EXHIBIT 99.7
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (the "Agreement"), made as of this 22nd
day of December, 1997, between the parties specified in Schedule 1
(collectively, the "Subordinated Parties") and Wilmington Trust Company, as
Collateral Agent for the benefit of the Senior Lenders (as defined below)
holding any of the $195,000,000 aggregate principal amount of Guaranteed Senior
Secured Notes of the Issuer due 2017 from time to time outstanding (the "Senior
Notes") under the several Note Purchase Agreements, each dated as of December
22, 1997 (the "Note Purchase Agreements") between the Issuer and the Purchasers
named therein. Capitalized terms used herein without other definition have the
respective meanings given in the Note Purchase Agreements.
WITNESSETH:
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WHEREAS, the Purchasers will, contemporaneously with the signing of
this Agreement, purchase not less than $195,000,000 aggregate principal amount
of Senior Notes; and
WHEREAS, the execution and delivery of this Subordination Agreement is
a condition, among others, to the Purchasers purchasing the Senior Notes
pursuant to the Note Purchase Agreements;
NOW, THEREFORE, to induce the Purchasers to purchase the Senior Notes
pursuant to the Note Purchase Agreements and in consideration of the Purchasers'
doing so, and for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Subordinated Parties hereby agree with the Collateral Agent for the benefit of
the Senior Lenders, as follows:
1. "Subordinated Debt" shall mean, on any date, any and all -
Indebtedness or other obligation of any of the Obligors arising under or in
connection with:
(a) Senior Notes held at any time on or prior to such date by a
Subordinated Party (or any Affiliate of a Subordinated Party);
(b) any promissory note of the Issuer originally issued to a
Guarantor or an Affiliate of such Guarantor, pursuant to Section 9.7 of the
Note Purchase Agreements;
(c) any Expansion Debt at any time on or prior to such date held by a
Subordinated Party or an Affiliate of such Subordinated Party;
(d) the Guarantee executed by Geon in favor of Olin and Xxxx Sunbelt,
Inc. dated as of August 23, 1996;
(e) the Guarantee executed by Olin in favor of Geon and 1997
Chloralkali Venture Inc. dated as of August 23, 1996; and
(f) other than additional equity investments in the Issuer by one or
both Partners (or their respective Affiliates), any relationship,
arrangement or undertaking between any Obligor and one or more Subordinated
Parties other than in the ordinary course of business and which arises from
the equity investment that one Subordinated Party has in another
Subordinated Party including, without limitation, any guarantees executed
by a Subordinated Party guaranteeing the obligations (payment or otherwise)
of an Affiliate of a Subordinated Party to another Subordinated Party.
For the avoidance of doubt, Subordinated Debt on any date shall
include, without limitation, any and all Indebtedness or other obligation of any
of the Obligors referred to in the preceding sentence irrespective of whether
the holder thereof on such date is a Subordinated Party or an Affiliate of a
Subordinated Party or any initial or subsequent transferee therefrom.
2. The Subordinated Debt shall be subordinate and junior in right of
payment to all Senior Debt (as defined in Section 3), to the extent and in the
manner provided in this Agreement.
3. As used in this Agreement, the term "Senior Debt" shall mean (a)
any and all Indebtedness and other obligations of the Issuer under the Senior
Notes and the related Note Purchase Agreements (other than any such Indebtedness
held by a Subordinated Creditor) including, without limitation, the unpaid
principal of and
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interest (including, without limitation, interest accruing at the then
applicable rate provided in the Note Purchase Agreements after the maturity of
the Senior Notes and interest accruing at the then applicable rate provided in
the Note Purchase Agreements after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Issuer, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) and Make Whole Amount, if any, on the Senior
Notes and all other obligations and liabilities of the Issuer to the Collateral
Agent or any Senior Lender, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Note Purchase Agreements and the other
Related Documents to which the Issuer is a party, in each case whether on
account of principal, interest, post-filing interest or post-petition interest,
Make-Whole Amount, reimbursement obligations, fees, indemnities, out-of-pocket
costs and expenses or otherwise (including, without limitation, all reasonable
fees and disbursements of counsel to the Collateral Agent or to the Noteholders
that are required to be paid by the Issuer pursuant to the terms of any of the
foregoing agreements) and (b) any and all Indebtedness and other obligations of
the Guarantors under their respective Guarantees (other than any such
Indebtedness held by a Subordinated Creditor) whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Guarantees
and the other Related Documents to which the Guarantor is a party, in each case
whether on account of principal, interest, post-filing interest or post-petition
interest, Make-Whole Amount, reimbursement obligations, fees, indemnities,
out-of-pocket costs and expenses or otherwise (including, without limitation,
all reasonable fees and disbursements of counsel to the Collateral Agent or to
the Noteholders that are required to be paid by the Guarantor pursuant to the
terms of any of the foregoing agreements). The Senior Debt shall continue to be
Senior Debt and entitled to the benefits of these subordination provisions
irrespective of any amendment, modification or waiver of any term of the Senior
Debt or extension or renewal of the Senior Debt.
4. "Subordinated Creditor" shall mean any holder from time to time of
any Subordinated Debt, including, without limitation, any Subordinated Party,
any Affiliate of a Subordinated Party and any initial or subsequent transferee
therefrom.
5. "Senior Lender" shall mean any holder of Senior Notes except the
Subordinated Creditors.
6. (a) No payment under Subordinated Debt shall be made by an Obligor
nor shall any Subordinated Creditor accelerate the maturity of or exercise any
remedies under such Subordinated Debt, if, at the time of such payment,
acceleration
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or exercise, or immediately after giving effect thereto, (i) full payment of any
amounts then due for principal of, premium, if any, sinking funds and interest
on Senior Debt has not been made or duly provided for in cash or (ii) there
shall have occurred a Default or an Event of Default and such Default or Event
of Default shall not have been cured or waived or shall not have ceased to
exist.
(b) If a Guarantor Default or Guarantor Event of Default shall have
occurred and be continuing, an Obligor shall not make any payment under any
Subordinated Debt held by the defaulting Guarantor or its Affiliates unless full
payment of amounts then due for principal of, premium, if any, sinking funds and
interest on Senior Debt has been made or duly provided for in cash provided that
notwithstanding the above, the occurrence of a Guarantor Default or Guarantor
Event of Default shall not prohibit payments by an Obligor under Subordinated
Debt held by a non-defaulting Guarantor or its Affiliates if such payments are
otherwise permitted under this Agreement.
(c) It is understood and agreed that:
(1) upon the occurrence and continuation of any Event of Default, any
Distributions with respect to partnership interests by the Issuer, and
(2) upon the occurrence and continuation of any Guarantor Event of
Default relating to a Guarantor, any Distributions with respect to
partnership interests by the Issuer payable to such Guarantor or its
Subsidiary Partner,
shall be subordinated to Senior Debt to the extent and as provided in
Section 9.7 of the Note Purchase Agreements.
7. In the event of
(a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to an Obligor, or its property,
(b) any proceeding for the liquidation, dissolution, or other
winding up of an Obligor, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings,
(c) any assignment by an Obligor for the benefit of creditors, or
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(d) any other marshaling of the assets of an Obligor,
then all Senior Debt of such Obligor shall first be paid in full in cash before
any payment or distribution, whether in cash, securities or other property,
shall be made by such Obligor or any Affiliate of such Obligor to any
Subordinated Creditor on account of any Subordinated Debt. Any payment or
distribution, whether in cash, securities or other property, shall be paid or
delivered directly to the Senior Lenders in accordance with relevant Percentages
then existing until all Senior Debt shall have been paid in full.
8. If any payment or distribution of any character or any security,
whether in cash, securities or other property, shall be received by any
Subordinated Creditors in contravention of any of the terms hereof and before
all the Senior Debt shall have been paid in full, such payment or distribution
or security shall be received in trust for the benefit of the Senior Lenders,
and shall be promptly paid or delivered or transferred to the Senior Lenders
ratably in accordance with the relevant Percentages then existing for
application to the payment of all Senior Debt remaining unpaid, to the extent
necessary to pay all such Senior Debt in full.
9. No present or future holder of any Senior Debt shall be prejudiced
in the right to enforce subordination of the Subordinated Debt by any act or
failure to act on the part of any Obligor or any Subordinated Creditor.
10. Subject to the terms hereof, the Subordinated Creditors shall be
subrogated, but only to the extent permitted by applicable law, to all rights of
the Senior Creditors to receive any further payments or distributions applicable
to the Senior Debt until the Subordinated Debt shall be paid in full, and, for
the purposes of such subrogation, but only to the extent permitted by applicable
law, no payment or distribution received by the Senior Lenders of cash,
securities, or other property to which the Subordinated Creditors would have
been entitled except for this Agreement shall, as between an Obligor, on the one
hand, and a Subordinated Creditor, on the other, be deemed to be a payment or
distribution by the Obligor on account of Senior Debt.
11. (a) The Subordinated Parties, by their execution of this
Agreement, (i) undertake and agree for the benefit of the Senior Lenders to
-
execute, verify, deliver and file any proofs of claim, consents, assignments or
other instruments which any Senior Lender may at any time require in order to
provide and realize upon any rights or claims pertaining to the Subordinated
Debt held by such Subordinated Party and to effectuate the full benefit of the
subordination contained herein and (ii) authorize each
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Senior Lender to take any action made in good faith as may be necessary or
appropriate to effect the subordination provided for herein and appoints each
Senior Lender his attorney-in-fact for such purposes.
(b) This Agreement defines the relative rights of the Subordinated
Creditors and holders of Senior Debt. Nothing in this Agreement shall:
(i) impair, as between an Obligor and the Subordinated Creditors the
obligations of an Obligor which is absolute and unconditional, to pay
principal of an interest on the Subordinated Debt in accordance with its
terms; or
(ii) affect the relative rights of Subordinated Creditors and
Creditors of an Obligor other than holders of Senior Debt.
12. The Senior Lenders may extend, renew, modify or amend the terms of
Senior Debt or any security therefor and release, sell or exchange such security
and otherwise deal freely with an Obligor to the same extent as could any
person, all without notice to or consent of the other Subordinated Creditors and
without affecting the liabilities and obligations of the Subordinated Creditors
pursuant to the provisions hereof.
13. To the extent permitted by applicable law, the Subordinated
Creditors hereby waive (a) notice of acceptance of this Agreement by the Senior
Lenders, (b) notice of the existence or creation or nonpayment of all or any of
the Senior Debt, and (c) all diligence in the collection or protection of or
realization upon the Senior Debt.
14. The Subordinated Creditors hereby agree to cause all instruments
evidencing the Subordinated Debt subject to the provisions of this Subordination
Agreement to be subject to an appropriate legend to the effect that the
indebtedness evidenced by each such instrument is subordinated to the Senior
Debt in the manner and to the extent set forth in this Subordination Agreement.
15. The priorities herein specified are applicable irrespective of the
time of creation of any Obligor's indebtedness.
16. The Subordinated Parties hereby expressly agree and represent that
this Agreement is to induce the Purchasers to purchase the Notes. The provisions
hereof shall be binding upon the Affiliates, successors and assigns of the
Subordinated Parties and all other holders from time to time of the Subordinated
Debt (including,
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without limitation, any initial and subsequent transferees from any of the
foregoing) and shall inure to the benefit of the Purchasers and all subsequent
and other Senior Lenders. It is hereby further agreed that the Senior Lenders
may enforce any and all rights derived from this Agreement by suit, either in
equity or law, for specific performance of any agreement herein contained or for
judgment at law and any other relief whatsoever appropriate to such action or
procedure. The Issuer hereby agrees that it will not allow any Senior Note to be
registered in the name of any Affiliate, successor or assign or initial or
subsequent transferee of a Subordinated Party unless such Affiliate, successor
or assign or initial or subsequent transferee first executes a subordination
agreement substantially in the form of this Agreement.
17. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE
EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.
18. Separate counterparts of this Agreement may be executed by any of
the parties hereto, each of which shall constitute an original, but all of such
counterparts together shall constitute one and the same instrument.
19. This Agreement shall not be amended or modified and no term or
provision hereof shall be waived without the express prior written consent of
the Required Holders.
20. Each Subordinated Party and the Collateral Agent (on behalf of the
Secured Parties) hereby irrevocably and unconditionally:
(a) submits in any legal action or proceeding relating to this
Agreement and the other Related Documents to which it is a party or for
recognition and enforcement of any judgment in respect thereof, whether in
tort or in contract or at law or in equity, to the exclusive general
jurisdiction of the Courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding brought in any such court or
that such
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action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(return receipt requested), postage prepaid, (i) to the Issuer at its
address referred to in Exhibit 18 to the Note Purchase Agreements; to Olin
at its address referred to in Schedule 5.2 to the Olin Guarantee; to Geon
at its address referred to in Schedule 5.2 to the Geon Guarantee; to Xxxx
Sunbelt Inc. at its address specified below:
x/x Xxxx Xxxxxxxxxxx
000 Xxxxxxx 0
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attn: Treasurer
Facsimile: (000) 000-0000
With copy to:
Xxxx Corporation
501 Xxxxxx 7
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attn: Corporate Secretary
Facsimile: (000) 000-0000
to 1997 Chloralkali Venture Inc. at its address specified below:
c/o The Geon Company
Xxx Xxxx Xxxxxx
Xxxx, Xxxx 00000
Attn: Secretary
Facsimile: (000) 000-0000
or to each of the above parties at such other address as the Collateral
Agent shall have been notified in writing and (ii) to the Collateral Agent
at its address referred to in Section 7.2 of the Collateral Agreement or at
such other address as the Subordinated Creditors shall have been notified
in writing; and
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(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction.
21. WAIVER OF JURY TRIAL. EACH SUBORDINATED PARTY AND THE COLLATERAL
-------------------
AGENT (ON BEHALF OF THE SECURED PARTIES) HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER RELATED DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, each of the undersigned has caused this
Subordination Agreement to be duly executed and delivered as of the date first
above written.
SUNBELT CHLOR ALKALI PARTNERSHIP
By: 1997 CHLORALKALI VENTURE, INC.,
as General Partner
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxx
Title: Assistant Treasurer
By: XXXX SUNBELT, INC.,
as General Partner
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
XXXX CORPORATION
By: /s/ X.X. Xxxxxxxx
-----------------------------
Title: VP & Treasurer
--------------------------
THE GEON COMPANY
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------
Title: Treasurer
--------------------------
XXXX SUNBELT, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------
Title: Vice President
--------------------------
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1997 CHLORALKALI VENTURE, INC.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------
Title: Assistant Treasurer
--------------------------
WILMINGTON TRUST COMPANY, as
Collateral Agent on behalf of the
Senior Lenders
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Title: Assistant Vice President
--------------------------
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Schedule 1
Subordinated Parties
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Sunbelt Chlor Alkali Partnership
The Geon Company
Xxxx Corporation
1997 Chloralkali Venture Inc.
Xxxx Sunbelt, Inc.