EXHIBIT 4.5
EXECUTION VERSION
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented, amended and restated
or otherwise modified from time to time, this "Agreement"), dated as of December
19, 2002, is made by STERLING CHEMICALS, INC., a Delaware corporation, and
STERLING CHEMICALS ENERGY, 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 (each such Person and each Borrower
individually a "Grantor" and, together with all such other Persons and all
Borrowers, collectively, the "Grantors"), in favor of THE CIT GROUP/BUSINESS
CREDIT, INC., as Administrative Agent for the Secured Parties (together with its
successors and assigns in such capacity, the "Administrative Agent").
RECITALS:
A. Pursuant to a Revolving Credit Agreement, dated as of the date
hereof (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"), and the Administrative Agent, the Lenders and the Issuer have
extended Commitments to make Credit Extensions to the Borrowers.
B. 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.
C. Each Grantor has duly authorized the execution, delivery and
performance of this Agreement.
D. 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 the Credit Agreement and the execution
and delivery of Rate Protection Agreements between the Borrowers and certain
Lenders.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Lenders, the Swing Line Lender and the Issuer to make Revolving Credit Loans and
Swing Line Loans and issue Letters of Credit pursuant to the Credit Agreement
and (ii) the Secured Parties to enter into Rate Protection Agreement(s), each
Grantor jointly and severally agrees, for the benefit of each Secured Party, 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.
"Borrower" and "Borrowers" are defined in the preamble.
"Collateral" is defined in Section 2.1.
"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;
(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
all applications for registration thereof, whether pending or in preparation,
all copyright licenses in the United States, the right to xxx for past, present
and future
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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 recital A.
"Disposition" means, with respect to any property, any sale, long-term
ground lease, Sale/Leaseback Transaction or similar transfer (whether by
foreclosure, deed-in-lieu of foreclosure, assignment or otherwise) of such
property, in each case to any Person (other than a Borrower or any Subsidiary of
any Borrower).
"Excluded Contracts" means, with respect to any Grantor, all contracts
for the receipt by such Grantor of services or supplies but excluding any
contracts that give rise to the payment of money to such Grantor.
"Excluded Equipment" means, to the extent any of the following items
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 (other than
Inventory) and all replacements thereof and additions, enhancements or upgrades
thereto, now or hereafter affixed, or attached to, placed upon or located on or
in the Real Property or any buildings, structures and other improvements
thereon.
"Excluded Intellectual Property" means, collectively, (a) all
patentable inventions, letters patent and applications for letters patent that
are necessary or appropriate for the continued operation of the plants located
at the Real Property, and (b) all Trade Secrets that are necessary or
appropriate for the continued operation of the plants located at the Real
Property.
"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, but
excluding (x) the Excluded Intellectual Property, and (y) to the extent the same
constitute Intellectual Property Collateral, the Excluded Contracts.
"Lenders" is defined in recital A.
"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;
(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; and
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(d) all Proceeds of, and rights associated with, the
foregoing (including license royalties and Proceeds of infringement
suits), the right to xxx 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.
"Real Property" means all real property now owned or hereafter acquired
by any Grantor, including, without limitation, that certain real property
located in Galveston County, Texas, more particularly described on Exhibit A of
the Indenture Deed of Trust.
"Receivable" means any right to payment for Goods sold, leased or
licensed or for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby a Borrower or a Subsidiary of a Borrower
transfers such property to a Person (other than a Borrower or a Subsidiary of a
Borrower) and a Borrower or a Subsidiary of a Borrower leases such transferred
property from such transferee.
"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.
"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, 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;
(b) all Trademark licenses in the United States;
(c) all reissues, extensions or renewals of any of the
items described in clauses (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)
through (c); and
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(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 information and know-how used
or obtained 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, and including the right to xxx 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.
"U.C.C." means the Uniform Commercial Code in effect in the State of
New York, as the same may be amended from time to time.
SECTION 1.2. 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 1.3. U.C.C. Definitions. Unless otherwise defined herein, the
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used in this Agreement as so
defined: Account, Chattel Paper, Commercial Tort Claim, Deposit Account,
Document, Electronic Chattel Paper, Equipment, General Intangible, Good,
Instrument, Inventory, Investment Property, Letter-of-Credit Right, Proceeds,
Record, Supporting Obligation and Tangible Chattel Paper.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. Each Grantor hereby assigns, pledges,
hypothecates, charges, delivers and transfers to the Administrative Agent, for
its benefit and the benefit of each of the Secured Parties, and hereby grants to
the Administrative Agent, for its benefit and the benefit of each of the Secured
Parties, a continuing security interest in all of such Grantor's right, title
and interest in and to the following, whether now owned or hereafter existing or
acquired by such Grantor (the "Collateral"):
(a) all Accounts and all books, other Records and
Proceeds with respect thereto;
(b) all Chattel Paper (including without limitation all
Tangible Chattel Paper and Electronic Chattel Paper) and all books,
other Records and Proceeds with respect thereto;
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(c) all Deposit Accounts, including without limitation
each Lockbox Account (including all deposits and investments therein
and all earnings thereon), and all books, other Records and Proceeds
with respect thereto, but excluding (x) the Indenture Collateral
Account, and (y) any Proceeds with respect to the Indenture Collateral
Account;
(d) all Documents and all books, other Records and
Proceeds with respect thereto;
(e) all General Intangibles (other than Excluded
Contracts) and all books, other Records and Proceeds with respect
thereto;
(f) all Inventory and all books, other Records and
Proceeds with respect thereto;
(g) all other Goods (including without limitation all
Equipment but excluding the Excluded Equipment) and all books, other
Records and Proceeds with respect thereto;
(h) all Instruments and all books, other Records and
Proceeds with respect thereto;
(i) all Intellectual Property Collateral and all books,
other Records and Proceeds with respect thereto;
(j) all Investment Property and all books, other Records
and Proceeds with respect thereto;
(k) all Letter-of-Credit Rights and all books, other
Records and Proceeds with respect thereto;
(l) all Receivables not otherwise described above
and all books, other Records and Proceeds with respect thereto; and
(m) all Supporting Obligations and all books, other
Records and Proceeds with respect thereto.
Notwithstanding the foregoing, the "Collateral" shall not include (i) any
Proceeds (other than Capital Securities of a Borrower or a Subsidiary of a
Borrower) arising from a Disposition, casualty or condemnation of Excluded
Equipment or Excluded Contracts, or (ii) any General Intangibles or other rights
arising under any contract, instrument, license or other document as to which
the grant of a security interest would constitute a violation of a valid and
enforceable restriction on such grant in favor of the Person(s) (other than such
Grantor) obligated on such contract, instrument, license or other document,
unless and until any required consents shall have been obtained. Each Grantor
agrees to use commercially reasonable efforts to obtain any such
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required consent with respect to any material item described in clause (ii) of
the immediately preceding sentence.
SECTION 2.2. Security for Obligations. This Agreement secures the
payment in cash in full of all Obligations.
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 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 Secured Party
may assign or otherwise transfer (in whole or in part) any Revolving Credit
Commitment or Swing Line Loan Commitment or 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 Secured Party under any Loan
Document 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 the sale, transfer or other disposition of Collateral in
accordance with the Credit Agreement, the security interests granted herein
shall automatically terminate with respect to such Collateral, but not the
Proceeds thereof. Upon the Termination Date, the security interests granted in
the Collateral by each Grantor hereunder shall automatically terminate and all
rights to such Collateral shall revert and be reassigned to such Grantor. Upon
any sale, transfer, disposition or termination described in either of the two
immediately preceding sentences, the Administrative Agent will, at the
applicable Grantor's sole expense, execute and deliver to such Grantor, without
any representations, warranties or recourse, such documents as such Grantor may
reasonably request to evidence such termination, release or reassignment.
SECTION 2.4. 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
(c) neither the Administrative Agent nor any other
Secured Party will have any obligation or liability under any such
contracts or agreements included in the
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Collateral by reason of this Agreement, nor will the Administrative
Agent or any other 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 2.5. 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 Secured Party
(i) to assert any claim or demand or to enforce
any right or remedy against the Borrowers 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 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 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
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 Obligations; or
(g) any other circumstances which might otherwise
constitute a defense available to, or a legal or equitable discharge
of, any Borrower, any surety or any guarantor.
SECTION 2.6. 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 Termination Date. Any
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amount paid to any Grantor on account of any payment made hereunder prior to the
Termination Date shall be held in trust for the benefit of the Secured Parties
and shall immediately be paid to the Administrative Agent for the benefit of the
Secured Parties and credited and applied against the 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 benefit of the Secured Parties of all or any part of the
Obligations; and
(b) the Termination Date has occurred,
each Secured Party agrees that, at the requesting Grantor's request, the
Administrative Agent, on behalf of the 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 Obligations resulting from such payment by
such Grantor. In furtherance of the foregoing, prior to the Termination Date,
each Grantor shall refrain from taking any action or commencing any proceeding
against any Borrower (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
Secured Party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Grantor represents
and warrants to each Secured Party as set forth in this Article III.
SECTION 3.2. Location of Collateral, etc. All of the Equipment,
Inventory and Deposit Accounts of such Grantor are respectively located at the
places specified in Item 3 of the Perfection Certificate. None of the Equipment
or 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 principal 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(d) of the Perfection Certificate. During the four
months preceding the date hereof, such Grantor has not been known by any legal
name different from the one set forth on Item 1(a) 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(c) of the Perfection
Certificate. 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.
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SECTION 3.3. Ownership, No Liens, etc. Such Grantor owns its
Collateral free and clear of any Lien, except for the security interest created
by this Agreement 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 3.4. 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 3.5. Negotiable Documents, Instruments and Chattel Paper.
Such Grantor has, prior to or 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 3.6. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral owned by such Grantor the loss, impairment or
infringement of which could reasonably be expected to 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 to record
its ownership of the registrations and applications included in such
Intellectual Property Collateral in the United States Patent and
Trademark Office and the United States Copyright Office, as applicable;
(d) such Grantor is the owner of the unencumbered right,
title and interest in and to such Intellectual Property Collateral
(except for (i) Liens created under the Loan Documents, (ii) Permitted
Liens, and (iii) 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; and
(e) such Grantor has performed all acts and has paid all
required fees and Taxes required to maintain the registrations and
applications filed with respect to any such Intellectual Property
Collateral that is used in and material for, or necessary to, any
Borrower's business.
Each 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
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any of the foregoing that are used in and material for, or necessary to, the
conduct of such Grantor's business as currently conducted.
SECTION 3.7. Validity, etc. This Agreement creates a valid security
interest in and Lien on all Collateral, and, upon the taking of the actions
described in Section 3.8(b), such Lien senior to all Liens (other than Liens
permitted by clauses (b), (d), (e), (f), (h), (k) and (l) of Section 7.2.3 of
the Credit Agreement).
SECTION 3.8. 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) except for the
filing of appropriate financing statements with the proper filing office in the
appropriate jurisdictions under applicable law to perfect the security interest
of the Administrative Agent in the Collateral and such recordings and
registrations as may be required under the trademark, copyright, and patent laws
of the United States and any other jurisdictions where the Borrowers own
Intellectual Property Collateral, for the perfection of or the exercise by the
Administrative Agent of its rights and remedies hereunder.
SECTION 3.9. 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.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. Each Grantor covenants and agrees
that, at all times prior to the 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 4.2. 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
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Equipment that is material to the operations of any Grantor, 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 statement respecting any loss or damage to
any of the Equipment in excess of $1,000,000 per occurrence; and
(c) pay when due all Taxes, assessments and governmental
charges 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 4.3. As to Receivables. (a) Such Grantor will: (i) 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 (other than Chattel Paper delivered to the Administrative Agent
pursuant to Section 3.5 or Section 4.6(a)), 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 Section 3.2, 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; (ii) not change its name,
corporate identity, jurisdiction of organization or federal taxpayer
identification number except upon 30 days' prior written notice to the
Administrative Agent; (iii) hold and preserve such Records concerning the
Receivables; and (iv) permit representatives of the Administrative Agent, at
reasonable times and intervals and upon reasonable notice during normal business
hours to inspect (and photocopy extracts from) such Records.
(b) Such Grantor shall have the right to collect, demand, receive,
receipt for, xxx 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 Event of Default shall have occurred and be
continuing.
(c) Except as otherwise provided in Section 7.2.19 of the Credit
Agreement, all cash kept by a Grantor in a Deposit Account shall be kept in a
Deposit Account subject to an applicable Lockbox Agreement. All Proceeds of
Collateral received by such Grantor shall be delivered in kind for deposit to
the applicable Lockbox Account. Such Proceeds of Collateral received by such
Grantor shall, prior to deposit in the Lockbox Account, be held (i) separate and
apart from, and not commingled with, any other property and (ii) in express
trust for the benefit of the Administrative Agent until delivery thereof is made
to the applicable Lockbox Account.
(d) The Administrative Agent shall have the right to apply any
amount in any Lockbox Account and/or the Concentration Account as set forth in
the Credit Agreement.
(e) With respect to each Lockbox Account and the Concentration
Account, it is hereby confirmed and agreed that (i) deposits in each such
account are subject to a security
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interest as contemplated hereby, (ii) each such 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, in each case
subject to the provisions of the applicable Lockbox Agreement.
(f) Such Grantor will not create any Chattel Paper without placing
a legend on such Chattel Paper acceptable to the Administrative Agent indicating
that the Administrative Agent has a security interest in such Chattel Paper.
SECTION 4.4. As to Collateral. (a) Until the occurrence and
continuance of 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 an Event of Default or, in the
absence of such request, as such Grantor may deem advisable, (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, and (iv) may issue licenses to third-parties with
respect to Trademarks, Patents, Copyrights, and Trade Secrets in the ordinary
course of business. The Administrative Agent, however, may, at any time upon the
occurrence and during the continuance of 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 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) 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 4.5. 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:
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(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, consistent
with past practice, 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
unless such other Trademark is subject to the Administrative Agent's
Lien hereunder, or (E) 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, in any such case,
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 relevant 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 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,
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) 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) and (b)); and
(e) such Grantor will, (i) as soon as practicable (and in
any event within thirty (30) days) after such Grantor obtains any
material item of Intellectual Property Collateral that is the subject
of a registration or application in the United States Patent and
14
Trademark Office or in the United States Copyright Office, notify the
Administrative Agent of the acquisition of such Intellectual Property
and, (ii) as soon as reasonably practicable after any request by the
Administrative Agent therefor (and in any event within ten (10)
Business Days of such request) execute and deliver to the
Administrative Agent notice(s) to be filed with the United States
Patent and Trademark Office or United States Copyright Office, as
applicable, with respect to the security interest granted by this
Agreement in such Intellectual Property Collateral, together with any
other documents as may be requested by the Administrative Agent and
required to acknowledge or register or perfect the Administrative
Agent's interest in any such item of Intellectual Property Collateral,
each of which notices and other documents shall be in form and
substance reasonably satisfactory to the Administrative Agent.
SECTION 4.6. 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 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 (excluding any Receivable not
included in calculating the Borrowing Base Amount and with respect to
which the payment owed to such Grantor does not exceed $500,000) 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
reasonably satisfactory to the Administrative Agent;
(b) take such actions as are reasonably requested by the
Administrative Agent in order to allow the Administrative Agent to
obtain control with respect to all Collateral consisting of (i) Deposit
Accounts, (ii) Investment Property, (iii) Letter-of-Credit Rights and
(iv) Electronic Chattel Paper;
(c) authorize, execute (if necessary) and deliver to the
Administrative Agent 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 reasonably request; and
(d) furnish to the Administrative Agent, from time to
time at the Administrative Agent's reasonable 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.
15
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 4.7. Insurance. Each Grantor will:
(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 if insurance companies cease to offer such insurance
generally or with deductibles in the amounts customarily obtained by
the Company, such insurance with such deductibles as is acceptable to
the Administrative Agent) 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 Grantor; and
(b) maintain 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.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. 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 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, 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;
(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 5.2. 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 any expense of the
Administrative Agent incurred in connection therewith shall be payable by such
Grantor pursuant to Section 6.3.
SECTION 5.3. Administrative Agent Has No Duty. The powers conferred
on the Administrative Agent hereunder are solely to protect its interest (on
behalf of the 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 5.4. Reasonable Care. The Administrative Agent agrees to use
reasonable care in the custody and preservation of any of the Collateral in its
possession in accordance with Section 9-207 of the U.C.C.; provided, that (a)
the Administrative Agent shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially similar to that which the
Administrative Agent accords its own property, and (b) it is understood that the
Administrative Agent shall have no responsibility for taking any necessary steps
to preserve rights against prior parties with respect to the Collateral.
ARTICLE VI
REMEDIES
SECTION 6.1. 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
17
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 as follows:
(i) first, to the payment of any and all fees
and expenses then due and owing to the Administrative Agent
(including, without limitation, any amounts payable to the
Administrative Agent pursuant to Section 10.3 of the Credit
Agreement and Section 6.3 of this Agreement);
(ii) second, to the payment of any and all fees
and expenses then due and owing to the other Lenders in
accordance with their respective Percentages;
(iii) third, to the payment of all accrued and
unpaid interest on Swing Line Loans;
(iv) fourth, to the payment of all accrued and
unpaid interest on Revolving Credit Loans, to each Lender in
accordance with each Lender's respective Percentage;
(v) fifth, to reduce the outstanding principal
amount of all Swing Line Loans until all outstanding Swing
Loans have been paid in full;
(vi) sixth, to the payment to the Lenders, in
accordance with their respective Percentages, of all
outstanding Revolving Credit Loans until all outstanding
Revolving Credit Loans have been paid in full;
(vii) seventh, to reduce all unpaid and
outstanding Reimbursement Obligations;
18
(viii) eighth, to Cash Collateralize all Letters of
Credit;
(ix) ninth, to the ratable payment of all other
unpaid and outstanding Obligations, to each Secured Party in
accordance with the proportion that the unpaid and outstanding
Obligations to such Secured Party bears to the unpaid and
outstanding Obligations to all Secured Parties; and
(x) tenth, any remaining funds shall continue to
be held by the Administrative Agent to be held as additional
collateral security and applied to any outstanding Obligations
in accordance with clauses (i)-(ix) above until the
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.
(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
(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.
The Administrative Agent shall notify the applicable Grantor promptly
after it exercises any right or rights pursuant to this Section 6.1(c)
with respect to Collateral of such Grantor; provided, that any failure
to provide such notice shall not in any way prejudice any such exercise
of any right or rights.
SECTION 6.2. 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
19
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 6.3. 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 willful misconduct and, each Grantor will, upon demand pay (without
duplication) 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.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. 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 7.2. 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.
20
SECTION 7.3. 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 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 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 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 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 and by facsimile, each of
which counterparts shall be deemed to be an original (whether such counterpart
is originally executed or a facsimile copy of a counterpart that is originally
executed) 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.
SECTION 7.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.9. 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
21
shall remain in full force and effect notwithstanding the addition of any new
Grantor as a party to this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
22
IN WITNESS WHEREOF, each party hereto has caused this Security
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
GRANTORS:
STERLING CHEMICALS, INC.
STERLING CHEMICALS ENERGY, INC.
By____________________________________
Name:
Title:
ADMINISTRATIVE AGENT:
THE CIT GROUP/BUSINESS CREDIT, INC., as
Administrative Agent, on behalf of
the Secured Parties
By____________________________________
Name: R. Xxxxx Xxxxx
Title: Vice President
Signature Page to Security Agreement
ANNEX I
to Security Agreement
SUPPLEMENT NO._____ TO SECURITY AGREEMENT
THIS SUPPLEMENT NO.___, dated as of________________, _______ (this
"Supplement"), to the Security Agreement, dated as of December 19, 2002 (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 (such capitalized term and all other capitalized terms being used
herein with the meanings provided, or incorporated by reference, in the Security
Agreement) which from time to time thereafter became a party thereto pursuant to
Section 7.9 thereof (each such Person and each Borrower is individually referred
to herein as a "Grantor", and collectively as the "Grantors"), and THE CIT
GROUP/BUSINESS CREDIT, INC., as Administrative Agent for each of the Secured
Parties, is made by _______________, a ____________ (the "Additional Grantor").
RECITALS:
A. Pursuant to a Revolving Credit Agreement, dated as of December
19, 2002 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation, and Sterling Chemicals Energy, Inc., a Delaware
corporation (each individually a "Borrower" and collectively the "Borrowers"),
the various financial institutions as are, or may from time to time become,
parties thereto (the "Lenders") and the Administrative Agent, the Lenders and
the Issuer have extended Commitments to make Credit Extensions to the Borrowers.
B. As a condition precedent to the making and maintenance of the
Credit Extensions under the Credit Agreement, the Additional Grantor is required
to execute and deliver this Supplement.
C. The Additional Grantor has duly authorized the execution,
delivery and performance of this Supplement and the Security Agreement.
D. 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.
E. Pursuant to the provisions of Section 7.9 of the Security
Agreement, the Additional Grantor is becoming a Grantor under the Security
Agreement.
F. The Additional Grantor desires to become a Grantor under the
Security Agreement in order to induce the Secured Parties to continue to make
and maintain Revolving Credit Loans and Swing Line Loans and issue and maintain
Letters of Credit under the Credit Agreement as consideration therefor.
Annex I to Security Agreement- Page 1
NOW, THEREFORE, the Additional Grantor agrees, for the benefit of each
Secured Party, as follows:
SECTION 1. In accordance with Section 7.9 of the Security
Agreement, the Additional Grantor 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, and hereby grants to the Administrative Agent,
for the benefit of the Secured Parties, a security interest in, all of the
following property now owned or at any time hereafter acquired by the Additional
Grantor or in which the Additional Grantor now has or at any time in the future
may acquire any right, title or interest (the "Additional Collateral") as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations:
(a) all Accounts and all books, other Records and
Proceeds with respect thereto;
(b) all Chattel Paper (including without limitation all
Tangible Chattel Paper and Electronic Chattel Paper) and all books,
other Records and Proceeds with respect thereto;
(c) [ALL COMMERCIAL TORT CLAIMS DESCRIBED ON SCHEDULE I
ATTACHED HERETO](1);
(d) all Deposit Accounts, including without limitation
each Lockbox Account (including all deposits and investments therein
and all earnings thereon), and all books, other Records and Proceeds
with respect thereto, but excluding (x) the Indenture Collateral
Account, and (y) any Proceeds with respect to the Indenture Collateral
Account;
(e) all Documents and all books, other Records and
Proceeds with respect thereto;
(f) all General Intangibles (other than Excluded
Contracts) and all books, other Records and Proceeds with respect
thereto;
(g) all Inventory and all books, other Records and
Proceeds with respect thereto;
(h) all other Goods (including without limitation all
Equipment but excluding the Excluded Equipment) and all books, other
Records and Proceeds with respect thereto;
(i) all Instruments and all books, other Records and
Proceeds with respect thereto;
---------------------
(1) Item to be deleted if the Additional Grantor does not have any Commercial
Tort Claims
Annex I to Security Agreement- Page 2
(j) all Intellectual Property Collateral and all books,
other Records and Proceeds with respect thereto;
(k) all Investment Property and all books, other Records
and Proceeds with respect thereto;
(l) all Letter-of-Credit Rights and all books, other
Records and Proceeds with respect thereto;
(m) all Receivables not otherwise described above and all
books, other Records and Proceeds with respect thereto; and
(n) all Supporting Obligations and all books, other
Records and Proceeds with respect thereto.
Notwithstanding the foregoing, the "Additional Collateral"
shall not include (i) any Proceeds (other than Capital Securities of a
Borrower or a Subsidiary of a Borrower) arising from a Disposition,
casualty or condemnation of Excluded Equipment or Excluded Contracts,
or (ii) any General Intangibles or other rights arising under any
contract, instrument, license or other document as to which the grant
of a security interest would constitute a violation of a valid and
enforceable restriction on such grant in favor of the Person(s) (other
than the Additional Grantor) obligated on such contract, instrument,
license or other document, unless and until any required consents shall
have been obtained. The Additional Grantor agrees to use commercially
reasonable efforts to obtain any such required consent with respect to
any material item described in clause (ii) of the immediately preceding
sentence.
In furtherance of the foregoing, each reference to a "Grantor" in the Security
Agreement shall be deemed to include the Additional Grantor, each reference to
"Collateral" in the Security Agreement shall be deemed to include the Additional
Collateral, and each Schedule hereto shall be deemed to be included in the
Schedules thereto.
SECTION 2. The Additional Grantor hereby represents and warrants
that (i) this Supplement has been duly authorized, executed and delivered by the
Additional Grantor and constitutes a legal, valid and binding obligation of the
Additional Grantor, 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, (ii) each Schedule attached hereto contains
true, correct and complete information with respect to the matters set forth
therein, and (iii) all representations and warranties set forth in Article III
of the Security Agreement, as supplemented hereby to incorporate each Schedule
hereto, are true and correct in all respects as to the Additional Grantor.
SECTION 3. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect in accordance with its terms.
Annex I to Security Agreement- Page 3
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 Additional
Grantor 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.
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 in several counterparts,
each of which shall be deemed to be an original (whether such counterpart is
originally executed or a facsimile copy of a counterpart that is originally
executed) 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
Additional Grantor shall have been received by the Administrative Agent.
IN WITNESS WHEREOF, the Additional Grantor 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________________________
Name:
Title:
ACKNOWLEDGED AND ACCEPTED BY:
THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative Agent, on behalf of the
Secured Parties
By___________________________
Name:
Title:
Annex I to Security Agreement- Page 4
SCHEDULE I
to Supplement No.___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Commercial Tort Claims(2)
---------------------
(2) Schedule I to be deleted if the Additional Grantor does not have any
Commercial Tort Claims
SCHEDULE [I] [II]
to Supplement No.___
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Perfection Certificate Information for Additional Grantor
1. Names and Business Qualifications. (a) The exact name
(as such name appears in the certificate of incorporation or similar
organizational document of the Additional Grantor), jurisdiction of
organization, and organizational identification number of the Additional
Grantor, and each jurisdiction in which the Additional Grantor is qualified to
conduct business as a foreign entity, are as follows:
---------------------------------------------------------------------------------------------------
Organizational Jurisdictions Where Qualified to
-------------- --------------------------------
Jurisdiction of Identification Transact Business as a Foreign
--------------- -------------- -------------------------------
Name Incorporation Number Corporation
---- ------------- ------ -----------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
(b) Set forth below is each other name that the
Additional Grantor has had since its organization, together with the date of the
relevant change:
(c) Except as set forth below, the Additional
Grantor has not changed its identity or organizational structure in any way
within the past five years.
(d) The following is a list of all other names
(including trade names or similar appellations) used by the Additional Grantor
or any of its divisions or other business units at any time during the past five
years:
2. Taxpayer Identification Numbers. The exact taxpayer
identification number of the Additional Grantor is as follows:
3. Current Locations. (a) The chief executive office of
the Additional Grantor is located at the following address:
(b) The following are all locations where the
additional Grantor maintains any chattel paper or any books or records relating
to any accounts receivable:
(c) The following are all locations where the
Additional Grantor maintains any Lockbox Account, deposit account, securities
account or other bank account:
(d) The following is a list of all real property
owned or leased by the Additional Grantor (identify: the complete address and
county of all such real property; whether such property is owned or leased; if
such property is leased, the name and complete address of the lessor of such
property; the use and approximate value of such property):
(e) The following are all the locations
(including the addresses) where the Additional Grantor maintains any equipment
or inventory not identified above (identify the approximate value of any such
equipment or inventory and the nature of such location):
(f) The following are the names and addresses
of all Persons other than the Additional Grantor which have possession of any
of the Additional Grantor's equipment:
(g) The following are the names and addresses
of all Persons other than the Additional Grantor which have possession of the
Additional Grantor's inventory (explain relationship of such Persons to a
Borrower, e.g., consignee, etc.):
4. Mobile Goods.
(a) Does the Additional Grantor own railroad cars or
other rolling stock? Yes_____ No____ .
If Yes, attached as Schedule 4(a) is a list and description of such
railroad cars or other rolling stock.
(b) Does the Additional Grantor own any aircraft? Yes ___
No____ .
If Yes, attached as Schedule 4(b) is a list and description of such
aircraft.
(c) Does the Additional Grantor own any automotive
equipment or other vehicles (including certificated trailers)? Yes___ No__.
If Yes, attached as Schedule 4(c) is a list and description of such
automotive equipment and other vehicles.
(d) Does the Additional Grantor own any barges, ships or
other vessels? Yes______ No____.
If Yes, attached as Schedule 4(d) is a list and description of such
barges, ships or other vessels (identify whether certificates of documentation
are issued for such vessels).
5. Consigned Inventory. Approximate dollar amount of the
Additional Grantor's inventory consigned to third parties at any
time:$____________.
6. Inventory Located Outside of U.S. Approximate dollar
amount of the Additional Grantor's inventory located outside of the United
States at any time: $_________.
7. Method of Shipment of Inventory. List the methods by
which the Additional Grantor's inventory is shipped to customers (e.g., common
carrier, by company owned vehicles, company owned railroad cars, etc.).
8. Unusual Transactions. The Additional Grantor's
receivables have been originated by the Additional Grantor and the Additional
Grantor's inventory has been acquired by the Additional Grantor in the ordinary
course of its business.
9. Government Contracts. The Additional Grantor is a
party to the following Federal, State or local government contracts:
10. Patents. Below is a list of each patent and patent
application in which the Additional Grantor has any interest (whether as owner,
licensee or otherwise):
(a) Nature of interest (e.g., owner, licensee, other);
(b) Description;
(c) Registration number;
(d) Issue date (patent) or date of application (patent
application); and
(e) Country of issuance (patent) or country of
application (patent application).
11. Trademarks. Below is a list of each registered
trademark and trademark application in which the Additional Grantor has any
interest (whether as owner, licensee or otherwise):
Registered Trademarks:
(a) Nature of interest (e.g., owner, licensee, other);
(b) Registered trademark;
(c) Registered number;
(d) Property covered;
(e) Date of registration;
(f) Country of registration;
Trademark Applications:
(a) Nature of interest (e.g., owner, licensee, other);
(b) Trademark to which application applies;
(c) Property covered;
(d) Date of application; and
(e) Country of application.
12. Copyrights. Below is a list of each copyright and
copyright application in which the Additional Grantor has any interest (whether
as owner, license or otherwise):
Copyrights:
(a) Nature of interest (e.g., owner, licensee, other);
(b) Copyright;
(c) Copyright number;
(d) Property covered;
(e) Date of copyright;
(f) Docket number; and
(g) Country of registration.
Copyright Applications:
(a) Nature of interest (e.g., owner, licensee, other);
(b) Copyright to which application applies;
(c) Property covered;
(d) Date of application; and
(e) Country of application.
13. Investment Property. Below is a list of all
securities (whether or not evidenced by a certificate), instruments and other
investment property which are in the name of or beneficially owned by the
Additional Guarantor (identify the issuer and nature of investment property).
14. Material Contract Rights. Below is a list of all
other contract rights, franchises and licenses (other than the real property
leases listed above) the cancellation or termination of which could be
reasonably expected to have a material adverse effect on (a) the business,
condition (financial or otherwise), operations, performance, properties, or
prospects of the Additional Guarantor, (b) the rights and remedies of any
Secured Party under any Loan Document to which the Additional Guarantor is a
party, or (c) the ability of the Additional Guarantor to perform its obligations
under the Loan Documents.
