the cost of restoring the
Collateral and the replacement of Goods destroyed, damaged or taken; or
(f) to the Grantor.
Notwithstanding the foregoing provisions of this Section 2.3 to the
contrary (but subject to the provisions of Section 2.4), and if each of the
following conditions is satisfied, the Grantee, upon request of the Grantor,
shall apply insurance proceeds or condemnation awards received by it to the
restoration or replacement of the Collateral, to the extent necessary for the
restoration or replacement thereof:
(i) there shall then exist no uncured Event of Default;
(ii) the Grantor shall furnish to the Grantee a certificate of
an architect or engineer reasonably acceptable to the Grantee stating
(x) that the Collateral is capable of being restored, prior to the
maturity of the Indenture, to substantially the same condition as
existed prior to the casualty or Taking, (y) the aggregate estimated
direct and indirect costs of such restoration and (z) as to any
Taking, that the property taken in such Taking, or sold under threat
thereof, is not necessary to the Grantor's customary use or occupancy
of the Property or Grantor otherwise provides Grantee adequate
assurance that the Collateral can be restored or is not necessary to
Grantor's use or occupancy of the Property; and
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(iii) in the event that the estimated cost of restoration set
forth in the certificate of such architect or engineer (and such
revisions to such estimate as are from time to time made) exceeds the
net insurance proceeds or condemnation awards actually received from
time to time, the Grantor shall deposit the amount of such excess
with the Grantee.
In the event that such insurance proceeds or condemnation awards are to be
utilized in the restoration of the Collateral, the Grantee shall disburse such
Proceeds and the additional amounts deposited by the Grantor for such
restoration after receipt of a written request for disbursement, on not fewer
than five (5) nor more than twelve (12) Business Days notice and, to the extent
applicable, in accordance with the Grantee's customary construction loan
procedures and conditions. In the event that such insurance or condemnation
awards are to be utilized to replace the Collateral so destroyed or taken, the
Grantee shall disburse such Proceeds after receipt of a written request for
disbursement, on not fewer than five (5) Business Days nor more than twelve
(12) Business Days notice simultaneously with the acquisition of such
replacement property by the Grantor. In the event that, after the restoration
or replacement of the Collateral, any insurance or condemnation awards shall
remain, such amount shall be paid to the Grantor. Insurance proceeds and
condemnation awards shall be invested in the manner reasonably requested by the
Grantor and approved by the Grantee, and all interest earned thereon shall be
applied as provided in this Section 2.3. If, prior to the receipt by the
Grantee of such insurance proceeds or condemnation awards, the Collateral shall
have been sold on foreclosure, the Grantee shall have the right to receive said
insurance proceeds or condemnation awards to the extent of any deficiency found
to be due upon such sale, with legal interest thereon, whether or not a
deficiency judgment shall have been sought or recovered or denied, and the
reasonable attorneys' fees, costs and disbursements incurred by the Grantee in
connection with the collection of such award or payment.
SECTION 2.4. Total Taking and Total Destruction. In the event of a Total
Destruction or a Total Taking, the Grantee shall apply all amounts recovered
under any insurance policy referred to in Section 2.1.1 and all awards received
by it on account of any such Taking as follows:
(a) first, to the payment of the reasonable costs and expenses
incurred by the Grantee in obtaining any such insurance proceeds or
awards, including the fees and expenses of attorneys and insurance and
other experts and consultants, the costs of litigation, arbitration,
mediation, investigations and other judicial, administrative or other
proceedings and all other out-of-pocket expenses;
(b) second, to the payment of the principal of the Obligations and
any interest (including Post-Petition Interest to the extent such interest
is an Obligation) accrued and unpaid thereon, without regard to whether
any portion or all of such amounts shall be matured or unmatured and, in
case such amount shall be insufficient to pay in full all such amounts,
then such amount shall be applied, first, to the payment of all amounts of
interest (including Post-Petition Interest to the extent such interest is
an Obligation) accrued on the Obligations and unpaid, and second, to the
payment of all amounts of principal at the time outstanding thereon;
(c) third, to the payment of, or the application to, any Obligation
(other than as provided in clause (b) above);
(d) fourth, to fulfill any of the other covenants contained herein as
the Grantee may determine; and
(e) fifth, the balance, if any, to the Grantor.
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ARTICLE III
EVENTS OF DEFAULT; REMEDIES, ETC.
SECTION 3.1. Events of Default; Acceleration. If an "Event of Default"
(pursuant to and as defined in Section 6.01 of the Indenture) shall have
occurred and be continuing, then and in any such event the Grantee may at any
time thereafter (unless all Events of Default shall theretofore have been
remedied and all costs and expenses, including, without limitation, attorneys'
fees and expenses incurred by or on behalf of the Grantee, shall have been paid
in full by the Grantor) declare, by written notice to the Grantor, the
Obligations to be due and payable immediately or on a date specified in such
notice, and on such date the same shall be and become due and payable, without
presentment, demand, protest or notice, all of which the Grantor hereby waives.
The Grantor will pay on demand all costs and expenses, including, without
limitation, attorneys' fees and expenses, incurred by or on behalf of the
Grantee in enforcing this Deed, or any other Indenture and any Security
Agreements executed pursuant to the Indenture, evidencing or securing the
Senior Secured Notes or occasioned by any default hereunder or thereunder.
SECTION 3.2. Legal Proceedings; Judicial Foreclosure. If an Event of
Default shall have occurred and be continuing, the Grantee at any time may, at
its election, proceed at law or in equity or otherwise to enforce the payment
and performance of the Obligations in accordance with the terms hereof and
thereof and to foreclose the security title of this Deed as against all or any
part of the Collateral and to have the same sold under the judgment or decree
of a court of competent jurisdiction. The Grantee shall be entitled to recover
in such proceedings all costs incident thereto, including attorneys' fees and
expenses in such amounts as may be fixed by the court.
SECTION 3.3. Power of Sale. If an Event of Default shall have occurred and
be continuing, Grantee, at its option, may sell the Collateral or any part of
the Collateral at one or more public sale or sales before the door of the
courthouse of the county in which the Land or any part of the Land is situated,
to the highest bidder for cash, in order to pay the Obligations, and all
expenses of sale and of all proceedings in connection therewith, including
attorney's fees, after advertising the time, place and terms of sale once a
week for four (4) weeks immediately preceding such sale (but without regard to
the number of days) in a newspaper in which Sheriff's sales are advertised in
said county. At any such public sale, Grantee may execute and deliver to the
purchaser a conveyance of the Collateral or any part of the Collateral, and to
this end, Grantor hereby constitutes and appoints Grantee the agent and
attorney-in-fact of Grantor to make such sale and conveyance, and thereby to
divest Grantor of all right, title and equity that Grantor may have in and to
the Collateral and to vest the same in the purchaser or purchasers at such sale
or sales, and all the acts and doings of said agent and attorney-in-fact are
hereby ratified and confirmed and any recitals in said conveyance or
conveyances as to facts essential to a valid sale shall be binding upon
Grantor. The aforesaid power of sale and agency hereby granted are coupled with
an interest and are irrevocable by death or otherwise, are granted as
cumulative of the other remedies provided hereby or by law for collection of
the Obligations and shall not be exhausted by one exercise thereof but may be
exercised until full payment of all of the Obligations. In the event of any
sale under this Deed by virtue of the exercise of the powers herein granted, or
pursuant to any order in any judicial proceeding or otherwise, the Collateral
may be sold as an entirety or in separate parcels and in such manner or order
as Grantee in its sole discretion may elect. One or more exercises of the
powers herein granted shall not extinguish nor exhaust such powers, until the
entire Collateral is sold or the Obligations paid in full. If the Obligations
are now or hereafter further secured by any chattel mortgages, pledges,
contracts of guaranty, assignments of lease or other security instruments,
Grantee may at its option exhaust the remedies granted under any of said
security instruments either concurrently or independently, and in such order as
Grantee may determine. Upon any public foreclosure sale or sales of all or any
portion of the Collateral under the power herein granted, Grantee may bid for
and purchase the Collateral
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and shall be entitled to apply all or any part of the Obligations as a credit
to the purchase price. In the event of any such public foreclosure sale or
sales under the power herein granted, Grantor shall be deemed a tenant holding
over and shall forthwith deliver possession to the purchaser or purchasers at
such sale or be summarily dispossessed according to provisions of law
applicable to tenants holding over.
SECTION 3.4. Uniform Commercial Code Remedies. If an Event of Default
shall have occurred and be continuing, the Grantee may exercise from time to
time and at any time any rights and remedies available to it under applicable
law upon default in the payment of the Obligations, including, without
limitation, any right or remedy available to it as a secured party under the
Uniform Commercial Code of the State. The Grantor shall, promptly upon request
by the Grantee, assemble the Collateral, or any portion thereof generally
described in such request, and make it available to the Grantee at such place
or places designated by the Grantee and reasonably convenient to the Grantee or
the Grantor. If the Grantee elects to proceed under the Uniform Commercial Code
of the State to dispose of portions of the Collateral, the Grantee, at its
option, may give the Grantor notice of the time and place of any public sale of
any such property, or of the date after which any private sale or other
disposition thereof is to be made, by sending notice by registered or certified
first class mail, postage prepaid, to the Grantor at least ten (10) days before
the time of the sale or other disposition. If any notice of any proposed sale,
assignment or transfer by the Grantee of any portion of the Collateral or any
interest therein is required by law, the Grantor conclusively agrees that ten
(10) days notice to the Grantor of the date, time and place (and, in the case
of a private sale, the terms) thereof is reasonable.
SECTION 3.5. Grantee Authorized to Execute Deeds, etc. The Grantor
irrevocably appoints the Grantee (which appointment is coupled with an interest
and is irrevocable by death or otherwise) the true and lawful attorney-in-fact
of the Grantor, in its name and stead and on its behalf, for the purpose of
effectuating any sale, assignment, transfer or delivery for the enforcement
hereof, whether pursuant to power of sale, foreclosure or otherwise, to execute
and deliver all such deeds, bills of sale, assignments, releases and other
instruments as may be designated in any such request.
SECTION 3.6. Purchase of Collateral by Grantee. The Grantee may be a
purchaser of the Collateral or of any part thereof or of any interest therein
at any public sale thereof, whether pursuant to power of sale, foreclosure or
otherwise, and the Grantee may apply upon the purchase price thereof the
Obligations secured hereby owing to the Grantee. Such purchaser shall, upon any
such purchase, acquire good title to the properties so purchased, free of the
security interest and security title of this Deed and free of all rights of
redemption in the Grantor. Section 3.7. Receipt a Sufficient Discharge to
Purchaser. Upon any sale of the Collateral or any part thereof or any interest
therein, whether pursuant to power of sale, foreclosure or otherwise, the
receipt of the Grantee or the officer making the sale under judicial
proceedings shall be a sufficient discharge to the purchaser for the purchase
money, and such purchaser shall not be obliged to see to the application
thereof.
SECTION 3.8. Waiver of Appraisement, Valuation, etc. The Grantor hereby
waives, to the fullest extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension and redemption laws now or hereafter
in force and all rights of marshaling in the event of any sale of the
Collateral or any part thereof or any interest therein.
SECTION 3.9. Sale a Bar Against Grantor. Any sale of the Collateral or any
part thereof or any interest therein under or by virtue of this Deed, whether
pursuant to power of sale, foreclosure or otherwise, shall forever be a bar
against the Grantor.
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SECTION 3.10. Obligations to Become Due on Sale. Except as otherwise
provided in the Indenture, upon any sale of the Collateral or any portion
thereof or interest therein by virtue of the exercise of any remedy by the
Grantee under or by virtue of this Deed, whether pursuant to power of sale,
foreclosure or otherwise in accordance with this Deed or by virtue of any other
remedy available at law or in equity or by statute or otherwise, at the option
of the Grantee, any sums or monies due and payable pursuant to the Indenture,
the Senior Secured Notes and Security Agreements and/or the Obligations shall,
if not previously declared due and payable, immediately become due and payable,
together with interest accrued thereon, and all other indebtedness which this
Deed by its terms secures.
SECTION 3.11. Application of Proceeds of Sale and Other Moneys. Except as
otherwise provided in the Indenture or herein, the proceeds of any sale of the
Collateral or any part thereof or any interest therein under or by virtue of
this Deed, whether pursuant to power of sale, foreclosure or otherwise, and all
other moneys at any time held by the Grantee as part of the Collateral, shall
be applied in such order of priority as the Grantee shall determine in its sole
and absolute discretion including, without limitation, as follows:
(a) first, to the payment of the reasonable costs and expenses of
such sale (including, without limitation, the cost of evidence of title
and the costs and expenses, if any, of taking possession of, retaining
custody over, repairing, managing, operating, maintaining and preserving
the Collateral or any part thereof prior to such sale), all reasonable
costs and expenses incurred by the Grantee or any other Person in
obtaining or collecting any insurance proceeds, condemnation awards or
other amounts received by the Grantee, all reasonable costs and expenses
of any receiver of the Collateral or any part thereof, and any Impositions
or other charges or expenses prior to the security interest or security
title of this Deed, which the Grantee may consider it necessary or
desirable to pay;
(b) second, to the payment of any Obligation (other than those set
forth in Section 3.11(c) below);
(c) third, to the payment of all amounts of principal of and interest
(including Post-Petition Interest to the extent such interest is an
Obligation) at the time due and payable under the Obligations at the time
outstanding (whether due by reason of maturity or by reason of any
prepayment requirement or by declaration or acceleration or otherwise),
including interest at the rate provided for in the Indenture on any
overdue principal and (to the extent permitted under applicable law) on
any overdue interest; and, in case such moneys shall be insufficient to
pay in full such principal and interest, then, first, ----- to the payment
of all amounts of interest (including Post-Petition Interest to the extent
such interest is an Obligation) at the time due and payable and, second,
to the payment of all amounts of principal at ------ the time due and
payable under the Obligations; and
(d) fourth, the balance, if any, held by the Grantee after payment in
full of all amounts referred to in subdivisions Sections 3.11(a), (b) and
(c) above, shall, unless a court of competent jurisdiction may otherwise
direct by final order not subject to appeal, be paid to or upon the
direction of the Grantor.
SECTION 3.12. Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, the Grantee shall, as a matter of right, without
notice, and without regard to the adequacy of any security for the indebtedness
secured hereby or the solvency of the Grantor, be entitled to the appointment
of a receiver for all or any part of the Collateral, whether such receivership
be incidental to a proposed sale of the Collateral or otherwise, and the
Grantor hereby consents to the appointment of such a receiver and will not
oppose any such appointment.
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SECTION 3.13. Possession, Management and Income. If an Event of Default
shall have occurred and be continuing, in addition to, and not in limitation
of, the rights and remedies provided in Section 1.14, the Grantee, upon five
(5) days written notice to the Grantor, may enter upon and take possession of
the Collateral or any part thereof by force, summary proceeding, ejectment or
otherwise and may remove the Grantor and all other Persons and any and all
property therefrom and may hold, operate, maintain, repair, preserve and manage
the same and receive all earnings, income, Rents, issues and Proceeds accruing
with respect thereto or any part thereof. The Grantee shall be under no
liability for or by reason of any such taking of possession, entry, removal or
holding, operation or management, except that any amounts so received by the
Grantee shall be applied to pay all costs and expenses of so entering upon,
taking possession of, holding, operating, maintaining, repairing, preserving
and managing the Collateral or any part thereof, and any Impositions or other
charges prior to the security title and security interest of this Deed which
the Grantee may consider it necessary or desirable to pay, and any balance of
such amounts shall be applied as provided in Section 3.11.
SECTION 3.14. Right of Grantee to Perform Grantor's Covenants, etc. If the
Grantor shall fail to make any payment or perform any act required to be made
or performed hereunder or under the other Obligations, the Grantee, without
notice to or demand upon the Grantor and without waiving or releasing any
obligation or Event of Default, may (but shall be under no obligation to) at
any time thereafter make such payment or perform such act for the account and
at the expense of the Grantor, and may enter upon the Collateral for such
purpose and take all such action thereon as, in the Grantee's opinion, may be
necessary or appropriate therefor. No such entry and no such action shall be
deemed an eviction of any lessee of the Property or any part thereof. All sums
so paid by the Grantee and all costs and expenses (including, without
limitation, attorneys' fees and expenses) so incurred, together with interest
thereon at the rate provided for in the Indenture from the date of payment or
incurring, shall constitute additional indebtedness under the Indenture secured
by this Deed and shall be paid by the Grantor to the Grantee on demand.
SECTION 3.15. Subrogation. To the extent that the Grantee, on or after the
date hereof, pays any sum due under any provision of any Legal Requirement or
any instrument creating any lien or security title prior or superior to the
lien or security title of this Deed, or the Grantor or any other Person pays
any such sum with the proceeds of the Senior Secured Notes, the Grantee shall
have and be entitled to a lien or security title on the Collateral equal in
priority to the lien or security title discharged, and the Grantee shall be
subrogated to, and receive and enjoy all rights and liens or security titles
possessed, held or enjoyed by, the holder of such lien or security title, which
shall remain in existence and benefit the Grantee in securing the Obligations.
SECTION 3.16. Remedies, etc., Cumulative. Each right, power and remedy of
the Grantee provided for in this Deed, the Indenture or any other Security
Agreements, or now or hereafter existing at law or in equity or by statute or
otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power or remedy provided for in this Deed, the Indenture, Senior
Secured Notes or any other Security Agreements, or now or hereafter existing at
law or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by the Grantee of any one or more of the rights, powers or
remedies provided for in this Deed, the Indenture, Senior Secured Notes, or any
other Security Agreements executed pursuant to the Indenture, or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Grantee of any or all such
other rights, powers or remedies.
SECTION 3.17. Provisions Subject to Applicable Law. All rights, powers and
remedies provided in this Deed may be exercised only to the extent that the
exercise thereof does not violate any applicable provisions of law and are
intended to be limited to the extent necessary so that they will not render
this Deed invalid, unenforceable or not entitled to be recorded, registered or
filed under the
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provisions of any applicable law. If any term of this Deed or any application
thereof shall be invalid or unenforceable, the remainder of this Deed and any
other application of such term shall not be affected thereby.
SECTION 3.18. No Waiver, etc. No failure by the Grantee to insist upon the
strict performance of any term hereof or of the Indenture, or of any other
Security Agreements executed pursuant to the Indenture, or to exercise any
right, power or remedy consequent upon a breach hereof or thereof, shall
constitute a waiver of any such term or of any such breach. No waiver of any
breach shall affect or alter this Deed, which shall continue in full force and
effect with respect to any other then existing or subsequent breach. By
accepting payment or performance of any amount or other Obligations secured
hereby before or after its due date, the Grantee shall not be deemed to have
waived its right either to require prompt payment or performance when due of
all other amounts and Obligations payable hereunder or to declare a default for
failure to effect such prompt payment.
SECTION 3.19. Compromise of Actions, etc. Any action, suit or proceeding
brought by the Grantee pursuant to any of the terms of this Deed, the
Indenture, Senior Secured Notes or any other Security Agreement executed
pursuant to the Indenture, or otherwise, and any claim made by the Grantee
hereunder or thereunder, may be compromised, withdrawn or otherwise dealt with
by the Grantee without any notice to or approval of the Grantor.
SECTION 3.20. Foreclosure - Authority Lease. If action is brought to
foreclose this Deed, the rents, income and profits issuing from the Land and
the Improvements shall be collected either through a receiver appointed by the
court after notice of application for such appointment has been given to the
Lessor under the Authority Lease or by Grantee. Notwithstanding anything to the
contrary contained in this Deed, all such money collected shall be first
applied for the payment of the rent due and owing under the Authority Lease or
to become due and owing to the Lessor under the Authority Lease, then for any
ad valorem taxes, insurance premiums or other charges due and payable under the
Authority Lease and for all other maintenance and operating charges and
disbursements incurred in connection with the operation and maintenance of the
Land and the Improvements. The balance of such monies shall be applied pursuant
to the terms of this Deed.
ARTICLE IV
DEFINITIONS
SECTION 4.1. Terms Defined in this Deed. When used herein the following
terms have the following meanings:
"Borrowers" shall have the meaning set forth in the third recital.
"Collateral" shall have the meaning set forth in the granting clause.
"Contracts" shall have the meaning set forth in clause (g) of the granting
clause.
"Deed" shall have the meaning set forth in the preamble.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time, or both, would constitute an Event of Default.
"Goods" shall have the meaning set forth in clause (c) of the granting
clause.
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<PAGE> 24
"herein", "hereof", "hereto", and "hereunder" and similar terms refer to
this Deed and not to any particular Section, paragraph or provision of this
Deed.
"Impositions" shall have the meaning set forth in Section 1.5.
"Improvements" shall have the meaning set forth in clause (b) of the
granting clause.
"Indemnified Parties" shall have the meaning set forth in Section 1.16.
"Insurance Requirements" shall have the meaning set forth in paragraph (a)
of Section 1.6.
"Land" shall have the meaning set forth in the first recital.
"Leases" shall have the meaning set forth in clause (d) of the granting
clause.
"Legal Requirements" shall have the meaning set forth in paragraph (b) of
Section 1.6.
"Grantee" shall have the meaning set forth in the preamble.
"Grantor" shall have the meaning set forth in the preamble.
"Obligations" means all liabilities, duties and obligations of the Grantor
as the Subsidiary Guarantor under and pursuant to its Subsidiary Guarantees
under the Indenture, all advances, if any, made by Grantee pursuant to the
terms of this Deed, and all duties and obligations of Grantor under this Deed.
"Permits" shall have the meaning set forth in clause (f) of the granting
clause.
"Permitted Encumbrances" shall have the meaning set forth in Section 1.2.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency or officer.
"Plans" shall have the meaning set forth in clause (e) of the granting
clause.
"Post-Petition Interest" shall have the meaning set forth in Section 2.3.
"Proceeds" shall have the meaning set forth in clause (j) of the granting
clause.
"Property" shall have the meaning set forth in clause (b) of the granting
clause.
"Real Estate" shall have the meaning set forth in clause (a) of the
granting clause.
"Rents" shall have the meaning set forth in clause (i) of the granting
clause.
"State" means the State of Georgia.
"Total Destruction" means any damage to or destruction of the Improvements
or any part thereof which, in the reasonable estimation of the Grantee shall
require the expenditure of an amount in excess of Ten Million Dollars
($10,000,000) to restore the Improvements to substantially the same condition
of the Improvements immediately prior to such damage or destruction.
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"Total Taking" means a Taking, whether permanent or for temporary use,
which, in the reasonable judgment of the Grantee, shall substantially interfere
with and adversely affect the normal operation of the Property by the Grantor
to such an extent as would reasonably be anticipated to cause a Material
Adverse Effect (as defined in the Credit Agreement).
SECTION 4.2. Use of Defined Terms. Terms for which meanings are provided
in this Deed shall, unless otherwise defined or the context otherwise requires,
have such meanings when used in any certificate and any opinion, notice or
other communication delivered from time to time in connection with this Deed or
pursuant hereto.
SECTION 4.3. Indenture Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Deed, including its preamble and
recitals, have the meanings provided in the Indenture.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Further Assurances; Financing Statements.
SECTION 5.1.1. Further Assurances. The Grantor, at its expense, will
execute, acknowledge and deliver all such instruments and take all such other
action as the Grantee from time to time may reasonably request:
(a) to better subject to the security title and security interest of
this Deed all or any portion of the Collateral,
(b) to perfect, publish notice or protect the validity of the
security title and security interest of this Deed,
(c) to preserve and defend the title to the Collateral and the rights
of the Grantee therein against the claims of all Persons as long as this
Deed shall remain undischarged,
(d) to better subject to the security title and security interest of
this Deed or to maintain or preserve the security title and security
interest of this Deed with respect to any replacement or substitution for
any Collateral or any other after-acquired property except as provided in
the Indenture, or
(e) in order to further effectuate the purposes of this Deed and to
carry out the terms hereof and to better assure and confirm to the Grantee
its rights, powers and remedies hereunder.
SECTION 5.1.2. Financing Statements. Notwithstanding any other provision
of this Deed, the Grantor hereby agrees that, without notice to or the consent
of the Grantor, the Grantee may file with the appropriate public officials such
financing statements, continuation statements, amendments and similar documents
as are or may become necessary to perfect, preserve or protect the security
interest granted by this Deed.
SECTION 5.2. Additional Security. Without notice to or consent of the
Grantor, and without impairment of the security interest and security title and
rights created by this Deed, the Grantee and the Holders may accept from the
Grantor or any other Person additional security for the Obligations. Neither
the giving of this Deed nor the acceptance of any such additional security
shall prevent the Grantee from
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resorting, first, to such additional security, or, first, to the security
created by this Deed, or concurrently to both, in any case without affecting
the Grantee's security title and rights under this Deed.
SECTION 5.3. Satisfaction; Partial Release, etc.
SECTION 5.3.1. Satisfaction. If the Obligations shall be repaid and
performed in full in accordance with the terms thereof, or otherwise as may be
provided in the Indenture, then on such date, the Grantee shall, upon the
request of the Grantor and at the Grantor's sole cost and expense, execute and
deliver such instruments, in form and substance reasonably satisfactory to the
Grantee, as may be necessary to effectively cancel and surrender this Deed.
Partial Release, etc. The Grantee may, at any time and from time to time,
without liability therefor, and without prior notice to the Grantor, release or
reconvey any part of the Collateral, consent to the making of any map or plat
of the Property, join in granting any easement thereon or join in any extension
agreement or agreement subordinating the security title and security interest
of this Deed.
SECTION 5.4. Notices, etc. All notices and other communications provided
to any of the parties hereto shall be in writing and addressed, delivered or
transmitted to such party as set forth in the Indenture.
SECTION 5.5. Waivers, Amendments, etc. The provisions of this Deed may be
amended, discharged or terminated and the observance or performance of any
provision of this Deed may be waived, either generally or in a particular
instance and either retroactively or prospectively, only by an instrument in
writing executed by the Grantor and the Grantee.
SECTION 5.6. Cross-References. References in this Deed and in each
instrument executed pursuant hereto to any Section or Article are, unless
otherwise specified, to such Section or Article of this Deed or such
instrument, as the case may be, and references in any Section, Article or
definition to any clause are, unless otherwise specified, to such clause of
such Section, Article or definition.
SECTION 5.7. Headings. The various headings of this Deed and of each
instrument executed pursuant hereto are inserted for convenience only and shall
not affect the meaning or interpretation of this Deed or such instrument or any
provisions hereof or thereof.
SECTION 5.8. Currency. Unless otherwise expressly stated, all references
to any currency or money, or any dollar amount, or amounts denominated in
"Dollars" herein will be deemed to refer to the lawful currency of the United
States.
SECTION 5.9. Governing Law. THIS DEED SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE.
SECTION 5.10. Successors and Assigns, etc. This Deed shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors, successors-in-title and assigns.
SECTION 5.11. Waiver of Jury Trial; Submission to Jurisdiction.
(a) EACH OF THE GRANTOR AND THE GRANTEE HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS DEED, THE INDENTURE, THE SENIOR SECURED NOTES AND THE
SECURITY AGREEMENTS, OR ANY OTHER RELATED
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INSTRUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE GRANTOR OR THE GRANTEE. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE GRANTEE AND TO ENTER INTO THE
TRANSACTIONS PROVIDED FOR IN THE INDENTURE AND TO PURCHASE THE SENIOR
SECURED NOTES.
(b) FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INVOLVING THIS DEED,
THE INDENTURE, THE SENIOR SECURED NOTES AND THE SECURITY AGREEMENTS
EXECUTED PURSUANT TO THE INDENTURE, THE GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ALL FEDERAL AND
STATE COURTS LOCATED IN THE STATE AND CONSENTS THAT IT MAY BE SERVED WITH
ANY PROCESS OR PAPER BY REGISTERED MAIL OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE IN ACCORDANCE WITH APPLICABLE LAW, PROVIDED A REASONABLE
TIME FOR APPEARANCE IS ALLOWED. THE GRANTOR AND GRANTEE EACH EXPRESSLY
WAIVES, TO THE EXTENT IT MAY LAWFULLY DO SO, ANY OBJECTION, CLAIM OR
DEFENSE WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY
ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS DEED, THE INDENTURE, THE
SENIOR SECURED NOTES AND THE SECURITY AGREEMENTS EXECUTED PURSUANT TO THE
INDENTURE IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT,
WITH RESPECT TO ANY SUCH CLAIM, SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER THE PERSON OF
THE GRANTOR. NOTHING CONTAINED HEREIN WILL BE DEEMED TO PRECLUDE THE
GRANTEE FROM BRINGING AN ACTION AGAINST THE GRANTOR IN ANY OTHER
JURISDICTION.
SECTION 5.12. Severability; Conflicts. Any provision of this Deed, the
Indenture or any other Security Agreements which is prohibited or unenforceable
in any jurisdiction shall as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Deed, the Indenture or such
Security Agreements or affecting the validity or enforceability of such
provision in any other jurisdiction. In the event of any conflict between the
terms of this Deed and the terms of the Indenture, the terms of the Indenture
shall control.
SECTION 5.13. Security Agreements. This Deed is a Security Agreements
executed pursuant to the Indenture and, unless otherwise expressly indicated
herein, shall be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 5.14. Usury Savings Clause. It is the intention of the Grantor and
the Grantee to conform strictly to the usury laws governing the Senior Secured
Notes and Security Agreements, and any interest payable under the Senior
Secured Notes and Security Agreements shall be subject to reduction to the
amount not in excess of the maximum non-usurious amount allowed under such
laws, as construed by the courts having jurisdiction over such matters. In the
event the Obligations become due and payable in full by reason of any provision
of the Senior Secured Notes and Security Agreements, or by reason of an
election by the Grantee resulting from an Event of Default, then earned
interest may never include more than the maximum amount permitted by law,
computed from the dates of each advance of loan proceeds under the Indenture
until payment, and any interest in excess of the maximum amount permitted by
law shall be canceled automatically or, if theretofore paid, at the option of
the Grantee, shall be rebated to the
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Grantor, or shall be credited on the principal amount of the Obligations or, if
all principal has been repaid, then the excess shall be rebated to the Grantor.
If any interest is canceled, credited against principal or rebated to the
Grantor in accordance with the foregoing sentence and, if thereafter the
interest payable hereunder is less than the maximum amount permitted by
applicable law, the rate hereunder shall automatically be increased to the
maximum extent possible to permit repayment to the Grantee and the Holders as
soon as possible of any interest in excess of the maximum amount permitted by
law which was earlier canceled, credited against principal or rebated to the
Grantor pursuant to the provisions of the foregoing sentence.
SECTION 5.15. Future Advances. This Deed is a "Future Advance Deed" under
the laws of the State. Any and all future advances under this Deed, the
Indenture and the Senior Secured Notes and Security Agreements executed
pursuant to the Indenture shall have the same priority as if the future advance
was made on the date that this Deed was recorded. This Deed shall secure the
Obligations, whenever incurred, such Obligations to be due at the times
provided herein and in the Subsidiary Guarantees executed by Grantor. Notice is
hereby given that the Obligations may increase as a result of any defaults
hereunder by Grantor due to, for example, and without limitation, unpaid
interest or late charges, unpaid taxes or insurance premiums which the Grantee
elects to advance, defaults under leases that the Grantee elects to cure,
attorney fees or costs incurred in enforcing the Indenture, the Senior Secured
Notes and the Security Agreements or other expenses incurred by the Grantee in
protecting the Collateral, the Obligations, the security of this Deed or the
Grantee's rights and interests.
SECTION 5.16. Georgia Agent. The rights, powers, duties and obligations
conferred or imposed upon the Collateral Agent under the Indenture pursuant to
this Deed with respect to the Collateral (including, without limitation,
holding the security title hereunder) are hereby conferred and imposed upon the
Georgia Agent to the extent, but only to the extent, that pursuant to the laws
of the State in effect from time to time the Collateral Agent shall be
incompetent or unqualified to exercise or perform such rights, power, duties
and obligations.
SECTION 5.17. Subordination to First Deed.
(a) The security title and security interest of this Deed shall be
subject and subordinate only to the security title and security interest
of the First Deed and Permitted Encumbrances. Notwithstanding anything to
the contrary contained in this Deed, this Deed shall not be subordinate to
any increases in the aggregate principal amount that may be borrowed (i)
under the First Deed or other documents executed in connection therewith,
or (ii) under any amendment, modifications, renewals, replacements or
consolidations thereof, made without the prior written consent of Grantee,
to an amount in excess of $70,000,000.
(b) Grantor represents and warrants that (i) the First Deed is in
full force and effect, and (ii) all principal, interest and other amounts
payable under the terms, covenants, conditions and provisions of the First
Deed and the other documents executed in connection therewith have been
and shall be paid in accordance with the terms, covenants, conditions and
provisions thereof.
(c) Grantor covenants and agrees that Grantor shall: (i) promptly and
faithfully observe, perform and comply with all the terms, covenants,
conditions and provisions of the First Deed and other documents executed
in connection therewith; (ii) not modify, or amend, or in any way alter or
permit the alteration of any of the terms, covenants, conditions or
provisions of the First Deed or the other documents executed in connection
therewith in a manner that will increase the aggregate principal amount of
indebtedness that may be borrowed under the First Deed and the other
documents executed in connection therewith the repayment of which is
secured by the First Deed to an amount in excess of $70,000,000; (iii)
promptly deliver to Grantee a copy of
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each notice of a default under the First Deed (hereinafter, a "First Deed
Default") received or delivered by Grantor in connection with the First
Deed; and (iv) furnish to Grantee copies of such additional information
and evidence as Grantee reasonably may require concerning Grantor's due
observance, performance and compliance with the terms, covenants,
conditions, and provisions of the First Deed and the other documents
executed in connection therewith (including, but without limiting the
generality of the foregoing, evidence, reasonably satisfactory to Grantee,
of the payment by Grantor of principal, interest and other amounts
required by the terms, covenants, conditions and provisions of the First
Deed and the other documents executed in connection therewith).
(d) Upon the occurrence and during the continuance of a First Deed
Default, in addition to any other rights and remedies that may be
available to Grantee, Grantee may, but shall not be obligated to, cure
such First Deed Default and Grantee shall be subrogated to the rights of
the holder of the First Deed against Grantor and the Property. To the
extent Grantee makes any payment of any installment of interest or any
payment of principal or other sum due under the First Deed and/or any
Senior Secured Note secured thereby, such payment (i) shall be deemed to
be Obligations secured hereby, (ii) shall be a security title and security
interest in the Premises prior to any right or title to, interest in, or
claim upon the Property subordinate to the security title and security
interest of this Deed, and (iii) shall accrue interest at a rate equal to
the lower of (a) eighteen percent (18%) per annum or (b) the maximum rate
permitted by law.
(e) If for any reason the indebtedness secured by the First Deed is
accelerated, or the Property or any part thereof is sold, or attempted to
be sold, pursuant to the First Deed, whether by power of sale, judicial
action or otherwise, or any other remedial action or proceeding is taken
or instituted in respect of the Property or any part thereof under the
First Deed, Grantor will indemnify and hold Grantee harmless from any
loss, cost or expense incurred by Grantee, including reasonable attorneys'
fees, in contesting any such action taken or instituted, or incurred by
Grantee on account of the acceleration of the indebtedness secured by the
First Deed, the sale of the Property pursuant thereto or Grantee's
purchase or payment of the First Deed.
(f) Grantor does herewith irrevocably appoint and constitute Grantee
as its true and lawful attorney-in-fact in its name, place and stead to,
upon the occurrence and during the continuance of a First Deed Default,
perform and comply with all obligations of Grantor under the First Deed,
to do and take, without any obligation to do so, any action as Grantee
deems necessary or desirable to cure any First Deed Default. Grantor
shall, within five (5) days after written request is made therefor by
Grantee, execute and deliver to Grantee or to any person which Grantee
shall designate, such further instruments, agreements, powers, deeds,
conveyances or the like as may be necessary to complete or perfect the
interest, rights or powers of Grantee pursuant to this paragraph.
(g) Upon receipt by Grantee of any notice of a First Deed Default,
Grantee may rely thereon and take any such reasonable action as Grantee
shall reasonably deem necessary , irrespective of whether the existence of
such First Deed Default or the nature thereof be questioned or denied by
or on behalf of Grantor.
Notwithstanding anything to the contrary contained in this Deed, and each
of the terms, conditions and provisions hereof, and Grantee's rights and
remedies hereunder, is, and at all times shall be subject and subordinate to the
First Deed. The parties hereto agree to execute a subordination agreement if
requested by Senior Lender or any lender under any refinancing of the
indebtedness secured by the First Deed.
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<PAGE> 30
IN WITNESS WHEREOF, the undersigned, by its duly elected officers and
pursuant to proper authority of its board of directors has duly executed,
sealed, acknowledged and delivered this instrument as of the day and year first
above written.
Signed, sealed and delivered STERLING PULP CHEMICALS, INC.,
in the presence of: a Georgia corporation
By:
- --------------------------------- -----------------------------------
Name:
Title:
- ---------------------------------
Notary Public
My commission expires:
[CORPORATE SEAL]
[AFFIX NOTARIAL SEAL]
DRAFTED BY:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Wylie S. Allen, Esq.
27
<PAGE> 31
SCHEDULE 1
Legal Description of the Land
[ ]
<PAGE> 32
SCHEDULE 2
Permitted Encumbrances
[ ]
<PAGE> 1
EXHIBIT 4.13
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented, amended and
restated or otherwise modified from time to time, this "Agreement"), dated as of
July 23, 1999 (the "Closing Date"), is made by STERLING CHEMICALS, INC., a
Delaware corporation, STERLING CANADA, INC., a Delaware corporation, STERLING
PULP CHEMICALS, INC., a Georgia corporation, STERLING PULP CHEMICALS US, INC., a
Delaware corporation, STERLING FIBERS, INC., a Delaware corporation, STERLING
CHEMICALS ENERGY, INC., a Delaware corporation, and STERLING CHEMICALS
INTERNATIONAL, INC., a Delaware corporation (individually referred to as an
"Assignor", and collectively referred to as the "Assignors"), and HARRIS TRUST
COMPANY OF NEW YORK, a New York corporation, as indenture trustee and collateral
agent (the "Collateral Agent") for the benefit of the holders (the "Holders") of
the 12 3/8% Senior Secured Notes due 2006 of Sterling Chemicals, Inc.
WITNESSETH:
WHEREAS, the Assignors and the Collateral Agent, as trustee, have
entered into that certain indenture dated as of July 23, 1999 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which Sterling Chemicals, Inc. issued $295 million in
the aggregate principal amount of 12 3/8% Senior Secured Notes due 2006
(together with any notes issued in replacement thereof or in exchange or
substitution therefor, the "Senior Secured Notes"); and
WHEREAS, pursuant to the terms of that certain Revolving Credit
Agreement, dated as of July 23, 1999, by and among Sterling Chemicals, Inc.,
Sterling Canada, Inc., Sterling Pulp Chemicals US, Inc., Sterling Pulp
Chemicals, Inc., Sterling Fibers, Inc., Sterling Chemicals Energy, Inc. and
Sterling Chemicals International, Inc., as Borrowers (collectively,
"Borrowers"), various financial institutions, as lenders ("Lenders"), DLJ
Capital Funding, Inc., as syndication agent ("Syndication Agent"), The CIT
Group/Business Credit, Inc., as the administrative agent (the "Administrative
Agent"), and Credit Suisse First Boston, as the documentation agent (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Credit Agreement"), the Lenders have agreed to make Fixed Assets Loans (as
defined in the Credit Agreement) (collectively, the "Senior Loan") to the
Borrowers in the maximum original principal amount of Seventy Million Dollars
($70,000,000), the payment of which is secured (pursuant to the terms of the
Fixed Assets Security Agreement, dated as of July 23, 1999 (the "Fixed Assets
Security Agreement")) by, inter alia, a first priority security interest in the
Collateral (the "Senior Pledge") in favor of the Fixed Assets Secured Parties
and certain other parties to the Credit Agreement, as set forth on the signature
pages thereto or as may be added from time to time pursuant to the terms
thereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Holders
to enter into the Indenture, each Assignor jointly and severally agrees, for the
benefit of each Holder, as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Agreement" is defined in the preamble.
"Closing Date" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Collateral Agent" is defined in the preamble.
"Current Assets Security Agreement" is defined in the Credit
Agreement.
"Equipment" has the meaning as defined in Section 9-109 of the U.C.C.
"Fixed Assets Security Agreement" is defined in the recitals.
"Holders" is defined in the preamble.
"Indenture" is defined in the recitals.
"Material Contracts" means all service contracts, supply contracts and
contract rights, but only to the extent necessary or appropriate for the
continued operation of the plants located at the Real Properties, as the
business thereupon is now conducted.
"Obligations" is defined in Section 2.5.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent in the
United States, including all patent applications in preparation for
filing in the United States and including each patent and patent
application referred to in Item A of Schedule II attached hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(c) all patent licenses in the United States, including each
patent license referred to in Item B of Schedule II attached hereto;
and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements
of any patent or patent application, referred to in clauses (a) or (b)
above, and for breach or enforcement of any patent license referred to
in clause (c) above;
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<PAGE> 3
but only to the extent any of the foregoing is necessary or appropriate for the
continued operation of the plants located at the Real Properties, as the
business thereupon is now conducted.
"Real Properties" means the plant facilities of the Assignors located
in Lowndes County, Georgia, Galveston County, Texas and Santa Rosa County,
Florida.
"Satisfaction Date" means the date on which all Obligations have been
paid in full or otherwise satisfied
"Senior Loan" is defined in the preamble.
"Senior Secured Notes" is defined in the preambles.
SECTION 1.2. Indenture Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Indenture.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Indenture or the context otherwise requires, terms for which meanings are
provided in the Uniform Commercial Code from time to time in effect in the State
of New York (the "U.C.C.") are used in this Agreement, including its preamble
and recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. Each Assignor hereby assigns, pledges,
hypothecates, charges, delivers, and transfers to the Collateral Agent for its
benefit and the ratable benefit of the Holders and hereby grants to the
Collateral Agent for its benefit and the ratable benefit of the Holders a
security interest in all of the following (collectively, the "Collateral"):
(a) the real property, buildings, structures and other
improvements to any of the foregoing, of the Assignors and to the
extent any of the following items of property constitute fixtures
and/or equipment under applicable laws, all fixtures, fittings,
appliances, apparatus, Equipment, machinery, building and construction
materials and other articles of every kind and nature whatsoever and
all replacements thereof, now or hereafter affixed or attached to,
placed upon or used in any way in connection with the complete and
comfortable use, enjoyment, occupation, operation, development and/or
maintenance of the Real Property of the Assignors or such buildings,
structures and other improvements, the Patent Collateral and the
Material Contracts;
(b) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing
Collateral (including proceeds which constitute property of the types
described in clause (a) and, to the extent not otherwise included, all
payments under insurance (whether or not the Collateral Agent is the
loss payee thereof) or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral).
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<PAGE> 4
Notwithstanding the foregoing, "Collateral" shall not include (a) any general
intangibles or other rights arising under any contracts, instruments, licenses
or other documents as to which the grant of a security interest would constitute
a violation of a valid and enforceable restriction in favor of a third party on
such grant, unless and until any required consents shall have been obtained or
(b) any Collateral (as defined in the Current Assets Security Agreement). Each
Assignor agrees to use its best efforts to obtain any such required consent with
respect to any material item of Collateral.
SECTION 2.2. Security for Obligations. This Agreement secures the
payment in cash in full of all Obligations under the Indenture and the Senior
Secured Notes.
SECTION 2.3. Continuing Security Interest. This Agreement shall create
a continuing security interest in the Collateral and shall:
(a) remain in full force and effect until the satisfaction of all
obligations under the Indenture and Senior Secured Notes (the
"Obligations");
(b) be binding upon each Assignor, its successors, transferees
and assigns; and
(c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent and
the Holders.
SECTION 2.4. Assignor Remains Liable. Anything herein to the contrary
notwithstanding:
(a) each Assignor will remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and will perform all of its duties and obligations under such
contracts and agreements to the same extent as if this Agreement had
not been executed;
(b) the exercise by the Collateral Agent of any of its rights
hereunder will not release any Assignor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral; and
(c) neither the Collateral Agent nor any Holder will have any
obligation or liability under any such contracts or agreements
included in the Collateral by reason of this Agreement, nor will the
Collateral Agent or any other Collateral Agent or any Holder be
obligated to perform any of the obligations or duties of any Assignor
thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 2.5. Security Interest Absolute. All rights of the Collateral
Agent and the security interests granted to the Collateral Agent hereunder, and
all obligations of each Assignor hereunder, shall be absolute and unconditional,
irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any Security Agreement;
(b) the failure of the Collateral Agent or any Holder
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<PAGE> 5
(i) to assert any claim or demand or to enforce any right or
remedy against the Assignors or any other Person under the
provisions of the Indenture or any Security Agreement or
otherwise or
(ii) to exercise any right or remedy against any guarantor
of, or collateral securing, any Obligations;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other
extension, compromise or renewal of any Obligations;
(d) any reduction, limitation, impairment or termination of any
Obligations for any reason (other than the repayment in full and in
cash of all Obligations), including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and
each Assignor hereby waives any right to or claim of) any defense or
set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality, nongenuineness, irregularity,
compromise or unenforceability of, or any other event or occurrence
affecting, any Obligations or otherwise;
(e) any amendment to, rescission, waiver or other modification
of, or any consent to departure from, any of the terms of the
Indenture or any Security Agreement;
(f) any addition, exchange, release, surrender or non-perfection
of any collateral (including the Collateral), or any amendment to or
waiver or release of or addition to or consent to departure from any
guaranty, for any of the Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any
Assignor, any surety or any guarantor.
SECTION 2.6. Postponement of Subrogation, etc. Each Assignor hereby
agrees that it will not exercise any rights which it may acquire by reason of
any payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the Satisfaction Date. Any amount paid to any Assignor on
account of any payment made hereunder prior to the Satisfaction Date shall be
held in trust for the benefit of the Collateral Agent and the Holders of the
Senior Secured Notes and shall immediately be paid to the Collateral Agent for
the ratable benefit of the Holders of the Senior Secured Notes and credited and
applied against the Obligations, whether matured or unmatured, in accordance
with the terms of the Indenture; provided, however, that if:
(a) such Assignor has made payment to the Collateral Agent for
the ratable benefit of the Holders of the Senior Secured Notes of all
or any part of the Obligations; and
(b) the Satisfaction Date has occurred,
the Collateral Agent, on behalf of the Holders of the Senior Secured Notes,
agrees that, at the requesting Assignor's request, the Collateral Agent, on
behalf of the Collateral Agent and the Holders of the Senior Secured Notes, will
execute and deliver to such Assignor appropriate
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<PAGE> 6
documents (without recourse and without representation or warranty) necessary to
evidence the transfer by subrogation to such Assignor of an interest in the
Obligations resulting from such payment by such Assignor. In furtherance of the
foregoing, prior to the Satisfaction Date, each Assignor shall refrain from
taking any action or commencing any proceeding against any Assignor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this
Agreement to the Collateral Agent or Holders of the Senior Secured Notes.
ARTICLE III REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Assignor represents
and warrants to the Collateral Agent and the Holders as set forth in this
Article III.
SECTION 3.2. Ownership, No Liens, etc. Each Assignor owns its
Collateral free and clear of any Lien, except for the security interest created
by this Agreement, the Lien in favor of the Fixed Assets Secured Parties (as
such term is defined in the Credit Agreement) and the Permitted Liens. No
effective financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office, except such as
may have been filed in favor of the Collateral Agent relating to this Agreement
or as have been filed in connection with the Fixed Assets Security Agreement and
Permitted Liens.
SECTION 3.3. Validity, etc. This Agreement creates a valid second
priority security interest in the Collateral securing the payment of the
Obligations, and the Assignors will at all times cause the security interests
granted pursuant to this Agreement to constitute valid perfected second priority
security interests (and, upon the expiration or termination of the Senior Debt
Intercreditor Agreement, first priority security interests) in the Collateral,
enforceable as such against all creditors of Assignor and (except as otherwise
specifically provided herein) any Persons purporting to purchase any Collateral
from Assignor. Assignor will, promptly upon request by Collateral Agent, execute
and deliver or cause to be executed and delivered, or use its best efforts to
procure, tax stamps, assignments, instruments and other documents, all in form
and substance reasonably satisfactory to the Collateral Agent, and take any
other actions that are necessary or, in the reasonable opinion of Collateral
Agent, desirable to perfect, continue the perfection of, or protect the second
(or, upon the expiration or termination of the Senior Debt Intercreditor
Agreement, first) priority of the Collateral Agent's security interest in the
Collateral, to protect the Collateral against the rights, claims or interests of
third persons (subject to the terms of the Senior Debt Intercreditor Agreement),
to enable the Collateral Agent to exercise or enforce its rights and remedies
hereunder, or otherwise to effect the purposes of this Agreement. Assignor also
hereby authorizes the Collateral Agent to file any financing or continuation
statements with respect to the Collateral without the signature of Assignor to
the extent permitted by applicable law. Assignor will pay all costs incurred in
connection with any of the foregoing.
SECTION 3.4. Authorization, Approval, etc. Except as have been
obtained or made and are in full force and effect, no material authorization,
material approval or other action by, and no material notice to or material
filing with, any Governmental Authority or regulatory body is required either
(a) for the grant by such Assignor of the security interest granted hereby, the
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<PAGE> 7
pledge by such Assignor of any Collateral pursuant hereto or for the execution,
delivery and performance of this Agreement by such Assignor or (b) for the
perfection of or the exercise by the Collateral Agent of its rights and remedies
hereunder.
SECTION 3.5. Compliance with Laws. Such Assignor is in compliance with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to materially
adversely affect the value of the Collateral.
ARTICLE IV COVENANTS
SECTION 4.1. Further Assurances, etc. Such Assignor agrees that, from
time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may reasonably request, in
order to perfect, preserve and protect any security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing and subject to the terms of the
Senior Debt Intercreditor Agreement, such Assignor will:
(a) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices as may be
necessary or desirable, or as the Collateral Agent may request, in
order to perfect and preserve the security interests and other rights
granted or purported to be granted to the Collateral Agent hereby; and
(b) furnish to the Collateral Agent, from time to time at the
Collateral Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
such Assignor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Assignor where
permitted by law. A carbon, photographic or other reproduction of this Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
ARTICLE V THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Each
Assignor hereby irrevocably appoints the Collateral Agent as such Assignor's
attorney-in-fact, with full authority and in the name, place and stead of the
Assignor or in its own name, from time to time in the Collateral Agent's
discretion, to take, upon the occurrence and during the continuance of an Event
of Default, any action and to execute any instrument which the Collateral Agent
may deem
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<PAGE> 8
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to ask, demand, collect, sue for, recover, compromise and
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(a) above;
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce
the rights of the Collateral Agent with respect to any of the
Collateral; and
(d) to perform the affirmative obligations of such Assignor
hereunder (including all obligations of such Assignor pursuant to
Section 4.1).
SECTION 5.2. Authority of Collateral Agent. The Collateral Agent shall
have and be entitled to exercise all powers hereunder that are specifically
granted to Collateral Agent by the terms hereof, together with such powers as
are reasonably incidental thereto. The Collateral Agent may perform any of its
duties hereunder or in connection with the Collateral by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of counsel concerning all such matters. Neither the Collateral Agent
nor any director, officer, employee, attorney or agent of the Collateral Agent
shall be responsible for the validity, effectiveness or sufficiency hereof or of
any document or security furnished pursuant hereto. The Collateral Agent and its
directors, officers, employees, attorneys and agents shall be entitled to rely
on any communication, instrument or document reasonably believed by it or them
to be genuine and correct and to have been signed or sent by the proper person
or persons.
Each Assignor acknowledges that the rights and responsibilities of the
Collateral Agent under this Agreement with respect to any action taken by the
Collateral Agent or the exercise or non-exercise by the Collateral Agent of any
option, right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Collateral
Agent and the Holders of the Senior Secured Notes, be governed by the Indenture
and by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Collateral Agent and Assignor, the Collateral
Agent shall be conclusively presumed to be acting as agent for the Holders of
the Senior Secured Notes with full and valid authority so to act or refrain from
acting, and Assignor shall not be obligated or entitled to make any inquiry
respecting such authority.
SECTION 5.3. Resignation or Removal of the Collateral Agent. Until
such time as the Obligations shall have been paid in full, the Collateral Agent
may at any time, by giving written notice to the Assignors, the Trustee (as
defined in the Indenture) and the Holders of the Senior Secured Notes, resign
and be discharged of the responsibilities hereby created, such resignation to
become effective upon (i) the appointment of a successor Collateral Agent and
(ii) the acceptance of such appointment by such successor Collateral Agent. As
promptly as
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practicable after the giving of any such notice, the Trustee (if the Trustee is
not then acting as the Collateral Agent hereunder) or if the Trustee and the
Collateral Agent are the same person or entity, the Holders of the Senior
Secured Notes shall appoint a successor Collateral Agent, which successor
Collateral Agent shall be reasonably acceptable to Assignor. If no successor
Collateral Agent shall be appointed and shall have accepted such appointment
within 90 days after the Collateral Agent gives the aforesaid notice of
resignation, the Collateral Agent may apply to any court of competent
jurisdiction to appoint a successor Collateral Agent to act until such time, if
any, as a successor shall have been appointed as provided in this Section 5.3.
Any successor so appointed by such court shall immediately and without further
act be superseded by any successor Collateral Agent appointed by the Holders of
the Senior Secured Notes, as provided in this Section 5.3. Any Collateral Agent
that has resigned shall be entitled to fees, costs and expenses to the extent
incurred or arising, or relating to events occurring, before its resignation or
removal.
SECTION 5.4. Release; Termination of Agreement. This Agreement shall
terminate upon the earlier to occur of (i) the Satisfaction Date, (ii) the day
of the Legal Defeasance of all of the Obligations pursuant to Section 8.02 of
the Indenture (other than those surviving Obligations specified therein) and
(iii) such other termination date as is provided in the Indenture. At such time,
the Collateral Agent shall, at the request of Assignor, reassign and redeliver
to Assignor all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Collateral Agent in accordance with the terms hereof.
Such reassignment and redelivery shall be without warranty by or recourse to the
Collateral Agent, except as to the absence of any prior assignments by the
Collateral Agent of its interest in the Collateral, and shall be at the expense
of Assignor.
Assignor agrees that it will not, except as permitted by the
Indenture, sell or dispose of, or grant any option or warrant with respect to,
any of the Collateral; provided, however, that if Assignor shall sell any of the
Collateral in accordance with the terms of the Indenture, the Collateral Agent
shall, at the request of Assignor and subject to requirements of Section 10.03
of the Indenture, release the Collateral subject to such sale free and clear of
the Lien under this Agreement.
SECTION 5.5. Collateral Agent Has No Duty. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Collateral Agent and the Holders of the Senior Secured Notes) in the Collateral
and shall not impose any duty on it to exercise any such powers. Except for
reasonable care of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent shall have no
duty as to any Collateral or responsibility for:
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any investment property, whether or not the Collateral Agent has or
is deemed to have knowledge of such matters; or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
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SECTION 5.6. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, that the Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as any Assignor
reasonably requests in writing from time to time, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care. If an Event of Default has occurred and
is continuing, the Collateral Agent shall not be required to comply with any
request of the Assignor with respect to the matters described in this Section.
ARTICLE VI REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may
(i) require each Assignor to, and such Assignor hereby agrees
that it will, at its expense and upon request of the Collateral
Agent forthwith, assemble all or part of the Collateral as
directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral
Agent which is reasonably convenient to both parties, and
(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon
such other terms as the Collateral Agent may deem commercially
reasonable. Each Assignor agrees that, to the extent notice of
sale shall be required by law, at least ten days prior notice to
such Assignor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. The Collateral Agent shall not be
obligated to make any sale of such Collateral regardless of
notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to
which it was so adjourned.
(b) All cash proceeds received by the Collateral Agent in respect
of any sale of, collection from or other realization upon all or any
part of the Collateral shall be applied by the Collateral Agent
against all or any part of the Obligations as follows:
(i) first, to the payment of any amounts payable to the
Collateral Agent pursuant to the Indenture and Section 6.3;
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(ii) second, to the equal and ratable payment of any
Obligations owed to Collateral Agent or any Holder of the Senior
Secured Notes pursuant to the Indenture or any other Security
Agreement, applied
(A) first to fees and expense reimbursements then due to
such Collateral;
(B) then to interest due to such Collateral Agent;
(C) then to pay the remaining outstanding Obligations;
(iii) third, to be held as additional collateral security
until the Satisfaction Date, after which such remaining cash
proceeds shall be paid over to the applicable Assignor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) The Collateral Agent may
(i) transfer all or any part of the Collateral into the name
of the Collateral Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and
security interest hereunder,
(ii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether
or not longer than the original period) any obligations of any
nature of any party with respect thereto,
(iii) take control of any proceeds of the Collateral and
(iv) execute (in the name, place and stead of such Assignor),
assignments and other instruments of conveyance or transfer with
respect to all or any of the Collateral.
SECTION 6.2. Compliance with Restrictions. Each Assignor agrees that
in any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Collateral Agent is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of applicable
law or in order to obtain any required approval of the sale or of the purchaser
by any Governmental Authority or official, and such Assignor further agrees that
such compliance shall not result in such sale being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Collateral
Agent be liable nor accountable to such Assignor for any discount allowed by the
reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction.
SECTION 6.3. Indemnity and Expenses. Each Assignor hereby jointly and
severally indemnifies and holds harmless the Collateral Agent from and against
any and all claims, losses and liabilities arising out of or resulting from this
Agreement (including enforcement of this Agreement), except claims, losses or
liabilities resulting from the Collateral Agent's gross
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<PAGE> 12
negligence or willful misconduct and each Assignor will, upon demand pay to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which the Collateral Agent may incur, in each case, in connection with:
(a) the administration of this Agreement;
(b) the custody, preservation, use, or operation of or the sale
of, collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder; or
(d) the failure by any Assignor to perform or observe any of the
provisions hereof.
ARTICLE VII MISCELLANEOUS PROVISIONS
SECTION 7.1. Security Agreement. This Agreement is a Security
Agreement executed pursuant to the Indenture and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any
provision of this Agreement nor consent to any departure by any Assignor
herefrom shall in any event be effective unless the same shall be in writing and
signed by the Collateral Agent (on behalf of the Holders of the Senior Secured
Notes) and each Assignor and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 7.3. Protection of Collateral. The Collateral Agent may from
time to time, at its option, perform any act which each Assignor agrees
hereunder to perform and which such Assignor shall fail to perform after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default) and the Collateral Agent may from time to time take any other action
which the Collateral Agent reasonably deems necessary for the maintenance,
preservation or protection of any of the Collateral or of its security interest
therein.
SECTION 7.4. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and addressed,
delivered or transmitted, if to any Assignor, at the address or facsimile number
of the Company provided for in the Indenture, and if to the Collateral Agent, at
the following address or facsimile number: Harris Trust Company of New York,
Wall Street Plaza, 19th Floor, 88 Pine Street, New York, NY 10005, Facsimile
No.: (212) 701-7664, Attn: Peter Morse, or as to any such party, at such other
address or facsimile number as shall be designated by such party in a written
notice to each other party complying as to delivery with the terms of this
Section. Any notice, (a) if mailed and properly addressed with postage prepaid
or if properly addressed and sent by pre-paid courier service, shall be deemed
given when received, or (b) if transmitted by facsimile, shall be deemed given
when transmitted (and telephonic confirmation of receipt thereof has been
received).
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SECTION 7.5. Headings. The various headings of this Agreement are
inserted for convenience only, and shall not affect the meaning or
interpretation of this Agreement or any provisions thereof.
SECTION 7.6. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 7.7. Counterparts; Effectiveness. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original (whether such counterpart is originally executed or an
electronic copy of an original) and all of which shall constitute together but
one and the same agreement. This Agreement shall become effective as of the date
first above written and be binding upon a Assignor when a counterpart hereof
executed on behalf of such Assignor shall have been received by the Collateral
Agent.
SECTION 7.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCLUDING THE LAW OF CONFLICTS EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
SECTION 7.9. Agreement Subject to the Senior Debt Intercreditor
Agreement. Notwithstanding anything to the contrary contained herein, it is
expressly understood and agreed by the parties hereto that this Agreement shall
be subject to the terms of the Senior Debt Intercreditor Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each Assignor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
STERLING CHEMICALS, INC.
By
------------------------------------
Title:
STERLING CANADA, INC.
By
------------------------------------
Title:
STERLING PULP CHEMICALS US, INC.
By
------------------------------------
Title:
STERLING PULP CHEMICALS, INC.
By
------------------------------------
Title:
STERLING FIBERS, INC.
By
------------------------------------
Title:
STERLING CHEMICALS ENERGY, INC.
By
------------------------------------
Title:
STERLING CHEMICALS INTERNATIONAL, INC.
By
------------------------------------
Title:
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<PAGE> 15
HARRIS TRUST COMPANY OF NEW YORK.
as Collateral Agent, on behalf of the
Holders of the Senior Secured Notes
By
--------------------------------------
Title:
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<PAGE> 16
SCHEDULE I
to Security Agreement
([NAME OF ASSIGNOR])
Item A. Patents
Issued Patents
Patent No. Issue Date Inventor(s) Title
Pending Patent Applications
Serial No. Filing Date Inventor(s) Title
Patent Applications in Preparation
Expected
Docket No. Filing Date Inventor(s) Title
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
<PAGE> 17
EXHIBIT A TO SECURITY AGREEMENT
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of________
__, ____, is made between ___________________, a ____________________ (the
"Assignor"), and HARRIS TRUST COMPANY OF NEW YORK, as Collateral Agent (together
with any successor(s) thereto in such capacity, the "Collateral Agent") for each
of the Collateral Agent and the Holders of the Senior Secured Notes.
WITNESSETH:
WHEREAS, Sterling Chemicals, Inc., Sterling Canada, Inc., Sterling
Pulp Chemicals, Inc., Sterling Pulp Chemicals, US, Inc., Sterling Fibers, Inc.,
Sterling Chemicals Energy, Inc., and Sterling Chemicals International, Inc., and
the Collateral Agent, as trustee, have entered into that certain indenture dated
as of July 23, 1999 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Indenture"), pursuant to which Sterling
Chemicals, Inc. issued $295 million in the aggregate principal amount of 123/8%
Senior Secured Notes due 2006 (together with any notes issued in replacement
thereof or in exchange or substitution therefor, the "Senior Secured Notes");
and
WHEREAS, the terms of the Indenture require that the Assignor (i)
pledge to the Collateral Agent for the ratable benefit of the Holders (as
defined in the Indenture) of the Senior Secured Notes, and grant to the
Collateral Agent for the ratable benefit of the Holders of the Senior Secured
Notes a second priority security interest in the Collateral (as defined herein)
and (ii) execute and deliver this Agreement in order to secure the payment and
performance by the Assignor of all of its obligations under the Indenture and
the Senior Secured Notes (the "Obligations");
NOW, THEREFORE, in consideration of the premises, the Assignor hereby
agrees with the Collateral Agent for its benefit and the ratable benefit of the
Holders of the Senior Secured Notes as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided (or incorporated by reference) in the
Security Agreement dated July 23, 1999 by and among Sterling Chemicals, Inc.,
Sterling Canada, Inc., Sterling Pulp Chemicals, Inc., Sterling Pulp Chemicals,
US, Inc., Sterling Fibers, Inc., Sterling Chemicals Energy, Inc., Sterling
Chemicals International, Inc. and Harris Trust Company of New York as indenture
trustee and collateral agent for the benefit of the Holders of the Senior
Secured Notes.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Obligations, the Assignor does hereby pledge and hypothecate
to the Collateral Agent, and grant to the Collateral
Exhibit A
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<PAGE> 18
Agent a security interest in, for its benefit and the benefit of each Holder,
all of the following property (the "Patent Collateral"), whether now owned or
hereafter acquired or existing by it:
(e) all letters patent and applications for letters patent in the
United States, including all patent applications in preparation for
filing in the United States and including each patent and patent
application referred to in Item A of Schedule I attached hereto;
(f) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(g) all patent licenses in the United States, including each
patent license referred to in Item B of Schedule I attached hereto;
and
(h) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements
of any patent or patent application, referred to in clauses (a) or (b)
above, and for breach or enforcement of any patent license referred to
in clause (c) above;
in each case, to the extent, but only to the extent, that any of the foregoing
is necessary or appropriate for the continued operation of the plant facilities
of Assignor located in Valdosta-Lowndes County, Georgia, Galveston County, Texas
and Santa Rosa County, Florida.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Assignor for the purpose of registering the security interest
of the Collateral Agent in the Patent Collateral with the United States Patent
and Trademark Office. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Collateral Agent for its benefit and the benefit of each Holder. The Security
Agreement (and all rights and remedies of the Collateral Agent and each Holder
thereunder) shall remain in full force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon the earliest to occur of
(i) the sale, transfer or other disposition of any Patent Collateral in
accordance with the Indenture, (ii) the day of the Legal Defeasance of all
Obligations pursuant to Section 8.02 of the Indenture, (iii) the Satisfaction
Date and (iv) such other termination date as is provided in the Indenture, the
Collateral Agent shall, at the Assignor's expense, execute and deliver to the
Assignor all instruments and other documents as may be necessary or proper to
release the Lien on the Patent Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Assignor does hereby further
acknowledge and affirm that the rights and remedies of the Collateral Agent with
respect to the Lien on the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
Exhibit A
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<PAGE> 19
SECTION 6. The Indenture or any other Security Agreements, etc. This
Agreement is a Security Agreement executed pursuant to the Indenture and shall
(unless otherwise expressly indicated herein) be construed, administered and
applied in accordance with the terms and provisions of the Indenture.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
(whether such counterpart is originally executed or an electronic copy of an
original) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the Assignor
shall have been received by the Collateral Agent.
SECTION 8. Agreement Subject to Senior Debt Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, it is expressly
understood and agreed by the parties hereto that this Agreement shall be subject
to the terms of the Senior Debt Intercreditor Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
ASSIGNOR:
By:
------------------------------------
Title:
------------------------------
HARRIS TRUST COMPANY OF NEW YORK,
as Collateral Agent, on behalf of the
Holders of the Senior Secured Notes
By:
------------------------------------
Title:
------------------------------
Exhibit A
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<PAGE> 20
SCHEDULE I
to Patent Security Agreement
Item A. Patents
Issued Patents
--------------
Patent No. Issue Date Inventor(s) Title
---------- ---------- ----------- -----
Pending Patent Applications
---------------------------
Serial No. Filing Date Inventor(s) Title
---------- ----------- ----------- -----
Patent Applications in Preparation
----------------------------------
Expected
Docket No. Filing Date Inventor(s) Title
---------- ----------- ----------- -----
Item B. Patent Licenses
Effective Expiration Subject
Licensor Licensee Date Date Matter
-------- -------- --------- ---------- -------
<PAGE> 1
EXHIBIT 4.14
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement") is
made and entered into as of July 23, 1999 (the "Closing Date"), by and among
Sterling Chemicals, Inc. the "Company"), a Delaware corporation, Sterling
Canada, Inc., a Delaware corporation and Sterling Pulp Chemicals US, Inc., a
Delaware corporation, each having its principal place of business c/o Sterling
Chemicals, Inc., 1200 Smith Street, Houston, Texas 77002-4312 (the Company and
each of the foregoing, a "Pledgor" and collectively, "Pledgors"), and Harris
Trust Company of New York, as indenture trustee and collateral agent (the
"Collateral Agent") for the benefit of itself and for the holders (the
"Holders") of the Company's 12 3/8% Senior Secured Notes due 2006, and having
an office at Wall Street Plaza, 19th Floor, 88 Pine Street, New York, New York
10005. Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture (hereinafter defined).
W I T N E S S E T H:
WHEREAS, as of the Closing Date, the Pledgors own and hold the issued
and outstanding shares of capital stock (collectively, the "Pledged Shares") of
the following corporations: (a) Sterling Fibers, Inc., a Delaware corporation;
(b) Sterling Chemicals International, Inc., a Delaware corporation; (c)
Sterling Chemicals Energy, Inc., a Delaware corporation; (d) Sterling Canada,
Inc., a Delaware corporation; (e) Sterling Pulp Chemicals US, Inc., a Delaware
corporation; and (f) Sterling Pulp Chemicals, Inc., a Georgia corporation ((a)
- - (f), collectively and individually, "Issuer"); and
WHEREAS, Pledgor and Collateral Agent, as trustee, have entered into
that certain indenture dated as of July 23, 1999 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which the Company issued $295 million in the
aggregate principal amount of 12 3/8% Senior Secured Notes due 2006 (together
with any notes issued in replacement thereof or in exchange or substitution
therefor, the "Senior Secured Notes"); and
WHEREAS, the terms of the Indenture require that the Pledgors (i) pledge
to Collateral Agent for the ratable benefit of the Holders of the Senior
Secured Notes, and grant to Collateral Agent for the ratable benefit of the
Holders of the Senior Secured Notes, a second priority security interest in the
Pledged Collateral (as defined herein) and (ii) execute and deliver this Pledge
Agreement in order to secure the payment and performance by the Pledgors of all
of their obligations under both the Indenture and the Senior Secured Notes
(including all guarantees thereof) (the "Obligations"); and
WHEREAS, pursuant to the terms of the Revolving Credit Agreement, by and
among Sterling Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp Chemicals
US, Inc., Sterling Pulp Chemicals, Inc., Sterling Fibers, Inc., Sterling
Chemicals Energy, Inc., and Sterling Chemicals International, Inc., as
borrowers (the "Borrowers"), various financial institutions, as lenders
("Lenders"), DLJ Capital Funding, Inc., as syndication agent ("Syndication
Agent"), The CIT/Business Credit, Inc., as administrative agent (the
"Administrative Agent"), and Credit Suisse First Boston, as documentation agent
("Documentation Agent"), the Fixed Assets Lenders
<PAGE> 2
(as defined in the Credit Agreement) have agreed to make Fixed Assets Loans (as
defined in the Credit Agreement) (the "Senior Loan") to the Borrowers in the
maximum original principal amount of Seventy Million Dollars ($70,000,000), the
payment of which is secured by, inter alia, a first priority pledge of the
Collateral (the "Senior Pledge") in favor of the Lenders and certain other
parties to the Credit Agreement, as set forth on the signature pages thereto or
as may be added from time to time pursuant to the terms thereof; and
WHEREAS, each Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement:
NOW, THEREFORE, in consideration of the premises, and in order to induce
the purchase of the Senior Secured Notes, Pledgor hereby agrees with the
Collateral Agent for its benefit and the ratable benefit of the Holders of the
Senior Secured Notes as follows:
ARTICLE I. DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof) when used in this Pledge
Agreement:
"Distributions" means any and all stock dividends, liquidating
dividends, Capital Stock resulting from (or in connection with the exercise of)
stock splits, reclassifications, warrants, options, non-cash dividends, mergers
or consolidations, and all other distributions (whether similar or dissimilar
to the foregoing) on or with respect to any Pledged Shares or other Capital
Stock constituting Collateral, but shall not include Dividends.
"Dividends" means any and all cash dividends and cash distributions with
respect to any Pledged Shares or other Pledged Collateral made in the ordinary
course of business, but shall not include liquidating dividends.
"Pledge Agreement" is defined in the preamble.
"Pledged Collateral" means all Pledged Shares, all other pledged Capital
Stock, all other equity securities, all assignments of any amounts due or to
become due with respect thereto, and all other instruments which are now being
delivered by the Pledgor to the Collateral Agent or may from time to time
hereafter be delivered by the Pledgor to the Collateral Agent for the purpose
of pledge under this Pledge Agreement, and all proceeds of any of the
foregoing.
"Pledged Shares" means the Capital Stock of any Issuer in the amounts
and percentages listed in Attachment 1 hereto.
"Satisfaction Date" means the date on which all Obligations under the
Indenture and the Senior Secured Notes have been paid in full or otherwise
satisfied.
"Securities Act" is defined in clause (a) of Section 6.2.
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<PAGE> 3
SECTION 1.2. Indenture Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Pledge Agreement, including
its preamble and recitals, have the meanings provided in the Indenture.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Indenture or the context otherwise requires, terms for which meanings are
provided in the Uniform Commercial Code from time to time in effect in the
State of New York (the "U.C.C.") are used in this Pledge Agreement, including
its preamble and recitals, with such meanings.
ARTICLE II. PLEDGE
SECTION 2.1. Grant of Security Interest. Each Pledgor hereby pledges,
hypothecates, assigns, charges, delivers and transfers to the Collateral Agent
for its benefit and for the ratable benefit of the Holders of the Senior
Secured Notes, and hereby grants to the Collateral Agent for the ratable
benefit of the Holders of the Senior Secured Notes, a continuing security
interest in, all of the following property (collectively, the "Collateral"):
(a) all issued and outstanding Pledged Shares of each Issuer
identified on Attachment 1 hereto;
(b) all other Pledged Shares issued from time to time;
(c) all other Pledged Collateral, whether now or hereafter
delivered to the Collateral Agent in connection with this Pledge
Agreement;
(d) all Dividends, Distributions, and other payments and rights
with respect to any Pledged Collateral; and
(e) all proceeds of any of the foregoing.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures the
payment in full and in cash of all Obligations.
SECTION 2.3. Delivery of Pledged Collateral. Pledgor hereby agrees that,
pursuant to the terms of the Senior Debt Intercreditor Agreement (as defined in
the Credit Agreement), all certificates or instruments representing or
evidencing the Collateral shall be held by the Administrative Agent for the
benefit of the Lenders and the Holders. Upon expiration or termination of the
Senior Debt Intercreditor Agreement, Pledgor shall immediately deliver or cause
to be delivered to the Collateral Agent all certificates or instruments
representing or evidencing the Collateral. All such certificates or instruments
shall be in suitable form for transfer by delivery and shall be accompanied by
instruments of transfer or assignment duly executed in blank and undated, all
in form and substance satisfactory to the Collateral Agent.
SECTION 2.4. Dividends on Pledged Share. In the event that any Dividend
is to be paid on any Pledged Share at a time when no Event of Default has
occurred and is continuing, such Dividend may be paid directly to the
applicable Pledgor. If any such Event of Default has occurred and is
continuing, then any such Dividend shall be paid directly to the Collateral
Agent.
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<PAGE> 4
SECTION 2.5. Continuing Security Interest. This Pledge Agreement shall
create a continuing security interest in the Collateral and shall:
(a) remain in full force and effect until all Obligations under
the Indenture and the Senior Secured Notes are satisfied in full;
(b) be binding upon each Pledgor and its successors, transferees
and assigns; and
(c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Holders of the Senior
Secured Notes.
The security interest granted herein shall terminate and all rights to the
Collateral shall revert to each Pledgor on the Satisfaction Date. Upon any such
termination or release of Collateral, the Collateral Agent will, at each
Pledgor's sole expense, deliver to such Pledgor, without any representations,
warranties or recourse of any kind whatsoever, all certificates and instruments
representing or evidencing all Pledged Shares, together with all other
Collateral held by the Collateral Agent hereunder, and execute and deliver to
such Pledgor such documents as such Pledgor shall reasonably request to
evidence such termination or release.
SECTION 2.6. Security Interest Absolute. All rights of the Collateral
Agent and the Liens granted to the Collateral Agent hereunder, and all
obligations of each Pledgor hereunder, shall be absolute and unconditional,
irrespective of
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(b) the failure of the Collateral Agent, for its own benefit or
the benefit of the Holders of the Senior Secured Notes:
(i) to assert any claim or demand or to enforce any right
or remedy against any Pledgor, any other Guarantor (as such term
is defined in the Indenture) or any other Person under the
provisions of the Indenture, the Senior Secured Notes or the
Security Agreements or otherwise, or
(ii) to exercise any right or remedy against any guarantor
of, or collateral securing, any Obligations of any Pledgor or any
other Guarantor.
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligation of any Pledgor or any other
Guarantor,
(d) any reduction, limitation, impairment or termination of any
Obligation of any Pledgor or any other Guarantor for any reason (other
than the satisfaction of and repayment in full and in cash of all
Obligations), including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and each Pledgor
hereby waives any right to or claim of) any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness,
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<PAGE> 5
irregularity, compromise or unenforceability of, or any other event or
occurrence affecting, any Obligation of any Pledgor, any other Guarantor
or otherwise,
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of the Indenture,
the Senior Secured Notes or the other Security Agreements,
(f) any addition, exchange, release, surrender or non-perfection
of any collateral (including the Collateral), or any amendment to or
waiver or release of or addition to or consent to departure from any
guaranty, for any of the Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any Pledgor,
any other Guarantor, any surety or any guarantor.
SECTION 2.7. Postponement of Subrogation, etc. No Pledgor will exercise
any rights which it may acquire by reason of any payment made hereunder,
whether by way of subrogation, reimbursement or otherwise, until the
Satisfaction Date. Any amount paid to any Pledgor on account of any payment
made hereunder shall be held in trust for the benefit of the Holders of the
Senior Secured Notes and shall immediately be paid to the Collateral Agent, for
the ratable benefit of the Holders of the Senior Secured Notes, and credited
and applied against the Obligations, whether matured or unmatured, in
accordance with the terms of the Indenture, provided, however, that if
(a) any Pledgor has made payment to the Collateral Agent for the
ratable benefit of the Holders of the Senior Secured Notes of all or any
part of the Obligations, and
(b) the Satisfaction Date has occurred,
the Collateral Agent, on behalf of the Holders of the Senior Secured Notes,
agrees that, at such Pledgor's request, the Collateral Agent, on behalf of the
Holders of the Senior Secured Notes, will execute and deliver to such Pledgor
appropriate documents (without recourse and without representation or warranty)
necessary to evidence the transfer by subrogation to such Pledgor of an
interest in the Obligations resulting from such payment by such Pledgor. In
furtherance of the foregoing, prior to the Satisfaction Date, each Pledgor
shall refrain from taking any action or commencing any proceeding against any
other Guarantor (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Pledge Agreement to the Collateral Agent or the
Holders of the Senior Secured Notes.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Warranties, etc. Each Pledgor represents and warrants unto
the Collateral Agent and the Holders of the Senior Secured Notes, as at the
date of each pledge and delivery hereunder (including each pledge and delivery
of Pledged Shares) by such Pledgor to the Collateral Agent of any Collateral as
set forth in this Article.
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<PAGE> 6
SECTION 3.2. Ownership, No Liens, etc. Each Pledgor is the legal and
beneficial owner of, and has good and valid title to (and has full right and
authority to pledge and assign) the Collateral, free and clear of all Liens,
except any Lien granted pursuant hereto in favor of the Collateral Agent or any
Permitted Lien.
SECTION 3.3. Valid Security Interest.
(a) The execution and delivery of this Pledge Agreement creates a
valid second-priority security interest in the Collateral and (i) in the
case of the Pledged Shares, upon the delivery of such Collateral to the
Administrative Agent or a person described in Section 8-301(a)(2) of the
U.C.C. such security interest will be a valid second-priority, perfected
security interest, and (ii) in the case of all other Collateral, upon
the filing of the U.C.C. financing statements (Form U.C.C.-1) delivered
by the Pledgors to the Collateral Agent with respect to such Collateral,
such security interest will be a valid second-priority, perfected
security interest. Each Pledgor has filed all U.C.C. financing
statements (Form U.C.C.-1) referred to above in the appropriate offices
therefor (or has provided the Collateral Agent with copies thereof
suitable for filing in such offices) and has taken all of the other
actions referred to above necessary to create perfected and
second-priority security interests in the applicable Collateral.
(b) Upon the expiration or termination of the Senior Debt
Intercreditor Agreement, and the receipt of notice of such satisfaction
by Pledgor, Pledgor shall deliver, or cause the Collateral to be
delivered, to the Collateral Agent, at which time the pledge made
pursuant to this Pledge Agreement shall create a valid and perfected
first priority security interest in the Collateral, securing the payment
of the Obligations for the benefit of Collateral Agent and the Holders
of the Senior Secured Notes, and enforceable as such against all
creditors of Pledgor and any Persons purporting to purchase any of the
Collateral from Pledgor.
SECTION 3.4. INTENTIONALLY OMITTED.
SECTION 3.5. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all such Pledged Shares are duly authorized and
validly issued, fully paid and non-assessable, and constitute all of the issued
and outstanding Capital Stock of each Issuer. No Pledgor has any Subsidiaries
incorporated in the United States of which it directly owns any Capital Stock
other than the Issuers and the Unrestricted Subsidiaries. All Pledged Shares
are certificated, have been delivered to the Collateral Agent or a person
described in Section 8-301(a)(2) of the U.C.C., with stock powers, accompanied
by undated instruments of transfer duly executed in blank and the Collateral
Agent has "control" (as defined in the U.C.C.) of such Pledged Shares.
SECTION 3.6. Authorization, Approval, etc. No authorization, approval or
other action by, and no notice to or filing with, any Governmental Authority,
regulatory body or other Person (other than those that have been, or on the
Closing Date will be, duly obtained or made and which are, or on the Closing
Date will be, in full force and effect) is required either
-6-
<PAGE> 7
(a) for the pledge by such Pledgor of any Collateral pursuant to
this Pledge Agreement or for the execution, delivery and performance of
this Pledge Agreement by such Pledgor, or
(b) for the exercise by the Collateral Agent of the voting or
other rights provided for in this Pledge Agreement, or, except with
respect to any Pledged Shares as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering and
sale of securities generally, the remedies in respect of the Collateral
pursuant to this Pledge Agreement,
provided, however, that in order to exercise the voting and certain other
rights provided for in this Pledge Agreement, the Pledged Shares must be
transferred into the name of the Collateral Agent on the books and records of
the Issuer prior to the exercise of such voting or other rights.
SECTION 3.7. Compliance with Laws. Each Pledgor is in compliance with
the requirements of all applicable laws (including, the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could have a material adverse effect
on the business, prospects, financial condition or results of operations of the
Pledgor and its Subsidiaries (as defined in the Indenture) taken as a whole, or
draw into question the validity of this Pledge Agreement or the other documents
contemplated by the Indenture or adversely affect the value of the Pledged
Shares.
SECTION 3.8. Power to Enter Into Agreement. Each Pledgor has full
corporate power and authority to enter into this Pledge Agreement.
SECTION 3.9. Due Execution. This Pledge Agreement has been duly executed
and delivered by Pledgor and constitutes a legal, valid and binding obligation
of each Pledgor, enforceable against such Pledgor in accordance with its terms,
except as the enforceability hereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and equitable principles of
general applicability.
SECTION 3.10. No Litigation. No litigation, investigation or proceeding
of or before any arbitrator or governmental authority is pending or, to the
best knowledge of any Pledgor, threatened by or against Pledgor or against any
of its properties or revenues with respect to this Pledge Agreement or any of
the transactions contemplated hereby.
SECTION 3.11. Legal Pledge. The pledge of the Collateral pursuant to
this Pledge Agreement is not prohibited by any applicable law or governmental
regulation, release, interpretation or opinion of the Board of Governors of the
Federal Reserve System or other regulatory agency (including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System).
ARTICLE IV. COVENANTS
SECTION 4.1. Protect Collateral, Further Assurances, etc. Except for the
Senior Pledge, or as otherwise provided for in the Credit Agreement, no Pledgor
will sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the
-7-
<PAGE> 8
Collateral Agent hereunder or as specifically permitted by the Indenture). Each
Pledgor will warrant and defend the right and title herein granted unto the
Collateral Agent in and to the Collateral (and all right, title and interest
represented by the Collateral) against the claims and demands of all Persons
whomsoever. Each Pledgor agrees that at any time, and from time to time, at the
expense of such Pledgor, such Pledgor will promptly execute and deliver all
further instruments, and take all further action, that may be necessary or
desirable, or that the Collateral Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. No Pledgor will permit any
Issuer to issue any Capital Stock unless the same are immediately pledged to
the Collateral Agent hereunder and delivered to the Administrative Agent, the
Collateral Agent or a person described in Section 8-301(a) of the U.C.C.
SECTION 4.2. Stock Powers, etc. Each Pledgor agrees that all Pledged
Shares (and all other Capital Stock constituting Collateral) delivered by such
Pledgor pursuant to this Pledge Agreement will be accompanied by duly executed,
undated stock powers or other equivalent instruments of transfer reasonably
acceptable to the Collateral Agent. Each Pledgor will, from time to time upon
the reasonable request of the Collateral Agent, promptly deliver to the
Collateral Agent such stock powers, instruments and similar documents,
reasonably satisfactory in form and substance to the Collateral Agent, with
respect to the Collateral as the Collateral Agent may reasonably request and
will, from time to time upon the request of the Collateral Agent after the
occurrence of any Event of Default, promptly cause each Issuer to transfer any
Pledged Shares or other Capital Stock constituting Collateral into the name of
any nominee designated by the Collateral Agent.
SECTION 4.3. Continuous Pledge. Subject to Section 2.4 hereof, each
Pledgor will, at all times, keep pledged to the Collateral Agent pursuant
hereto all Pledged Shares and all other Capital Stock constituting Collateral,
all Dividends and Distributions with respect thereto, and all other Collateral
and other Capital Stock, instruments, proceeds and rights from time to time
received by or distributable to such Pledgor in respect of any Collateral. Any
Distributions on Pledged Shares consisting of Capital Stock will be
certificated.
SECTION 4.4. Voting Rights, Dividends, etc. Each Pledgor agrees:
(a) if an Event of Default shall have occurred and be continuing,
promptly upon receipt of notice thereof by such Pledgor and without any
request therefore by the Collateral Agent, to deliver (properly endorsed
where required hereby or requested by the Collateral Agent) to the
Collateral Agent all Dividends, Distributions and all proceeds of the
Collateral, all of which shall be held by the Collateral Agent as
additional Collateral for use in accordance with Section 6.4 hereof; and
(b) if an Event of Default shall have occurred and be continuing
and the Collateral Agent shall have notified such Pledgor of the
Collateral Agent's intention to exercise its voting power under this
Section:
(i) the Collateral Agent may exercise (to the exclusion of
such Pledgor) the voting power and all other incidental rights of
ownership with respect to any
-8-
<PAGE> 9
Pledged Shares or other Capital Stock constituting Collateral,
and such Pledgor hereby grants the Collateral Agent an
irrevocable proxy, exercisable under such circumstances, to vote
the Pledged Shares and such other Collateral; and
(ii) promptly to deliver to the Collateral Agent such
additional proxies and other documents as may be necessary to
allow the Collateral Agent to exercise such voting power.
All Dividends, Distributions and proceeds which may at any time and from time
to time be held by Pledgor but which Pledgor is then obligated to deliver to
the Collateral Agent, shall, until delivery to the Collateral Agent, be held by
such Pledgor separate and apart from its other property in trust for the
Collateral Agent. The Collateral Agent agrees that unless an Event of Default
shall have occurred and be continuing and the Collateral Agent shall have given
the notice referred to in this Section, each Pledgor have the exclusive power
to exercise all voting and other consensual rights with respect to any Capital
Stock (including any of the Pledged Shares) constituting Collateral and the
Collateral Agent shall, upon the written request of such Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by such Pledgor, and which are necessary to allow such Pledgor to
exercise such powers with respect to any such share of Capital Stock (including
any of the Pledged Shares) constituting Collateral; provided, however, that no
vote shall be cast, or consent, waiver or ratification given, or action taken
by any Pledgor that would materially impair the value of any Collateral or be
inconsistent with or violate any provision of the Indenture, the Senior Secured
Notes or this Pledge Agreement.
ARTICLE V. THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby irrevocably appoints the Collateral Agent as such Pledgor's
attorney-in-fact, with full authority and in the name, place and stead of the
Pledgor or in its own name, from time to time in the Collateral Agent's
discretion, to take, upon the occurrence and during the continuance of an Event
of Default, any action and to execute any instrument which the Collateral Agent
may deem necessary or advisable to accomplish the purposes of this Pledge
Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise and
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral,
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Collateral Agent with respect to any of the Collateral.
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SECTION 5.2. Authority of Collateral Agent.
(a) The Collateral Agent shall have and be entitled to exercise
all powers hereunder that are specifically granted to the Collateral
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. The Collateral Agent may perform any of its duties
hereunder or in connection with the Collateral by or through agents or
employees and shall be entitled to retain counsel and to act in reliance
upon the advice of counsel concerning all such matters. Neither the
Collateral Agent nor any director, officer, employee, attorney or agent
of the Collateral Agent shall be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Collateral Agent and its directors,
officers, employees, attorneys and agents shall be entitled to rely on
any communication, instrument or document reasonably believed by it or
them to be genuine and correct and to have been signed or sent by the
proper person or persons.
(b) Each Pledgor acknowledges that the rights and
responsibilities of the Collateral Agent under this Pledge Agreement
with respect to any action taken by the Collateral Agent or the exercise
or non-exercise by the Collateral Agent of any option, right, request,
judgment or other right or remedy provided for herein or resulting or
arising out of this Pledge Agreement shall, as between the Collateral
Agent and the Holders of the Senior Secured Notes, be governed by the
Indenture and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Collateral Agent and
each or any Pledgor, the Collateral Agent shall be conclusively presumed
to be acting as agent for the Holders of the Senior Secured Notes with
full and valid authority so to act or refrain from acting, and each
Pledgor shall not be obligated or entitled to make any inquiry
respecting such authority.
SECTION 5.3. Resignation or Removal of the Collateral Agent. Until such
time as the Obligations shall have been paid in full, the Collateral Agent may
at any time, by giving written notice to Pledgor, the Trustee (as defined in
the Indenture) and the Holders of the Senior Secured Notes, resign and be
discharged of the responsibilities hereby created, such resignation to become
effective upon (i) the appointment of a successor Collateral Agent and (ii) the
acceptance of such appointment by such successor Collateral Agent. As promptly
as practicable after the giving of any such notice, the Trustee (if the Trustee
is not then acting as the Collateral Agent hereunder), or if the Trustee and
the Collateral Agent are the same person or entity, the Holders of the Senior
Secured Notes shall appoint a successor Collateral Agent, which successor
Collateral Agent shall be reasonably acceptable to the Pledgors. If no
successor Collateral Agent shall be appointed and shall have accepted such
appointment within 90 days after the Collateral Agent gives the aforesaid
notice of resignation, the Collateral Agent may apply to any court of competent
jurisdiction to appoint a successor Collateral Agent to act until such time, if
any, as a successor shall have been appointed as provided in this Section. Any
successor so appointed by such court shall immediately and without further act
be superseded by any successor Collateral Agent appointed by the Holders of the
Senior Secured Notes, as provided in this Section. Simultaneously with its
replacement as Collateral Agent hereunder, the Collateral Agent so replaced
shall deliver to its successor all documents, instruments, certificates and
other items of whatever kind (including, without limitation, the certificates
and instruments evidencing the Collateral and all instruments of transfer or
assignment) held by it pursuant to the terms hereof.
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<PAGE> 11
Any Collateral Agent that has resigned shall be entitled to fees, costs and
expenses to the extent incurred or arising, or relating to events occurring,
before its resignation or removal.
SECTION 5.4. Release; Termination of Agreement.
(a) This Pledge Agreement shall terminate upon the earlier to
occur of: (i) full and final payment and performance of the Obligations
(and upon receipt by the Collateral Agent of Pledgor's written
certification that all such Obligations have been satisfied) and payment
in full of all fees and expenses owing by the Pledgors to the Collateral
Agent, (ii) the day of the Legal Defeasance of all of the Obligations
pursuant to Section 8.02 of the Indenture (other than those surviving
Obligations specified therein) or (iii) such other termination date as
is provided by the Indenture. At such time, the Collateral Agent shall,
at the request of any Pledgor, reassign and redeliver to such Pledgor
all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Collateral Agent in accordance with the terms
hereof. Such reassignment and redelivery shall be without warranty by or
recourse to the Collateral Agent, except as to the absence of any prior
assignments by the Collateral Agent of its interest in the Collateral,
and shall be at the expense of the Pledgors.
(b) Each Pledgor agrees that it will not, except as permitted by
the Indenture, sell or dispose of, or grant any option or warrant with
respect to, any of the Collateral; provided, however, that if any
Pledgor shall sell any of the Collateral in accordance with the terms of
the Indenture, the Collateral Agent shall, at the request of such
Pledgor and subject to requirements of Section 10.03 of the Indenture,
release the Collateral subject to such sale free and clear of the Lien
under this Pledge Agreement.
SECTION 5.5. Collateral Agent May Perform. If any Pledgor falls to
perform any agreement contained herein, the Collateral Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Collateral Agent incurred in connection therewith shall be payable by such
Pledgor pursuant to Section 6.5 hereof.
SECTION 5.6. Collateral Agent Has No Duty. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Holders of the Senior Secured Notes) in the Collateral and shall not impose any
duty on it to exercise any such powers. Except for the reasonable care of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Collateral Agent shall have no duty as to any Collateral or
responsibility for
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not the Collateral Agent has or is deemed to
have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
SECTION 5.7. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession, provided, however, the Collateral Agent shall be
deemed to have exercised reasonable care in the
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custody and preservation of any of the Collateral, if it takes such action for
that purpose as the relevant Pledgor reasonably requests in writing from time
to time, but failure of the Collateral Agent to comply with any such request at
any time shall not in itself be deemed a failure to exercise reasonable care.
ARTICLE VI. REMEDIES
SECTION 6.1. Certain Remedies. If an Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may, without notice except as
specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Collateral Agent's
offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Collateral Agent may deem commercially
reasonable. Each Pledgor agrees that, to the extent notice of sale shall
be required by law, at least ten day's prior notice to such Pledgor of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefore, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(b) The Collateral Agent may
(i) transfer all or any part of the Collateral into the
name of the Collateral Agent or its nominee, with or without
disclosing that such Collateral is subject to the Lien hereunder,
(ii) notify the parties obligated on any of the Collateral
to make payment to the Collateral Agent of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit
or otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether
or not longer than the original period) any obligations of any
nature of any party with respect thereto,
(iv) endorse any checks, drafts or other writings in any
Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral and
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(vi) execute (in the name, place and stead of any Pledgor)
endorsements, assignments., stock powers and other instruments of
conveyance or transfer with respect to all or any of the
Collateral.
SECTION 6.2. Securities Laws. If the Collateral Agent shall determine to
exercise its right to sell all or any of the Collateral pursuant to Section
6.1, each Pledgor agrees that, upon request of the Collateral Agent, such
Pledgor will use commercially reasonable efforts to, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause
to be done all such other acts and things, as may be necessary or, in
the opinion of the Collateral Agent, advisable to register such
Collateral under the provisions of the Securities Act of 1933, as from
time to time amended (the "Securities Act"), and to cause the
registration statement relating thereto to -------------- become
effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion
of the Collateral Agent, are necessary or advisable. all in conformity
with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable
thereto;
(b) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
the Collateral Agent,
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may
be necessary to make such sale of the Collateral or any part thereof
valid and binding and in compliance with applicable law.
Each Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Collateral Agent or the Holders of the
Senior Secured Notes by reason of the failure by such Pledgor to perform any of
the covenants contained in this Section and, consequently, agrees that, if such
Pledgor shall fall to perform any of such covenants, it shall pay, as
liquidated damages and not as a penalty, an amount equal to the value (as
determined by the Collateral Agent) of the Collateral on the date the
Collateral Agent shall demand compliance with this Section.
SECTION 6.3. Compliance with Restrictions. Each Pledgor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Collateral Agent is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have
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<PAGE> 14
certain qualifications and restrict such prospective bidders and purchasers to
persons who will represent and agree that they are purchasing for their own
account for investment and not with a view to the distribution or resale of
such Collateral), or in order to obtain any required approval of the sale or of
the purchaser by any Governmental Authority, and each Pledgor further agrees
that such compliance shall not result in such sale being considered or deemed
not to have been made in a commercially reasonable manner, nor shall the
Collateral Agent be liable nor accountable to any Pledgor for any discount
allowed by reason of the fact that such Collateral is sold in compliance with
any such limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Collateral Agent in respect of any sale of, collection from or other
realization upon, all or any part of the Collateral may, in the discretion of
the Collateral Agent, be held by the Collateral Agent as additional collateral
security for, or then or at any time thereafter be applied (after payment of
any amounts payable to the Collateral Agent pursuant to Section 7.07 of the
Indenture and, Section 6.5 below) in whole or in part by the Collateral Agent
against, all or any part of the Obligations in such order as the Collateral
Agent shall elect. Any surplus of such cash or other proceeds held by the
Collateral Agent and remaining after the Satisfaction Date, shall be paid over
to the applicable Pledgor or to whomsoever may be lawfully entitled to receive
such surplus. The Pledgors shall remain liable on a joint and several basis for
any deficiency.
SECTION 6.5. Indemnity and Expenses. Each Pledgor hereby jointly and
severally indemnifies and holds harmless the Collateral Agent from and against
any and all claims, losses and liabilities arising out of or resulting from
this Pledge Agreement (including enforcement of this Pledge Agreement), except
claims, losses or liabilities resulting from the Collateral Agent's gross
negligence or wilful misconduct, and each Pledgor will pay to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which the
Collateral Agent may incur, in each case, in connection with:
(a) the administration of this Pledge Agreement,
(b) the custody, preservation, use or operation of, or the sale
of, collection from or other realization upon, any of the Collateral,
(c) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or
(d) the failure by any Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII. MISCELLANEOUS PROVISIONS
SECTION 7.1. Security Agreement. This Pledge Agreement is a Security
Agreement executed pursuant to the Indenture and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any provision
of this Pledge Agreement nor consent to any departure by any Pledgor herefrom
shall in any event
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<PAGE> 15
be effective unless the same shall be in writing and signed by the Collateral
Agent (on behalf of the Holders of the Senior Secured Notes) and each Pledgor,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.
SECTION 7.3. Protection of Collateral .The Collateral Agent may from
time to time, at its option, and at the expense of the Pledgors, perform any
act which any Pledgor agrees hereunder to perform and which such Pledgor shall
fall to perform after being requested in writing so to perform (it being
understood that no such request need be given after the occurrence and during
the continuance of an Event of Default) and the Collateral Agent may from time
to time take any other action which the Collateral Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and addressed, delivered or
transmitted, if to any Pledgor, at the address or facsimile number of the
Company provided for in the Indenture, and, if to the Collateral Agent, at
Harris Trust Company of New York, Wall Street Plaza, 19th Floor, 88 Pine
Street, New York, NY 10005, Telecopier No.: (212) 701-7664, Attn: Peter Morse,
or as to any such party at such other address or facsimile number as shall be
designated by such party in a written notice to each other party complying as
to delivery with the terms of this Section. Any notice, (a)(i) if mailed and
properly addressed with postage prepaid or (ii) if properly addressed and sent
by pre-paid courier service, shall be deemed given when such notice has been
received or (b) if transmitted by facsimile, shall be deemed given when
transmitted (and telephonic confirmation of receipt thereof has been received).
SECTION 7.5. Headings. The various headings of this Pledge Agreement are
inserted for convenience only, and shall not affect the meaning or
interpretation of this Pledge Agreement or any provisions hereof.
SECTION 7.6. Severability. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such provision
and such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions of this Pledge
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 7.7. Governing Law. THIS PLEDGE AGREEMENT SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK, EXCLUDING THE LAW OF CONFLICTS.
SECTION 7.8. Counterparts. This Pledge Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original (whether such counterpart is originally executed or an electronic copy
of an original) and all of which shall constitute together but one and the same
agreement. This Pledge Agreement shall become effective and binding upon any
Pledgor when a counterpart hereof executed on behalf of such Pledgor shall have
been received by the Collateral Agent.
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[Signatures commence on the following page}
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<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
STERLING CHEMICALS, INC.
By
-------------------------------------
Title:
STERLING CANADA, INC.
By -------------------------------------
Title:
STERLING PULP CHEMICALS US, INC.
By
-------------------------------------
Title:
HARRIS TRUST COMPANY OF NEW YORK
as Collateral Agent
By
-------------------------------------
Title:
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<PAGE> 18
ATTACHMENT 1
to
Pledge Agreement
[NAME OF PLEDGOR]
<TABLE>
<CAPTION>
Pledged Shares
--------------
Issuer Capital Stock
- ------ -------------
Authorized Outstanding % of Shares
Shares Shares Pledged
---------- ----------- -----------
<S> <C> <C> <C>
Sterling Fibers, Inc. 100%
Sterling Chemicals 100%
International, Inc.
Sterling Chemicals 100%
Energy, Inc.
Sterling Canada, Inc. 100%
Sterling Pulp 100%
Chemicals, Inc.
Sterling Pulp 100%
Chemicals US, Inc.
</TABLE>
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<PAGE> 1
EXHIBIT 4.15
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement") is
made and entered into as of July 23, 1999 (the "Closing Date"), by Sterling
Chemicals, Inc., a Delaware corporation (the "Company"), and Sterling Canada,
Inc., a Delaware corporation, each having as its principal place of business c/o
Sterling Chemicals, Inc., 1200 Smith Street, Houston, Texas 77002-4312 (the
Company and each of the foregoing, a "Pledgor," and collectively, the
"Pledgors"), in favor of Harris Trust Company of New York, a New York
corporation, as indenture trustee and collateral agent (the "Collateral Agent")
for the benefit of itself and for the holders (the "Holders") of the Company's
12 3/8% Senior Secured Notes due 2006, and having an office at Wall Street
Plaza, 19th Floor, 88 Pine Street, New York, New York 10005. Capitalized terms
used but not otherwise defined herein shall have the meanings ascribed thereto
in the Indenture (hereinafter defined).
W I T N E S S E T H:
WHEREAS, as of the Closing Date, the Pledgors own and hold the issued
and outstanding shares of capital stock (collectively, the "Pledged Shares") of
the following corporations: (a) Sterling Pulp Chemicals, Ltd., an Ontario
corporation; (b) Sterling NRO Ltd., an Ontario corporation; and (c) Sterling
Chemicals Marketing, Inc., a Barbados corporation ((a) - (c), collectively and
individually, the "Issuer"); and
WHEREAS, Pledgor and Collateral Agent, as trustee, have entered into
that certain indenture dated as of July 23, 1999 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which the Company issued $295 million in the aggregate
principal amount of 12 3/8% Senior Secured Notes due 2006 (together with any
notes issued in replacement thereof or in exchange or substitution therefor, the
"Senior Secured Notes"); and
WHEREAS, the terms of the Indenture require that the Pledgors (i)
pledge to Collateral Agent for the ratable benefit of the Holders of the Senior
Secured Notes, and grant to Collateral Agent for the ratable benefit of the
Holders of the Senior Secured Notes, a first priority security interest in the
Pledged Collateral (as defined herein) and (ii) execute and deliver this Pledge
Agreement in order to secure the payment and performance by the Pledgors of all
of their obligations under both the Indenture and the Senior Secured Notes
(including all guarantees thereof) (the "Obligations"); and
WHEREAS, each Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement:
NOW, THEREFORE, in consideration of the premises, and in order to
induce the Holders of the Senior Secured Notes to purchase the Senior Secured
Notes, Pledgor hereby agrees with the Collateral Agent for its benefit and the
ratable benefit of the Holders of the Senior Secured Notes as follows:
<PAGE> 2
ARTICLE I. DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof) when used in this Pledge
Agreement:
"Distributions" means any and all stock dividends, liquidating
dividends, Capital Stock resulting from (or in connection with the exercise of)
stock splits, reclassifications, warrants, options, non-cash dividends, mergers
or consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other Capital Stock
constituting Collateral, but shall not include Dividends.
"Dividends" means any and all cash dividends and cash distributions
with respect to any Pledged Shares or other Pledged Collateral made in the
ordinary course of business, but shall not include liquidating dividends.
"Pledge Agreement" is defined in the preamble.
"Pledged Collateral" means all Pledged Shares, all other pledged
Capital Stock, all other equity securities, all assignments of any amounts due
or to become due with respect thereto, and all other instruments which are now
being delivered by the Pledgor to the Collateral Agent or may from time to time
hereafter be delivered by the Pledgor to the Collateral Agent for the purpose of
pledge under this Pledge Agreement and all proceeds of any of the foregoing.
"Pledged Shares" means the Capital Stock of any Issuer in the amounts
and percentages listed on Attachment 1 hereto.
"Satisfaction Date" means the date on which all Obligations under the
Indenture and the Senior Secured Notes have been paid in full or otherwise
satisfied.
"Securities Act" is defined in clause (a) of Section 6.2.
SECTION 1.2. Indenture Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Pledge Agreement, including
its preamble and recitals, have the meanings provided in the Indenture.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Indenture or the context otherwise requires, terms for which meanings are
provided in the Uniform Commercial Code from time to time in effect in the State
of New York (the "U.C.C.") are used in this Pledge Agreement, including its
preamble and recitals, with such meanings.
ARTICLE II. PLEDGE
SECTION 2.1. Grant of Security Interest. Each Pledgor hereby pledges,
hypothecates, assigns, charges, delivers and transfers to the Collateral Agent
for its benefit and for the ratable benefit of the Holders of the Senior Secured
Notes, and hereby grants to the
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<PAGE> 3
Collateral Agent for the ratable benefit of the Holders of the Senior Secured
Notes, a continuing security interest in, all of the following property
(collectively, the "Collateral"):
(a) 65% of the issued and outstanding Pledged Shares of each
Issuer identified on Attachment 1 hereto;
(b) 65% of all other Pledged Shares issued from time to time;
(c) all other Pledged Collateral, whether now or hereafter
delivered to the Collateral Agent in connection with this Pledge
Agreement;
(d) all Dividends, Distributions, and other payments and
rights with respect to any Pledged Collateral; and
(e) all proceeds of any of the foregoing.
Notwithstanding the foregoing, at no time shall the Pledged Shares of
any Issuer constitute in excess of 65% of all issued and outstanding Capital
Stock of such Issuer.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures
the payment in full and in cash of all Obligations.
SECTION 2.3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares, shall be delivered to and held by or on behalf of the Collateral Agent
and for the benefit of the Holders of the Senior Secured Notes pursuant hereto,
shall be in suitable form for transfer by delivery and shall be accompanied by
all necessary instruments of transfer or assignment, shall be duly executed in
blank, all in form and substance satisfactory to the Collateral Agent.
SECTION 2.4. Dividends on Pledged Share. In the event that any Dividend
is to be paid on any Pledged Share at a time when no Event of Default has
occurred and is continuing, such Dividend may be paid directly to the applicable
Pledgor. If any such Event of Default has occurred and is continuing, then any
such Dividend shall be paid directly to the Collateral Agent.
SECTION 2.5. Continuing Security Interest. This Pledge Agreement shall
create a continuing security interest in the Collateral and shall:
(a) remain in full force and effect until all Obligations
under the Indenture and the Senior Secured Notes are satisfied in full;
(b) be binding upon each Pledgor and its successors,
transferees and assigns; and
(c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Holders of the Senior
Secured Notes.
The security interest granted herein shall terminate and all rights to the
Collateral shall revert to each Pledgor on the Satisfaction Date. Upon any such
termination or release of Collateral, the Collateral Agent will, at each
Pledgor's sole expense, deliver to such Pledgor, without any
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<PAGE> 4
representations, warranties or recourse of any kind whatsoever, all certificates
and instruments representing or evidencing all Pledged Shares, together with all
other Collateral held by the Collateral Agent hereunder, and execute and deliver
to such Pledgor such documents as such Pledgor shall reasonably request to
evidence such termination or release.
SECTION 2.6. Security Interest Absolute. All rights of the Collateral
Agent and the Liens granted to the Collateral Agent hereunder, and all
obligations of each Pledgor hereunder, shall be absolute and unconditional,
irrespective of
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(b) the failure of the Collateral Agent, for its own benefit
or the benefit of the Holders of the Senior Secured Notes:
(i) to assert any claim or demand or to enforce any
right or remedy against any Pledgor, any other Guarantor (as
such term is defined in the Indenture) or any other Person
under the provisions of the Indenture, the Senior Secured
Notes and the Security Agreements or otherwise, or
(ii) to exercise any right or remedy against any
guarantor of, or collateral securing, any Obligations of any
Pledgor or any other Guarantor.
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations or any other
extension, compromise or renewal of any Obligation of any Pledgor or
any other Guarantor,
(d) any reduction, limitation, impairment or termination of
any Obligation of any Pledgor or any other Guarantor for any reason
(other than the satisfaction of and repayment in full and in cash of
all Obligations), including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and each Pledgor
hereby waives any right to or claim of) any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise or
unenforceability of, or any other event or occurrence affecting, any
Obligation of any Pledgor, any other Guarantor or otherwise,
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Indenture, the Senior Secured Notes or the other Security
Agreements,
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any
Pledgor, any other Guarantor, any surety or any guarantor.
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SECTION 2.7. Postponement of Subrogation, etc. No Pledgor will exercise
any rights which it may acquire by reason of any payment made hereunder, whether
by way of subrogation, reimbursement or otherwise, until the Satisfaction Date.
Any amount paid to any Pledgor on account of any payment made hereunder shall be
held in trust for the benefit of the Holders of the Senior Secured Notes and
shall immediately be paid to the Collateral Agent, for the ratable benefit of
the Holders of the Senior Secured Notes, and credited and applied against the
Obligations, whether matured or unmatured, in accordance with the terms of the
Indenture, provided, however, that if
(a) any Pledgor has made payment to the Collateral Agent for
the ratable benefit of the Holders of the Senior Secured Notes of all
or any part of the Obligations, and
(b) the Satisfaction Date has occurred,
the Collateral Agent, on behalf of the Holders of the Senior Secured Notes,
agrees that, at such Pledgor's request, the Collateral Agent, on behalf of the
Holders of the Senior Secured Notes, will execute and deliver to such Pledgor
appropriate documents (without recourse and without representation or warranty
necessary to evidence the transfer by subrogation to such Pledgor of an interest
in the Obligations resulting from such payment by such Pledgor. In furtherance
of the foregoing, prior to the Satisfaction Date, each Pledgor shall refrain
from taking any action or commencing any proceeding against any other Guarantor
(or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in respect of payments made
under this Pledge Agreement to the Collateral Agent or the Holders of the Senior
Secured Notes.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Warranties, etc. Each Pledgor represents and warrants unto
the Collateral Agent and the Holders of the Senior Secured Notes, as at the date
of each pledge and delivery hereunder (including each pledge and delivery of
Pledged Shares) by such Pledgor to the Collateral Agent of any Collateral as set
forth in this Article.
SECTION 3.2. Ownership, No Liens, etc. Each Pledgor is the legal and
beneficial owner of, and has good and valid title to (and has full right and
authority to pledge and assign) the Collateral, free and clear of all Liens,
except any Lien granted pursuant hereto in favor of the Collateral Agent or any
Permitted Lien.
SECTION 3.3. Valid Security Interest. The execution and delivery of
this Pledge Agreement creates a valid first-priority security interest in the
Collateral and (a) in the case of the Pledged Shares, upon the delivery of such
Collateral to the Collateral Agent or a person described in Section 8-301(a)(2)
of the U.C.C. such security interest will be a valid first-priority, perfected
security interest, and (b) in the case of all other Collateral, upon the filing
of the U.C.C. financing statements (Form U.C.C.-1) delivered by the Pledgors to
the Collateral Agent with respect to such Collateral, such security interest
will be a valid first-priority, perfected security interest. Each Pledgor has
filed all U.C.C. financing statements (Form U.C.C.-1) referred to above in the
appropriate offices therefor (or has provided the Collateral Agent with copies
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thereof suitable for filing in such offices) and has taken all of the other
actions referred to above necessary to create perfected and first-priority
security interests in the applicable Collateral.
SECTION 3.4. INTENTIONALLY OMITTED.
SECTION 3.5. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all such Pledged Shares are duly authorized and validly
issued, fully paid and non-assessable, and constitute sixty-five percent (65%)
of the issued and outstanding Capital Stock of each Issuer. No Pledgor has any
Subsidiaries incorporated outside of the United States of which it directly owns
any Capital Stock other than the Issuers and the Unrestricted Subsidiaries. All
Pledged Shares are certificated, have been delivered to the Collateral Agent or
a person described in Section 8-301(a)(2) of the U.C.C., with stock powers,
accompanied by undated instruments of transfer duly executed in blank and the
Collateral Agent has "control" (as defined in the U.C.C.) of such Pledged
Shares.
SECTION 3.6. Authorization, Approval, etc. No authorization, approval
or other action by, and no notice to or filing with, any Governmental Authority,
regulatory body or other Person (other than those that have been, or on the
Closing Date will be, duly obtained or made and which are, or on the Closing
Date will be, in full force and effect) is required either
(a) for the pledge by such Pledgor of any Collateral pursuant
to this Pledge Agreement or for the execution, delivery and performance
of this Pledge Agreement by such Pledgor, or
(b) for the exercise by the Collateral Agent of the voting or
other rights provided for in this Pledge Agreement, or, except with
respect to any Pledged Shares as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering and
sale of securities generally, the remedies in respect of the Collateral
pursuant to this Pledge Agreement,
provided, however, that in order to exercise the voting and certain other rights
provided for in this Pledge Agreement, the Pledged Shares must be transferred
into the name of the Collateral Agent on the books and records of the Issuer
prior to the exercise of such voting or other rights.
SECTION 3.7. Compliance with Laws. Each Pledgor is in compliance with
the requirements of all applicable laws (including, the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could have a material adverse effect on
the business, prospects, financial condition or results of operations of the
Pledgor and its Subsidiaries (as defined in the Indenture), taken as a whole, or
draw into question the validity of this Pledge Agreement or the other documents
contemplated by the Indenture or adversely affect the value of the Pledged
Shares.
SECTION 3.8. Power to Enter Into Agreement. Each Pledgor has full
corporate power and authority to enter into this Pledge Agreement.
SECTION 3.9. Due Execution. This Pledge Agreement has been duly
executed and delivered by Pledgor and constitutes a legal, valid and binding
obligation of each Pledgor, enforceable against each Pledgor in accordance with
its terms, except as the enforceability hereof
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may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and equitable principles of general applicability.
SECTION 3.10. No Litigation. No litigation, investigation or proceeding
of or before any arbitrator or governmental authority is pending or, to the best
knowledge of any Pledgor, threatened by or against Pledgor or against any of its
properties or revenues with respect to this Pledge Agreement or any of the
transactions contemplated hereby.
SECTION 3.11. Legal Pledge. The pledge of the Collateral pursuant to
this Pledge Agreement is not prohibited by any applicable law or governmental
regulation, release, interpretation or opinion of the Board of Governors of the
Federal Reserve System or other regulatory agency (including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System).
ARTICLE IV. COVENANTS
SECTION 4.1. Protect Collateral, Further Assurances, etc. No Pledgor
has or will sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Collateral Agent hereunder and as
specifically provided by the Indenture). Each Pledgor will warrant and defend
the right and title herein granted unto the Collateral Agent in and to the
Collateral (and all right, title and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. Each Pledgor agrees
that at any time, and from time to time, at the expense of such Pledgor, such
Pledgor will promptly execute and deliver all further instruments, and take all
further action, that may be necessary or desirable, or that the Collateral Agent
may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. No Pledgor will permit any Issuer to issue any Capital Stock unless
the same are immediately pledged to the Collateral Agent hereunder and the
additional Capital Stock is pledged to Collateral Agent at the pro-rata levels
outlined in Section 2.1 hereof and delivered to the Collateral Agreement or a
person described in Section 8.301(a)(2) of the U.C.C.
SECTION 4.2. Stock Powers, etc. Each Pledgor agrees that all Pledged
Shares (and all other Capital Stock constituting Collateral) delivered by such
Pledgor pursuant to this Pledge Agreement will be accompanied by duly executed,
undated stock powers or other equivalent instruments of transfer reasonably
acceptable to the Collateral Agent. Each Pledgor will, from time to time upon
the reasonable request of the Collateral Agent, promptly deliver to the
Collateral Agent such stock powers, instruments and similar documents,
reasonably satisfactory in form and substance to the Collateral Agent, with
respect to the Collateral as the Collateral Agent may reasonably request and
will, from time to time upon the request of the Collateral Agent after the
occurrence of any Event of Default, promptly cause each Issuer to transfer any
Pledged Shares or other Capital Stock constituting Collateral into the name of
any nominee designated by the Collateral Agent.
SECTION 4.3. Continuous Pledge. Subject to Section 2.4 hereof, each
Pledgor will, at all times, keep pledged to the Collateral Agent pursuant hereto
all Pledged Shares and all other
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Capital Stock constituting Collateral, all Dividends and Distributions with
respect thereto, and all other Collateral and other Capital Stock, instruments,
proceeds and rights from time to time received by or distributable to such
Pledgor in respect of any Collateral. Any Distributions on Pledged Shares
consisting of Capital Stock will be certificated.
SECTION 4.4. Voting Rights, Dividends, etc. Each Pledgor agrees:
(a) if an Event of Default shall have occurred and be
continuing, promptly upon receipt thereof by such Pledgor and without
any request therefore by the Collateral Agent, to deliver (properly
endorsed where required hereby or requested by the Collateral Agent) to
the Collateral Agent all Dividends, Distributions and all proceeds of
the Collateral, all of which shall be held by the Collateral Agent as
additional Collateral for use in accordance with Section 6.4 hereof;
and
(b) if an Event of Default shall have occurred and be
continuing and the Collateral Agent shall have notified such Pledgor of
the Collateral Agent's intention to exercise its voting power under
this Section:
(i) the Collateral Agent may exercise (to the
exclusion of such Pledgor) the voting power and all other
incidental rights of ownership with respect to any Pledged
Shares or other Capital Stock constituting Collateral, and
such Pledgor hereby grants the Collateral Agent an irrevocable
proxy, exercisable under such circumstances, to vote the
Pledged Shares and such other Collateral; and
(ii) promptly to deliver to the Collateral Agent such
additional proxies and other documents as may be necessary to
allow the Collateral Agent to exercise such voting power.
All Dividends, Distributions and proceeds which may at any time and from time to
time be held by Pledgor but which Pledgor is then obligated to deliver to the
Collateral Agent, shall, until delivery to the Collateral Agent, be held by such
Pledgor separate and apart from its other property in trust for the Collateral
Agent. The Collateral Agent agrees that unless an Event of Default shall have
occurred and be continuing and the Collateral Agent shall have given the notice
referred to in this Section, each Pledgor have the exclusive power to exercise
all voting and other consensual rights with respect to any Capital Stock
(including any of the Pledged Shares) constituting Collateral and the Collateral
Agent shall, upon the written request of such Pledgor, promptly deliver such
proxies and other documents, if any, as shall be reasonably requested by such
Pledgor, and which are necessary to allow such Pledgor to exercise such powers
with respect to any such share of Capital Stock (including any of the Pledged
Shares) constituting Collateral; provided, however, that no vote shall be cast,
or consent, waiver or ratification given, or action taken by any Pledgor that
would materially impair the value of any Collateral or be inconsistent with or
violate any provision of the Indenture, the Senior Secured Notes or this Pledge
Agreement.
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ARTICLE V. THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby irrevocably appoints the Collateral Agent as such Pledgor's
attorney-in-fact, with full authority and in the name, place and stead of the
Pledgor or in its own name, from time to time in the Collateral Agent's
discretion, to take, upon the occurrence and during the continuance of an Event
of Default, any action and to execute any instrument which the Collateral Agent
may deem necessary or advisable to accomplish the purposes of this Pledge
Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise and
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral,
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Collateral Agent with respect to any of the Collateral.
SECTION 5.2. Authority of Collateral Agent.
(a) The Collateral Agent shall have and be entitled to
exercise all powers hereunder that are specifically granted to the
Collateral Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. The Collateral Agent may perform any of
its duties hereunder or in connection with the Pledged Collateral by or
through agents or employees and shall be entitled to retain counsel and
to act in reliance upon the advice of counsel concerning all such
matters. Neither the Collateral Agent nor any director, officer,
employee, attorney or agent of the Collateral Agent shall be
responsible for the validity, effectiveness or sufficiency hereof or of
any document or security furnished pursuant hereto. The Collateral
Agent and its directors, officers, employees, attorneys and agents
shall be entitled to rely on any communication, instrument or document
reasonably believed by it or them to be genuine and correct and to have
been signed or sent by the proper person or persons.
(b) Each Pledgor acknowledges that the rights and
responsibilities of the Collateral Agent under this Pledge Agreement
with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, right,
request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the
Collateral Agent and the Holders of the Senior Secured Notes, be
governed by the Indenture and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Collateral Agent and each and any Pledgor, the Collateral Agent shall
be conclusively presumed to be acting as agent for the Holders of the
Senior Secured Notes
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with full and valid authority so to act or refrain from acting, and
each Pledgor shall not be obligated or entitled to make any inquiry
respecting such authority.
SECTION 5.3. Resignation or Removal of the Collateral Agent. Until such
time as the Obligations shall have been paid in full, the Collateral Agent may
at any time, by giving written notice to Pledgor, the Trustee (as defined in the
Indenture) and the Holders of the Senior Secured Notes, resign and be discharged
of the responsibilities hereby created, such resignation to become effective
upon (i) the appointment of a successor Collateral Agent and (ii) the acceptance
of such appointment by such successor Collateral Agent. As promptly as
practicable after the giving of any such notice, the Trustee (if the Trustee is
not then acting as the Collateral Agent hereunder), or if the Trustee and the
Collateral Agent are the same person or entity, the Holders of the Senior
Secured Notes shall appoint a successor Collateral Agent, which successor
Collateral Agent shall be reasonably acceptable to the Pledgors. If no successor
Collateral Agent shall be appointed and shall have accepted such appointment
within 90 days after the Collateral Agent gives the aforesaid notice of
resignation, the Collateral Agent may apply to any court of competent
jurisdiction to appoint a successor Collateral Agent to act until such time, if
any, as a successor shall have been appointed as provided in this Section. Any
successor so appointed by such court shall immediately and without further act
be superseded by any successor Collateral Agent appointed by the Holders of the
Senior Secured Notes, as provided in this Section. Simultaneously with its
replacement as Collateral Agent hereunder, the Collateral Agent so replaced
shall deliver to its successor all documents, instruments, certificates and
other items of whatever kind (including, without limitation, the certificates
and instruments evidencing the Collateral and all instruments of transfer or
assignment) held by it pursuant to the terms hereof. Any Collateral Agent that
has resigned shall be entitled to fees, costs and expenses to the extent
incurred or arising, or relating to events occurring, before its resignation or
removal.
SECTION 5.4. Release; Termination of Agreement.
(a) This Pledge Agreement shall terminate upon the earlier to
occur of: (i) full and final payment and performance of the Obligations
(and upon receipt by the Collateral Agent of the Pledgors' written
certification that all such Obligations have been satisfied) and
payment in full of all fees and expenses owing by the Pledgors to the
Collateral Agent, (ii) the day of the Legal Defeasance of all of the
Obligations pursuant to Section 8.02 of the Indenture (other than those
surviving Obligations specified therein) or (iii) such other
termination date as is provided by the Indenture. At such time, the
Collateral Agent shall, at the request of any Pledgor, reassign and
redeliver to such Pledgor all of the Collateral hereunder that has not
been sold, disposed of, retained or applied by the Collateral Agent in
accordance with the terms hereof. Such reassignment and redelivery
shall be without warranty by or recourse to the Collateral Agent,
except as to the absence of any prior assignments by the Collateral
Agent of its interest in the Collateral, and shall be at the expense of
such Pledgor.
(b) Each Pledgor agrees that it will not, except as permitted
by the Indenture, sell or dispose of, or grant any option or warrant
with respect to, any of the Collateral; provided, however, that if any
Pledgor shall sell any of the Collateral in accordance with the terms
of the Indenture, the Collateral Agent shall, at the request of such
Pledgor and
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subject to requirements of Section 10.03 of the Indenture, release the
Collateral subject to such sale free and clear of the Lien under this
Pledge Agreement.
SECTION 5.5. Collateral Agent May Perform. If any Pledgor falls to
perform any agreement contained herein, the Collateral Agent may itself perform,
or cause performance of, such agreement, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by such Pledgor pursuant
to Section 6.5 hereof.
SECTION 5.6. Collateral Agent Has No Duty. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Holders of the Senior Secured Notes) in the Collateral and shall not impose any
duty on it to exercise any such powers. Except for the reasonable care of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Collateral Agent shall have no duty as to any Collateral or
responsibility for
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any Collateral, whether or not the Collateral Agent has or is deemed
to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.
SECTION 5.7. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession, provided, however, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as the relevant
Pledgor reasonably requests in writing from time to time, but failure of the
Collateral Agent to comply with any such request at any time shall not in itself
be deemed a failure to exercise reasonable care. If an Event or Event of Default
has occurred and is continuing, the Collateral Agent shall not be required to
comply with any request of any Pledgor with respect to the matters described in
this Section.
ARTICLE VI. REMEDIES
SECTION 6.1. Certain Remedies. If an Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may, without notice except
as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Collateral
Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. Each Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten day's prior notice to
such Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
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notification. The Collateral Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefore, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) The Collateral Agent may
(i) transfer all or any part of the Collateral into
the name of the Collateral Agent or its nominee, with or
without disclosing that such Collateral is subject to the Lien
hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Collateral Agent of any
amount due or to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts or other writings in
any Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral
and
(vi) execute (in the name, place and stead of any
Pledgor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
SECTION 6.2. Securities Laws. If the Collateral Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to Section
6.1, each Pledgor agrees that, upon request of the Collateral Agent, such
Pledgor will use commercially reasonable efforts to, at its own expense:
(a) execute and deliver, and cause each issuer of the
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Collateral Agent, advisable to
register such Collateral under the provisions of the Securities Act of
1933, as from time to time amended (the "Securities Act"), and to cause
the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to
the related prospectus which, in the opinion of the Collateral Agent,
are necessary or advisable. all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
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(b) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
the Collateral Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law.
Each Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Collateral Agent or the Holders of the
Senior Secured Notes by reason of the failure by such Pledgor to perform any of
the covenants contained in this Section and, consequently, agrees that, if such
Pledgor shall fall to perform any of such covenants, it shall pay, as liquidated
damages and not as a penalty, an amount equal to the value (as determined by the
Collateral Agent) of the Collateral on the date the Collateral Agent shall
demand compliance with this Section.
SECTION 6.3. Compliance with Restrictions. Each Pledgor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Collateral Agent is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority, and each Pledgor further
agrees that such compliance shall not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner, nor shall the
Collateral Agent be liable nor accountable to any Pledgor for any discount
allowed by reason of the fact that such Collateral is sold in compliance with
any such limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Collateral Agent in respect of any sale of, collection from or other realization
upon, all or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as additional collateral security for, or
then or at any time thereafter be applied (after payment of any amounts payable
to the Collateral Agent pursuant to Section 7.07 of the Indenture and, Section
6.5 below) in whole or in part by the Collateral Agent against, all or any part
of the Obligations in such order as the Collateral Agent shall elect. Any
surplus of such cash or other proceeds held by the Collateral Agent and
remaining after the Satisfaction Date, shall be paid over to the applicable
Pledgor or to whomsoever may be lawfully entitled to receive such surplus. The
Pledgors shall remain liable on a joint and several basis for any deficiency.
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SECTION 6.5. Indemnity and Expenses. Each Pledgor hereby jointly and
severally indemnifies and holds harmless the Collateral Agent from and against
any and all claims, losses and liabilities arising out of or resulting from this
Pledge Agreement (including enforcement of this Pledge Agreement), except
claims, losses or liabilities resulting from the Collateral Agent's gross
negligence or wilful misconduct, and each Pledgor will pay to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which the
Collateral Agent may incur, in each case, in connection with:
(a) the administration of this Pledge Agreement,
(b) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the
Collateral,
(c) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or
(d) the failure by any Pledgor to perform or observe any of
the provisions hereof.
ARTICLE VII. MISCELLANEOUS PROVISIONS
SECTION 7.1. Security Agreement. This Pledge Agreement is a Security
Agreement executed pursuant to the Indenture and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any
provision of this Pledge Agreement nor consent to any departure by any Pledgor
herefrom shall in any event be effective unless the same shall be in writing and
signed by the Collateral Agent (on behalf of the Holders of the Senior Secured
Notes) and each Pledgor, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it is given.
SECTION 7.3. Protection of Collateral. The Collateral Agent may from
time to time, at its option, and at the expense of the Pledgors, perform any act
which any Pledgor agrees hereunder to perform and which such Pledgor shall fall
to perform after being requested in writing so to perform (it being understood
that no such request need be given after the occurrence and during the
continuance of an Event of Default) and the Collateral Agent may from time to
time take any other action which the Collateral Agent reasonably deems necessary
for the maintenance, preservation or protection of any of the Collateral or of
its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and addressed,
delivered or transmitted, if to any Pledgor, at the address or facsimile number
of the Company provided for in the Indenture, and, if to the Collateral Agent,
at Harris Trust Company of New York, Wall Street Plaza, 19th Floor, 88 Pine
Street, New York, NY 10005, Telecopier No.: (212) 701-7664, Attn: Peter Morse,
or as to any such party at such other address or facsimile number as shall be
designated by such party in a written notice to each other party complying as to
delivery with the terms of this Section. Any
-14-
<PAGE> 15
notice, (a)(i) if mailed and properly addressed with postage prepaid or (ii) if
properly addressed and sent by pre-paid courier service, shall be deemed given
when such notice has been received or (b) if transmitted by facsimile, shall be
deemed given when transmitted (and telephonic confirmation of receipt thereof
has been received).
SECTION 7.5. Heading. The various headings of this Pledge Agreement are
inserted for convenience only, and shall not affect the meaning or
interpretation of this Pledge Agreement or any provisions hereof.
SECTION 7.6. Severability. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such provision
and such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions of this Pledge
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 7.7. Governing Law. THIS PLEDGE AGREEMENT SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK, EXCLUDING THE LAW OF CONFLICTS.
SECTION 7.8. Counterparts. This Pledge Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original (whether such counterpart is originally executed or an electronic copy
of an original) and all of which shall constitute together but one and the same
agreement. This Pledge Agreement shall become effective and binding upon any
Pledgor when a counterpart hereof executed on behalf of such Pledgor shall have
been received by the Collateral Agent.
[Signatures commence on the following page]
-15-
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
PLEDGORS:
STERLING CHEMICALS, INC.
By
----------------------------------------
Title:
STERLING CANADA, INC.
By
----------------------------------------
Title:
COLLATERAL AGENT:
HARRIS TRUST COMPANY OF NEW YORK,
a New York corporation, as Collateral Agent
By
----------------------------------------
Title:
-16-
<PAGE> 17
ATTACHMENT 1
to
Pledge Agreement
<TABLE>
<CAPTION>
NAME OF PLEDGOR
Pledged Shares
--------------
Issuer Capital Stock
------ --------------------------------------------------------------------------
Authorized % of Shares Outstanding Number of
Shares Pledged Shares Shares
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sterling Pulp Chemicals, Ltd.
o Class A Special -- 43,685.127 65% 28,395.333
Sterling NRO Ltd.
o Class A Special -- 73,714.994 65% 47,914.714
o Common 1000 1000 65% 650
Sterling Chemicals Marketing, Inc. 1000 1000 65% 650
</TABLE>
-17-
<PAGE> 1
EXHIBIT 4.16
================================================================================
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JULY 23, 1999
BY AND AMONG
STERLING CHEMICALS, INC.
CERTAIN OF ITS DOMESTIC SUBSIDIARIES
AS GUARANTORS
AND
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
AND
CREDIT SUISSE FIRST BOSTON CORPORATION
AS INITIAL PURCHASERS
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of July 23, 1999, by and among Sterling Chemicals, Inc., a
Delaware corporation (the "COMPANY"), the domestic Subsidiaries of the Company
set forth on Schedule A attached hereto (each a "GUARANTOR" and collectively,
the "GUARANTORS"), and Donaldson, Lufkin & Jenrette Securities Corporation and
Credit Suisse First Boston Corporation (each an "INITIAL PURCHASER" and,
collectively, the "INITIAL PURCHASERS"), each of whom has agreed to purchase the
Company's 12 3/8% Senior Secured Notes due 2006 (the "SERIES A NOTES") pursuant
to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the purchase agreement, dated July
19, 1999 (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors
and the Initial Purchasers. In order to induce the Initial Purchasers to
purchase the Series A Notes, the Company has 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
3 of the Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the indenture, dated July 23,
1999, between the Company and Harris Trust Company of New York, as Trustee,
relating to the Series A Notes and the Series B Notes (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.
BUSINESS DAY: Any day on which commercial banks are not authorized or
required to close in New York, New York.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An 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 the Series B 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
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<PAGE> 3
Series B Notes in the same aggregate principal amount as the aggregate principal
amount of Series A Notes duly and validly tendered by Holders thereof pursuant
to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are duly and validly tendered by Holders in connection with
such exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers
propose to sell the Series A Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act and pursuant to Regulation S
under the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
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 Series B 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.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SERIES B NOTES: The Company's 12 3/8% Series B Senior Secured Notes
due 2006 to be issued pursuant to the Indenture: (a) in the Exchange Offer or
(b) as contemplated by Section 4 hereof.
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<PAGE> 4
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each (a) Series A Note, until the
earliest to occur of (i) the date on which such Series A Note is exchanged in
the Exchange Offer for a Series B Note which is entitled to be resold to the
public by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (ii) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes), or (iii) the date on which
such Series A Note is sold to the public pursuant to Rule 144 under the Act (or
any successor rule thereof) and (b) Series B Note held by a Broker Dealer until
the date on which such Series B Note is disposed of by a Broker-Dealer pursuant
to the "Plan of Distribution" 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 OFFER
(a) Unless the 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 filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 60 days after the
Closing Date (such 60th day being the "FILING DEADLINE"), (ii) use its best
efforts to cause such Exchange Offer Registration Statement to become effective
at the earliest possible time, but in no event later than 180 days after the
Closing Date (such 180th day being the "EFFECTIVENESS DEADLINE"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
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 such
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 Series B 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,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting (i) registration of the Series B Notes to be offered
in exchange for the Series A Notes that are Transfer Restricted Securities and
(ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
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<PAGE> 5
(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 the 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 laws. No securities other than the Series B 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 Series A 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 Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and the
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
Series B 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 Section 6(a) and (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
one year 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. 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 Business
Day after such request (if the request is received by 3 p.m. Central Time), at
any time during such period.
4
<PAGE> 6
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) any Holder of Transfer
Restricted Securities shall notify the Company within 20 days following the
Consummation Deadline that (A) such Holder was prohibited by law or Commission
policy from participating in the Exchange Offer, (B) such Holder may not resell
the Series B 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 Series A 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 (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above (such
earlier date being 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
all Transfer Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to the day that is 120
days after the Filing Deadline for the Shelf Registration Statement or, if
later, the date by which the Exchange Offer Registration Statement would
otherwise have been required to be declared effective if the obligation to file
the Shelf Registration Statement had not arisen (such 120th day or later date,
if applicable, being 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 federal law (i.e.,
clause (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) above.
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 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 (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(c)(i)) following the Closing Date, or such shorter period
as will terminate when (x) all Transfer Restricted Securities covered by such
Shelf Registration Statement have been sold pursuant thereto or (y) the only
remaining Transfer Restricted Securities have been determined in good faith by
the Company, after reasonable inquiry, to be eligible for resale under Rule
144(k); provided, however, that the Company shall not be obligated to keep the
Shelf Registration
5
<PAGE> 7
Statement effective if (i) the Company is required to file a post-effective
amendment to such Shelf Registration Statement to incorporate audited financial
information with respect to the Company or any of the Guarantors where such
post-effective amendment needs to be declared effective to permit Holders to use
the related Prospectus or (ii) the Company determines, in its reasonable
judgment, upon advice of counsel, that the continued effectiveness and usability
of the Shelf Registration Statement would (A) require the disclosure of material
information that the Company has a bona fide business reason for keeping
confidential or (B) interfere with any merger, sale of all or substantially all
of the assets, or material financing, acquisition or disposition involving the
Company or any of its direct or indirect Subsidiaries or its parent which the
Company has a bona fide business reason for keeping confidential; provided that
the failure to keep the Shelf Registration Statement effective and usable for
offers and sales of Series A Notes for such reasons shall last no longer than 30
days in any 12-month period (whereafter Liquidated Damages shall accrue and be
payable) (the period during which the Company is excused from keeping the Shelf
Registration Statement effective and usable, a "SUSPENSION PERIOD").
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration 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, and liquidated damages shall not accrue with respect to any
Transfer Restricted Securities of such Holder, unless and until two Business
Days after such Holder shall have provided all such information. Each selling
Holder of Transfer Restricted Securities 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.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation Deadline
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose (except during any Suspension Period) 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 such five day period (each such event referred to in clauses
(i) through (iv), a "REGISTRATION Default"), then the Company and 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
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<PAGE> 8
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 $.50 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, (1) upon
filing of the Exchange Offer Registration Statement (and/or, if applicable, the
Shelf Registration Statement), in the case of (i) above, (2) upon the
effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) 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 (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the 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 and thereafter cease to
accrue liquidated damages, all obligations of the Company and the Guarantors to
pay accrued liquidated damages with respect to such 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 Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A 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. In connection with the
foregoing, the Company and the Guarantors hereby agree to take all such
other actions 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
7
<PAGE> 9
counsel to the Company setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer 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) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Series B Notes to be issued in the Exchange Offer and (C) it is
acquiring the Series B Notes in its ordinary course of business. As a
condition to its participation in the Exchange Offer each Holder using
the Exchange Offer to participate in a distribution of the Series B
Notes shall acknowledge and agree that, if the resales are of Series B
Notes obtained by such Holder in exchange for Series A Notes acquired
directly from the Company or an Affiliate thereof, it (1) could not,
under Commission policy as in effect on the date of this Agreement,
rely on the position of the Commission enunciated in Morgan Stanley and
Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2) must comply with
the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K.
(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 clause (i) above, (B) including a
representation that neither the Company nor any Guarantor has entered
into any arrangement or understanding with any Person to distribute the
Series B 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 participating in the Exchange Offer is acquiring the Series B
Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B 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 clause (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
8
<PAGE> 10
and use their respective 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
Series A Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Notes on the Shelf Registration Statement for
this purpose and issue the Series B 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 period required by this Agreement, the
Company and the Guarantors shall file promptly an appropriate amendment
to such Registration Statement curing such defect, and, if Commission
review is required, use their respective 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 each Initial Purchaser who is required to deliver
a prospectus in connection with sales or market making activities (an
"AFFILIATED MARKET MAKER") and, in the case of a Shelf Registration
Statement, each Holder of securities covered thereby, promptly and, if
requested by any such Affiliated Market Maker or Holder, confirm such
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<PAGE> 11
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
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 6(c)(i), 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 the Initial Purchasers and 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 the Initial Purchasers and such Holders shall reasonably object
within five Business Days after the receipt thereof. An Initial
Purchaser or 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
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<PAGE> 12
material fact or omits 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 the Guarantors' 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;
(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 any attorney
or accountant retained by such Holders, all relevant financial and
other records, pertinent corporate documents of the Company and the
Guarantors and cause the Company's and the Guarantors' officers,
directors and employees to supply all information reasonably requested
by any such 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 any information that is designated in writing
by the Company, in good faith, as confidential at the time of delivery
of such information shall be kept confidential by such persons unless
such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public
generally through a third party without an accompanying obligation of
confidentiality; 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 so long as any
such person agrees to be bound by such confidentiality agreement,
provided further, that if any Holder determines, in good faith, that
(i) it has a conflict of interest with such designated representative
or otherwise concludes it would be inappropriate for such
representative to act on its behalf or (ii) the investigation by such
designated representative on behalf of such Holder would violate such
Holder's internal procedures, then such Holder shall be permitted to
conduct an independent inspection of the Company.
(viii) if requested by any Initial Purchaser and, in the case
of a Shelf Registration Statement, any Holder 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 Holder
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;
(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
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<PAGE> 13
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 Holder 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) enter into such agreements (including underwriting
agreements) and 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 (A) any Initial Purchaser
(without regard to the principal amount of the Transfer Restricted
Securities held) or (B) in the case of a Shelf Registration Statement,
the Holders of 33 1/3% in aggregate principal amount of the Transfer
Restricted Securities covered thereby (the "REQUISITE HOLDERS"), in
connection with any sale or resale pursuant to any applicable
Registration Statement. In such connection, the Company and the
Guarantors shall:
(A) upon request of any Initial Purchaser (in the case of an
Exchange Offer) or the Requisite Holders (in the case of a Shelf
Registration Statement), furnish (or in the case of paragraphs (2)
and (3), 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 such Guarantor, confirming, as of
the date thereof, the matters set forth in Sections 6(aa),
9(a) and 9(b) of the Purchase Agreement and such other similar
matters as such Holders may reasonably request;
(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 paragraph (e) of Section 9 of the Purchase
Agreement and such other matter as such Holder may reasonably
request, 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
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<PAGE> 14
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
independently verified, the accuracy, completeness or fairness
of the financial statements, notes and schedules and other
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(g) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance
with the matters covered in clause (A) above and with any
customary conditions contained in the any agreement entered into
by the Company and the Guarantors pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders 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 the selling 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 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;
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<PAGE> 15
(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 selling Holders to facilitate
the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as 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
clause (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 under the Indenture 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 their respective 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 filed 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 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
Transfer 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
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<PAGE> 16
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.
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 Series B 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 as provided in
Section 7(b) hereof, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Series B 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).
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 the Guarantors.
(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 Series A Notes in the Exchange Offer and/or selling
or reselling Series A Notes or Series B 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 Latham & Watkins 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 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
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<PAGE> 17
(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 and 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 Series B Notes or registered Series A 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 (in
the case of any Prospectus, in the light of the circumstances under which they
were made) 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 any
Registration Statement, preliminary prospectus or Prospectus shall not inure to
the benefit of any Holder or its directors, officers or persons who control such
Holder (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) who failed to deliver a final Prospectus (as then amended or
supplemented, provided by the Company to the several Holders in the requisite
quantity and on a timely basis to permit proper delivery on or prior to written
confirmation of such sale) to the person asserting any losses, claims, damages
and liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any 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 statement therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in the final Prospectus and it shall have been determined
that such person would not have incurred such losses, claims, damages and
liabilities and judgments had the final Prospectus been delivered.
(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 (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. 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 amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) 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 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such
16
<PAGE> 18
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 8(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 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 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 twenty business 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, 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 (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by
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<PAGE> 19
clause 8(d)(i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also 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 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 such Guarantor, 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 amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and judgments referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(a), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
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 reasonably 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 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 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 such 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
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<PAGE> 20
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and agree that
any failure by the Company and/or the Guarantors 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
granting any current or future registration rights with respect to its
securities to any Person, except the registration rights granted pursuant to the
Warrant Agreement dated December 15, 1998, the Warrant Agreement dated August
15, 1996, the Registration Rights Agreement dated August 21, 1996, the Parent
Pledge Agreement dated July 23, 1999 between Sterling Chemicals Holdings, Inc.
and the CIT Group/Business Credit, Inc., as Administrative Agent and the Obligor
Pledge Agreement dated July 23, 1999 among the Company, the Guarantors and the
CIT Group/Business Credit, Inc., as Administrative Agent. 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 Section 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
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.
19
<PAGE> 21
(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 Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to the Company or the Guarantors, to:
Sterling Chemicals, Inc.
1200 Smith Street, Suite 1900
Houston, Texas 77002-4312
Telecopier No.: (713) 654-9507
Attention: David G. Elkins, Esq.
With a copy to:
Andrews & Kurth, L.L.P.
600 Travis, Suite 4200
Houston, Texas 77002-3090
Telecopier No.: (713) 220-4285
Attention: William Finnegan, 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 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.
20
<PAGE> 22
(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.
21
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
STERLING CHEMICALS, INC.
-----------------------------------------
By:
Name:
Title:
STERLING CHEMICALS ENERGY, INC.
-----------------------------------------
By:
Name:
Title:
STERLING CHEMICALS INTERNATIONAL, INC.
-----------------------------------------
By:
Name:
Title:
STERLING FIBERS, INC.
-----------------------------------------
By:
Name:
Title:
22
<PAGE> 24
STERLING CANADA, INC.
-----------------------------------------
By:
Name:
Title:
STERLING PULP CHEMICALS US, INC.
-----------------------------------------
By:
Name:
Title:
STERLING PULP CHEMICALS, INC.
-----------------------------------------
By:
Name:
Title:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:
-------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
-------------------------------
Name:
Title:
23
<PAGE> 25
SCHEDULE A
Sterling Chemicals Energy, Inc.
Sterling Chemicals International, Inc.
Sterling Fibers, Inc.
Sterling Canada, Inc.
Sterling Pulp Chemicals US, Inc.
Sterling Pulp Chemicals, Inc.
24
<PAGE> 1
EXHIBIT 4.17
SENIOR DEBT INTERCREDITOR AGREEMENT
THIS SENIOR DEBT INTERCREDITOR AGREEMENT, dated as of July 23, 1999 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, this "Agreement"), between HARRIS TRUST COMPANY OF NEW YORK, as trustee
(in such capacity, the "Trustee") on behalf of itself and the holders
(collectively referred to as the "Holders") of the Senior Secured Notes (such
capitalized term and all other capitalized terms not otherwise defined herein
shall have the meanings set forth or incorporated in Article I) which are or may
become Holders pursuant to the Senior Secured Note Indenture referred to below,
and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative agent (in such
capacity, the "Administrative Agent") on behalf of the Lenders party to the
Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, pursuant to the Revolving Credit Agreement, dated as of July
23, 1999 (as amended, supplemented, refinanced, amended and restated or
otherwise modified from time to time, the "Credit Agreement"), among Sterling
Chemicals, Inc., a Delaware corporation (the "Company"), Sterling Canada, Inc.,
a Delaware corporation, Sterling Pulp Chemicals US, Inc., a Delaware
corporation, Sterling Pulp Chemicals, Inc., a Georgia corporation, Sterling
Fibers, Inc., a Delaware corporation, Sterling Chemicals Energy, Inc., a
Delaware corporation, and Sterling Chemicals International, Inc., a Delaware
corporation (the Company, together with each such Person, collectively, the
"Borrowers", and each, individually, a "Borrower"), the various financial
institutions as are or may become parties thereto (collectively, the "Lenders"),
DLJ Capital Funding, Inc., as Syndication Agent for the Lenders, Credit Suisse
First Boston, as Documentation Agent for the Lenders, and the Administrative
Agent, the Lenders have extended commitments to make Credit Extensions
thereunder;
WHEREAS, certain of the Lenders have extended Fixed Assets Loan
Commitments (the "Fixed Assets Lenders") pursuant to which Borrowings of Fixed
Assets Loans will be made from time to time on and subsequent to the Closing
Date but prior to the Fixed Assets Loan Commitment Termination Date;
WHEREAS, pursuant to the Senior Secured Note Indenture, dated as of
July 23, 1999 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Senior Secured Note Indenture"), between the
Company and the Trustee, the Company will issue 12 3/8% Senior Secured Notes due
2006 (the "Senior Secured Notes") for gross cash proceeds of $295,000,000;
WHEREAS, as security for the Fixed Assets Obligations, the Borrowers
and Parent have each executed and delivered the relevant Fixed Assets Security
Documents to which they are a party pursuant to which the Borrowers and Parent
assigned and pledged to the Administrative Agent for its benefit and the ratable
benefit of each of the Fixed Assets Lenders, and granted to the Administrative
Agent for
<PAGE> 2
its benefit and the ratable benefit of each of the Fixed Assets Lenders, a
first-priority security interest in all of the Fixed Assets Collateral and the
Parent Collateral;
WHEREAS, as security for the Senior Notes Obligations, the Borrowers
have each executed and delivered the Senior Notes Collateral Documents pursuant
to which the Borrowers assigned and pledged to the Trustee for its benefit and
the ratable benefit of each of the Holders, and granted to the Trustee for its
benefit and the ratable benefit of each of the Holders, a first-priority
security interest in all of the Senior Notes Collateral and a second-priority
security interest in all of the Fixed Assets Collateral;
WHEREAS, in order to perfect the security interests in the Collateral,
each of the Administrative Agent (on behalf of itself and the Fixed Assets
Lenders) and the Trustee (on behalf of itself and the Holders) will file
financing statements under the U.C.C. (with the Fixed Assets Lenders making such
filings prior to any filings of the Trustee on behalf of the Holders) and file
certain mortgages, deeds of trust, security agreements and/or pledge agreements
and take such other actions as each such Secured Parties' Representative may
deem necessary or desirable to perfect the security interests granted to the
applicable Secured Parties by the Borrowers pursuant to the applicable
Collateral Documents; and
WHEREAS, the Secured Parties desire to agree to the relative priority
of their respective security interests in the Collateral, and certain other
rights, priorities and interests as between themselves;
NOW, THEREFORE, in consideration of the premises and other covenants
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Agreement" is defined in the preamble.
"Applicable Agreement" means, as the context requires, the Fixed Assets
Security Documents, the Senior Notes Collateral Documents, the Credit Agreement
and the Senior Secured Note Indenture.
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<PAGE> 3
"Borrower" and "Borrowers" are defined in the first recital.
"Collateral" means, collectively, the Fixed Assets Collateral,
the Senior Notes Collateral and the Parent Collateral.
"Collateral Documents" means, collectively, the Fixed Assets
Security Documents and the Senior Notes Collateral Documents.
"Company" is defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Enforcement" means the taking by the Administrative Agent, on
behalf of the Fixed Assets Lenders, of any action to repossess any of
the Fixed Assets Collateral or to commence judicial or nonjudicial
enforcement of any of their respective rights and remedies with respect
to the Fixed Assets Collateral.
"Fixed Assets Collateral" means all "Collateral" as such term
is defined in each Fixed Assets Security Document including, without
limitation, the real property, fixtures and equipment of the Borrowers
and the pledge by certain Borrowers of the Capital Securities of
certain Subsidiaries.
"Fixed Assets Lenders" is defined in the second recital.
"Fixed Assets Obligations" means all obligations of every kind
and nature (including without limitation, principal, fees, interest
(including interest which accrues after or would accrue but for the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrowers) expenses,
indemnities and all other sums chargeable to the Borrowers) (monetary
or otherwise, whether absolute or contingent, matured or unmatured) of
the Borrowers and each other Obligor arising under or in connection
with the Fixed Assets Loans, the Credit Agreement and each other Loan
Document which secures or guarantees such obligations (including
obligations under a Rate Protection Agreement where the counterparty is
a Fixed Assets Lender (or its Affiliate)), in each case, to the extent
such obligations are owed to any Fixed Assets Secured Party.
"Fixed Assets Security Documents" means the Fixed Assets
Security Agreement, the Obligor Pledge Agreement, the Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing,
dated as of July 23, 1999, among Sterling Fibers, Inc. and The CIT
Group/Business Credit, Inc. (with respect to Florida property),
Leasehold Deed to Secure Debt, Assignment and Security Agreement, dated
as of July 23, 1999, among Sterling Pulp Chemicals, Inc., The CIT
Group/Business Credit, Inc. and U.S. Bank Trust National Association as
Georgia co-agent (with respect to Georgia Property), and Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing,
dated as of July 23, 1999, among Sterling Chemicals, Inc. and The CIT
Group/Business Credit, Inc. (with respect to Texas property), and each
other agreement pursuant to which the Administrative Agent is
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<PAGE> 4
granted a Lien to secure the Fixed Assets Obligations and each other
agreement, certificate, document or instrument delivered in connection
with any of the foregoing, whether or not specifically mentioned herein
or therein.
"Holders" is defined in the preamble.
"Lenders" is defined in the first recital.
"Liquidation Proceeds" means the net proceeds received or
receivable in respect of any sale, exchange, transfer, liquidation,
collection or other disposition of any Fixed Assets Collateral which is
not made in the ordinary course of the Borrowers' business.
"Obligations" means, collectively, the Fixed Assets
Obligations and the Senior Notes Obligations.
"Parent Collateral" means the "Collateral" as defined in the
Parent Pledge Agreement, dated as of July 23, 1999, between the Parent
and the Administrative Agent on behalf of the Fixed Assets Secured
Parties, relating to the pledge by the Parent of 100% of the
outstanding Capital Securities of the Company to secure the Fixed
Assets Obligations.
"Secured Parties" means, collectively or individually (as the
case may be), the Fixed Assets Secured Parties and the Senior Notes
Secured Parties.
"Secured Parties' Representative" means, collectively or
individually (as the case may be), the Administrative Agent and the
Trustee.
"Senior Notes Canadian Pledge Agreement" means the Senior
Notes Canadian Pledge Agreement, dated as of July 23, 1999, between
Sterling Canada, Inc. and the Trustee, relating to the pledge by
Sterling Canada, Inc. of 65% of its ownership interests in Sterling
Pulp Chemicals, Ltd., an Ontario company, and Sterling NRO, Ltd., an
Ontario company, to secure the Senior Notes Obligations.
"Senior Notes Collateral" means all "Collateral" as such term
is defined in Senior Notes Canadian Pledge Agreement.
"Senior Notes Collateral Documents" means the Stock Pledge and
Security Agreement, dated as of July 23, 1999, among Sterling
Chemicals, Inc., Sterling Canada, Inc., Sterling Pulp Chemicals, US,
Inc., and Harris Trust Company of New York (with respect to US
subsidiaries), Stock Pledge and Security Agreement, dated as of July
23, 1999, among Sterling Chemicals, Inc., Sterling Canada, Inc., and
Harris Trust Company of New York (with respect to foreign
subsidiaries), Security Agreement, dated as of July 23, 1999, among
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<PAGE> 5
Sterling Chemicals, Inc., Sterling Pulp Canada, Inc., Sterling Pulp
Chemicals, Sterling Pulp Chemicals, US, Inc., Sterling Fibers, Inc.,
Sterling Chemicals Energy, Inc., Sterling Chemicals International, Inc.
and Harris Trust Company of New York, Second Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Filing, dated as of
July 23, 1999, among Sterling Fibers, Inc. and Harris Trust Company of
New York (with respect to Florida property), Leasehold Deed to Secure
Debt, Assignment and Security Agreement, dated as of July 23, 1999,
among Sterling Pulp Chemicals, Inc., Harris Trust Company of New York
and U.S. Bank Trust National Association as Georgia co-agent (with
respect to Georgia Property), and Second Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing, dated as of
July 23, 1999, among Sterling Chemicals, Inc. and Harris Trust Company
of New York (with respect to Texas property).
"Senior Notes Documents" means the Senior Secured Note
Indenture, the Senior Secured Notes or any Senior Notes Collateral
Document.
"Senior Notes Obligations" means all obligations (monetary or
otherwise, whether absolute or contingent, matured or unmatured) of the
Company and its Subsidiaries arising under or in connection with any
Senior Notes Documents.
"Senior Notes Secured Parties" means, collectively, the
Holders and the Trustee.
"Senior Secured Note Indenture" is defined in the third
recital.
"Senior Secured Notes" is defined in the third recital.
"Trustee" is defined in the preamble.
SECTION 1.2. Other Defined Terms. Unless otherwise defined herein or
the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
SECTION 1.3. U.C.C. Terms. Terms not otherwise defined herein which are
defined in, or used in, the U.C.C. shall, unless the context indicates
otherwise, be used in this Agreement as defined or used in the U.C.C.
ARTICLE II
Interests in the Collateral
SECTION 2.1. Priorities. Notwithstanding the date or manner of, or
order of perfection of the Secured Parties' respective security interests in and
liens on the Collateral, and notwithstanding any provisions of the U.C.C., any
applicable law or decision, or any Applicable Agreement, or whether any Secured
Party has possession of all or any part of the Collateral, the following, as
between the Secured Parties, shall be the relative priority of the security
interests and liens of the Secured Parties in the Collateral:
(a) with respect to Fixed Assets Collateral, the Fixed Assets Secured
Parties' security interests in and liens on such Fixed Assets Collateral
shall be senior and prior to the Senior
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<PAGE> 6
Notes Secured Parties' security interest in and liens on such Fixed Assets
Collateral in all respects;
(b) with respect to the Parent Collateral and the Current Assets, the
Senior Notes Secured Parties shall have no right, title or interest of any
kind whatsoever in any such Parent Collateral or Current Assets; and
(c) with respect to Senior Notes Collateral, the Fixed Assets Secured
Parties shall have no right, title or interest of any kind whatsoever in any
such Senior Notes Collateral.
SECTION 2.2. Subordination. Each of the Senior Notes Secured Parties
agrees that its security interest in and liens on the Fixed Assets Collateral
shall be subordinated and junior in all respects to the Fixed Assets Secured
Parties' security interests in and liens on all such Fixed Assets Collateral.
ARTICLE III
Exercise of Remedies; Enforcement
SECTION 3.1. Enforcement Rights. (a) The Administrative Agent shall
have the sole and exclusive right to sell, transfer or otherwise dispose of the
Fixed Assets Collateral in any manner deemed necessary or appropriate by it
without regard to the security interest or liens of the Senior Notes Secured
Parties and without the Senior Notes Secured Parties' consent. The Trustee will,
immediately upon the sale, transfer or other disposition of all or any part of
the Fixed Assets Collateral by the Administrative Agent (including pursuant to
any disposition of any Fixed Assets Collateral permitted under the Credit
Agreement), release or otherwise terminate the security interests or liens of
the Senior Notes Secured Parties in all such Fixed Assets Collateral, and the
Trustee will immediately deliver U.C.C. termination statements (Form U.C.C.-3)
or such other instruments as may be suitable or appropriate in connection
therewith.
(b) The Senior Notes Secured Parties acknowledge and agree that, with
respect to any Enforcement commenced by the Administrative Agent in compliance
with the provisions hereof, (I) the Senior Notes Secured Parties shall have no
right to direct or participate in any aspect of such Enforcement, (ii) the time,
place and manner of any such Enforcement and the price at which any of the Fixed
Assets Collateral which is the subject of such Enforcement is liquidated, as
well as all other details of such Enforcement, shall be determined solely in the
discretion of the Administrative Agent, and (iii) the Senior Notes Secured
Parties shall have no claim or action against the Administrative Agent with
respect to any such Enforcement or with respect to the amount of Liquidation
Proceeds realized as a result of any such Enforcement; provided, that such
Enforcement complies, in all material respects with applicable law and the terms
of this Agreement and each of the Applicable Agreements.
(c) Each of the Senior Notes Secured Parties agrees that it shall not
contest or support any other Person in contesting in any proceeding (including,
in any bankruptcy, moratorium,
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<PAGE> 7
reorganization or other insolvency proceeding) the legality, validity, binding
effect, priority, enforceability or effectiveness of the Administrative Agent's
and the Fixed Assets Secured Parties' first-priority, perfected security
interest in and liens on any of the Fixed Assets Collateral.
(d) For the sole purpose of perfecting the Secured Parties' security
interest in and liens on the Fixed Assets Collateral pledged to the
Administrative Agent pursuant to the Obligor Pledge Agreement (the "Stock"), the
Administrative Agent shall maintain sole possession and control of such Stock
for the benefit of the Fixed Assets Secured Parties and as agent for the Senior
Notes Secured Parties. Nothing herein shall impose upon the Administrative Agent
any duty or liability to the Senior Notes Secured Parties other than the duties
expressly described in this clause (d) and Section 3.2. Upon the payment in cash
in full of the Fixed Assets Obligations and the permanent termination of the
Fixed Assets Loan Commitment, the Administrative Agent will deliver possession
of the Stock to the Trustee unless the Trustee has previously provided the
Administrative Agent with written notice that the Senior Notes Obligations have
been indefeasibly paid in full. In no event shall the Administrative Agent have
any liability to any Senior Notes Secured Party except for liability finally
determined by a court of competent jurisdiction to have resulted solely from the
Administrative Agent's gross negligence or willful misconduct.
(e) The Senior Notes Secured Parties understand and agree that, so long
as any Fixed Assets Obligations shall not have been paid in cash in full and
until all commitments to make Credit Extensions under the Credit Agreement and
the related Loan Documents shall have been fully and permanently terminated, the
Administrative Agent shall accept directions only from the Fixed Assets Secured
Parties.
SECTION 3.2. Allocation of Liquidation Proceeds from any Disposition of
Collateral. (a) Liquidation Proceeds derived from a disposition or collection of
Fixed Assets Collateral shall be paid to the Administrative Agent for
application, (i) first, to the Fixed Assets Obligations until the Fixed Assets
Obligations are paid in full in cash, (ii) second, if any Liquidation Proceeds
remain, to the Senior Notes Obligations, until the Senior Notes Obligations are
paid in full, and (iii) third, if any Liquidation Proceeds remain, to the
Borrowers or to such other Person which is entitled to such Liquidation Proceeds
pursuant to applicable law.
(b) Each of the Senior Notes Secured Parties agrees that if it receives
Liquidation Proceeds of Fixed Assets Collateral to which it is not entitled
pursuant to the terms of this Agreement, then such Senior Notes Secured Party
shall promptly remit such proceeds to the Administrative Agent for application
in accordance with clause (a) of this Section 3.2. For purposes of this Section
3.2, Liquidation Proceeds of Fixed Assets Collateral shall include proceeds of
Fixed Assets Collateral received by any party hereto from any source whatsoever,
including by means of setoff.
SECTION 3.3. Senior Notes Secured Parties' Remedies. Each Senior Notes
Secured Party agrees that it will not pursue any of the remedies provided under
applicable law for by the terms of any Senior Notes Document that arise as a
result of a default or event of default under such Senior Notes Document, unless
and until the Administrative Agent declares the Fixed Assets Obligations to be
due and payable or the Lenders and the Administrative Agent exercise their
remedies
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<PAGE> 8
(including foreclosure) under the Fixed Assets Security Document with respect to
the Fixed Assets Collateral.
SECTION 3.4. Extensions, Modifications, etc. Either of the Secured
Parties may, without affecting the validity of this Agreement, extend the times
of payment of any Indebtedness of any Borrower to such Secured Parties or modify
any of the terms and conditions of any Applicable Agreement or any other
document evidencing, securing or executed in connection with the Indebtedness
which is the subject of either the Credit Agreement or the Senior Secured Note
Indenture, as applicable, in any case in accordance with the Applicable
Agreements, without the consent of the other Secured Parties and without giving
notice thereof to the other Secured Parties.
SECTION 3.5. Reservation of Rights. Any failure on the part of either
of the Secured Parties to promptly exercise any right hereby given or reserved
or given or reserved in any other document to which such Secured Parties are
party or beneficiary shall not prevent the exercise of any such right at any
time thereafter. Subject to Sections 3.2 and 3.3, each of the Secured Parties
may pursue and enforce any remedy or remedies accorded herein independently of,
or in conjunction or concurrently with or subsequent to, its pursuit and
enforcement of any remedy or remedies which it may otherwise have against any
Borrower.
ARTICLE IV
Certain Restrictions and Agreements
SECTION 4.1. Marshaling; Foreclosure on Collateral. (a) Each of the
Senior Notes Secured Parties (i) acknowledges that the Fixed Assets Obligations
are secured by collateral other than the Fixed Assets Collateral, and (ii)
agrees that none of the Fixed Assets Secured Parties shall have any obligation
to marshall the assets of any Borrower or any other Person in which it has a
security interest, before enforcing its rights in any Fixed Assets Collateral,
and the Senior Notes Secured Parties shall have no rights whatsoever hereunder
to share or participate in any proceeds of such other collateral.
(b) The Trustee agrees that it will not file any U.C.C. financing
statements (Form U.C.C.-1) or other similar financing statements or record any
mortgages or deed of trust with respect to any of the Fixed Assets Collateral
until such time as the Administrative Agent has filed its U.C.C. financing
statements (Form U.C.C.-1) or other similar financing statements and recorded
its mortgages with respect to such Fixed Assets Collateral and has notified the
Trustee of the completion of such filings and recordations.
SECTION 4.2. Accountings. At any time and from time to time after the
commencement of an Enforcement with respect to any Fixed Assets Collateral, the
Administrative Agent and the Trustee agree to provide to each other, upon
written request, information as to the outstanding amount of any of the
Obligations, the amount and identity of Liquidation Proceeds received by the
Administrative Agent in respect of any Fixed Assets Collateral from any third
Person and the
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application thereof, and such other information relating to the Fixed Assets
Collateral as such party may reasonably request.
SECTION 4.3. Notices of Defaults. The Administrative Agent and the
Trustee each agree to give the other copies of any notice of the occurrence or
existence of a Default or Event of Default which the Administrative Agent or the
Trustee, as the case may be, sends to the Company, simultaneously with the
sending of such notice to the Company, but the failure to do so shall not affect
the validity of such notice or create a cause of action against the party
failing to give such notice or create any claim or right on behalf of any third
party. The sending of such notice shall not give the recipient the obligation to
cure such default.
SECTION 4.4. Insurance; Condemnation Proceeds. Notwithstanding anything
to the contrary herein, with respect to policies which insure the Fixed Assets
Collateral, if, pursuant to the Applicable Agreements, the Borrowers are is
required to obtain satisfactory loss payable endorsements naming the Fixed
Assets Secured Parties and the Senior Notes Secured Parties, as their interests
may appear, as loss payees, or with such other designation as the parties hereto
may agree, the Administrative Agent shall, subject to the Administrative Agent's
rights under the Applicable Agreements, have the sole exclusive right, as
against the Senior Notes Secured Parties, to effect settlement of such insurance
policy in the event of any loss to any Fixed Assets Collateral. All proceeds of
such policy shall be paid to the Administrative Agent (for its own account and
the account of the Fixed Assets Lenders). The Administrative Agent shall apply
the proceeds of such policy in accordance with clause (a) of Section 3.2.
SECTION 4.5. U.C.C. Notices. In the event the Administrative Agent
shall be required by the U.C.C. or any other applicable law to give notice to
the Trustee of an intended disposition of any portion of the Fixed Assets
Collateral, such notice shall be given in accordance with Section 5.2, and five
days' notice shall be deemed to be commercially reasonable. The execution of
this Agreement by each of the Administrative Agent, on behalf of the Fixed
Assets Secured Parties, and the Trustee, on behalf of the Senior Notes Secured
Parties, shall be deemed to be each Secured Parties' notice to the other of a
claim of an interest in the Fixed Assets Collateral for the purposes of Section
9-505 of the U.C.C.
SECTION 4.6. Assignment of Agreement or Claim. The Trustee hereto
agrees that it will not sell, transfer, assign or otherwise dispose of all or
any part of the Senior Notes Obligations, or any notes, instruments or
agreements evidencing such Senior Notes Obligations, or any of its interest in
any of the foregoing, unless, prior to any such sale, transfer, assignment or
other disposition, (i) such purchaser or transferee shall agree, in writing, to
be bound by the terms of this Agreement and (ii) any document, instrument or
agreement evidencing all or any part of the Senior Notes Obligations, is marked
with the following legend:
NOTICE: THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A CERTAIN
INTERCREDITOR AGREEMENT, DATED AS OF JULY 23, 1999, BETWEEN HARRIS
TRUST COMPANY OF NEW YORK, AS TRUSTEE AND HOLDERS REPRESENTATIVE ON
BEHALF OF ITSELF AND CERTAIN OTHER HOLDERS OF
-9-
<PAGE> 10
THE SENIOR SECURED NOTES AND THE CIT GROUP/BUSINESS CREDIT, INC., AS
ADMINISTRATIVE AGENT ON BEHALF OF ITSELF AND THE LENDERS.
SECTION 4.7. Independent Credit Investigations. No party to this
Agreement, nor any directors, officers, agents or employees of any party to this
Agreement, shall be responsible to any other party to this Agreement or to any
other Person, for the Company's or the other Borrowers' solvency, financial
condition or ability to repay any of the Obligations, or any lien or security
interests granted by the Borrowers or Parent to either of the Secured Parties in
connection therewith. Each of the parties hereto has entered into its respective
financing agreements with the Borrowers based upon its own independent
investigation, and makes no warranty or representation to the others nor does it
rely upon any representation of any other party hereto with respect to matters
identified or referred to in this Section 4.7.
SECTION 4.8. Representations and Warranties of the Parties to Each
Other. Each party hereto warrants and represents to the other parties hereto
that:
(a) it has full right, power and authority to enter into this
Agreement;
(b) its execution and delivery of this Agreement does not and will not
constitute a breach of or default under any provision contained in its
certificate of incorporation, by-laws, certificate of formation and/or any
similar arrangements applicable to any of such party's capital, or any
agreement to which it is a party or by which it is bound;
(c) this Agreement, when executed and delivered by such party, shall
constitute the legal, valid and binding obligation of such party enforceable
against it in accordance with its terms (except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and by principles of equity); and
(d) its execution and delivery hereof and performance hereunder does
not and will not violate any applicable law.
ARTICLE V
Miscellaneous
SECTION 5.1. Loan Documents. This Agreement does not modify the
respective duties and rights of the Administrative Agent and the Lenders to one
another under the Credit Agreement and the other Loan Documents.
SECTION 5.2. Notices. All notices, requests and other communications
provided to any party hereto under this Agreement shall be in writing or by
facsimile and addressed, delivered or transmitted
-10-
<PAGE> 11
(a) If to the Administrative Agent:
The CIT Group/Business Credit, Inc.
Two Lincoln Center
5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attention: R. Grant Weiss
Facsimile: 972-455-1690
(b) If to the Trustee:
Harris Trust Company of New York
Wall Street Plaza
19th Floor
88 Pine Street
New York, New York 10005
Attention: Peter Morse
Facsimile: (212) 701-7664
Any notice, if (i) (x) mailed and properly addressed with postage prepaid or (y)
properly addressed and sent by pre-paid courier service, shall be deemed given
when received, or (ii) transmitted by facsimile, shall be deemed given when
transmitted (and telephonic confirmation of receipt thereof has been received).
SECTION 5.3. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 5.4. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original (whether such counterpart is originally
executed or an electronic copy of an original and each party hereto expressly
waives its rights to receive originally executed documents) and all of which
shall constitute together but one and the same agreement. This Agreement shall
become effective as of the date first above written when counterparts hereof
executed on behalf of each of the parties hereto shall have been received by
each of the parties hereto.
SECTION 5.5. Successors and Assigns. This Agreement is a continuing
agreement of subordination and the Fixed Assets Secured Lenders may, from time
to time and without notice to the Senior Notes Secured Lenders, extend credit to
or make other financial arrangements with the Borrowers in reliance hereon. This
Agreement shall (a) remain in full force and effect until the Fixed Assets
Obligations shall have been paid in cash in full and all commitments to make
Credit Extensions thereunder have been permanently terminated, and
notwithstanding the occurrence of any insolvency event (it being understood and
agreed that the provisions of this Agreement shall continue in full force and
effect after the filing of any bankruptcy case and during the pendency of
-11-
<PAGE> 12
any insolvency event), (b) be binding upon the Senior Notes Secured Parties, the
Borrowers, and their respective successors, transferees and assigns, and (c)
inure to the benefit of and be enforceable by the Administrative Agent and each
Fixed Assets Secured Party and their respective successors, transferees and
assigns. This Agreement shall be binding upon and shall inure to the benefit of
each of the Secured Parties and their respective successors and assigns. To the
extent the Credit Agreement is amended, supplemented, refinanced, amended and
restated or otherwise modified at any time, and/or the Fixed Assets Obligations
are refinanced, whether by the Administrative Agent, the Fixed Assets Lenders or
any unrelated third party, such refinancing indebtedness shall be entitled to
the benefits hereof and this Agreement shall continue in full force and effect
and shall inure to the benefit of each holder of such refinancing indebtedness
and each party serving in a representative or fiduciary capacity under the
documentation governing such refinancing indebtedness as if such refinancing
indebtedness were the Fixed Assets Obligations on the date hereof and the
holders, representatives and fiduciaries were the Fixed Assets Secured Parties
on the date hereof. To the extent that Senior Notes Obligations are refinanced,
such refinancing indebtedness shall be entitled to the benefits hereof and this
Agreement shall continue in full force and effect and shall inure to the benefit
of and be binding upon each holder of such refinanced indebtedness and each
party serving in a representative or fiduciary capacity under the documentation
governing such refinancing indebtedness as if such refinancing indebtedness were
the Senior Notes Obligations on the date hereof and such holders,
representatives and fiduciaries were the Senior Notes Secured Parties on the
date hereof. In the event that either the Fixed Assets Obligations or the Senior
Notes Obligations are refinanced, each of the parties agrees to execute any
amendment to this Agreement which is reasonably required in order to more
accurately describe such refinancing indebtedness, the holders thereof or the
representatives or fiduciaries thereunder or to otherwise give full effect to
the purpose and intent of this Section 5.5.
SECTION 5.6. Waivers, Amendment, etc. The provisions of this Agreement
may from time to time be amended, modified, or waived, if such amendment,
modification or waiver is in writing and consented to by each of the
Administrative Agent and the Trustee.
SECTION 5.7. Fees and Expenses. The Senior Notes Secured Parties agree
to pay, upon demand, to the Fixed Assets Secured Parties, any and all reasonable
costs and expenses, including reasonable attorneys' fees and disbursements,
which the Fixed Assets Secured Parties may incur in connection with the exercise
or enforcement of any of the rights or interest of the Fixed Assets Secured
Parties under this Agreement, by reason of (a) any breach by the Senior Notes
Secured Parties of any of its obligations or agreements hereunder, (b) the
taking of any actions by the Senior Notes Secured Parties challenging any of the
provisions hereof or which are inconsistent with the terms hereof and (c) the
failure of the Senior Notes Secured Parties to take any action required to be
taken by it or requested to be taken by it, in each case pursuant to the terms
of this Agreement, and the Borrowers, jointly and severally, agree to pay, upon
demand, to the Administrative Agent, any and all reasonable costs and expenses,
including reasonable attorneys' fees and disbursements, which the Administrative
Agent may incur in connection with the exercise or enforcement of rights or
interest of the Administrative Agent hereunder.
-12-
<PAGE> 13
SECTION 5.8. Termination of Agreement. This Agreement shall be
effective and may not be terminated or otherwise revoked by any of the Secured
Parties or any of their respective successors and assigns until the Termination
Date.
SECTION 5.9. No Rights for Third Parties. THIS AGREEMENT CONSTITUTES AN
AGREEMENT AMONG AND FOR THE BENEFIT OF THE SECURED PARTIES ONLY, AND NOTHING
CONTAINED HEREIN SHALL CONFER OR BE DEEMED TO CREATE ANY RIGHTS OR BENEFITS FOR
THE BENEFIT OF ANY OTHER PARTY, AND ANY AMENDMENT, MODIFICATION OR WAIVER MAY BE
MADE TO THIS AGREEMENT WITHOUT CONSENT OF, OR NOTICE TO, ANY OTHER PARTY OTHER
THAN THE SENIOR NOTES SECURED PARTIES AND THE COMPANY. NO PARTY IS (OR SHALL BE
DEEMED TO BE) A THIRD PARTY BENEFICIARY UNDER THIS AGREEMENT.
SECTION 5.10. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCLUDING THE LAW OF CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS. This Agreement constitutes the entire understanding among the
parties hereto with respect to the subject matter hereof and supersedes any
prior agreements, written or oral, with respect thereto.
SECTION 5.11. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF ANY OF THE PARTIES HERETO THAT IS BROUGHT IN THE STATE
OF NEW YORK SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE
STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OF THE STATE OF NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY FIXED ASSETS COLLATERAL
MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH FIXED ASSETS COLLATERAL MAY BE FOUND.
SECTION 5.12. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION (WHETHER SOUNDING IN TORT, CONTRACT
OR OTHERWISE) BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF EITHER OF THE PARTIES HERETO. EACH PARTY HERETO
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
OTHER PARTY HERETO TO ENTER INTO THIS AGREEMENT.
-13-
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Administrative Agent for the
Fixed Assets Secured Parties
By:
---------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
HARRIS TRUST COMPANY OF NEW YORK,
as Trustee and on behalf of the
Holders of the Senior Secured Notes
By:
---------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
ACKNOWLEDGED AND AGREED TO
AS OF THE DATE FIRST ABOVE WRITTEN:
STERLING CHEMICALS, INC.,
on behalf of itself and each other Borrower
By:
---------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
-14-
<PAGE> 1
EXHIBIT 4.18
AMENDMENT OF INTERCREDITOR AGREEMENT
THIS AMENDMENT OF INTERCREDITOR AGREEMENT (this "Amendment"), dated as
of July 22, 1999, among CHASE BANK OF TEXAS, N.A. (formerly known as Texas
Commerce Bank National Association), as Administrative Agent (the
"Administrative Agent"), STERLING CHEMICALS HOLDINGS, INC., a Delaware
corporation (the "Company"), and STATE STREET BANK AND TRUST COMPANY, as
Trustee (in such capacity, the "Trustee").
PRELIMINARY STATEMENTS
A. The Company and Fleet National Bank, as Trustee, (the "Initial
Trustee"), entered into that certain Indenture dated as of August 15,
1996 (as heretofore amended, the "Indenture") providing, among other
things, for the issuance of the Company's 13 1/2% Senior Secured
Discount Notes Due 2008 in the aggregate principal amount of
$191,751,000 (the "Discount Notes"). Capitalized terms used but not
defined herein shall have the meanings specified for such terms in the
Indenture.
B. The Trustee has prior to the date hereof replaced the Initial Trustee
as the Trustee under the Indenture.
C. On June 21, 1996, STX Chemicals Corp., a Delaware corporation and a
wholly-owned subsidiary of the Company that is now known as Sterling
Chemicals, Inc. ("Chemicals"), and certain of its Affiliates entered
into that certain Credit Agreement (as heretofore amended, the "Credit
Agreement") dated as of June 21, 1996 with the Administrative Agent,
and the Lenders named therein, pursuant to which, among other things,
the Lenders named therein committed to lend Chemicals an aggregate
amount of up to $456,500,000. In connection with the Credit Agreement
and the Indenture, the Administrative Agent and the Initial Trustee
entered into that certain Intercreditor Agreement dated as of August
21, 1996 (the "Intercreditor Agreement").
D. The Company and its Restricted Subsidiaries plan to refinance the
indebtedness outstanding under the Credit Agreement by, among other
things, incurring indebtedness under a new Revolving Credit Agreement,
dated as of July 23, 1999 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the "New Credit
Agreement"), to be entered into among Chemicals, certain other Wholly
Owned Subsidiaries of the Company, the various financial institutions
from time to time parties thereto (the "New Lenders"), the CIT
Group/Business Credit, Inc., as the Administrative Agent (the "New
Administrative Agent"), Credit Suisse First Boston, as the
Documentation Agent, and DLJ Capital Funding, Inc., as the Syndication
Agent, pursuant to which Chemicals or any such Wholly Owned Subsidiary
could borrow, on a revolving credit basis, up to $155,000,000 under
(A) an
<PAGE> 2
$85,000,000 revolving credit facility secured by the accounts
receivable and inventory of Chemicals and such Wholly Owned
Subsidiaries (the "Working Capital Revolver") and (B) a $70,000,000
revolving credit facility which would be secured by a first priority
pledge on the fixed assets and capital stock of Chemicals and such
Wholly Owned Subsidiaries (the "Fixed Assets Revolver") and the
Amendment is a condition precedent to the making of loans under, and
the effectiveness of, the New Credit Agreement.
E. Pursuant to Section 10.01 of the Indenture, the Company and the Trustee
may amend or supplement the Intercreditor Agreement, without the
consent of any Holder of a Discount Note, to, among other things, cure
any ambiguity, omission, defect or inconsistency.
F. The Company has determined that the Intercreditor Agreement contains
certain ambiguities, omissions, defects and/or inconsistencies with
respect to the ability of the Company to secure any refinancing of the
Lender Liabilities (as defined in the Intercreditor Agreement) with a
pledge of Collateral (as defined in the Intercreditor Agreement) having
the same priority as the priority of the security interest in the
Collateral held by the Lenders under the Credit Agreement.
G. Pursuant to Section 10.01 of the Indenture, upon the request of the
Company accompanied by a resolution of the Board of Directors
authorizing the execution of an amendment of the Intercreditor
Agreement, and upon receipt of certain documents by the Trustee, the
Trustee is required to join in the execution of any amendment of the
Intercreditor Agreement authorized or permitted by the terms of the
Indenture.
H. The Board of Directors of the Company has authorized the execution of
this Amendment and, simultaneously with and as a condition to the
execution of this Amendment by the Trustee, the Company is delivering
to the Trustee resolutions of the Board of Directors authorizing the
execution of this Amendment and an Officer's Certificate and Opinion of
Counsel, each in the form required by the Indenture and satisfactory to
the Trustee.
I. All acts and things necessary to make the Intercreditor Agreement, as
amended hereby, a valid, binding and legal agreement according to its
terms have been done and performed.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company covenants and agrees with the Administrative Agent and
the Trustee, for the equal and proportionate benefit of the respective Holders
from time to time of the Discount Notes, as follows:
-2-
<PAGE> 3
ARTICLE I
Amendment of Intercreditor Agreement
Section 1.01. Amendments of Intercreditor Agreement. The Intercreditor
Agreement is hereby amended so that:
(a) each term contained in the Intercreditor Agreement (or incorporated
therein by reference) which describes, defines or pertains or relates to
any form of indebtedness or liability under the Credit Agreement or any
other Loan Document (as defined in the Intercreditor Agreement) (including,
but not limited to, the definitions of "Lender Liabilities" and
"Commitments") shall, for all purposes of the Intercreditor Agreement, also
include any indebtedness or liabilities of the Company and its Restricted
Subsidiaries at any time and from time to time issued or incurred (i) to
refinance, extend, renew, rearrange, refund, repay, redeem, defease, retire
or replace the indebtedness or liabilities under the Credit Agreement or
any other Loan Document (including any indebtedness or liabilities under
the Fixed Assets Revolver) or (ii) in connection with any subsequent
refinancing, extension, renewal, rearrangement, refunding, repayment,
redemption, defeasance, retirement or replacement of any such indebtedness
or liabilities referred to in clause (i) or this clause(ii) (the
indebtedness and liabilities referred to clauses (i) and (ii) above,
collectively, "Refinancing Debt"); provided that, in no event shall the
aggregate indebtedness under any Refinancing Debt at any time outstanding
exceed $456,500,000;
(b) each term contained in the Intercreditor Agreement (or incorporated
therein by reference) which describes, defines or pertains or relates to
any document governing, evidencing or otherwise related to any indebtedness
or liabilities under the Credit Agreement or any other Loan Document
(including, but not limited to, the definitions of "Credit Agreement,"
"Loan Documents," Financing Documents" and "Lender Notes") shall, for all
purposes of the Intercreditor Agreement, also include any document from
time to time governing, evidencing or otherwise related to any Refinancing
Debt (including the New Credit Agreement and the Parent Pledge Agreement,
dated as of July 23, 1999 (the "Parent Pledge Agreement"), between the New
Administrative Agent and the Company, as amended, supplemented, amended and
restated or otherwise modified from time to time, to the extent that the
same governs the Fixed Assets Revolver and the notes evidencing the
indebtedness under the Fixed Assets Revolver); or
(c) each term contained in the Intercreditor Agreement (or incorporated
therein by reference) which describes, defines or pertains or relates to
any person or entity from time to time serving in any capacity or holding
any indebtedness or liabilities under the Credit Agreement or any Loan
Document or holding any Collateral (as defined in the Intercreditor
Agreement) (including, but not limited to, the definitions of
"Administrative Agent," "Issuing Banks" and "Lenders") shall, for all
purposes of the Intercreditor Agreement, also include any person or entity
from time to time serving in any capacity or holding any indebtedness or
liabilities under any document governing, evidencing or otherwise related
-3-
<PAGE> 4
to any Refinancing Debt (including the agents, issuers and lenders under
the New Credit Agreement).
Section 1.02. Effect of Amendments. Upon the effectiveness of this
Amendment, (a) any and all indebtedness and liabilities under or pertaining to
Refinancing Debt and any Collateral securing the same shall be entitled to the
benefits, priorities and protection provided, or purported to be provided, by
the Intercreditor Agreement to the same extent as if such indebtedness and
liabilities were the original "Lender Liabilities" thereunder and the Collateral
was Collateral for such original "Lender Liabilities", (b) any document
governing, evidencing or otherwise related to any Refinancing Debt (including
the New Credit Agreement to the extent that the same governs the Fixed Assets
Revolver, the notes evidencing the indebtedness under the Fixed Assets Revolver
and any security or pledge agreement granting or continuing any security
interest in the Collateral to secure such indebtedness and any related
liabilities) shall be entitled to the benefits, priorities and protection
provided, or purported to be provided, by the Intercreditor Agreement to the
same extent as if such documents were the original "Credit Agreement," "Loan
Documents," "Financing Documents," "Lender Notes" and "Collateral" thereunder
and (c) any person or entity serving in any capacity, holding any indebtedness
under any document governing, evidencing or otherwise related to such
Refinancing Debt or holding, directly or indirectly, any Collateral to secure
such indebtedness (including the agents, issuers and lenders under the New
Credit Agreement and the Parent Pledge Agreement) shall be entitled to the
benefits, priorities and protection provided, or purported to be provided, by
the Intercreditor Agreement to the same extent as if such persons and entities
were the original "Administrative Agent," "Issuing Banks" and "Lenders"
thereunder.
Section 1.03. Effectiveness. This Amendment shall not be or become
effective unless and until the parties hereto have executed and delivered this
Agreement in the space provided below. Concurrently with the effectiveness of
the New Credit Agreement, the Administrative Agent shall be directed to transfer
the Collateral to the New Administrative Agent who shall hold such Collateral
pursuant to the terms of the Intercreditor Agreement as amended.
ARTICLE II
The Trustee
The Trustee hereby accepts the trusts declared and provided in this
Amendment, upon the terms and conditions contained in the Indenture and Security
Documents (including the Intercreditor Agreement) as supplemented. All of the
provisions of the Indenture and the Intercreditor Agreement with respect to the
rights, privileges, immunities, powers and duties of the Trustee shall be
applicable in respect of this Amendment as fully and with the same effect as if
set forth herein in full. The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Amendment, the
authorization, or permissibility of this Amendment pursuant to the terms of the
Indenture or the Intercreditor Agreement, the due execution hereof by the
Company or for or in respect of the recitals or statements contained
-4-
<PAGE> 5
herein (other than the statements being made solely by the Company. The Trustee
shall not be responsible in any manner to determine the correctness or
provisions contained in this Amendment.
ARTICLE III
Effect of Execution and Delivery Hereof
From time after and execution and delivery of this Amendment, (i) the
Intercreditor Agreement shall be deemed to be modified as provided herein, (ii)
this Amendment shall form a part of the Indenture and Security Documents
(including the Intercreditor Agreement), (iii) except as modified by this
Amendment, the Indenture and Security Documents (including the Intercreditor
Agreement) shall continue in full force and effect, and (iv) every Holder of
Discount Notes heretofore and hereafter authenticated and delivered under the
Indenture shall be bound by this Amendment.
ARTICLE IV
Miscellaneous Provisions
Section 4.01 Headings. The headings of the Articles and Sections of
this Amendment have been inserted for convenience only, and shall not, for any
reason, be deemed to be part of this Amendment and shall in no way modify or
restrict any of the terms or provisions hereof.
Section 4.02 Counterparts. This Amendment may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered in original form or by facsimile or
other electronic means shall be an original, but all of which shall together
constitute one and the same instrument.
Section 4.03 Successors and Assigns. All agreements of the Company
contained in this Amendment shall bind the Company and its successors. All
agreements of the Trustee in this Amendment shall bind the Trustee and its
successors. This Amendment shall be binding upon and inure to the benefit of and
be enforceable by the Holders of any Discount Notes then Outstanding.
Section 4.04 Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICT OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and first year above written.
-5-
<PAGE> 6
CHASE BANK OF TEXAS, N.A., as Administrative
Agent
[SEAL]
By:
Title
ATTEST:
By:
Title:
STERLING CHEMICALS HOLDINGS, INC.
[SEAL]
By:
Title:
ATTEST:
By:
Title:
STATE STREET BANK AND TRUST COMPANY
As Trustee
[SEAL]
By:
Printed Name:
Title:
-6-
<PAGE> 1
EXHIBIT 11.1
STERLING CHEMICALS HOLDINGS, INC.
EARNINGS PER SHARE COMPUTATION
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, NINE MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE
Weighted average of common stock outstanding 12,516 12,185 12,469 12,007
Net Loss $ (16,415) $ (13,118) $ (54,335) $ (39,551)
Less: Preferred dividend requirements and accretion (672) (607) (1,975) (1,826)
Plus: Depreciation of value of Released Shares -- -- 1,048 505
------------ ------------ ------------ ------------
Net loss used in basic loss per share $ (17,087) $ (13,725) $ (55,262) $ (40,872)
============ ============ ============ ============
BASIC LOSS PER SHARE $ (1.37) $ (1.13) $ (4.43) $ (3.40)
============ ============ ============ ============
DILUTED EARNINGS PER SHARE
Weighted average of common stock outstanding 12,516 12,185 12,469 12,007
Total weighted average shares outstanding used in
diluted loss per share computation (1) 12,516 12,185 12,469 12,007
Net loss $ (16,415) $ (13,118) $ (54,335) $ (39,551)
Less: Preferred dividend requirements and accretion (672) (607) (1,975) (1,826)
Plus: Depreciation of value of Released Shares -- -- 1,048 505
------------ ------------ ------------ ------------
Net loss used in diluted earning per share $ (17,087) $ (13,725) $ (55,262) $ (40,872)
============ ============ ============ ============
DILUTED LOSS PER SHARE (1) $ (1.37) $ (1.13) $ (4.43) $ (3.40)
============ ============ ============ ============
</TABLE>
(1) Due to losses resulting in anti-dilution, same as amount used in basic
computation.
<PAGE> 1
Exhibit 15.1
Deloitte & Touche LLP
333 Clay Street
Suite 2300
Houston, Texas 77002
August 10, 1999
Sterling Chemicals Holdings, Inc.
1200 Smith Street, Suite 1900
Houston, Texas 77094
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Sterling Chemicals Holdings, Inc. and subsidiaries for the three
and nine month periods ended June 30, 1999 and 1998, as indicated in our report
dated August 10, 1999; because we did not perform an audit, we expressed no
opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, is
incorporated by reference in Registration Statement No. 333-30917 for Sterling
Chemicals Holdings, Inc. on Form S-3 and in Registration Statement No. 333-52795
for Sterling Chemicals Holdings, Inc. on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statements prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CIK>0000795662
<NAME>STERLING CHEMICALS HOLDINGS, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 6,327
<SECURITIES> 0
<RECEIVABLES> 119,019
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