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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., 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000-0000 (the Company and
each of the foregoing, a "Pledgor" and collectively, "Pledgors"), and Xxxxxx
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, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. 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
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(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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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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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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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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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
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(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
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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
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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, xxx 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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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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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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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
Xxxxxx Trust Company of Xxx Xxxx, Xxxx Xxxxxx Xxxxx, 00xx Xxxxx, 00 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, Telecopier No.: (000) 000-0000, Attn: Xxxxx Xxxxx,
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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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:
XXXXXX TRUST COMPANY OF NEW YORK
as Collateral Agent
By
-------------------------------------
Title:
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ATTACHMENT 1
to
Pledge Agreement
[NAME OF PLEDGOR]
Pledged Shares
--------------
Issuer Capital Stock
------ -------------
Authorized Outstanding % of Shares
Shares Shares Pledged
---------- ----------- -----------
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.
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