EXHIBIT 4.1
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STERLING CHEMICALS, INC.
$150,000,000
11 1/4% SENIOR SUBORDINATED NOTES DUE 2007
_________________
INDENTURE
Dated as of April 7, 1997
_________________
FLEET NATIONAL BANK
Trustee
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CROSS-REFERENCE TABLE
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310 (a)(1)............................... 8.10
(a)(2)............................... 8.10
(a)(3)............................... N/A
(a)(4)............................... N/A
(a)(5)............................... 8.10
(b).................................. 8.10
(c).................................. N/A
311 (a).................................. 8.11
(b).................................. 8.11
(c).................................. N/A
312 (a).................................. 2.05
(b).................................. 12.03
(c).................................. 12.03
313 (a).................................. 11.02
(b)(i)............................... 11.02
(b)(2)............................... 8.06
(c).................................. 8.06; 11.02
(d).................................. 8.06
314 (a).................................. 8.03; 11.02
(b).................................. 11.03
(c)(1)............................... 12.04
(c)(2)............................... 12.04
(c)(3)............................... N/A
(d).................................. 11.02; 11.03
(e).................................. 12.05
(f).................................. N/A
315 (a).................................. 8.01
(b).................................. 8.05; 12.02
(c).................................. 8.01
(d).................................. 8.01
(e).................................. 7.11
316 (a)(1)(A)............................ 7.05
(a)(1)(B)............................ 7.04
(a)(2)............................... N/A
(b).................................. 7.07
317 (a)(1)............................... 7.08
(a)(2)............................... 7.09
(b).................................. 2.04
318 (a).................................. 12.01
(b).................................. N/A
(c).................................. 12.01
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
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TABLE OF CONTENTS
Page
PARTIES............................................................... 1
RECITALS OF STERLING.................................................. 1
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions...................................... 1
Section 1.02. Other Definitions................................ 16
Section 1.03. Incorporation by Reference of Trust Indenture Act 16
Section 1.04. Rules of Construction............................ 17
ARTICLE II
THE NOTES
Section 2.01. Form and Dating.................................. 17
Section 2.02. Execution and Authentication..................... 18
Section 2.03. Registrar and Paying Agent....................... 19
Section 2.04. Paying Agent to Hold Money In Trust.............. 20
Section 2.05. Lists of Holders of Notes........................ 20
Section 2.06. Transfer and Exchange............................ 20
Section 2.07. Replacement Notes................................ 25
Section 2.08. Outstanding Notes................................ 25
Section 2.09. Temporary Notes and Certificated Notes........... 26
Section 2.10. Cancellation..................................... 26
Section 2.11. Defaulted Interest............................... 27
Section 2.12. CUSIP Number..................................... 27
ARTICLE III
REDEMPTION
Section 3.01. Notices to Trustee............................... 27
Section 3.02. Selection of Notes to be Redeemed................ 27
Section 3.03. Notice of Redemption............................. 28
Section 3.04. Effect of Notice of Redemption................... 28
Section 3.05. Deposit of Redemption Price...................... 29
Section 3.06. Notes Redeemed in Part........................... 29
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Note: This Table of Contents shall not, for any reason, be deemed to be part
of the Indenture.
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ARTICLE IV
CHANGE OF CONTROL
ARTICLE V
COVENANTS
Page
Section 5.01. Payment of Principal, Premium and Interest....... 31
Section 5.02. Maintenance of Office or Agency.................. 31
Section 5.03. SEC Reports...................................... 31
Section 5.04. Limitation On Debt............................... 32
Section 5.05. Limitation On Restricted Payments................ 33
Section 5.06. Limitation On Restrictions On Distributions from
Restricted Subsidiaries.......................... 37
Section 5.07. Limitation On Sales of Assets and Subsidiary
Stock............................................ 38
Section 5.08. Limitation On Transactions with Affiliates....... 40
Section 5.09. Limitation On the Sale or Issuance of Capital
Stock of Restricted Subsidiaries................. 41
Section 5.10. Compliance Certificates.......................... 41
Section 5.11. Further Instruments and Acts..................... 41
ARTICLE VI
SUCCESSORS
Section 6.01. When Sterling May Merge or Transfer Assets....... 42
Section 6.02. Successor Company Substituted.................... 42
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.01. Events of Default................................ 43
Section 7.02. Acceleration..................................... 44
Section 7.03. Other Remedies................................... 44
Section 7.04. Waiver of Past Defaults.......................... 45
Section 7.05. Control by Majority.............................. 45
Section 7.06. Limitation On Suits.............................. 45
Section 7.07. Unconditional Right of Holders of Notes to
Receive Payment.................................. 46
Section 7.08. Collection Suit by Trustee....................... 46
Section 7.09. Trustee May File Proofs of Claim................. 46
Section 7.10. Priorities....................................... 46
Section 7.11. Undertaking for Costs............................ 47
Section 7.12. Waiver of Stay, Extension and Usury Laws......... 47
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Page
ARTICLE VIII
TRUSTEE
Section 8.01. Duties of Trustee................................ 47
Section 8.02. Rights of Trustee................................ 48
Section 8.03. Individual Rights of Trustee..................... 49
Section 8.04. Trustee's Disclaimer............................. 49
Section 8.05. Notice of Default................................ 49
Section 8.06. Reports by Trustee to Holders of Notes........... 49
Section 8.07. Compensation and Indemnity....................... 50
Section 8.08. Replacement of Trustee........................... 50
Section 8.09. Successor Trustee by Merger, Etc................. 51
Section 8.10. Eligibility; Disqualification.................... 52
Section 8.11. Preferential Collection of Claims Against
Sterling......................................... 52
ARTICLE IX
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Liability on Notes; Defeasance...... 52
Section 9.02. Conditions to Defeasance......................... 53
Section 9.03. Application of Trust Money....................... 54
Section 9.04. Repayment to Sterling............................ 54
Section 9.05. Indemnity for Government Obligations............. 54
Section 9.06. Reinstatement.................................... 54
ARTICLE X
AMENDMENT, SUPPLEMENT AND WAIVER
Section 10.01. Without Consent of Holders of Notes............. 55
Section 10.02. With Consent of Holders of Notes................ 56
Section 10.03. Compliance with Trust Indenture Act............. 57
Section 10.04. Revocation and Effect of Consents and Waivers... 57
Section 10.05. Notation On or Exchange of Notes................ 57
Section 10.06. Trustee to Sign Amendments, Etc................. 57
Section 10.07. Payment for Consents............................ 58
ARTICLE XI
SUBORDINATION OF NOTES
Section 11.01. Notes Subordinate to Senior Debt; Notes Pari
Passu with Senior Subordinated Debt.............. 58
Section 11.02. Payment Over of Proceeds Upon Dissolution, Etc... 58
Section 11.03. No Payment When Senior Debt in Default........... 59
Section 11.04. Payment Permitted If No Default.................. 60
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Page
Section 11.05. Subrogation to Rights of Holders of Senior Debt.. 60
Section 11.06. Provisions Solely to Define Relative Rights...... 61
Section 11.07. Trustee to Effectuate Subordination.............. 61
Section 11.08. No Waiver of Subordination Provisions............ 61
Section 11.09. Notice to Trustee................................ 62
Section 11.10. Reliance on Judicial Order or Certificate of
Liquidating Agent................................ 62
Section 11.11. Trustee Not Fiduciary for Holders of Senior Debt. 63
Section 11.12. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights................. 63
Section 11.13. Article XI Applicable to Paying Agents........... 63
Section 11.14. Trust Moneys Not Subordinated.................... 63
ARTICLE XII
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls..................... 63
Section 12.02. Notices.......................................... 64
Section 12.03. Communication by Holders of Notes with Other
Holders of Notes................................. 65
Section 12.04. Certificate and Opinion as to Conditions
Precedent........................................ 65
Section 12.05. Statements Required in Certificate or Opinion.... 65
Section 12.06. Rules by Trustee and Agents...................... 65
Section 12.07. No Personal Liability of Directors, Officers,
Employees, Incorporators and Stockholders........ 66
Section 12.08. Governing Law.................................... 66
Section 12.09. No Adverse Interpretation of Other Agreements.... 66
Section 12.10. Successors....................................... 66
Section 12.11. Severability..................................... 66
Section 12.12. Counterpart Originals............................ 66
Section 12.13. Table of Contents, Headings, Etc................. 66
EXHIBIT A--Form of Initial Note
EXHIBIT B--Form of Exchange Note
iv
INDENTURE, dated as of April 7, 1997, between Sterling Chemicals, Inc.
("Sterling"), a corporation duly organized and existing under the laws of the
State of Delaware, and Fleet National Bank, a national banking association duly
organized and existing under the laws of the United States of America, as
trustee (the "Trustee").
RECITALS OF STERLING
Sterling has duly authorized the execution and delivery of this
Indenture to provide for the issuance of up to $150,000,000 aggregate principal
amount of Sterlings' 11 1/4% Senior Subordinated Notes Due 2007 issuable as
provided in this Indenture. All things necessary to make this Indenture a valid
agreement of Sterling, in accordance with its terms, have been done, and
Sterling has done all things necessary to make the Notes, when executed by
Sterling and authenticated and delivered by the Trustee hereunder and duly
issued by Sterling, the valid obligations of Sterling as hereinafter provided.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Notes, as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Affiliate" means with respect to any specified Person any other
Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Section 5.07 and Section 5.08 only, the term
"Affiliate" shall also mean any beneficial owner (as defined in Rules 13d-3 and
13d-5 under the Exchange Act) of Capital Stock representing 10% or more of the
total voting power of the Voting Stock (on a fully diluted basis) of Sterling or
of rights or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner in accordance with the first sentence of this definition.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the purposes
of this definition as a "disposition") by Sterling or any of its Restricted
Subsidiaries,
including any disposition by means of a merger, consolidation or similar
transaction, for gross proceeds in excess of $2.0 million, other than (i) a
disposition by a Restricted Subsidiary to Sterling or by Sterling or a
Restricted Subsidiary to a Wholly Owned Subsidiary; (ii) a disposition of
property or assets (other than shares of Capital Stock of a Restricted
Subsidiary and which do not constitute all or substantially all of the assets of
any division or line of business of Sterling or any Restricted Subsidiary) at
fair market value in the ordinary course of business; (iii) for purposes of
Section 5.07 only, a disposition that constitutes a Restricted Payment or a
Permitted Investment permitted pursuant to Section 5.05; (iv) the disposition of
all or substantially all of the assets of Sterling permitted pursuant to Section
6.01; and (v) the disposition of assets in exchange for other assets that
satisfy the requirement for replacement assets pursuant to Section
5.07(a)(ii)(2).
"Attributable Debt" means, in respect of a Sale/Leaseback Transaction,
as at the time of determination, the present value (discounted at the interest
rate borne by the Notes, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale/Leaseback Transaction (including any period for which such lease has
been extended).
"Average Life" means, as of the date of determination, with respect to
any Debt or Preferred Stock, the quotient obtained by dividing (i) the sum of
the products of numbers of years from the date of determination to the dates of
each successive scheduled principal payment of such Debt or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount of
such payment, by (ii) the sum of all such payments.
"Bankruptcy Law" means title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of Sterling or any
committee thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means each day which is not a Legal Holiday.
"Canadian Facility" means a revolving loan and letter of credit
facility for loans and letters of credit in Canadian dollars or U.S. dollars to
or for the account of Sterling Pulp Chemicals, Ltd., a Wholly Owned Subsidiary
of Sterling.
"Capital Lease Obligations" means with respect to any Person any
obligation which is required to be classified and accounted for as a capital
lease on the face of a balance sheet of such Person prepared in accordance with
GAAP; the amount of such obligation shall be the capitalized amount thereof,
determined in accordance with GAAP; and the Stated Maturity thereof shall be the
date of the last payment of rent or any other amount due under such lease prior
to the first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Capital Stock" means with respect to any Person any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in such Person (however designated), including any
Preferred Stock, but excluding any debt securities convertible into or
exchangeable for such equity.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
2
"Commodity Agreement" means any commodity future contract, commodity
option or other similar agreement or arrangement (limited in amount to
underlying exposure, and not for speculative purposes) entered into by Sterling
or any Restricted Subsidiary that is designed to protect Sterling or any
Restricted Subsidiary against fluctuations in the price of commodities used by
Sterling or a Restricted Subsidiary as raw materials in the ordinary course of
business.
"Consolidated EBITDA Coverage Ratio" means, as of any date of
determination, the ratio of (i) the aggregate amount of EBITDA for the period of
the most recent four consecutive fiscal quarters ending at least 45 days prior
to the date of such determination to (ii) Consolidated Interest Expense for such
four fiscal quarters; provided, however, that (1) if Sterling or any Restricted
Subsidiary has Incurred any Debt since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the
Consolidated EBITDA Coverage Ratio is an Incurrence of Debt, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Debt as if such Debt had been Incurred on
the first day of such period and the discharge of any other Debt repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new Debt
as if such discharge had occurred on the first day of such period, (2) if since
the beginning of such period Sterling or any Restricted Subsidiary shall have
made any Asset Disposition, the EBITDA for such period shall be reduced by an
amount equal to the EBITDA (if positive) directly attributable to the assets
which are the subject of such Asset Disposition for such period, or increased by
an amount equal to the EBITDA (if negative), directly attributable thereto for
such period, and Consolidated Interest Expense for such period shall be reduced
by an amount equal to the Consolidated Interest Expense directly attributable to
any Debt of Sterling or any Restricted Subsidiary repaid, repurchased, defeased
or otherwise discharged with respect to Sterling and its continuing Restricted
Subsidiaries in connection with such Asset Dispositions for such period (or, if
the Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Debt of such
Restricted Subsidiary to the extent Sterling and its continuing Restricted
Subsidiaries are no longer liable for such Debt after such sale), (3) if since
the beginning of such period Sterling or any Restricted Subsidiary (by merger or
otherwise) shall have made an Investment in any Restricted Subsidiary (or any
Person which becomes a Restricted Subsidiary) or an acquisition of assets,
including any acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Debt) as if such Investment or
acquisition occurred on the first day of such period, and (4) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into Sterling or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or any
Investment that would have required an adjustment pursuant to clause (2) or (3)
above if made by Sterling or a Restricted Subsidiary during such period, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Asset Disposition or Investment
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the amount
of income or earnings relating thereto, and the amount of Consolidated Interest
Expense associated with any Debt Incurred in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of Sterling. If any Debt bears a floating rate of interest
and is being given pro forma effect, the interest of such Debt shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Debt if such Interest Rate Agreement has a
remaining term in excess of 12 months).
3
"Consolidated Interest Expense" means, for any period, the total
interest expense of Sterling and its consolidated Restricted Subsidiaries, plus,
to the extent not included in such interest expense, (i) interest expense
attributable to Capital Lease Obligations; (ii) amortization of debt discount
and debt issuance cost; (iii) capitalized interest; (iv) non-cash interest
payments; (v) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing; (vi) net costs
under Interest Rate Agreements (including amortization of fees); (vii) Preferred
Stock dividends in respect of all Redeemable Stock of Sterling and all Preferred
Stock of Restricted Subsidiaries held by Persons other than Sterling or a Wholly
Owned Subsidiary; (viii) interest incurred in connection with Investments in
discontinued operations; (ix) interest actually paid by Sterling or any of its
Restricted Subsidiaries under any Guarantee of Debt or other obligation of any
other Person; and (x) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than Sterling or any
Restricted Subsidiary) in connection with Debt Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income of
Sterling and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income (i) any net income of any Person
if such Person is not a Restricted Subsidiary, except that (A) subject to the
exclusion contained in clause (iv) below, Sterling's equity in the net income of
any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such period to Sterling or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a
Restricted Subsidiary, to the limitations contained in clause (iii) below), and
(B) Sterling's equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income to the extent of any cash
actually contributed by Sterling or a Restricted Subsidiary to such Person
during such period; (ii) any net income (or loss) of any Person acquired by
Sterling or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition; (iii) any net income of any Restricted
Subsidiary to the extent such Restricted Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or indirectly, to
Sterling, except that (A) subject to the exclusion contained in clause (iv)
below, Sterling's equity in the net income of any such Restricted Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Restricted Subsidiary
during such period to Sterling or another Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other distribution to
another Restricted Subsidiary, to the limitation contained in this clause), and
(B) Sterling's equity in a net loss of any such Restricted Subsidiary for such
period shall be included in determining such Consolidated Net Income; (iv) any
gain or loss realized upon the sale or other disposition of any assets of
Sterling or its consolidated Subsidiaries (including pursuant to any sale-and-
leaseback arrangement) which is not sold or otherwise disposed of in the
ordinary course of business and any gain or loss realized upon the sale or other
disposition of any Capital Stock of any Person; (v) extraordinary gains or
losses; and (vi) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of Section 5.05 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries to
Sterling or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted pursuant to
Section 5.05(a)(iv)(3)(E).
4
"Consolidated Net Worth" means with respect to any Person the total of
the amounts shown on the balance sheet of such Person and its consolidated
subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of such Person ending at least 45 days
prior to the taking of any action for the purpose of which the determination is
being made, as (i) the par or stated value of all outstanding Capital Stock of
such Person, plus (ii) paid-in capital or capital surplus relating to such
Capital Stock, plus (iii) any retained earnings or earned surplus, less (A) any
accumulated deficit, (B) any amounts attributable to Redeemable Stock, and (C)
any amounts attributable to Exchangeable Stock.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 or such other address as to which the Trustee
may give notice to Sterling.
"Credit Agreements" means (i) the agreement, dated June 21, 1996,
among Sterling, as borrower, Texas Commerce Bank National Association, as
administrative agent, and the other lenders party thereto, and their respective
successors and assigns, and (ii) the agreement dated January 31, 1997, among
Sterling, as borrower, Texas Commerce Bank National Association, as
administrative agent, and the other lenders party thereto and their respective
successors and assigns, in each case, as the same may be amended, supplemented,
waived and otherwise modified from time to time in accordance with the terms
thereof.
"Currency Agreement" means with respect to any Person any foreign
exchange contract, currency swap agreement or other similar agreement (limited
in amount to underlying exposure, and not for speculative purposes) to which
such Person is a party or a beneficiary.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Debt" means with respect to any Person, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is responsible or
liable; (ii) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such Person;
(iii) all obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations of such Person and all
obligations of such Person under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business); (iv) all
obligations of such Person for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (i) through (iii) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit); (v) all Redeemable
Stock of such Person and, with respect to any Subsidiary of such Person, all
Preferred Stock other than pay-in-kind dividends in the form of Preferred Stock
(the amount of Debt represented thereby shall equal the greater of its
liquidation preference and the redemption, repayment or other repurchase
obligations with respect thereto, but excluding any accrued dividends); (vi) all
Hedging Obligations of such Person; (vii) all obligations of the type referred
to in clauses (i) through (v) of other Persons and all dividends of other
Persons for the payment of which, in either case, such Person is responsible or
liable, directly or indirectly, as obligor, guarantor or
5
otherwise, including by means of any Guarantee; and (viii) all obligations of
the type referred to in clauses (i) through (vi) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation being deemed to be the
lesser of the value of such property or assets or the amount of the obligation
so secured. The amount of Debt of any Person at any date shall be the
outstanding balance of such date of all unconditional obligations as described
above and the maximum liability upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date; provided,
however, that the amount outstanding at any time of any Debt Incurred with
original issue discount is the face amount of such Debt less the remaining
unamortized portion of the original issue discount of such Debt at such time as
determined in conformity with GAAP.
"Default" means any event that is, after notice or with the passage
of time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees and
their respective successors.
"Designated Senior Debt" means the Debt under the Credit Agreements
and any bank credit facility refinancing such debt.
"Discount Notes" means $191,751,000 aggregate principal amount at
maturity of 13 1/2% Senior Secured Discount Notes Due 2008 of Holdings issued
pursuant to the Discount Notes Indenture.
"Discount Notes Indenture" means that certain Indenture, dated as of
August 15, 1996, among Holdings and Fleet National Bank, as Trustee, relating to
the Discount Notes, as the same may be amended or supplemented in accordance
with its terms.
"EBITDA" means for any period the sum of Consolidated Net Income, plus
Consolidated Interest Expense plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) all income tax expense of
Sterling; (ii) depreciation expense; (iii) amortization expense; (iv) an amount
equal to any extraordinary gain or loss realized in connection with an Asset
Disposition; (v) the impact of accruals for periods prior to the Issue Date for
Sterling's Stock Appreciation Rights Plan; and (vi) all other non-cash items
reducing such Consolidated Net Income (excluding any non-cash item to the extent
it represents an accrual of, or reserve for, cash disbursements for any
subsequent period) less all non-cash items increasing such Consolidated Net
Income (such amount calculated pursuant to this clause (vi) not to be less than
zero), in each case for such period. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation and
amortization of, a Subsidiary of Sterling shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that
the net income of such Subsidiary was included in calculating Consolidated Net
Income and only if a corresponding amount would be permitted at the date of
determination to be dividended or otherwise paid to Sterling by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Subsidiary or
its stockholders.
6
"Equity Private Placement" means the private placement of shares of
common stock of STX Acquisition Corp. (which shares were converted into shares
of common stock of Holdings) in connection with the recapitalization of Sterling
consummated on August 21, 1996.
"ESOP" means the employee stock ownership plan of Sterling.
"ESOP Loan" means the loan from Sterling to the ESOP of $6.5 million
in connection with the formation of the ESOP.
"ESOP Loan Provisions" means the provisions of the Credit Agreement
pursuant to which lenders thereunder have committed to make ESOP loans available
to Sterling.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the 11 1/4% Senior Subordinated Notes Due 2007
to be issued pursuant to this Indenture in connection with a Registered Exchange
Offer pursuant to the Registration Rights Agreement.
"Exchangeable Stock" means any Capital Stock which is exchangeable or
convertible into another security (other than Capital Stock of Sterling which is
neither Exchangeable Stock nor Redeemable Stock).
"Existing Subordinated Notes" means $275,000,000 in original principal
amount of Sterling's 11 3/4 Senior Subordinated Notes Due 2006 issued August 21,
1996.
"Existing Subordinated Notes Indenture" means that certain Indenture,
dated as of August 15, 1996, between Sterling and Fleet National Bank, as
Trustee, relating to the Existing Subordinated Notes.
"Foreign Asset Sale" means an Asset Disposition in respect of Capital
Stock or assets of a Foreign Subsidiary or a Restricted Subsidiary of the type
described in Section 936 of the Code to the extent that the proceeds of such
Asset Disposition are received by a Person subject in respect of such proceeds
to the tax laws of a jurisdiction other than the United States or any state
thereof or the District of Columbia.
"Foreign Subsidiary" means a Restricted Subsidiary that is
incorporated in a jurisdiction other than the United States or a State thereof
or the District of Columbia and with respect to which more than 66-2/3% of any
of its sales, earnings or assets (determined on a consolidated basis in
accordance with GAAP) are located in, generated from or derived from operations
located in territories or jurisdictions outside the United States.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
(i) in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants; (ii) statements and
pronouncements of the Financial Accounting Standards Board; (iii) in such other
statements by such other entity as approved by a significant segment of the
accounting profession; and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
7
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation of any
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation of such Person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise); or (ii) entered into for purposes of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business or guarantees of obligations of a Subsidiary in the ordinary course of
business if such obligations do not constitute Debt of such Subsidiary. The
term "Guarantee" used as a verb shall have a corresponding meaning.
"Hedging Obligations" means with respect to any Person the obligations
of such Person pursuant to any Interest Rate Agreement, Currency Agreement or
Commodity Agreement (limited in amount to underlying exposure, and not for
speculative purposes).
"Holder" means the Person in whose name a Note is registered on the
Note Register.
"Holdings" means Sterling Chemicals Holdings, Inc., a Delaware
corporation.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Debt or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall be deemed to be the
Incurrence of Debt.
"Indenture" means this Indenture, as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"Independent Financial Advisor" means a reputable accounting,
appraisal or investment banking firm that, in the reasonable good faith judgment
of the Board of Directors, is qualified to perform the task for which such firm
has been engaged and is independent with respect to Sterling and its Affiliates.
"Initial Notes" means the 11 1/4% Senior Subordinated Notes Due 2007
issued under this Indenture on or about the date hereof.
"Initial Purchasers" means Credit Suisse First Boston Corporation and
Chase Securities Inc.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement (limited
in amount to underlying exposure, and not for speculative purposes) designed to
protect Sterling or any Restricted Subsidiary against fluctuations in interest
rates.
8
"Investment" means with respect to any Person any loan or advance to,
any acquisition of Capital Stock, equity interest, obligation or other security
of, or capital contribution or other investment in, or any other credit
extension to (including by way of Guarantee of any Debt of), such Person. For
purposes of the definition of "Unrestricted Subsidiary", the definition of
"Restricted Payment" and Section 5.05 of this Indenture, (i) "Investment" shall
include the portion (proportionate to Sterling's equity interest in such
Subsidiary) of the fair market value of the net assets of any Subsidiary of
Sterling at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that if such designation is made in connection
with the acquisition of such Subsidiary or the assets owned by such Subsidiary,
the "Investment" in such Subsidiary shall be deemed to be the consideration paid
in connection with such acquisition; provided, further, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, Sterling shall be
deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) Sterling's "Investment"
in such Subsidiary at the time of such redesignation less (y) the portion
(proportionate to Sterling's equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Investment Grade Rating" means a rating of BBB- or higher by S&P and
Baa3 or higher by Moody's or the equivalent of such rating by S&P and Moody's or
by any other Rating Agencies selected as provided in the definition of Rating
Agency.
"Issue Date" means the date on which the Initial Notes are originally
issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, in the city of the Corporate Trust Office
of the Trustee or at a place of payment are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Moody's" means Xxxxx'x Investor Service, Inc.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to such
properties or assets that are the subject of such Asset Disposition or received
in any other noncash form) therefrom, in each case net of (i) all legal, title
and recording expenses, commissions and other fees and expenses incurred, and
all Federal, state, provincial, foreign and local taxes required to be accrued
as a liability under GAAP, as a consequence of such Asset Disposition; (ii) all
payments made on any Debt which is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon or other security
agreement of any kind with respect to such assets, or which must by its terms,
or in order to obtain a necessary consent to such Asset Disposition, or by
applicable law be repaid out of the proceeds from such Asset Disposition; (iii)
all distributions and other payments required to be
9
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Disposition; and (iv) the deduction of appropriate amounts
provided by the sellers as a reserve, in accordance with GAAP, against any
liabilities associated with the property or other assets disposed in such Asset
Disposition and retained by Sterling or any Restricted Subsidiary after such
Asset Disposition.
"Net Cash Proceeds" means with respect to any issuance or sale of
Capital Stock, the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible common
stock of such corporation; provided, however, that Non-Convertible Capital Stock
shall not include any Redeemable Stock or Exchangeable Stock.
"Notes" means the Initial Notes, the Exchange Notes and the Private
Exchange Notes, treated as a single class.
"Notes Custodian" means the custodian with respect to a Global Note
(as appointed by the Depository), or any successor person thereto and shall
initially be the Trustee.
"Officer" means with respect to any Person the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, Controller, Secretary or any Vice-
President of such Person.
"Officers' Certificate" means a certificate signed on behalf of
Sterling by two Officers of Sterling, one of whom must be the principal
executive officer, principal financial officer, treasurer or principal
accounting officer of Sterling.
"Opinion of Counsel" means a written opinion from legal counsel, who
may be an employee of or counsel to Sterling or the Trustee.
"Permitted Holders" means (i) the purchasers in the Equity Private
Placement; (ii) any Person who on the date of issuance of the Notes is an
officer, director, stockholder, employee or consultant of The Sterling Group,
Inc., or The Unicorn Group, L.L.C.; (iii) each of Xxxxx X. Xxxxxxxx, Xxxxxxx X.
Xxxxxx, J. Xxxxxx Xxxxxxxx, Xxxxxx X. Xxxxx and Xxxxxx Xxxx; (iv) any Permitted
Transferee with respect to any Person covered by the preceding clauses (i)
through (iii) hereof; (v) the ESOP; or (vi) any savings or investment plan
sponsored by Sterling or Holdings.
"Permitted Investment" means an Investment by Sterling or any
Restricted Subsidiary in (i) a Wholly Owned Subsidiary or a Person that will,
upon the making of such Investment, become a Wholly Owned Subsidiary; (ii)
Temporary Cash Investments; (iii) receivables owing to Sterling or any
Restricted Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; (iv)
stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to Sterling or any Restricted Subsidiary
or in satisfaction of judgments; (v)
10
any Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition as permitted pursuant to Section
5.07; (vi) Investments by Sterling or a Restricted Subsidiary in a Person to the
extent the consideration for such Investment consists of shares of Capital Stock
of Sterling or Holdings (other than Redeemable Stock of Sterling); (vii)
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (viii) loans or
advances to employees or to a trust for the benefit of such employees that are
made in the ordinary course of business of Sterling or such Restricted
Subsidiary; (ix) the ESOP Loan; (x) another Person if as a result of such
Investment such Person is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, Sterling or a Restricted
Subsidiary; provided that such Person's primary business is reasonably related
to the business of Sterling and its Restricted Subsidiaries; and (xi)
Investments in Unrestricted Subsidiaries or joint ventures (whether in corporate
or partnership form or otherwise), in either case in entities engaged in
businesses reasonably related to the business of Sterling and its Restricted
Subsidiaries, in an aggregate amount not to exceed $10 million; provided,
however, that the amount available for Investments pursuant to this clause (xi)
shall be reduced pursuant to Section 5.05(a)(iv)(3)(G).
"Permitted Transferee" means with respect to any Person (i) in the
case of an entity, any Affiliate of such Person; and (ii) in the case of an
individual, any person related by lineal or collateral consanguinity to such
individual or to the spouse of such individual (adopted persons shall be
considered the natural born child of their adoptive parents; lineal
consanguinity is the relationship that exists between persons of whom one is
descended (or ascended) in direct line from the other, as between son, father,
grandfather, great-grandfather; and collateral consanguinity is that
relationship that exists between persons who have the same ancestors, but do not
descend (or ascend) from the other, as between uncle and nephew, or cousin and
cousin), in each case to whom such Person has transferred common stock of
Holdings.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock" means, as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Private Exchange" means the offer by Sterling, pursuant to the
Registration Rights Agreement, to the Initial Purchasers to issue and deliver to
the Initial Purchasers, in exchange for the Initial Notes held by the Initial
Purchasers as part of their initial distribution, a like aggregate principal
amount of Private Exchange Notes.
"Private Exchange Notes" means the 11 1/4% Senior Subordinated Notes
Due 2007 to be issued pursuant to this Indenture in connection with a Private
Exchange effected pursuant to the Registration Rights Agreement.
"Public Equity Offering" means an underwritten primary public offering
of common stock of Holdings pursuant to an effective registration statement
under the Securities Act.
11
"Public Market" means any time after (i) a Public Equity Offering has
been consummated; and (ii) at least 15% of the total issued and outstanding
common stock of Holdings has been distributed by means of an effective
registration statement under the Securities Act or sales pursuant to Rule 144
under the Securities Act.
"Rating Agency" means S&P and Moody's, or if S&P or Moody's or both
shall not make a rating on the Notes publicly available, a nationally recognized
statistical rating agency or agencies, as the case may be, selected by Sterling
(as certified by a resolution of the Board of Directors) which shall be
substituted for S&P or Moody's or both, as the case may be.
"Redeemable Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed on or prior to the Stated Maturity of the
Notes or is redeemable at the option of a Holder thereof at any time on or prior
to the Stated Maturity of the Notes.
"Refinance" means, with respect to any Debt, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other Debt
in exchange or replacement for, such indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of Sterling or
any Restricted Subsidiary existing on the Issue Date or Incurred in compliance
with this Indenture including Debt that Refinances Refinancing Debt; provided,
however, that (i) such Refinancing Debt has a Stated Maturity no earlier than
the Stated Maturity of the Debt being Refinanced; (ii) such Refinancing Debt has
an Average Life at the time such Refinancing Debt is Incurred that is equal to
or greater than the Average Life of the Debt being Refinanced; (iii) such
Refinancing Debt has an aggregate principal amount (or if Incurred with original
issue discount, an aggregate issue price) that is equal to or less than the
aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding or committed (plus fees and expenses,
including any premium and defeasance costs) under the Debt being Refinanced; and
(iv) with respect to any Refinancing Debt of Debt other than Senior Debt, such
Refinancing Debt shall rank no more senior, and shall be at least as
subordinated, in right of payment to the Notes as the Debt being so extended,
renewed, refunded or refinanced; provided, further, however, that Refinancing
Debt shall not include (x) Debt of a Subsidiary that Refinances Debt of
Sterling, or (y) Debt of Sterling or a Restricted Subsidiary that Refinances
Debt of an Unrestricted Subsidiary.
"Registered Exchange Offer" means an offer by Sterling, pursuant to
the Registration Rights Agreement, to certain Holders of Initial Notes, to issue
and deliver to such Holders, in exchange for the Initial Notes, a like aggregate
principal amount of Exchange Notes registered under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement dated April 1, 1997 among Sterling and the Initial Purchasers.
"Responsible Officer" means, when used with respect to the Trustee,
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers.
"Restricted Subsidiary" means any Subsidiary of Sterling that is not
an Unrestricted Subsidiary.
12
"Revolving Credit Provisions" means the provisions of the Credit
Agreements pursuant to which lenders thereunder have committed to make available
to Sterling, a revolving credit facility, including the Canadian Facility.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby Sterling or a Restricted Subsidiary
transfers such property to a Person and Sterling or a Restricted Subsidiary
leases it from such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"Secured Debt" means any Debt of Sterling secured by a Lien.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Senior Debt" means (i) Debt of Sterling, whether outstanding on the
Issue Date or thereafter Incurred; and (ii) accrued and unpaid interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to Sterling whether or not such
interest is an allowable claim in any such proceeding) in respect of (A)
indebtedness of Sterling for money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment of which
Sterling is responsible or liable unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are subordinate in right of payment to the Notes;
provided, however, that Senior Debt shall not include (1) any obligation of
Sterling to Holdings or any subsidiary of Holdings, (2) any liability for
Federal, state, local or other taxes owed or owing by Sterling, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (4) any Debt of Sterling (and any accrued and unpaid interest in
respect thereof) which is subordinate or junior in any respect to any other Debt
or other obligation of Sterling, (5) that portion of any Debt which at the time
of Incurrence is Incurred in violation of this Indenture, (6) Debt owed, due, or
guaranteed on behalf of, any director, officer or employee of Sterling or any
Subsidiary (including, without limitation, amounts owed for compensation), and
(7) Debt which when Incurred and without respect to any election under Section
1111(b) of Xxxxx 00 Xxxxxx Xxxxxx Code, is without recourse to Sterling.
"Senior Subordinated Debt" means the Notes, the Existing Subordinated
Notes and any other Debt of Sterling that specifically provides that such Debt
is to rank pari passu with the Notes in right of payment and is not subordinated
by its terms in right of payment to any Debt or other obligation of Sterling
which is not Senior Debt.
"Shelf Registration Statement" means the registration statement issued
by Sterling in connection with the offer and sale of Initial Notes or Private
Exchange Notes, pursuant to the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" of Sterling as such term is defined in Rule 1-02 of
Regulation S-X, promulgated by the SEC.
"S&P" means Standard & Poor's Ratings Group.
13
"Stated Maturity" means with respect to any security the date
specified in such security as the fixed date on which the principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Debt of Sterling (whether
outstanding on the Issue Date or thereafter Incurred) that is subordinate or
junior in right of payment to the Notes.
"Subsidiary" means any corporation, association, partnership or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock or other interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) Sterling; (ii) Sterling and one or more
Subsidiaries; or (iii) one or more Subsidiaries.
"Tangible Property" means all land, buildings, machinery and equipment
and leasehold interests and improvements which would be reflected on a balance
sheet of Sterling prepared in accordance with GAAP, excluding (i) all rights,
contracts and other intangible assets of any nature whatsoever; and (ii) all
inventories and other current assets.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency
thereof; (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 270 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50,000,000 (or the
foreign currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker dealer
or mutual fund distributor; (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above; (iv) investments in commercial paper, maturing not more than 180
days after the date of acquisition, issued by a corporation (other than an
Affiliate of Sterling or Holdings) organized and in existence under the laws of
the United States of America or any foreign country recognized by the United
States of America with a rating at the time as of which any investment therein
is made of "P-l" (or higher) according to Moody's or "A-1" (or higher) according
to S&P; (v) investments in securities with maturities of six months or less from
the date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by S&P or "A" by Xxxxx'x; (vi)
participations (for a tenor of not more than 90 days) in loans to Persons having
short-term credit ratings of at least "A-1" and "P-1" by S&P and Xxxxx'x,
respectively; (vii) with respect to any Foreign Subsidiary organized in Canada,
commercial paper of Canadian companies rated R-1 High or the equivalent thereof
by Dominion Bond Rating Services with maturities of less than one year; and
(viii) with respect to Foreign Subsidiaries not organized in Canada, government
obligations of another country whose debt securities are rated by S&P and/or
Xxxxx'x "A-1" or "P-1", or the equivalent thereof
14
(if a short-term debt rating is provided by either) or at least "AA" or "AA2",
or the equivalent thereof (if a long-term unsecured debt rating is provided by
either), in each case, with maturities of less than 12 months.
"Term Loan Provisions" means the provisions of the Credit Agreements
pursuant to which lenders thereunder have committed to make term loans available
to Sterling.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Transfer Restricted Notes" means Definitive Notes and Notes that bear
or are required to bear the legend set forth in Section 2.06(d).
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture, and
thereafter such term shall mean such successor serving hereunder.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Unrestricted Subsidiary" means (i) any Subsidiary of Sterling that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
Sterling (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries own
any Capital Stock or Debt of, or holds any Lien on any property of, Sterling or
any other Subsidiary of Sterling that is not a Subsidiary of the Subsidiary to
be so designated; provided, however, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less, or (B) if such Subsidiary has
assets of greater than $1,000, such designation would be permitted pursuant to
Section 5.05; and provided, further, however, that (1) no Subsidiary of Sterling
that is a Restricted Subsidiary on the Issue Date (other than a Restricted
Subsidiary with total assets of $1,000 or less on the Issue Date) may be
designated an Unrestricted Subsidiary, and (2) no Subsidiary holding, directly
or indirectly, any assets (other than assets totaling $1,000 or less which
constituted the only assets of a Restricted Subsidiary on the Issue Date) held
by Sterling or a Restricted Subsidiary on the Issue Date may be designated an
Unrestricted Subsidiary. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (x) if such Unrestricted Subsidiary at
such time has Debt, Sterling could Incur $1.00 of additional Debt pursuant to
Section 5.04(a), and (y) no Default shall have occurred and be continuing. Any
such designation by the Board of Directors shall be by Sterling to the Trustee
by promptly filing with the Trustee a copy of the board resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by
Sterling or another Wholly Owned
15
Subsidiary; provided, however, that a Foreign Subsidiary shall be a Wholly Owned
Subsidiary if more than 90% of the Capital Stock and Voting Stock thereof is
owned by Sterling or another Wholly Owned Subsidiary.
Section 1.02. Other Definitions.
Defined in
Term Article/Section
----- ---------------
"Affiliate Transaction"....... Section 5.08
"Agent Members"............... Section 2.01
"blockage period"............. Section 11.03
"Change of Control"........... Article IV
"covenant defeasance"......... Section 9.01
"Default Amount".............. Section 7.02
"Definitive Notes"............ Section 2.01
"Event of Default"............ Section 7.01
"Global Note"................. Section 2.01
"IAI"......................... Section 2.01
"legal defeasance"............ Section 9.01
"Note Register"............... Section 2.03
"Notes Payment"............... Section 11.02
"parent corporation".......... Article IV
"Paying Agent"................ Section 2.03
"Payment Default"............. Section 7.01
"Proceeding".................. Section 11.02
"Purchase Agreement".......... Section 2.01
"QIB"......................... Section 2.01
"Registrar"................... Section 2.03
"Regulation S"................ Section 2.01
"Restricted Payment".......... Section 5.05
"Rule 144A"................... Section 2.01
"Senior Nonmonetary Default".. Section 11.03
"Senior Payment Default"...... Section 11.03
"specified corporation"....... Article IV
"Successor Company"........... Section 6.01
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
(i) "indenture securities" means the Notes;
(ii) "indenture security holder" means a Noteholder;
(iii) "indenture to be qualified" means this Indenture;
16
(iv) "indenture trustee" or "institutional trustee" means the
Trustee;
(v) "obligor" upon the Notes means Sterling and any successor
obligor upon the Notes.
All other terms used in this Indenture that are (i) defined by the
TIA; (ii) defined by TIA reference to another statute; or (iii) defined by SEC
rule under the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) the word "or" shall not be deemed to be exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular; and
(v) provisions apply to successive events and transactions.
ARTICLE II
THE NOTES
Section 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Exchange Notes, the
Private Exchange Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B, which is hereby incorporated by
reference and expressly made a part of this Indenture. The Notes may have such
notations, legends or endorsements approved as to form by Sterling and required,
as applicable, by law, stock exchange rule, agreements to which Sterling is
subject and/or usage. Each Note shall be dated the date of its authentication.
The Notes shall be issuable only in denominations of $1,000 and integral
multiples thereof. The terms of the Notes set forth in Exhibit A and Exhibit B
are part of the terms of this Indenture.
The Initial Notes are being offered and sold by Sterling pursuant to a
Purchase Agreement, dated April 1, 1997, among Sterling and the Initial
Purchasers (the "Purchase Agreement").
(a) Global Notes. Initial Notes offered and sold to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) (a
"QIB") in reliance on Rule 144A under the Securities Act ("Rule 144A") or in
reliance on Regulation S under the Securities Act
17
("Regulation S"), in each case as provided in the Purchase Agreement, shall be
issued initially in the form of one permanent global Note in definitive, fully
registered form without interest coupons (the "Global Note") with the global
Note legend and restricted Note legend set forth in Exhibit A hereto, which
shall be deposited on behalf of the purchasers of the Initial Notes represented
thereby with the Trustee, as custodian for the Depository (or with such other
custodian as the Depository may direct), and registered in the name of the
Depository or a nominee of the Depository, duly executed by Sterling and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depository or its nominee
as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to
the Global Note deposited with or on behalf of the Depository.
Sterling shall execute and the Trustee shall, in accordance with this
Section 2.01(b), authenticate and deliver initially one Global Note that (i)
shall be registered in the name of the Depository or the nominee of the
Depository and (ii) shall be delivered by the Trustee to the Depository or
pursuant to the Depository's instructions or held by the Trustee as custodian
for the Depository.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to the Global Note held on
their behalf by the Depository or by the Trustee as the custodian of the
Depository or under such Global Note, and the Depository may be treated by
Sterling, the Trustee and any agent of Sterling or the Trustee as the absolute
owner of such Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Sterling, the Trustee or any agent
of Sterling or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of customary practices of
such Depository governing the exercise of the rights of a holder of a beneficial
interest in the Global Note.
(c) Certificated Notes. Except as provided in this Section or Section
2.06 or 2.09, owners of beneficial interests in the Global Note will not be
entitled to receive physical delivery of certificated Notes. Purchasers of
Initial Notes who are institutional "accredited investors" as described in Rule
501(a)(1), (2), (3) or (7) under the Securities Act (each an "IAI") and who are
not QIBs and did not purchase Initial Notes sold in reliance on Regulation S
will receive certificated Initial Notes bearing the restricted securities legend
set forth in Exhibit A hereto (such securities as held by an IAI are herein
referred to as "Definitive Notes"); provided, however, that upon transfer of
such certificated Initial Notes to a QIB or in reliance on Regulation S such
certificated Initial Notes will, unless the Global Note has previously been
exchanged, be exchanged for an interest in the Global Note pursuant to the
provisions of Section 2.06. Definitive Notes will bear the restricted
securities legend set forth on Exhibit A unless removed in accordance with
Section 2.06(d).
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Section 2.02. Execution and Authentication.
Two Officers of Sterling shall sign the Notes for Sterling by manual
or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office
at the time such Note is authenticated such Note shall be valid nevertheless.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature of the Trustee shall be conclusive evidence that
a Note has been authenticated in accordance with the terms of this Indenture.
The Trustee, upon a written order of Sterling signed by two Officers
of Sterling, shall authenticate and deliver (1) Initial Notes for original issue
in an aggregate principal amount of $150,000,000, and (2) Exchange Notes or
Private Exchange Notes for issue only in a Registered Exchange Offer or a
Private Exchange, respectively, pursuant to the Registration Rights Agreement,
for a like principal amount of Initial Notes, in each case upon a written order
of Sterling signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of Sterling. Such order shall specify the
amount of the Notes to be authenticated, the date on which the original issue of
Notes is to be authenticated and whether the Notes are to be Initial Notes,
Exchange Notes or Private Exchange Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed $150,000,000 except as provided in
Section 2.07.
The Trustee may appoint an authenticating agent acceptable to Sterling
to authenticate the Notes. Unless limited by the terms of such appointment, any
such authenticating agent may authenticate the Notes whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such authenticating agent of the Trustee. An authenticating
agent has the same rights as an Agent to deal with Sterling or an Affiliate of
Sterling.
Section 2.03. Registrar and Paying Agent.
Sterling shall maintain (i) an office or agency where the Notes may be
presented for registration of transfer or for exchange (including any co-
registrar, the "Registrar"); and (ii) an office or agency where the Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Holders of Notes and of the transfer and exchange of such Notes (the "Note
Register"). Sterling may appoint one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" shall include any such
additional paying agent. Sterling may change any Paying Agent, Registrar or co-
registrar without prior notice to any Holder of a Note. Sterling shall notify
the Trustee and the Trustee shall notify the Holders of the Notes of the name
and address of any Agent not a party to this Indenture. Sterling or any of its
domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar. Sterling shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which shall incorporate
the provisions of the TIA. Any such agency agreement shall implement the
provisions of this Indenture that relate to such Agent. If Sterling fails to
maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the
Trustee shall act as such, as appropriate, and shall be entitled to appropriate
compensation in accordance with Section 8.07.
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Sterling initially appoints the Trustee as Registrar, Paying Agent and
agent for service of notices and demands in connection with the Notes.
Section 2.04. Paying Agent to Hold Money In Trust.
On or prior to each due date of the principal of, premium, if any, and
interest on any Note, Sterling shall deposit with the Paying Agent a sum
sufficient to pay such principal, premium, if any, and interest when so becoming
due. Sterling shall require each Paying Agent (other than the Trustee) to agree
in writing that the Paying Agent shall hold in trust for the benefit of the
Holders of the Notes or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, and interest on the Notes, and shall
notify the Trustee of any Default by Sterling in making any such payment. While
any such Default continues, the Trustee may require a Paying Agent to pay all
money held by it to the Trustee. Sterling at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than Sterling) shall have no further
liability for the money delivered to the Trustee. If Sterling acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders of the Notes all money held by it as Paying Agent.
Section 2.05. Lists of Holders of Notes.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders of Notes. If the Trustee is not the Registrar, Sterling shall
furnish to the Trustee at least three Business Days before each interest payment
date and at such other times as the Trustee may request in writing a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of the Holders of Notes, including the aggregate principal amount
of Notes held by each such Holder of Notes.
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. Definitive Notes
shall be issued in registered form and shall be transferable only upon the
surrender of Definitive Notes for registration of transfer. When Definitive
Notes are presented to the Registrar with a request to register the transfer or
to exchange them for an equal principal amount of Definitive Notes of other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met; provided, however, that any
Definitive Notes presented or surrendered for registration of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instruction
of transfer in form satisfactory to the Registrar and the Trustee duly
executed by the Holder thereof or by his attorney duly authorized in
writing; and
(ii) are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act, pursuant to Section 2.06(b)
or pursuant to clause (A), (B) or (C) below, and are accompanied by the
following additional information and documents, as applicable:
(A) if such Definitive Notes are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a
20
certification from such Holder to that effect (in the form set forth
on the reverse of the Note); or
(B) if such Definitive Notes are being transferred to Sterling a
certification to that effect (in the form set forth on the reverse of
the Note); or
(C) if such Definitive Notes are being transferred pursuant to
an exemption from registration in accordance with Rule 144 or
Regulation S under the Securities Act: (i) a certificate to that
effect (in the form set forth on the reverse of the Note), and (ii)
if Sterling or Registrar so requests, evidence reasonably
satisfactory to them as to the compliance with the restrictions set
forth in the legend set forth in Section 2.06(d)(i).
(b) Restrictions on Transfer of a Definitive Note for a Beneficial
Interest in the Global Note. A Definitive Note may not be exchanged for a
beneficial interest in the Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse of the Note,
that such Definitive Note is being transferred to a QIB in accordance with
Rule 144A under the Securities Act or to a non-U.S. person in accordance
with Rule 904 under the Securities Act; and
(ii) written instructions directing the Trustee to make, or to direct
the Notes Custodian to make, an adjustment on its books and records with
respect to such Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note,
then the Trustee shall cancel such Definitive Note and cause, or direct the
Notes Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Notes Custodian, the
aggregate principal amount of Notes represented by the Global Note to be
increased accordingly. If no Global Note is then outstanding, Sterling shall
issue and the Trustee shall authenticate, upon written order of Sterling in the
form of an Officers' Certificate, a new Global Note in the appropriate principal
amount.
(c) Transfer and Exchange of Global Notes.
(i) The transfer and exchange of the Global Note or beneficial
interests therein shall be effected through the Depository, in accordance
with this Indenture (including applicable restrictions on transfer set forth
herein, if any) and the procedures of the Depository therefor, if
applicable.
(ii) Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in Section 2.09), the Global Note may not be
transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
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(iii) In the event that the Global Note is exchanged for Notes in
definitive form pursuant to Section 2.09, prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Notes, such Notes may be exchanged only in
accordance with such procedures as are substantially consistent with the
provisions of this Section 2.06 (including the certification requirements
set forth on the reverse of the Initial Notes intended to ensure that such
transfers comply with Rule 144A or Regulation S, as the case may be) and
such other procedures as may from time to time be adopted by Sterling.
(d) Legend.
(i) Except as permitted by the following paragraphs (ii) and (iii)
each Note certificate evidencing the Global Note and the Definitive Notes
(and all Notes issued in exchange therefor or substitution thereof) shall
bear a legend in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND UNDER APPLICABLE STATE
SECURITIES LAWS, AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER
OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i)
THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE."
When set forth on a Definitive Note, the legend will include the
following additional words:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS."
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(ii) Upon any sale or transfer of a Transfer Restricted Note (including
any Transfer Restricted Note represented by the Global Note) pursuant to
Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Note that is a
Definitive Note, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Note for a certificated Note that
does not bear the legend set forth above and rescind any restriction
on the transfer of such Transfer Restricted Note;
(B) in the case of any Transfer Restricted Note that is
represented by the Global Note, the Registrar shall permit the Holder
thereof to request the issuance of a certificated Note that does not
bear the legend set forth above and rescind any restrictions on the
transfer of such Transfer Restricted Note, if the sale or exchange
was made in reliance on Rule 144 and the Holder certifies to that
effect in writing to the Registrar (such certification to be in the
form set forth on the reverse of the Note).
(iii) After a transfer of any Initial Notes or Private Exchange
Notes during the period of the effectiveness of a Shelf Registration
Statement with respect to such Initial Notes or Private Exchange Notes, as
the case may be, all requirements pertaining to legends on such Initial Note
or such Private Exchange Note will cease to apply, the requirements
requiring any such Initial Note or such Private Exchange Note issued to
certain Holders be issued in global form will cease to apply, and a
certificated Initial Note or Private Exchange Note without legends will be
available to the transferee of the Holder of such Initial Notes or Private
Exchange Notes or upon receipt of directions to transfer such Holder's
interest in the Global Note, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Notes pursuant to which Holders of such Initial Notes
are offered Exchange Notes in exchange for their Initial Notes, all
requirements pertaining to such Initial Notes that Initial Notes issued to
certain Holders be issued in global form will cease to apply and
certificated Initial Notes with the restricted securities legend set forth
in Exhibit A hereto will be available to Holders of such Initial Notes that
do not exchange their Initial Notes and Exchange Notes in certificated form
will be available to Holders that exchange such Initial Notes in such
Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Initial Notes pursuant to which Holders of such Initial Notes are offered
Private Exchange Notes in exchange for their Initial Notes, all requirements
pertaining to such Initial Notes that Initial Notes issued to certain
holders be issued in global form will still apply, and Private Exchange
Notes in global form with the restricted securities legend set forth in
Exhibit A hereto will be available to Holders that exchange such Initial
Notes in such Private Exchange.
(e) Cancellation or Adjustment of Global Note. At such time as all
beneficial interests in the Global Note have either been exchanged for
certificated Notes, redeemed, repurchased or canceled, such Global Note shall be
returned to the Depository for cancellation or retained and canceled by the
Trustee. At any time prior to such cancellation, if any beneficial interest in
the Global Note is exchanged for certificated Notes, redeemed, repurchased or
23
canceled, the principal amount of Notes represented by such Global Note shall be
reduced and an adjustment shall be made by the Trustee or the Notes Custodian to
reflect such reduction on the books and records of the Notes Custodian for such
Global Note with respect to such Global Note.
(f) Obligations with Respect to Transfers and Exchanges of Notes.
(i) To permit registration of transfers and exchanges,
Sterling shall execute and the Trustee shall authenticate
certificated Notes, Definitive Notes and the Global Note at the
Registrar's or co-registrar's request.
(ii) Sterling may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges in connection
with any transfer or exchange pursuant to this Section 2.06.
(iii) Sterling shall not be required to make and the Registrar or
co-registrar need not register transfers or exchanges of certificated
or Definitive Notes selected for redemption (except, in the case of
any Definitive Note to be redeemed in part, the portion thereof not
to be redeemed), or any Notes for a period of 15 days before a
selection of Notes to be redeemed or 15 days before an interest
payment date.
(iv) Prior to the due presentation for registration of transfer
of any Note, Sterling, the Trustee, the Paying Agent, the Registrar
or any co-registrar may deem and treat the person in whose name a
Note is registered as the absolute owner of such Note for the purpose
of receiving payment of principal of and interest on such Note and
for all other purposes whatsoever, whether or not such Note is
overdue, and none of Sterling, the Trustee, the Paying Agent, the
Registrar or any co-registrar shall be affected by notice to the
contrary.
(v) All Notes issued upon any transfer or exchange pursuant to
the terms of this Indenture will evidence the same debt and will be
entitled to the same benefits under this Indenture as the Notes
surrendered upon such transfer or exchange.
(g) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner in the Global Note, a member of, or a
participant in the Depository or other Person with respect to the
accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Notes or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than the Depository)
of any notice (including any notice of redemption) or the payment of
any amount, under or with respect to such Notes. All notices and
communications to be given to the Holders and all payments to be made
to Holders under the Notes shall be given or made only to or upon the
order of the registered Holders (which shall be the Depository or its
nominee in the case of the Global Note). The rights of beneficial
owners in the Global Note shall be exercised only through the
Depository subject to the applicable rules and procedures of the
Depository.
24
The Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Note (including any
transfers between or among Depository participants, members or
beneficial owners in the Global Note) other than to make any required
delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly
required by, the terms of this Indenture, and to examine the same to
determine substantial compliance as to form with the express
requirements hereof.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or Sterling and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, Sterling shall issue and the Trustee shall authenticate a
replacement Note if Sterling's and the Trustee's reasonable requirements for the
replacements of Notes are met. If required by the Trustee or Sterling, an
indemnity bond shall be supplied by the Holder that is sufficient in the
judgment of the Trustee and Sterling to protect Sterling, the Trustee, any Agent
or any authenticating agent from any loss which any of them may suffer if a Note
is replaced.
Every replacement Note shall be an obligation of Sterling.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee, except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.08 as not outstanding. A
Note does not cease to be outstanding because Sterling, a Subsidiary of Sterling
or an Affiliate of Sterling holds such Note.
If a Note is replaced pursuant to Section 2.07, it shall cease to be
outstanding unless the Trustee receives proof satisfactory to it that such
replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be
outstanding upon surrender of such Note and replacement thereof pursuant to
Section 2.07.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Notes (or
portions thereof) to be redeemed or maturing, as the case may be, and the Paying
Agent is not prohibited from paying such money to the Holders of Notes on that
date pursuant to the terms of this Indenture, then on and after that date such
Notes (or portions thereof) shall cease to be outstanding and interest thereon
shall cease to accrue.
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Section 2.09. Temporary Notes and Certificated Notes.
(a) Until definitive Notes are ready for delivery, Sterling may
prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may have such
variations as Sterling and the Trustee consider appropriate for temporary Notes.
Without unreasonable delay, Sterling shall prepare and the Trustee shall
authenticate definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.
(b) The Global Note deposited with the Depository or with the Trustee
as custodian for the Depository pursuant to Section 2.01 shall be transferred to
the beneficial owners thereof in the form of certificated Notes in an aggregate
principal amount equal to the principal amount of such Global Note, in exchange
for such Global Note, only if such transfer complies with Section 2.06 and (i)
the Depository notifies Sterling that it is unwilling or unable to continue as
Depository for such Global Note or if at any time such Depository ceases to be a
"clearing agency" registered under the Exchange Act and a successor depository
is not appointed by Sterling within 90 days of such notice, (ii) an Event of
Default has occurred and is continuing or (iii) Sterling, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of certificated Notes under this Indenture.
(c) Any Global Note that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depository to the
Trustee to be so transferred, in whole or from time to time in part, without
charge, and the Trustee shall authenticate and deliver, upon such transfer of
each portion of such Global Note, an equal aggregate principal amount of Initial
Notes of authorized denominations. Any portion of the Global Note transferred
pursuant to this Section shall be executed, authenticated and delivered only in
denominations of $1,000 and any integral multiple thereof and registered in such
names as the Depository shall direct. Any Initial Note delivered in exchange
for an interest in the Global Note shall, except as otherwise provided by
Section 2.06(d), bear the restricted securities legend set forth in Exhibit A
hereto.
(d) Subject to the provisions of Section 2.09(c), the registered
Holder of the Global Note may grant proxies and otherwise authorize any person,
including agent members, participants and persons that may hold interests
through agent members, to take any action which a Holder is entitled to take
under this Indenture or the Notes.
(e) In the event of the occurrence of any of the events specified in
Section 2.09(b), Sterling will promptly make available to the Trustee a
reasonable supply of certificated Notes in definitive, fully registered form
without interest coupons.
Section 2.10. Cancellation.
Sterling at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation, and shall destroy
such canceled Notes (subject to the record retention requirement of the Exchange
Act), and, upon the request of Sterling, deliver a certificate of such
destruction to Sterling, unless Sterling directs canceled Notes to be returned
to them. Sterling may not issue new Notes to replace Notes it has redeemed,
paid or delivered to the Trustee for cancellation.
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Section 2.11. Defaulted Interest.
If Sterling defaults in a payment of interest on the Notes, Sterling
shall pay such defaulted interest in any lawful manner. Sterling may pay such
defaulted interest to the Persons who are Holders of the Notes on a subsequent
special record date, which date shall be at the earliest practicable date but in
all events at least five Business Days prior to the payment date, in each case
at the rate provided in the Notes. Sterling shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days prior to the
special record date, Sterling shall mail or cause to be mailed to each Holder of
a Note a notice that states such special record date, such related payment date
and the amount of any such defaulted interest to be paid to Holders of the
Notes.
Section 2.12. CUSIP Number.
Sterling in issuing the Notes may use a "CUSIP" number, and, if
Sterling shall do so, the Trustee shall use such CUSIP number in notices of
redemption or exchange as a convenience to Holders; provided, however, that any
such notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in such notice or on the Notes and that
reliance may be placed only on the other identification numbers printed on the
Notes. Sterling will notify the Trustee of any change in a CUSIP number.
ARTICLE III
REDEMPTION
Section 3.01. Notices to Trustee.
If Sterling elects to redeem Notes pursuant to paragraph 5 of the
Notes, Sterling shall notify the Trustee in writing of the redemption date, the
principal amount of Notes to be redeemed and the paragraph of the Notes pursuant
to which the redemption will occur.
Sterling shall give each notice to the Trustee provided for in this
Section 3.01 at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from Sterling to the effect that such
redemption will comply with the conditions herein. If fewer than all of the
Notes are to be redeemed, the record date relating to such redemption shall be
selected by Sterling and given to the Trustee, which record date shall not be
less than 15 days after the date of notice to the Trustee.
Section 3.02. Selection of Notes to be Redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed pro rata, unless otherwise required by law or
regulation (including regulation of The Depository Trust Company). The Trustee
shall make the selection from outstanding Notes not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Notes that have denominations larger than $1,000. Notes and portions of Notes
the Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for
27
redemption. The Trustee shall notify Sterling promptly of the Notes or portions
of Notes to be redeemed.
Section 3.03. Notice of Redemption.
Sterling shall at least 30 days but not more than 60 days before a
redemption date mail or cause to be mailed, by first class-mail, a notice of
redemption to each Holder of Notes of which are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the redemption date;
(ii) the redemption price,
(iii) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed, and that after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued;
(iv) the name and address of the Paying Agent;
(v) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(vi) that, unless Sterling defaults in making such redemption payment
or the Paying Agent is prohibited from making such payment pursuant to the terms
of this Indenture, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(vii) the paragraph of the Notes and/or the Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(viii) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At Sterling's request, at least five Business Days prior to the date
upon which such notice is to be mailed unless the Trustee consents to a shorter
period, the Trustee shall give the notice of redemption in Sterling's name and
at Sterling's expense. In such event, Sterling shall provide the Trustee with
the information required by this Section 3.03.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03,
Notes called for redemption shall become due and payable on the redemption date
and at the redemption price stated in such notice of redemption. Upon surrender
to the Paying Agent, such Notes shall be paid at the redemption price stated in
such notice of redemption, plus accrued interest to the redemption date.
Failure to give notice to a Holder of a Note or any defect in any notice shall
not affect the validity of any notice to any other Holder of a Note.
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Section 3.05. Deposit of Redemption Price.
On or prior to any redemption date, Sterling shall deposit with the
Paying Agent (or, if Sterling or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and
accrued interest on all Notes to be redeemed on that date. The Trustee or the
Paying Agent shall promptly return to Sterling any money deposited with the
Trustee or the Paying Agent by Sterling in excess of the amounts necessary to
pay the redemption price of, and accrued interest on, all Notes to be redeemed
on that date other than Notes or portions of Notes called for redemption which
have been delivered by Sterling to the Trustee for cancellation.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, Sterling shall
issue and the Trustee shall authenticate for the Holder of the Notes (at the
expense of Sterling) a new Note equal in principal amount to the unredeemed
portion of the Note surrendered.
ARTICLE IV
CHANGE OF CONTROL
(a) Upon the occurrence of a Change of Control (as defined below),
each Holder of a Note shall have the right to require Sterling to repurchase
such Holder's Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest (if any) to the date of
repurchase (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date).
(b) The occurrence of any of the following events shall constitute a
"Change of Control" under this Indenture:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act except that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the Voting Stock
of Holdings; provided that the Permitted Holders "beneficially own" (as
defined above), directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the Voting Stock of Holdings than such other
Person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors of Holdings (for the purposes of this clause (i), (A) such other
Person shall be deemed to beneficially own any Voting Stock of a corporation
(the "specified corporation") held by any other corporation (the "parent
corporation"), if such other Person "beneficially owns" (as defined above),
directly or indirectly, more than 35% of the voting power of the Voting
Stock of such parent corporation and the Permitted Holders "beneficially
own" (as defined above), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Voting Stock of such parent
corporation and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors of such parent corporation, and (B) the
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Permitted Holders shall be deemed to beneficially own any Voting Stock of a
specified corporation held by any parent corporation so long as the
Permitted Holders beneficially own (as so defined), directly or indirectly,
in the aggregate a majority of the voting power of the Voting Stock of the
parent corporation);
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of Holdings
or Sterling (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of Holdings
or Sterling, as the case may be, was approved by a majority of the directors
of Holdings or Sterling, as the case may be, then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of Holdings or Sterling, as
the case may be, then in office;
(iii) the merger or consolidation of Holdings or Sterling with or
into another Person or the merger of another Person (other than a Permitted
Holder) with or into Holdings or Sterling, or the sale or transfer in one or
a series of transactions of all or substantially all the assets of Holdings
or Sterling to another Person (other than a Permitted Holder), and, in the
case only of any such merger or consolidation, the securities of Holdings or
Sterling that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of the Voting Stock of
Holdings or Sterling are changed into or exchanged for cash, securities or
property, unless pursuant to such transaction such securities are changed
into or exchanged for, in addition to any other consideration, securities of
the surviving corporation that represent immediately after such transaction,
at least a majority of the aggregate voting power of the Voting Stock of the
surviving corporation; or
(iv) for so long as a holding company ownership structure is
maintained over Sterling, Holdings shall hold less than a majority of the
Capital Stock of Sterling (other than Preferred Stock of Sterling issued in
accordance with the terms of this Indenture) or less than a majority of the
Voting Stock of Sterling.
(c) Within 30 days following any Change of Control, Sterling shall
mail a notice to each Holder with a copy to the Trustee stating: (i) that a
Change of Control has occurred and that such Holder has the right to require
Sterling to purchase such Holder's Notes at a purchase price in cash equal to
101% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of holders of record on the
relevant record date to receive interest on the relevant interest payment date);
(ii) the material circumstances and facts regarding such Change of Control
(including information with respect to pro forma historical income, cash flow
and capitalization, each after giving effect to such Change of Control); (iii)
the repurchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed in the event of a Change of Control);
and (iv) the instructions determined by Sterling, consistent with the covenant
described hereunder, that a Holder must follow in order to have its Notes
purchased.
(d) Sterling shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Article IV. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Article IV, Sterling shall
comply
30
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Article IV by virtue thereof.
ARTICLE V
COVENANTS
Section 5.01. Payment of Principal, Premium and Interest.
Sterling shall duly and punctually pay the principal of (and premium,
if any) and interest on the Notes in accordance with the terms of this Indenture
and the Notes.
Section 5.02. Maintenance of Office or Agency.
Sterling shall maintain an office or agency (which may be an office of
the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where
Notes may be surrendered for registration of transfer or exchange and where
notices and demands to or upon Sterling in respect of the Notes and this
Indenture may be served. Sterling shall give prompt written notice to the
Trustee of the location, and any change in such location, of such office or
agency. If at any time Sterling shall fail to maintain any such required office
or agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
Sterling also from time to time may designate one or more additional
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and from time to time may rescind any such designation;
provided, however, that no such designation or rescission shall in any manner
relieve Sterling of its obligation to maintain an office or agency for such
purposes. Sterling shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 5.03. SEC Reports.
So long as any of the Notes remain outstanding, Sterling shall cause
copies of all quarterly and annual financial reports and of the information,
documents, and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which Sterling is required to
file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, including
without limitation, Forms 8-K, 10-Q and 10-K, to be filed with the Trustee and
mailed to the Holders at their addresses appearing in the Note Register
maintained by the Registrar, in each case, within 5 Business Days of filing with
the SEC. If Sterling is not subject to the requirements of such Section 13 or
15(d) of the Exchange Act, Sterling shall nevertheless continue to file with the
SEC, in conformity with Section 13 or Section 15(d) of the Exchange Act, and
provide the Trustee and Holders of Notes with such annual and quarterly reports
(without exhibits in the case of documents provided to the Trustee and Holders
of Notes) and such information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which are specified in Section 13 or Section 15(d) of the Exchange
Act, including without limitation, Forms 8-K, 10-Q and 10-X. Xxxxxxxx shall
also comply with the provisions of TIA Section 314(a).
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Section 5.04. Limitation On Debt.
(a) Sterling shall not Incur, and shall not permit any Restricted
Subsidiary to Incur, directly or indirectly, any Debt unless the Consolidated
EBITDA Coverage Ratio at the date of such Incurrence exceeds 1.75 to 1.0 if such
Debt is Incurred on or prior to August 15, 1998, or 2.0 to 1.0 if such Debt is
Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), Sterling and its
Restricted Subsidiaries may Incur the following Debt:
(i) Debt Incurred pursuant to the Revolving Credit Provisions of the
Credit Agreements or any other revolving credit facility which, when taken
together with all letters of credit and the principal amount of all other
Debt Incurred pursuant to this clause (i), does not exceed the greater of
$100 million and the sum of (x) 65% of the gross book value of the inventory
of Sterling and its Restricted Subsidiaries, and (y) 85% of the gross book
value of the accounts receivable of Sterling and its Restricted
Subsidiaries;
(ii) Debt Incurred pursuant to the Term Loan Provisions of the Credit
Agreements or any indenture or term loan provisions of any other credit or
loan agreement which, when taken together with the principal amount of all
other Debt Incurred pursuant to this clause (ii), does not exceed $350
million outstanding at any one time less the aggregate amount of all
principal repayments of any such Debt actually made after the Issue Date
(other than any such principal repayments made as a result of the
Refinancing of any such Debt);
(iii) Debt Incurred pursuant to the ESOP Loan Provisions of the
Credit Agreements in an aggregate principal amount not to exceed $6.5
million outstanding at any one time less the aggregate amount of all
principal repayments of any such Debt actually made after the Issue Date
(other than any such principal repayments made as a result of the
Refinancing of any such Debt);
(iv) Debt of Sterling owed to and held by a Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any Capital
Stock that results in such Wholly Owned Subsidiary ceasing to be a Wholly
Owned Subsidiary or any transfer of such Debt (other than to a Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the issuance of
such Debt by Sterling;
(v) Debt of a Restricted Subsidiary incurred and outstanding on or
prior to the date on which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by Sterling (other than Debt issued in connection
with, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted Subsidiary
or was acquired by Sterling);
(vi) the Existing Subordinated Notes and the Notes;
(vii) Debt outstanding on the Issue Date (other than Debt described
in clause (i), clause (ii), clause (iii), clause (iv), clause (v) or clause
(vi);
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(viii) Refinancing Debt in respect of Debt Incurred pursuant to
paragraph (a) or pursuant to clause (vi) or clause (vii) or this clause
(viii);
(ix) Hedging Obligations; provided, that with respect to Interest
Rate Agreements and Currency Agreements (if such Currency Agreements relate
to Debt), only to the extent directly related to Debt permitted to be
Incurred by Sterling pursuant to this Indenture; and
(x) Debt in an aggregate principal amount which, together with all
other Debt of Sterling and the Restricted Subsidiaries then outstanding
(other than Debt permitted by clauses (i) through (ix) of this paragraph (b)
or paragraph (a) above) does not exceed $25 million.
For purposes of determining compliance with this paragraph (b), (i) in the event
that an item of Debt meets the criteria of more than one of the types of Debt
described in paragraph (b), Sterling, in its sole discretion, will classify such
item of Debt and only be required to include the amount and type of such Debt in
one of the clauses of paragraph (b); and (ii) an item of Debt may be divided and
classified in more than one of the types of Debt in paragraph (b).
(c) Notwithstanding paragraph (a) and paragraph (b) above, Sterling
shall not Incur any Debt if the proceeds thereof are used, directly or
indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any
Subordinated Obligations unless such Debt shall be subordinated to the Notes to
at least the same extent as such Subordinated Obligations.
(d) Notwithstanding paragraph (a) and paragraph (b) above, (i)
Sterling shall not Incur any Debt if such Debt is subordinated or junior in
ranking to any Senior Debt, unless such Debt is Senior Subordinated Debt or is
expressly subordinated in right of payment to Senior Subordinated Debt; and (ii)
Sterling shall not issue any Secured Debt which is not Senior Debt unless
contemporaneously therewith effective provision is made to secure the Notes
equally and ratably with such Secured Debt for so long as such Secured Debt is
secured by a Lien.
Section 5.05. Limitation On Restricted Payments.
(a) Sterling shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to:
(i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving Sterling) or similar payment to the direct
or indirect holders of its Capital Stock (except dividends or distributions
payable solely in its Non-Convertible Capital Stock or in options, warrants
or other rights to purchase its Non-Convertible Capital Stock and except
dividends or distributions payable to Sterling or a Restricted Subsidiary),
and other than pro rata dividends or other distributions made by a
Restricted Subsidiary of Sterling that is not a Wholly Owned Subsidiary to
minority shareholders (or owners of an equivalent interest in the case of a
Restricted Subsidiary that is an entity other than a corporation);
(ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of Sterling, any direct or indirect parent of Sterling or a
Restricted Subsidiary (other than such Capital Stock owned by Sterling or
any Wholly Owned Subsidiary);
33
(iii) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligations (other than
purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date
of acquisition); or
(iv) make any Investment in any Person (other than a Permitted
Investment) (any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition, retirement or Investment being
herein referred to as a "Restricted Payment"), if at the time Sterling or
such Restricted Subsidiary makes such Restricted Payment: (1) a Default
shall have occurred and be continuing (or would result therefrom); (2)
Sterling, after giving pro forma effect to such Restricted Payment, would
not be permitted to Incur an additional $1.00 of Debt pursuant to Section
5.04(a); or (3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of: (A)
50% of the Consolidated Net Income accrued during the period (treated as one
accounting period) from the beginning of the fiscal quarter during which the
Existing Subordinated Notes were originally issued to the end of the most
recent fiscal quarter ending at least 45 days prior to the date of such
Restricted Payment (or, in case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit); provided, however, that if the Notes
achieve an Investment Grade Rating during any fiscal quarter, the
percentage for such fiscal quarter (and for any other fiscal quarter where,
on the first day of such fiscal quarter, the Notes shall have an Investment
Grade Rating) will be 100% of Consolidated Net Income during such fiscal
quarter; provided, further, however, that if such Restricted Payment is to
be made in reliance upon an additional amount permitted pursuant to the
immediately preceding proviso, the Notes must have an Investment Grade
Rating at the time such Restricted Payment is declared or, if not declared,
made; (B) the aggregate Net Cash Proceeds received by Sterling from the
issue or sale of its Capital Stock (other than Redeemable Stock or
Exchangeable Stock) subsequent to the Issue Date (other than an issuance or
sale to a Subsidiary or an employee stock ownership plan or similar trust);
(C) the aggregate Net Cash Proceeds received by Sterling from the issue or
sale of its Capital Stock (other than Redeemable Stock or Exchangeable
Stock) to an employee stock ownership plan subsequent to the Issue Date;
provided, however, that if such employee stock ownership plan issues any
Debt, such aggregate amount shall be limited to an amount equal to any
increase in the Consolidated Net Worth of Sterling resulting from principal
repayments made by such employee stock ownership plan with respect to Debt
issued by it to finance the purchase of such Capital Stock; (D) the amount
by which Debt of Sterling is reduced on Sterling's balance sheet upon the
conversion or exchange (other than by a Subsidiary) subsequent to the Issue
Date, of any Debt of Sterling convertible or exchangeable for Capital Stock
(other than Redeemable Stock or Exchangeable Stock) of Sterling (less the
amount of any cash, or other property, distributed by Sterling upon such
conversion or exchange); (E) an amount equal to the sum of (x) the net
reduction in Investments in Unrestricted Subsidiaries resulting from
dividends, repayments of loans or advances or other transfers of assets, in
each case to Sterling or any Restricted Subsidiary from Unrestricted
Subsidiaries, and (y) the portion (proportionate to Sterling's equity
interest in such Subsidiary) of the fair market value of the net assets of
an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary; provided, however, that the foregoing
sum shall not exceed, in the case of any Unrestricted Subsidiary, the amount
of Investments previously made (and treated as a Restricted Payment) by
Sterling or any Restricted Subsidiary in
34
such Unrestricted Subsidiary; (F) to the extent not covered in sub-clauses
(A) through (E) of this clause (iv)(3), the aggregate net cash proceeds
received after the date of the Existing Subordinated Notes Indenture by
Sterling as capital contributions (other than from any of its Restricted
Subsidiaries); and (G) $5 million; provided, however, that, to the extent
used, such $5 million shall reduce the amount available for Investments
pursuant to clause (xii) of the definition of "Permitted Investments"; and
provided, further, however, that the amounts available under this sub-clause
(G) and under clause (xi) of the definition of "Permitted Investments" shall
in no event exceed $10 million in the aggregate.
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or Subordinated
Obligations of Sterling made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of Sterling (other than
Redeemable Stock or Exchangeable Stock of Sterling and other than Capital
Stock of Sterling issued or sold to a Subsidiary or an employee stock
ownership plan); provided, however, that (1) such purchase or redemption
shall be excluded in the calculation of the amount of Restricted Payments,
and (2) the Net Cash Proceeds from such sale shall be excluded from clause
(iv)(3)(B) and clause (iv)(3)(C) of paragraph (a) above;
(ii) any purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Obligations of Sterling made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Debt of Sterling which is permitted to be Incurred pursuant to Section
5.04; provided, however, that such purchase, redemption, defeasance or other
acquisition or retirement for value shall be excluded in the calculation of
the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from
Net Available Cash to the extent permitted under Section 5.07; provided,
however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this provision; provided, however, that at the time of declaration of
such dividend, no other Default shall have occurred and be continuing (or
would result therefrom); and provided, further, however, that such dividend
shall be included in the calculation of the amount of Restricted Payments;
(v) the declaration or payment of any dividend on shares of
Sterling's common stock so long as (1) Sterling would be permitted
immediately after giving pro forma effect to such declaration or payment to
Incur an additional $1.00 of Debt pursuant to Section 5.04(a), (2) such
declaration or payment is made immediately prior to a date on which cash
interest is required to be paid on the Discount Notes, and (3) the full
amount of such payment is applied by Holdings on such date as payment of
such cash interest on the Discount Notes; provided that such dividend shall
be included in the calculation of the amount of Restricted Payments;
(vi) payments to the ESOP on behalf of the employees of Holdings or
its Subsidiaries; provided, however, that all such payments by Sterling and
its Subsidiaries
35
may not exceed, during any fiscal year, 10% of the aggregate compensation
expense during such fiscal year attributable to employees of Holdings and
its Subsidiaries who are eligible to participate in the ESOP;
(vii) a payment to Holdings to pay its operating and administrative
expenses, including, without limitation, directors fees, legal and audit
expenses, SEC compliance expenses, and corporate franchise and other taxes,
in an amount not to exceed the greater of $2.0 million per fiscal year and
0.2% of revenues of Sterling for the preceding fiscal year; provided,
however, that such amount shall be excluded in the calculation of the amount
of Restricted Payments;
(viii) a payment by Sterling to Holdings or to the ESOP or directly
by Sterling to be used to repurchase common stock of Holdings distributed to
participants and beneficiaries of the ESOP as required by and in accordance
with the ESOP as in effect on the Issue Date and Section 409(h)(1)(B) of the
Code and the regulations thereunder; provided, however, that such amount
shall be excluded in the calculation of the amount of Restricted Payments;
(ix) a payment by Sterling to Holdings or the ESOP, or directly by
Sterling, to be used to repurchase, redeem, acquire or retire for value any
Capital Stock of Holdings pursuant to any stockholder's agreement,
management equity subscription plan or agreement, stock option plan or
agreement or employee benefit plan in effect as of the Issue Date or such
employee plan or agreement or employee benefit plan as may be adopted by
Sterling or Holdings from time to time; provided, however, that the
aggregate price paid for all Capital Stock repurchased, redeemed, acquired
or retired by Sterling or on behalf of Holdings or Sterling shall not exceed
$5 million in any fiscal year; provided, further, however, that such amount,
to the extent related to the ESOP, shall be excluded in the calculation of
Restricted Payments;
(x) a payment to Holdings pursuant to the tax sharing agreement as
the same may be amended from time to time in a manner not materially adverse
to Sterling; provided, however, that such amount shall be excluded in the
calculation of the amount of Restricted Payments;
(xi) any payment to Holdings to permit Holdings to make payments for
advisory services owed pursuant to the engagement letter dated as of April
23, 1996, by and between STX Acquisition Corp. and The Sterling Group, Inc.;
provided, however, that such amount shall be excluded in the calculation of
the amount of Restricted Payments; and
(xii) a payment to Holdings to permit Holdings to comply with the
terms of the Discount Notes Indenture relating to the application of
proceeds from an Asset Disposition (relating to the sale or disposition of
property by Sterling) as defined in such Discount Notes Indenture; provided,
however, that such amount shall be excluded in the calculation of the amount
of Restricted Payments.
36
Section 5.06. Limitation On Restrictions On Distributions from Restricted
Subsidiaries.
Sterling shall not, and shall not permit any Restricted Subsidiary to,
create or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to:
(i) pay dividends or make any other distributions on its Capital
Stock or pay any Debt or other obligation owed to Sterling,
(ii) make any loans or advances to Sterling or
(iii) transfer any of its property or assets to Sterling, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect on the Issue Date or pursuant to the issuance of the Notes;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Debt Incurred by
such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by Sterling (other than Debt
Incurred as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by
Sterling) and outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Debt Incurred pursuant to an agreement
referred to in clause (iii)(1) or clause (iii)(2) or contained in any
amendment to an agreement referred to in clause (iii)(1) or clause
(iii)(2); provided, however, that the encumbrances and restrictions
contained in any of such refinancing agreement or amendment are no
less favorable to the Holders than encumbrances and restrictions with
respect to such Restricted Subsidiary contained in such agreements;
(4) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests to
the extent such provisions restrict the transfer of the lease or
other customary non-assignment provisions in contracts (other than
contracts that constitute Debt) entered into the ordinary course of
business to the extent such provisions restrict the transfer of the
assets subject to such contracts;
(5) in the case of this clause (iii), restrictions contained in
security agreements or mortgages securing Debt of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of
the property subject to such security agreements or mortgages;
(6) encumbrances or restrictions imposed by operation of
applicable law; and
(7) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or
37
substantially all the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition.
Section 5.07. Limitation On Sales of Assets and Subsidiary Stock.
(a) Sterling shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate any Asset Disposition unless
(i) Sterling or such Restricted Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair market value,
as determined in good faith by the Board of Directors (including as to the
value of all non-cash consideration), of the shares and assets subject to
such Asset Disposition and at least 85% of the consideration thereof
received by Sterling or such Restricted Subsidiary is in the form of cash or
cash equivalents, and
(ii) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by Sterling (or such Restricted Subsidiary, as
the case may be):
(1) FIRST, to the extent Sterling elects (or is required by the terms
of any Senior Debt), to prepay, repay or purchase Senior Debt or Debt (other
than any Redeemable Stock) of a Wholly Owned Subsidiary (in each case other
than Debt owed to Sterling or an Affiliate of Sterling or Holdings) within
180 days from the later of the date of such Asset Disposition or the receipt
of such Net Available Cash;
(2) SECOND, to the extent of the balance of such Net Available Cash
after application in accordance with clause (ii)(1) above, at Sterling's
election to the investment by Sterling, any Wholly Owned Subsidiary or the
Restricted Subsidiary making such Asset Disposition in assets to replace the
assets that were the subject of such Asset Disposition or an asset that (as
determined by the Board of Directors) will be used in the business of
Sterling, the Wholly Owned Subsidiaries or the Restricted Subsidiary making
such Asset Disposition existing on the date of original issuance of the
Notes or in businesses reasonably related thereto, in each case within the
later of one year from the date of such Asset Disposition or the receipt of
such Net Available Cash;
(3) THIRD, to the extent of the balance of such Net Available Cash
after application in accordance with clause (ii)(1) and clause (ii)(2), to
make an offer to purchase Notes (and any other Senior Subordinated Debt of
Sterling designated by Sterling) pursuant to and subject to the conditions
contained in this Indenture; and
(4) FOURTH, to the extent of the balance of such Net Available Cash
after application in accordance with clause (ii)(1), clause (ii)(2) and
clause (ii)(3), to (A) the acquisition by Sterling, any Wholly Owned
Subsidiary or the Restricted Subsidiary making such Asset Disposition of
Tangible Property, or (B) the prepayment, repayment or purchase of Debt
(other than any Redeemable Stock) of Sterling or Debt of any Restricted
Subsidiary (in either case other than Debt owed to Sterling or an Affiliate
of Sterling), in each case within one year from the later of the receipt of
such Net Available Cash and the date the offer described in paragraph (b)
below is consummated;
provided, however, that in connection with any prepayment, repayment or purchase
of Debt pursuant to clause (ii)(1), clause (ii)(3) or clause (ii)(4) of this
paragraph (a), Sterling shall cause
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the related loan commitment (if any) to be permanently reduced in an amount
equal to the principal amount so prepaid, repaid or purchased. Notwithstanding
the foregoing provisions of this paragraph, Sterling and its Restricted
Subsidiaries shall not be required to apply any Net Available Cash in accordance
with this paragraph except to the extent that the aggregate Net Available Cash
from all Asset Dispositions which are not applied in accordance with this
paragraph exceeds $20 million. Pending application of Net Available Cash
pursuant to this paragraph, such Net Available Cash shall be invested in
Temporary Cash Investments.
For the purposes of this Section 5.07, the following are deemed to be
cash or cash equivalents: (x) the express assumption of Debt of Sterling or any
Restricted Subsidiary and the release of Sterling or such Restricted Subsidiary
from all liability on such Debt in connection with such Asset Disposition, and
(y) securities received by Sterling or any Restricted Subsidiary from the
transferee that are converted by Sterling or such Restricted Subsidiary into
cash within 90 days of the receipt of such securities. The 85% limitation
referred to in the previous paragraph shall not apply to any Asset Disposition
in which the cash portion of the consideration received therefor, determined in
accordance with the previous sentence, is equal to or greater than what the
after-tax proceeds would have been had such Asset Disposition complied with such
85% limitation.
(b) In the event of an Asset Disposition that requires the purchase of
the Notes (and other Senior Subordinated Debt) pursuant to clause (a)(ii)(3)
above, Sterling will be required to purchase Notes tendered pursuant to an offer
by Sterling for the Notes (and other Senior Subordinated Debt) at a purchase
price of 100% of their principal amount (without premium) plus accrued but
unpaid interest (or, in respect of such other Senior Subordinated Debt, such
lesser price, if any, as may be provided for by the terms of such Senior
Subordinated Debt) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in this Indenture. If the aggregate
purchase price of Notes (and any other Senior Subordinated Debt) tendered
pursuant to such offer is less than the Net Available Cash allotted to the
purchase thereof, Sterling will be required to apply the remaining Net Available
Cash in accordance with clause (a)(ii)(4) above. Sterling shall not be required
to make such an offer to purchase Notes (and other Senior Subordinated Debt)
pursuant to this Section 5.07 if the Net Available Cash available therefor is
less than $10 million (which lesser amount shall be carried forward for purposes
of determining whether such an offer is required with respect to any subsequent
Asset Disposition).
To the extent that any or all of the Net Available Cash of any Foreign
Asset Sale is prohibited or delayed by applicable local law from being
repatriated to the United States, the portion of such Net Available Cash so
affected shall not be required to be applied at the time provided above, but may
be retained by the applicable Restricted Subsidiary (and invested in accordance
with the last sentence of the first paragraph of paragraph (a) above) so long,
but only so long, as the applicable local law will not permit repatriation to
the United States. Sterling shall agree to cause the applicable Restricted
Subsidiary to promptly take all actions required by the applicable local law to
permit such repatriation. Once such repatriation of any of such affected Net
Available Cash is permitted under the applicable local law, such repatriation
shall be immediately effected and such repatriated Net Available Cash will be
applied in the manner described in this Section 5.07.
(c) Sterling shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 5.07. To the extent that the provisions of any
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securities laws or regulations conflict with provisions of this Section 5.07,
Sterling shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this clause by virtue
thereof.
Section 5.08. Limitation On Transactions with Affiliates.
(a) Sterling shall not, and shall not permit any Restricted Subsidiary
to, conduct any business or enter into any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of Holdings or Sterling (an
"Affiliate Transaction") unless:
(i) the terms of such Affiliate Transaction are (1) set forth in
writing, and (2) as favorable to Sterling or such Restricted Subsidiary as
terms that would be obtainable at the time for a comparable transaction or
series of related transactions in arm's length dealings with an unrelated
third Person,
(ii) if such Affiliate Transaction involves an amount in excess of
$2.5 million, the disinterested members of the Board of Directors have, by
resolution, determined in good faith that such Affiliate Transaction meets
the criteria set forth in clause (i)(2) above, and
(iii) if such Affiliate Transaction involves an amount in excess of
$7.5 million, such Affiliate Transaction is determined by an Independent
Financial Advisor to be fair from a financial standpoint to Sterling or its
Restricted Subsidiary, as the case may be.
The foregoing requirements shall not be applicable to (x) contracts
with Xxxx Capital Services, Inc. or its affiliates in the ordinary course of
business on terms as favorable to Sterling or the relevant Restricted Subsidiary
as would be obtainable at the time for a comparable transaction in arm's length
dealings with an unrelated third Person, or (y) any purchase or supply contracts
in the ordinary course of business on terms as favorable to Sterling or the
relevant Restricted Subsidiary as would be obtainable at the time for a
comparable transaction in arm's length dealings with an unrelated third Person;
provided, however, that the Board of Directors shall, not later than the 60th
day after the end of each six-month period following the Issue Date, have
reviewed such contracts and determined that such contracts meet the criteria set
forth in this sub-clause (y).
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(i) any Restricted Payment or Permitted Investment permitted to be
paid pursuant to the covenant described in Section 5.05;
(ii) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors or the board of directors of the relevant Restricted
Subsidiary;
(iii) loans or advances to employees in the ordinary course of
business, but in any event not to exceed $2 million in the aggregate
outstanding at any one time;
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(iv) the payment of reasonable and customary fees to directors of
Sterling and its Restricted Subsidiaries who are not employees of Sterling
or its Restricted Subsidiaries;
(v) any transaction between Sterling and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries;
(vi) indemnification payments to directors and officers of Sterling
in accordance with applicable state laws.
Section 5.09. Limitation On the Sale or Issuance of Capital Stock of Restricted
Subsidiaries.
Sterling shall not sell or otherwise dispose of any shares of Capital
Stock of a Restricted Subsidiary, and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
shares of its Capital Stock except:
(i) to Sterling or a Wholly Owned Subsidiary;
(ii) if, immediately after giving effect to such issuance, sale or
other disposition, such Restricted Subsidiary remains a Restricted Subsidiary;
or
(iii) if all shares of Capital Stock of such Restricted Subsidiary are
sold or otherwise disposed of; provided, however, that in connection with any
sale pursuant to this clause (iii), Sterling may retain no more than 10% of the
outstanding Capital Stock of the Restricted Subsidiary being sold as a portion
of the purchase price in connection with such sale.
In connection with any such sale or disposition of Capital Stock,
Sterling or any such Restricted Subsidiary shall comply with Section 5.07.
Section 5.10. Compliance Certificates.
Sterling shall deliver to the Trustee, within 120 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of Sterling and its Subsidiaries during the preceding fiscal year has
been made under the supervision of the signing Officers with a view to
determining whether Sterling has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such Officers' Certificate, that to the best of his or her knowledge
Sterling has kept, observed, performed and fulfilled each covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action each is taking or
proposes to take with respect thereto). Sterling shall also comply with TIA
Section 314(a)(4).
Section 5.11. Further Instruments and Acts.
Upon request of the Trustee, Sterling will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
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ARTICLE VI
SUCCESSORS
Section 6.01. When Sterling May Merge or Transfer Assets.
Sterling shall not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not Sterling) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form acceptable
to the Trustee, all the obligations of Sterling under the Notes and this
Indenture;
(ii) immediately after giving effect to such transaction (and treating
any Debt which becomes an obligation of the Successor Company or any Subsidiary
as a result of such transaction as having been Incurred by such Successor
Company or such Subsidiary at the time of such transaction), no Default shall
have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of Debt pursuant to
Section 5.04(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount which is not
less than the Consolidated Net Worth of Sterling prior to such transaction minus
any costs incurred in connection with such transaction; and
(v) Sterling shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with the
terms of this Indenture.
Section 6.02. Successor Company Substituted.
The Successor Company shall be the successor to Sterling and shall
succeed to, and be substituted for, and may exercise every right and power of,
Sterling under this Indenture, but the predecessor Person in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Notes.
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ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.01. Events of Default.
Each of the following shall constitute an "Event of Default":
(i) Sterling defaults in any payment of interest on any Note when the
same becomes due and payable, whether or not such payment shall be prohibited by
Article XI, and such default continues for a period of 30 days;
(ii) Sterling defaults in the payment of the principal of any Note
when the same becomes due and payable at its Stated Maturity, upon redemption,
upon declaration, upon required repurchase or otherwise, whether or not such
payment shall be prohibited by Article XI;
(iii) Sterling fails to comply with Article VI;
(iv) Sterling fails to comply for 30 days after the notice specified
in this Section 7.01 with any of its obligations contained in Article IV (other
than a failure to purchase Notes), Section 5.03, Section 5.04, Section 5.05,
Section 5.06, Section 5.07 (other than a failure to purchase Notes), Section
5.08, Section 5.09 or Section 5.10;
(v) Sterling fails to comply with any of its agreements in the Notes
or this Indenture (other than those referred to in clause (i), clause (ii),
clause (iii) or clause (iv) of this Section 7.01) and such failure continues for
60 days after the notice specified in this Section 7.01;
(vi) a default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any Debt for
money borrowed by Sterling or any of its Subsidiaries (or the payment of which
is Guaranteed by Sterling or any of its Subsidiaries) whether such Debt or
Guarantee now exists, or is created after the date of this Indenture, which
default (1) is caused by failure to pay principal of or premium, if any, or
interest on such Debt prior to the expiration of the grace period provided in
such Debt on the date of such default ("Payment Default"), or (2) results in the
acceleration of such Debt prior to its express maturity and, in each case, the
principal amount of any such Debt, together with the principal amount of any
other such Debt under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $10 million or more;
(vii) Sterling or any Significant Subsidiary of Sterling pursuant to
or within the meaning of Bankruptcy Law: (1) commences a voluntary case, (2)
consents to the entry of an order for relief against it in an involuntary case,
(3) consents to the appointment of a Custodian of it or for all or substantially
all of its property; or (4) makes a general assignment for the benefit of its
creditors;
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (1) is for relief against Sterling or any
Significant Subsidiary of Sterling in an involuntary case, (2) appoints a
Custodian of Sterling or any Significant Subsidiary of Sterling or for all or
substantially all of the property of Sterling or any Significant Subsidiary of
Sterling, or (3) orders the liquidation of Sterling or any Significant
Subsidiary of Sterling, and the order or decree remains unstayed and in effect
for 60 consecutive days; and
43
(ix) any final non-appealable judgment or decree not covered by
insurance or as to which the insurance carrier has denied responsibility for the
payment of money in excess of $10 million is rendered against Sterling or a
Significant Subsidiary and is not discharged and there is a period of 60 days
following such judgment during which such judgment or decree is not discharged,
waived or the execution thereof stayed.
A Default under clause (iv) or clause (v) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
Notes notify Sterling of the Default and Sterling does not cure such Default
within the time specified after receipt of such notice.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
Sterling shall deliver to the Trustee, within 30 days after the
occurrence thereof, an Officers' Certificate of any Event of Default pursuant to
clause (iii), clause (iv), clause (v), clause (vi), clause (vii), clause (viii)
or clause (ix) and any event which with the giving of notice or the lapse of
time would become an Event of Default, its status and what action Sterling is
taking or proposes to take in respect thereof.
Section 7.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clause (vii) or clause (viii) of Section 7.01) occurs and is continuing, the
Trustee by notice to Sterling, or the Holders of at least 25% in aggregate
principal amount of the then outstanding Notes by written notice to Sterling and
the Trustee, may declare the principal of and accrued but unpaid interest on all
the Notes to be due and payable (collectively, the "Default Amount"). Upon such
a declaration, the Default Amount shall be due and payable immediately.
Notwithstanding the foregoing, in case of an Event of Default specified in
clause (vii) or clause (viii) of Section 7.01, all outstanding Notes shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holders of the Notes. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
Section 7.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes and this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any such Notes in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon any Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in such Event of
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Default. No remedy shall be exclusive of any other remedy. All remedies shall
be cumulative to the extent permitted by law.
Section 7.04. Waiver of Past Defaults.
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive an existing Default and its consequences, except (i) a Default in
the payment of the principal of, premium, if any, or interest on, the Notes; or
(ii) a Default in respect of a provision that under Section 10.02 cannot be
amended without the consent of each Holder affected thereby. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 7.05. Control by Majority.
Holders of a majority in principal amount of the Notes then
outstanding may direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the terms of this Indenture or if, subject
to Section 8.01, the Trustee reasonably determines that such action, if taken,
would be unduly prejudicial to the rights of other Holders of Notes or may
involve the Trustee in personal liability.
Section 7.06. Limitation On Suits.
Except to enforce the right to receive payment of principal, premium,
if any, or interest when due, no Holder of a Note may pursue any remedy with
respect to this Indenture or the Notes, unless:
(i) such Holder has previously given the Trustee notice that an
Event of Default is continuing;
(ii) Holders of at least 25% in principal amount of the Notes then
outstanding have requested the Trustee to pursue the remedy;
(iii) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense;
(iv) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity; and
(v) Holders of a majority in principal amount of the Notes then
outstanding have not given the Trustee a direction inconsistent with such
request within such 60-day period.
A Holder of a Note shall not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
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Section 7.07. Unconditional Right of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, and
interest on such Note, on or after the respective due dates expressed in such
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of any
such Holder of a Note.
Section 7.08. Collection Suit by Trustee.
If an Event of Default specified in Section 7.01(i) or Section
7.01(ii) occurs and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against Sterling for the entire amount
then due and owing, plus the amounts provided for in Section 8.07.
Section 7.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Holders of the Notes allowed in any judicial proceedings
relative to Sterling, Sterling's creditors or Sterling's property, and, unless
prohibited by law or applicable regulations, may vote on behalf of the Holders
of Notes in any election of a trustee in bankruptcy or other Person performing
similar functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder of a Note to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders of Notes, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due to Trustee under Section 8.07.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder of a Note any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder of a Note thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder of a Note in any such proceeding.
Section 7.10. Priorities.
If the Trustee collects any money pursuant to this Article VII, it
shall pay out the money in the following order:
(i) FIRST: to the Trustee for amounts due to it under Section 8.07;
(ii) SECOND: to holders of Senior Debt to the extent required by
Article XI;
(iii) THIRD: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable
on the Notes for principal, premium, if any, and interest, respectively; and
(iv) FOURTH: to Sterling.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 7.10.
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Section 7.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 7.11 shall not apply to a suit by the Trustee, a suit by a Holder
of a Note pursuant to Section 7.07, or a suit by Holders of more than 10% in
principal amount of the Notes then outstanding.
Section 7.12. Waiver of Stay, Extension and Usury Laws.
Sterling (to the extent that it may lawfully do so) shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and Sterling (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and shall not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VIII
TRUSTEE
Section 8.01. Duties of Trustee.
(a) If an Event of Default of which a Responsible Officer of the
Trustee is aware has occurred and is continuing, the Trustee shall exercise such
of the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default of which a
Responsible Officer of the Trustee is aware:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(c) The Trustee shall not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct or bad faith, except that:
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(i) this paragraph does not limit the effect of paragraph (b) of
this Section 8.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with a
direction received by it pursuant to Section 7.05.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraph
(a), paragraph (b) and paragraph (c) of this Section 8.01.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if the Trustee shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with Sterling.
(g) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 8.01 and to the provisions of the TIA.
Section 8.02. Rights of Trustee.
(a) The Trustee may rely upon any document reasonably believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in any such document.
(b) Before the Trustee acts or refrains from taking any act, the
Trustee may require an Officers' Certificate or an Opinion of Counsel or both.
The Trustee shall not be liable for any action taken or omitted to be taken by
it in good faith in reliance on such Officers' Certificate or such Opinion of
Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent; provided, however, that any such
agent is appointed by the Trustee with due care.
(d) The Trustee shall not be liable for any action taken or omitted to
be taken by it in good faith which it reasonably believes to be authorized or
within its rights or powers conferred upon it by this Indenture; provided,
however, that the Trustee's conduct does not constitute negligence, willful
misconduct or bad faith.
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(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters shall be full and complete authorization
and protection from liability in respect to any action taken, omitted or
suffered by the Trustee hereunder in good faith and in accordance with the
advice or opinion of such counsel.
Section 8.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with Sterling or any Affiliate
of Sterling with the same rights as it would have if the Trustee were not the
Trustee hereunder. However, in the event the Trustee acquires any conflicting
interest in accordance with the TIA it must eliminate such conflicting interest
within 90 days, apply to the SEC for permission to continue as Trustee or
resign. Any Paying Agent, Registrar or co-registrar may do the same with like
rights. The Trustee shall at all times remain subject to Section 8.10 and
Section 8.11.
Section 8.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for Sterling's use of the proceeds of the Notes and it shall not be
responsible for any statement contained herein or any statement contained in the
Notes or any other document in connection with the sale of the Notes or pursuant
to this Indenture other than the Trustee's certificates of authentication.
Section 8.05. Notice of Default.
If a Default occurs and is continuing and if such Default is known to
a Responsible Officer of the Trustee, the Trustee shall mail to each Holder of a
Note a notice of such Default within 90 days (or such shorter period as may be
required by applicable law) after such Default occurs. Except in the case of a
Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
Section 8.06. Reports by Trustee to Holders of Notes.
Within 60 days after each May 15, beginning with May 15 following the
date of this Indenture, the Trustee shall mail to Holders of the Notes a brief
report dated as of such reporting date that complies with TIA Section 313(a) to
the extent such a report is required by TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to Sterling and filed with the SEC and each stock exchange
on which the Notes may be listed. Sterling shall promptly notify the Trustee
upon the Notes being listed on any stock exchange and any delisting thereof.
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Section 8.07. Compensation and Indemnity.
Sterling shall pay to the Trustee from time to time reasonable
compensation for the Trustee's acceptance of this Indenture and its services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. Sterling shall reimburse the
Trustee for all reasonable out-of-pocket expenses incurred or made by it in the
course of its services hereunder. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts.
Sterling shall indemnify the Trustee against any and all loss,
liability or reasonable expense incurred by it in connection with the
administration of this trust and the performance of its duties under this
Indenture, except any such loss, liability or expense attributable to the
negligence, willful misconduct or bad faith of the Trustee.
The Trustee shall notify Sterling promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify Sterling shall not
relieve Sterling of its obligations hereunder except to the extent that Sterling
may be materially prejudiced by such failure. Sterling shall defend the claim
and the Trustee shall cooperate in the defense of such claim. The Trustee may
have separate counsel and Sterling shall pay the reasonable fees and expenses of
such counsel. Sterling need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
negligence, willful misconduct or bad faith. Sterling need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
Sterling's payment obligations under this Section 8.07 shall survive
the satisfaction and discharge of this Indenture.
To secure Sterling's payment obligations under this Section 8.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except such money or property that is held by it in
trust for the benefit of Holders of Notes to pay principal and interest on
particular Notes.
If the Trustee shall incur expenses after the occurrence of a Default
specified in Section 7.01(vii) or Section 7.01(viii), such expenses (including
the reasonable fees and expenses of its agents and counsel) are intended to
constitute expenses of administration under Bankruptcy Law.
Section 8.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 8.08.
The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying Sterling in writing. The Holders of Notes of not
less than a majority in principal amount of the Notes then outstanding may
remove the Trustee by so notifying the Trustee and Sterling in writing. Sterling
shall remove the Trustee if:
(i) the Trustee fails to comply with Section 8.10;
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(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a Custodian or other public officer takes charge of the
Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), Sterling shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by Sterling.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, Sterling or the
Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee after written request by any Holder of a Note who has
been a Holder of a Note for at least six months fails to comply with Section
8.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
Any successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Sterling. Thereupon, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all of the rights, powers and duties of the Trustee under
this Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Note. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the Lien provided for
in Section 8.07. Notwithstanding replacement of the Trustee pursuant to this
Section 8.08, Sterling's obligations under Section 8.07 shall continue for the
benefit of the retiring Trustee.
Section 8.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee entity without any further act shall constitute the successor
Trustee; provided, however, that such entity shall be otherwise qualified and
eligible under this Article VIII.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor Trustee, and deliver such Notes so authenticated, and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
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Section 8.10. Eligibility; Disqualification.
This Indenture at all times shall have a Trustee which satisfies the
requirements of TIA 310(a). Trustee shall be a corporation organized and doing
business under the laws of the United States of America or of any State thereof
authorized under such laws to exercise corporate trustee power, shall be subject
to supervision or examination by federal or state authority and shall have a
combined capital and surplus of at least $50 million as set forth in its most
recently published annual report of condition. The Trustee shall be subject to
TIA Section 310(b).
Section 8.11. Preferential Collection of Claims Against Sterling.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee which has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE IX
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Liability on Notes; Defeasance.
(a) When (i) Sterling delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation; or (i)
all outstanding Notes have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III of this
Indenture and Sterling irrevocably deposits with the Trustee funds sufficient to
pay at maturity or upon redemption all outstanding Notes including interest
thereon to maturity or such redemption date (other than Notes replaced pursuant
to Section 2.07), and if in either case Sterling pays all other sums payable
hereunder by Sterling, then this Indenture shall, subject to Section 9.01(c),
cease to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of this Indenture on demand of Sterling accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of Sterling.
(b) Subject to Section 9.01(c) and Section 9.02, Sterling at any time
may terminate (i) all of Sterling obligations under the Notes and this Indenture
("legal defeasance"); or (ii) its obligations under Article IV, Section 5.02,
Section 5.03, Section 5.04, Section 5.05, Section 5.06, Section 5.07, Section
5.08, Section 5.09, Section 5.10, Section 5.11, Section 6.01(iii), Section
6.01(iv), Section 7.01(iv), Section 7.01(vi), Section 7.01(vii) (with respect
only to Significant Subsidiaries), Section 7.01(viii) (with respect only to
Significant Subsidiaries) and Section 7.01(ix) ("covenant defeasance").
Sterling may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If Sterling exercises its legal defeasance option, payment of the
Notes may not be accelerated because of an Event of Default. If Sterling
exercises its covenant defeasance option, payment of the Notes may not be
accelerated because of an Event of Default specified in Section 7.01 (iv),
Section 7.01(vi), Section 7.01(vii) (with respect only to Significant
Subsidiaries), Section 7.01(viii) (with respect only to Significant
Subsidiaries), Section 7.01(ix) or the failure of Sterling to comply with
Article IV.
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Upon satisfaction of the conditions set forth herein and at the
request of Sterling, the Trustee shall acknowledge in writing the discharge of
those obligations of Sterling terminated thereby.
(c) Notwithstanding clause (a) and clause (b) above, Sterling's
obligations contained in Section 2.03, Section 2.04, Section 2.05, Section 2.06,
Section 2.07, Section 8.07, Section 8.08 and this Article IX shall survive until
the Notes have been paid in full. Thereafter, Sterling's obligations contained
in Section 8.07, Section 9.04 and Section 9.05 shall survive.
Section 9.02. Conditions to Defeasance.
Sterling may exercise its legal defeasance option or its covenant
defeasance option only if:
(i) Sterling irrevocably deposits in trust with the Trustee money or
U.S. Government Obligations for the payment of principal, premium (if any)
and interest on the Notes to maturity or redemption, as the case may be;
(ii) Sterling delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants expressing their opinion that the
payments of principal and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the Notes to
maturity or redemption, as the case may be;
(iii) 91 days pass after the deposit is made and during the 91-day
period no Default specified in Section 7.01(vii) or Section 7.01(viii) in
either case with respect to Sterling occurs which is continuing at the end
of the period;
(iv) the deposit does not constitute a default under any other
agreement binding on Sterling and is not prohibited by Article XI;
(v) Sterling delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the U.S. Investment
Company Act of 1940, as amended;
(vi) in the case of the legal defeasance option, Sterling shall have
delivered to the Trustee an Opinion of Counsel in the United States stating
that (1) Sterling has received from, or there has been published by, the
Internal Revenue Service a ruling, or (2) since the date of this Indenture
there has been a change in the applicable U.S. Federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of Notes will not recognize income, gain or
loss for U.S. Federal income tax purposes as a result of such defeasance and
will be subject to U.S. Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance
had not occurred;
(vii) in the case of the covenant defeasance option, Sterling shall
have delivered to the Trustee an Opinion of Counsel in the United States to
the effect that the Holders of Notes will not recognize income, gain or loss
for U.S. Federal income tax purposes as a result of such covenant defeasance
and will be subject to U.S. Federal income tax on the
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same amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and
(viii) Sterling delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Notes as contemplated by this Article IX
have been complied with.
Before or after a deposit, Sterling may make arrangements satisfactory
to the Trustee for the redemption of the Notes at a future date in accordance
with Article III.
Section 9.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to this Article IX. The Trustee shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of principal
of, and premium, if any, and interest on, the Notes.
Section 9.04. Repayment to Sterling.
The Trustee and the Paying Agent shall promptly turn over to Sterling
upon request any excess money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to Sterling upon request any money held by them for the
payment of principal or interest that remains unclaimed for two years, and,
thereafter, Holders of Notes entitled to the money shall look to Sterling for
payment as general creditors.
Section 9.05. Indemnity for Government Obligations.
Sterling shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
Section 9.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article IX by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
Sterling's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to this Article IX until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article IX; provided,
however, that, if Sterling has made any payment of interest on or principal of
any of the Notes because of the reinstatement of its obligations, Sterling shall
be subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
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ARTICLE X
AMENDMENT, SUPPLEMENT AND WAIVER
Section 10.01. Without Consent of Holders of Notes.
Sterling and the Trustee may amend or supplement this Indenture or
the Notes without the consent of any Holder of a Note:
(i) to cure any ambiguity, omission, defect or inconsistency;
(ii) to provide for the assumption of Sterling's obligations to the
Holders of the Notes in the case of a merger or consolidation pursuant to
Article VI;
(iii) to provide for uncertificated Notes in addition to or in place
of certificated Notes (provided that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Notes are described in Section 163(f)(2)(B) of
the Code);
(iv) to add guarantees with respect to the Notes;
(v) to add to the covenants of Sterling and its Subsidiaries
hereunder for the benefit of the Holders of Notes or to surrender any right
or power conferred upon Sterling;
(vi) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
rights hereunder of any Holder of a Note; or
(vii) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of Sterling accompanied by a resolution of the Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
10.06, the Trustee shall join with Sterling in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
contained therein, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture which affects its own rights, duties or
immunities under this Indenture or otherwise.
After an amendment, supplement or waiver under this Section 10.01
becomes effective, Sterling shall mail to the Holders of Notes affected thereby
a notice briefly describing any such amendment, supplement or waiver. Any
failure of Sterling to mail such notice, or any defect therein, shall not in any
way impair or affect the validity of any such amended or supplemental Indenture
or waiver. Subject to Section 7.04 and Section 7.07, the Holders of a majority
in aggregate principal amount of the Notes then outstanding may waive compliance
by Sterling in any particular instance with any provision of this Indenture or
the Notes.
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Section 10.02. With Consent of Holders of Notes.
Sterling and the Trustee may amend or supplement this Indenture, the
Notes or any amended or supplemental Indenture with the written consent of the
Holders of Notes of at least a majority in aggregate principal amount of the
Notes then outstanding, and any existing Default and its consequences or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the Notes then
outstanding. However, without the consent of each Holder of a Note affected,
any amendment, supplement or waiver may not:
(i) reduce the amount of Notes the Holders of which must consent to
an amendment;
(ii) reduce the rate of or extend the time for payment of interest on
any Note;
(iii) reduce the principal of or extend the Stated Maturity of any
Note (except that Sterling's obligations to make an offer to repurchase the
Notes as a result of a Change of Control may be waived or modified with the
prior written consent of the Holders of a majority in principal amount of
the Notes);
(iv) reduce the premium payable upon the redemption of any Note or
change the time at which any Note may be redeemed in accordance with Article
III;
(v) make any Notes payable in money other than that stated in the
Note;
(vi) impair the right of any Holder of a Note to receive payment of,
principal of and interest on such Holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such Holder's Notes;
(vii) make any change in Section 7.04 or Section 7.07 or the second
sentence of this Section 10.02; or
(viii) make any change in any material provision of Article XI that
adversely affects the interests of any Holder of a Note.
Upon the request of Sterling accompanied by a resolution of the Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory with
the Trustee of the consent of the Holders of Notes as aforesaid and upon receipt
by the Trustee of the documents described in Section 10.06, the Trustee shall
join with Sterling in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 10.02 to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
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After an amendment, supplement or waiver under this Section 10.02
becomes effective, Sterling shall mail to the Holders of Notes affected thereby
a notice briefly describing any such amendment, supplement or waiver. Any
failure of Sterling to mail such notice, or any defect therein, shall not in any
way impair or affect the validity of any such amended or supplemental Indenture
or waiver. Subject to Section 7.04 and Section 7.07, the Holders of a majority
in aggregate principal amount of the Notes then outstanding may waive compliance
by Sterling in any particular instance with any provision of this Indenture or
the Notes.
Section 10.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 10.04. Revocation and Effect of Consents and Waivers.
Until an amendment, supplement or waiver becomes effective, a consent
to such amendment, supplement or waiver by a Holder of a Note is a continuing
and binding consent by the Holder of a Note and every subsequent Holder of a
Note or portion of a Note that evidences the same Debt as the consenting
Holder's Note, even if a notation of the consent or waiver is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver shall become effective in
accordance with its terms and thereafter shall bind every Holder of a Note.
Sterling may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Notes entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, such Persons which were Holders of Notes at
such record date (or their duly designated proxies), and only such Persons,
shall be entitled to give such consent or to revoke any consent previously given
or to take any such action, whether or not such Persons continue to be Holders
of Notes after such record date. No such consent shall be valid or effective
for more than 120 days after such record date.
Section 10.05. Notation On or Exchange of Notes.
If an amendment or supplement changes the terms of a Note, the Trustee
may require the Holder of such Note to deliver such Note to the Trustee. The
Trustee may place an appropriate notation on the Note regarding the changed
terms and return it to the Holder of such Note. Alternatively, if Sterling or
the Trustee so determines, Sterling in exchange for such Note shall issue and
the Trustee shall authenticate a new Note that reflects such changed terms.
Failure to make the appropriate notation or to issue a new Note shall not affect
the validity of such amendment or supplement.
Section 10.06. Trustee to Sign Amendments, Etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article X if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment or
supplement the Trustee shall be entitled to receive, and (subject
57
to Section 8.01) shall be fully protected in relying upon, an Officer's
Certificate and an Opinion of Counsel stating that such amendment or supplement
is authorized or permitted pursuant to this Indenture. Sterling shall not sign
any amendment or supplemental Indenture until the Board of Directors approves
any such amendment or supplemental Indenture.
Section 10.07. Payment for Consents.
Sterling shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Note for or as an
inducement to any consent, amendment, supplement or waiver with respect to any
term or provision of this Indenture or the Notes, unless such consideration is
offered to be paid or agreed to be paid to all Holders of Notes that consent,
waive or agree to amend or supplement in the time frame set forth in the
solicitation documents relating to any such consent, waiver or agreement to
amend or supplement.
ARTICLE XI
SUBORDINATION OF NOTES
Section 11.01. Notes Subordinate to Senior Debt; Notes Pari Passu with Senior
Subordinated Debt.
Sterling covenants and agrees, and each Holder of a Note, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article XI, the payment of the
principal of and premium, if any, and interest on each and all of the Notes are
hereby expressly made subordinate and subject in right of payment to the prior
payment in full of all Senior Debt of Sterling. All provisions of this Article
XI shall be subject to Section 11.14 hereof. The Notes shall rank pari passu in
right of payment with all Senior Subordinated Debt of Sterling.
Section 11.02. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (i) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to Sterling or to its creditors, as
such, or to its assets; or (ii) any liquidation, dissolution or other winding up
of Sterling, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy; or (iii) any assignment for the benefit of creditors
or any other marshalling of assets or liabilities of Sterling, then and in any
such event specified in clause (i), clause (ii) or clause (iii) above (each such
event, if any, herein sometimes referred to as a "Proceeding") the holders of
Senior Debt of Sterling will be first entitled to receive payment in full of all
amounts due or to become due on or in respect of all Senior Debt of Sterling, or
provision shall be made for such payment, in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of such Senior Debt, before
the Holders of the Notes are entitled to receive any payment or distribution of
any kind or character, on account of principal of (or premium, if any) or
interest on or other obligations in respect of the Notes or on account of any
purchase or other acquisition of Notes by Sterling (all such payments,
distributions, purchases and acquisitions herein referred to, individually and
collectively, as a "Notes Payment"), and to that end the holders of Senior Debt
of Sterling shall be entitled to receive, for application to the
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payment thereof, any Notes Payment which may be payable or deliverable in
respect of the Notes in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section 11.02, the Trustee receives payment or distribution of assets of
Sterling of any kind or character, before all the Senior Debt of Sterling is
paid in full in cash or cash equivalents, then and in such event, subject to
Section 11.04, such Notes Payment shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other person making payment or distribution of assets of Sterling for
application to the payment of all Senior Debt of Sterling remaining unpaid, to
the extent necessary to pay the Senior Debt of Sterling in full in cash or cash
equivalents, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Debt of Sterling.
For purposes of this Article XI only, the words "any payment or
distribution of any kind or character" shall not be deemed to include a payment
or distribution of stock or securities of Sterling provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy law or of any other corporation provided for by such plan of
reorganization or readjustment which stock or securities are subordinated in
right of payment to all then outstanding Senior Debt of Sterling, to at least
the same extent as the Notes are so subordinated as provided in this Article XI;
provided that (1) if a new corporation results from such reorganization or
readjustment, such corporation assumes any Senior Debt of Sterling not paid in
full in cash or cash equivalents in connection with such reorganization or
readjustment; and (2) the rights of the holders of such Senior Debt are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of Sterling with, or the merger of Sterling
into, another person or the liquidation or dissolution of Sterling following the
convey ance or transfer of all or substantially all of its properties and assets
as an entirety to another person upon the terms and conditions set forth in
Article VI shall not be deemed a Proceeding for the purposes of this Section
11.02 if the person formed by such consolidation or into which Sterling is
merged or the person which acquires by conveyance or transfer such properties
and assets as an entirety, as the case may be, shall, as part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article VI.
Section 11.03. No Payment When Senior Debt in Default.
In the event that any Senior Payment Default (as defined below) shall
have occurred and be continuing, then Sterling may not make any Notes Payment
unless and until such Senior Payment Default shall have been cured or waived or
shall have ceased to exist or all amounts then due and payable in respect of
Designated Senior Debt shall have been paid in full, or provision shall have
been made for such payment, in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of such Designated Senior Debt. The term "Senior
Payment Default" means any default in the payments of principal of (or premium,
if any) or interest on any Designated Senior Debt of Sterling when due, whether
at the maturity thereof or by declaration or acceleration, call for redemption
or otherwise.
In the event that any Senior Nonmonetary Default (as defined below)
shall have occurred and be continuing, then, upon the receipt by Sterling and
the Trustee of written notice of such Senior Nonmonetary Default from the
representatives of holders of the Designated Senior Debt to which such default
relates, Sterling may not make any Notes Payment for a period (the "blockage
period") commencing on the date Sterling and Trustee receive such written notice
and
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ending 179 days after the date of such receipt of such written notice (or
earlier) if terminated (i) by written notice to the Trustee and Sterling from
the representative of holders of Designated Senior Debt that gave such written
notice; (ii) because such Designated Senior Debt has been repaid in full; or
(iii) because such default is no longer continuing). In any event, not more
than one blockage period may be commenced during any period of 360 consecutive
days and there shall be a period of at least 181 consecutive days in each period
of 360 consecutive days when no blockage period is in effect. For all purposes
of this paragraph, no Senior Nonmonetary Default that existed or was continuing
on the date of commencement of any blockage period with respect to the
Designated Senior Debt initiating such blockage period will be, or can be, made
the basis for the commencement of a subsequent blockage period unless such
default has been cured or waived for a period of not less than 90 consecutive
days. The term "Senior Nonmonetary Default" means the occurrence or existence
and continuance of any event of default, or of any event which, after notice or
lapse of time (or both), would become an event of default, under the terms of
any instrument pursuant to which any Designated Senior Debt is outstanding,
permitting (after notice or lapse of time or both) one or more holders of such
Senior Debt (or a trustee or agent on behalf of the holders thereof) to declare
such Senior Debt due and payable prior to the date on which it should otherwise
become due and payable, other than a Senior Payment Default.
In the event that, notwithstanding the foregoing, Sterling shall make
any Notes Payment to the Trustee or any Holder prohibited by the foregoing
provisions of this Section 11.03, then and in such event, subject to Section
11.04, such Notes Payment shall be paid over and delivered forthwith to the
holders of the Senior Debt of Sterling remaining unpaid, to the extent necessary
to pay in full all the Senior Debt of Sterling.
The provisions of this Section 11.03 shall not apply to any Notes
Payment with respect to which Section 11.02 would be applicable.
Section 11.04. Payment Permitted If No Default.
Nothing contained in this Article XI or elsewhere in this Indenture or
in any of the Notes shall prevent (i) Sterling, at any time except during the
pendency of any Proceeding referred to in Section 11.02 or under the conditions
described in Section 11.03, from making Notes Payments; or (ii) the application
by the Trustee of any money deposited with it hereunder to Notes Payments or the
retention of such Notes Payment by the Holders, if, at the time of such
application by the Trustee, it did not have knowledge that such Notes Payment
would have been prohibited by the provisions of this Article XI.
Section 11.05. Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all amounts due or to become due on
or in respect of Senior Debt of Sterling, or the provision for such payment, in
cash or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt of Sterling, the Holders of the Notes shall be subrogated (equally
and ratably with the holders of all Debt of Sterling, if any, which by its
express terms is subordinated to Senior Debt of Sterling to substantially the
same extent as the Notes are subordinated to the Senior Debt of Sterling and is
entitled to like rights of subrogation by reason of any payments or
distributions made to holders of such Senior Debt) to the rights of the holders
of such Senior Debt of Sterling to receive payments and distributions of cash,
property and securities applicable to the Senior Debt of Sterling until the
principal of (and premium, if any) and interest on the Notes shall be paid in
full. For purposes of such
60
subrogation, no payments or distributions to the holders of the Senior Debt of
Sterling of any cash, property or securities to which the Holders of the Notes
or the Trustee would be entitled except for the provisions of this Article XI,
and no payments over pursuant to the provisions of this Article XI to the
holders of Senior Debt of Sterling by Holders of the Notes or the Trustee,
shall, as among Sterling, its creditors other than holders of Senior Debt and
the Holders of the Notes, be deemed to be a payment or distribution by Sterling
to or on account of the Senior Debt of Sterling.
Section 11.06. Provisions Solely to Define Relative Rights.
The provisions of this Article XI are and are intended solely for the
purpose of defining the relative rights of the Holders of Notes on the one hand
and the holders of Senior Debt of Sterling on the other hand. Nothing contained
in this Article XI or elsewhere in this Indenture or in the Notes is intended to
or shall (i) impair, as among Sterling, its creditors other than holders of
Senior Debt and the Holders of the Notes, the obligation of Sterling, which is
absolute and unconditional, to pay to the Holders of the Notes the principal of
(and premium, if any) and interest on the Notes as and when the same shall
become due and payable in accordance with their terms; or (ii) affect the
relative rights against Sterling of the Holders of the Notes and creditors of
Sterling other than the holders of Senior Debt; or (iii) prevent the Trustee or
the Holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article XI of the holders of Senior Debt of Sterling to receive cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder.
Section 11.07. Trustee to Effectuate Subordination.
Each Holder of a Note by such Holder's acceptance thereof authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article XI and appoints the Trustee his attorney-in-fact for any and all such
purposes.
Section 11.08. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt of
Sterling to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of
Sterling or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by Sterling with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt of Sterling may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article XI or the
obligations hereunder of the Holders of the Notes to the holders of Senior Debt,
do any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew, increase or alter, Senior
Debt, or otherwise amend or supplement in any manner Senior Debt or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (iii) release any person
liable in any
61
manner for the payment or collection of Senior Debt; and (iv) exercise or
refrain from exercising any rights against Sterling and any other person.
Section 11.09. Notice to Trustee.
Sterling shall give prompt written notice to the Trustee of any fact
known to Sterling which would prohibit the making of any payment to or by the
Trustee in respect of the Notes. Notwithstanding the provisions of this Article
XI or any other provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts which could prohibit the making of
any payment to or by the Trustee in respect of the Notes, unless and until the
Trustee shall have received written notice thereof specifically referencing this
Article XI from Sterling or a holder of Senior Debt of Sterling or from any
trustee therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Section 8.01, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 11.09 at
least two Business Days prior to the date upon which by the terms hereof any
money may became payable for any purpose (including, without limitation, the
payment of the principal of (and premium, if any) or interest on any Note),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purpose for which such money was received and shall not be affected by
any notice to the contrary which may be received by it within two Business Days
prior to such date.
Subject to the provisions of Section 8.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Debt of Sterling (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Debt of Sterling (or a trustee therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any person as a holder of Senior Debt of Sterling to participate in any
payment or distribution pursuant to this Article XI, the Trustee may request
each person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Debt of Sterling held by such person, the extent to
which such person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such person under this Article XI,
and if such evidence is not furnished, the Trustee may defer any payment to such
person pending judicial determination as to the right of such person to receive
such payment.
Section 11.10. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of Sterling referred to in
this Article XI, the Trustee, subject to the provisions of Section 8.01, and the
Holders of the Notes shall be entitled to rely upon any order or decree entered
by any court of competent jurisdiction in which such Proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other person making
such payment or distribution, delivered to the Trustee or to the Holders of
Notes, for the purpose of ascertaining the persons entitled to participate in
such payment or distribution, the holders of the Senior Debt of Sterling and
other Debt of Sterling, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article XI.
62
Section 11.11. Trustee Not Fiduciary for Holders of Senior Debt.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt of Sterling and shall not be liable to any such holders
if it shall in good faith mistakenly pay over or distribute to Holders of Notes
or to Sterling or to any other person cash, property or securities to which any
holders of Senior Debt of Sterling shall be entitled by virtue of this Article
XI or otherwise. With respect to the holders of Senior Debt of Sterling, the
Trustee undertakes to perform or to observe only such of its covenants or
obligations as are specifically set forth in this Article XI and no implied
covenants or obligations with respect to holders of Senior Debt of Sterling
shall be read into this Indenture against the Trustee.
Section 11.12. Rights of Trustee as Holder of Senior Debt; Preservation of
Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XI with respect to any Senior Debt of Sterling
which may at any time be held by it, to the same extent as any other holder of
Senior Debt of Sterling, and nothing in this Indenture shall deprive the Trustee
of any of its rights as such holder.
Nothing in this Article XI shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.07.
Section 11.13. Article XI Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by Sterling and be then acting hereunder, the term "Trustee" as
used in this Article XI shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XI in addition to or in place of the Trustee; provided,
however, that Section 11.12 shall not apply to Sterling or any Affiliate of
Sterling if it or such Affiliate acts as Paying Agent.
Section 11.14. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments
from money or the proceeds of U.S. Government Obligations held in trust under
Article IX by the Trustee for the payment of principal of, and premium, if any,
and interest on, the Notes shall not be subordinated to the prior payment of any
Senior Debt or subject to the restrictions on this Article XI, and none of the
Trustee or the Holders shall be obligated to pay over any such amount to
Sterling or any holder of Senior Debt of Sterling or any other creditor of
Sterling.
63
ARTICLE XII
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), such imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by Sterling or the Trustee to the other is
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:
If to Sterling:
Sterling Chemicals, Inc.
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxx X. Xxxx
If to the Trustee:
Fleet National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No: (000) 000-0000
Attention: Corporate Trust Administration
Sterling or the Trustee, by notice each to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders of
Notes) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder of a Note shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
Note Register. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder of a Note or any defect in
such notice shall not affect its sufficiency with respect to other Holders of
Notes.
64
If a notice or communication is mailed in the manner set forth above
within the time prescribed, such notice or communication shall be deemed to be
duly given whether or not the addressee receives it.
If Sterling mails a notice or communication to Holders of Notes, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of Notes.
Holders of Notes pursuant to TIA Section 312(b) may communicate with
other Holders of Notes with respect to their rights under this Indenture or the
Notes. Sterling, the Trustee, the Registrar, the Paying Agent and any other
Person shall have the protection of TIA Section 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by Sterling to the Trustee to take any
action under this Indenture, Sterling shall furnish to the Trustee:
(i) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions and covenants, if any, provided for in this Indenture relating to
the proposed action have been satisfied; and
(ii) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all conditions and covenants have been satisfied.
Section 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant contained in this Indenture shall include:
(i) a statement that the Person making such certificate or opinion
has read such condition or covenant;
(ii) a statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether such condition or covenant has
been satisfied; and
(iv) a statement as to whether, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders of Notes. The Registrar and Paying Agent may make reasonable rules and
set reasonable requirements for their functions.
65
Section 12.07. No Personal Liability of Directors, Officers, Employees,
Incorporators and Stockholders.
No director, officer, employee, incorporator or stockholder of
Sterling, as such, shall have any liability for any obligations of Sterling
under the Notes or this Indenture or for any claim based on, in respect of, or
by reason of, such obligations. Each Holder of a Note by accepting a Note
waives and releases all such liability. Such waiver and release form a part of
the consideration for issuance of the Notes.
Section 12.08. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICT OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of Sterling or its Subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 12.10. Successors.
All agreements of Sterling contained in this Indenture and the Notes
shall bind Sterling and its successors. All agreements of the Trustee in this
Indenture shall bind the Trustee and its successors.
Section 12.11. Severability.
In case any provision of this Indenture or the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
such signed copy shall be deemed to be an original, and all of such signed
copies together shall represent one and the same agreement.
Section 12.13. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience only,
and shall not, for any reason, be deemed to be part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
66
SIGNATURES
----------
DATED AS OF APRIL 7, 1997 STERLING CHEMICALS, INC.
BY: /s/ XXX X. XXXX
_________________________________
NAME: Xxx X. Xxxx
TITLE: Vice President and
Chief Financial Officer
ATTEST:
/s/ F. XXXXXXX XXXXX
____________________________
NAME: F. Xxxxxxx Xxxxx
TITLE: Secretary
DATED AS OF APRIL 7, 1997 FLEET NATIONAL BANK,
AS TRUSTEE
BY: /s/ XXXXXXX X. XXXXXXX
_________________________________
NAME: Xxxxxxx X. Xxxxxxx
TITLE: Vice President
ATTEST:
/s/ XXXXXXXXX X. XXXXXX
____________________________
NAME: Xxxxxxxxx X. Xxxxxx
TITLE: Vice President
67
EXHIBIT A
---------
[FORM OF FACE OF INITIAL NOTE]
----------------------------
STERLING CHEMICALS, INC.
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.*
[Restricted Notes Legend]
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND UNDER APPLICABLE STATE
SECURITIES LAWS, AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER
OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(i) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
------------------------
* This legend should only be added if the Security is issued in global form.
A-1
ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES
(i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."
["IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.]**
------------------------
** Include on a Definitive Security to be held by an institutional "accredited
investor" (as defined in Rule 501(a), (1), (2), (3) or (7) under the
Securities Act).
A-2
No. __________ Principal Amount $
CUSIP No. _________
11 1/4% Senior Subordinated Notes Due 2007
STERLING CHEMICALS, INC., a Delaware corporation, promises to pay to
___________________________________, or registered assigns, the principal sum of
_________ Dollars on April 1, 2007.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Additional provisions of this Note are set forth on the reverse side
of this Note.
Dated: ________________
STERLING CHEMICALS, INC.
By _______________________________
Title:
By _______________________________
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
FLEET NATIONAL BANK,
as Trustee, certifies
that this is one of the
Notes referred to in the
Indenture.
By ____________________________
Authorized Signatory
A-3
[FORM OF REVERSE SIDE OF NOTE]
----------------------------
11 1/4% Senior Subordinated Notes Due 2007
1. Interest
--------
STERLING CHEMICALS, INC., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called "Sterling"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above provided, however, that if
a Registration Default (as defined in the Registration Rights Agreement) occurs,
interest will accrue on this security at a rate of 11 3/4% per annum from and
including the date on which any such Registration Default shall occur but
excluding the date on which all Registration Defaults have been cured.
Sterling will pay interest semi-annually on April 1 and October 1 of
each year, commencing October 1, 1997. Interest on the Notes will accrue from
the most recent date to which interest has been paid, or, if no interest has
been paid, from April 7, 1997. Interest will be computed on the basis of a 360-
day year of twelve 30-day months. Sterling shall pay interest on overdue
principal at the rate borne by the Notes.
2. Method of Payment
-----------------
Sterling will pay interest on the Notes (except defaulted interest) to
the Persons who are registered Holders of Notes at the close of business on the
March 15 or September 15 next preceding the interest payment date even if Notes
are canceled after the record date and on or before the interest payment date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
Sterling will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
However, Sterling may pay principal and interest by check payable in such money.
It may mail an interest check to a Holder's registered address.
3. Paying Agent and Registrar
--------------------------
Initially, Fleet National Bank, a national banking association (the
"Trustee"), will act as Paying Agent and Registrar. Sterling may appoint and
change any Paying Agent, Registrar or co-registrar without notice. Sterling or
any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.
4. Indenture
---------
Sterling issued the Notes under an Indenture dated as of April 7, 1997
(the "Indenture"), between Sterling and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb)
as in effect on the date of the Indenture (the "TIA"). Terms defined in the
Indenture and not defined herein have the meanings ascribed thereto in the
Indenture. The Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and the TIA for a statement of those terms.
A-4
The Notes are unsecured senior subordinated obligations of Sterling
limited to $150,000,000 aggregate principal amount (subject to Section 2.07 of
the Indenture). The Indenture imposes certain limitations on the incurrence of
additional indebtedness by Sterling and certain of its subsidiaries, the payment
of dividends on, and the redemption of, capital stock of Sterling and certain of
its Subsidiaries, the making of Investments, restrictions on distributions from
certain Subsidiaries, the use of proceeds from the sale of assets and Subsidiary
stock and transactions with affiliates. The Indenture also restricts the
ability of Sterling to consolidate or merge with or into, or to transfer all or
substantially all its assets to, another person.
5. Optional Redemption
-------------------
The Notes will be redeemable, at Sterling's option, in whole or in
part, at any time and from time to time on or after April 1, 2002, upon not less
than 30 nor more than 60 days' prior notice mailed by first-class mail to each
Holder's registered address, at the following redemption prices (expressed in
percentages of principal amount at maturity), plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on or after April 1 of the years
set forth below:
Redemption
Year Price
---- ----------
2002 . . . . . . . . 105.625%
2003 . . . . . . . . 103.750%
2004 . . . . . . . . 101.875%
2005 . . . . . . . . 100.000%
In addition, at any time and from time to time prior to April 1, 2000,
Sterling may redeem in the aggregate up to 35% of the original principal amount
of the Notes with the proceeds of one or more Public Equity Offerings following
which there is a Public Market, at a redemption price (expressed as a percentage
of principal amount) of 111.25%, plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that at least $97,500,000 aggregate principal amount of the
Notes must remain outstanding after each such redemption.
6. Notice of Redemption
--------------------
Notice of redemption shall be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Notes to be redeemed
at its registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Notes (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Notes (or
such portions thereof) called for redemption.
A-5
7. Put Provisions
--------------
Upon a Change of Control, any Holder of Notes will have the right to
cause Sterling to repurchase all or any part of the Notes of such Holder at a
purchase price equal to 101% of the principal amount of the Notes to be
repurchased plus accrued interest to the date of repurchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the interest payment date) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
-------------
The Notes are subordinated to Senior Debt. To the extent provided in
the Indenture, Senior Debt must be paid before the Notes may be paid. Sterling
agrees, and each Holder of a Note by accepting a Note agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give effect to such subordination provisions and appoints the Trustee as
attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
---------------------------------
The Notes are in registered form without coupons in denominations of
$1,000 (or, in the case of Securities sold to institutional "accredited
investors" as described in Rule 501(a) (1), (2), (3) or (7) under the Securities
Act in a transaction intended to be exempt from registration under the
Securities Act, minimum denominations of $500,000) and integral multiples of
$1,000. Holders of Notes may transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder of a Note, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Note selected for redemption (except,
in the case of a Note to be redeemed in part, the portion of the Note not to be
redeemed) or any Notes for a period of 15 days before a selection of Notes to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
---------------------
The registered Holder of this Note may be treated as the sole owner of
such Note for all purposes.
11. Unclaimed Money
---------------
Subject to applicable abandoned property law, if money for the payment
of principal or interest remains unclaimed for two years, the Trustee or Paying
Agent shall pay the money back to Sterling at its request unless an abandoned
property law designates another Person. After any such payment, Holders
entitled to the money must look only to Sterling and not to the Trustee or
Paying Agent for payment.
12. Discharge and Defeasance
------------------------
Subject to certain conditions, Sterling at any time may terminate some
or all of its obligations under the Notes and the Indenture if Sterling deposits
with the
A-6
Trustee money or U.S. Government Obligations for the payment of principal and
interest on the Notes to redemption or maturity, as the case may be.
13. Amendment; Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount outstanding of the Notes; and (ii) any
default or compliance with any provision may be waived with the written consent
of the Holders of a majority in principal amount of the Notes then outstanding.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Holder of a Note, Sterling and the Trustee may amend the Indenture or the
Notes to cure any ambiguity, omission, defect or inconsistency, or to comply
with Article VI of the Indenture, or to provide for uncertificated Notes, in
addition to or in place of certificated Notes, or to add guarantees with respect
to the Notes or add additional covenants or surrender rights and powers
conferred on Sterling, or to make any change that would provide additional
rights or benefits to the Holders of Notes or that does not adversely affect the
rights of any Holder of a Note or to comply with requirements of the SEC in
connection with the qualification of the Indenture under the TIA.
14. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest; (ii) default in payment of principal on the Notes at
maturity, upon redemption, upon declaration, upon required repurchase or
otherwise; (iii) failure by Sterling to comply with other covenants in the
Indenture or the Notes, in certain cases subject to notice and lapse of time;
(iv) certain accelerations (including failure to pay within any grace period
after final maturity) of other Debt of Sterling or any of its Subsidiaries if
the amount accelerated (or so unpaid) aggregates $10 million or more; (v)
certain events of bankruptcy or insolvency with respect to Sterling and its
Significant Subsidiaries; and (vi) certain judgments or decrees for the payment
of money in excess of $10 million. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Notes may declare all the Notes to be due and payable immediately. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Notes being due and payable immediately upon the occurrence of such Events
of Default.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Notes notice of any continuing Default (except a
Default in payment of principal or interest) if it determines that withholding
such notice is in the interest of the Holders of Notes.
15. Trustee Dealings with Sterling
------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with and collect obligations owed to it
by Sterling or its
A-7
Affiliates and may otherwise deal with Sterling or its Affiliates with the same
rights it would have if it were not Trustee.
16. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of Sterling or
the Trustee shall not have any liability for any obligations of Sterling under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of such obligations. By accepting a Note, each Holder of a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
17. Authentication
--------------
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the face of this Note.
18. Abbreviations
-------------
Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
-------------
Pursuant to the recommendation promulgated by the Committee on Uniform
Security Identification Procedures Sterling has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use such CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
__________________________
Sterling will furnish to any Holder of a Note upon written request and
without charge to such Holder of a Note a copy of the Indenture which contains
the text of this Note in larger type. Requests may be made to:
Sterling Chemicals, Inc.
0000 Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxx X. Xxxx
A-8
================================================================================
ASSIGNMENT FORM
To assign this Note, complete the form below:
I or we assign and transfer this Note to:
[Print or type assignee's name, address and zip code]
[Insert assignee's soc. sec. or tax I.D. No. ]
and irremovably appoint ___________________ agent to transfer this Note
on the books of Sterling. The agent may substitute another to act for
him.
================================================================================
Date: ______________ Your Signature:_________________________________________
================================================================================
Sign exactly as your name appears on the face of this Note.
A-9
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
RESTRICTED NOTES
This certificate relates to $_________ principal amount of Notes held in (check
applicable space) ____ book-entry or _____ definitive form by the undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Note held by the Depository a Note or
Notes in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Note (or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
The undersigned confirms that such Notes are being:
CHECK ONE BOX BELOW:
(1) [_] acquired for the undersigned's own account, without Transfer
(in satisfaction of Section 2.06(a)(ii)(A) of the
Indenture); or
(2) [_] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933, as amended; or
(3) [_] transferred pursuant to and in compliance with Regulation
S under the Securities Act of 1933, as amended; or
(4) [_] transferred pursuant to and in compliance with Rule 144
under the Securities Act of 1933, as amended; or
(5) [_] transferred pursuant to an effective registration statement
under the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however, that if box (2), (3) or (4) is
checked, Sterling or the Trustee may require evidence reasonably satisfactory to
them as to the compliance with the restrictions set forth in the legend on the
face of this Note.
_____________________________
Signature
A-10
Signature Guarantee: _______________________________________
(Signature must be guaranteed by member
firm of the New York Stock Exchange or a
commercial bank or trust company)
A-11
OPTION OF HOLDER OF NOTE TO ELECT PURCHASE
If you elect to have this Note purchased by Sterling pursuant to
Article IV or Section 5.07 of the Indenture, check the box:
[_]
If you elect to have only part of this Note purchased by Sterling
pursuant to Article IV or Section 5.07 of the Indenture, state the amount:
$___________________________
Date:_________________ Your Signature: ______________________________
(Sign exactly as your name
appears on the face of the
Note)
Signature Guarantee: _________________________________________________________
(Signature must be guaranteed by a member firm of the New
York Stock Exchange or a commercial bank or trust company)
A-12
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:
===================================================================================================================
DATE OF AMOUNT OF DECREASE IN AMOUNT OF INCREASE IN PRINCIPAL AMOUNT OF THIS SIGNATURE OF AUTHORIZED
EXCHANGE PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF GLOBAL NOTE FOLLOWING SIGNATORY OF TRUSTEE OR NOTES
THIS GLOBAL NOTE THIS GLOBAL NOTE SUCH DECREASE OR INCREASE CUSTODIAN
-------------------------------------------------------------------------------------------------------------------
===================================================================================================================
A-13
EXHIBIT B
---------
[FORM OF FACE OF EXCHANGE NOTE AND
PRIVATE EXCHANGE NOTE]
*
**
STERLING CHEMICALS, INC. $
No. CUSIP:
11 1/4% Senior Subordinated Note Due 2007
Sterling Chemicals, Inc., a Delaware corporation, promises to pay to
or registered assigns, the principal sum of
Dollars on April 1, 2007.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Additional provisions of this Note are set forth on the other side of
this Note.
STERLING CHEMICALS, INC.
by
Dated: _________________
[Seal]
____________________________
Title:
____________________________
Title
________________________
* If the Note is to be issued in global form add the Global Notes Legend
from Exhibit A and the attachment to Exhibit A captioned "[TO BE ATTACHED TO
GLOBAL NOTES] - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE".
** If the Note is a Private Exchange Note issued in a Private Exchange to
the Initial Purchasers holding an unsold portion of its initial allotment, add
the restricted securities legend from Exhibit A and include the "Certificate to
be Delivered upon Exchange or Registration of Transfer of Restricted Notes" from
Exhibit A.
B-1
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
FLEET NATIONAL BANK,
as Trustee, certifies
that this is one of the
Notes referred to
in the Indenture.
by
____________________
Authorized Signatory
B-2
[FORM OF REVERSE SIDE OF NOTE]
----------------------------
11 1/4% Senior Subordinated Notes Due 2007
1. Interest
--------
STERLING CHEMICALS, INC., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called "Sterling"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above provided, however, that if
a Registration Default (as defined in the Registration Rights Agreement) occurs,
interest will accrue on this security at a rate of 11 3/4% per annum from and
including the date on which any such Registration Default shall occur but
excluding the date on which all Registration Defaults have been cured.
Sterling will pay interest semi-annually on April 1 and October 1 of
each year, commencing October 1, 1997. Interest on the Notes will accrue from
the most recent date to which interest has been paid, or, if no interest has
been paid, from April 7, 1997. Interest will be computed on the basis of a 360-
day year of twelve 30-day months. Sterling shall pay interest on overdue
principal at the rate borne by the Notes.
2. Method of Payment
-----------------
Sterling will pay interest on the Notes (except defaulted interest) to
the Persons who are registered Holders of Notes at the close of business on the
March 15 or September 15 next preceding the interest payment date even if Notes
are canceled after the record date and on or before the interest payment date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
Sterling will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
However, Sterling may pay principal and interest by check payable in such money.
It may mail an interest check to a Holder's registered address.
3. Paying Agent and Registrar
--------------------------
Initially, Fleet National Bank, a national banking association (the
"Trustee"), will act as Paying Agent and Registrar. Sterling may appoint and
change any Paying Agent, Registrar or co-registrar without notice. Sterling or
any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.
4. Indenture
---------
Sterling issued the Notes under an Indenture dated as of April 7, 1997
(the "Indenture"), between Sterling and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as
in effect on the date of
B-3
the Indenture (the "TIA"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the TIA for a statement of those terms.
The Notes are unsecured senior subordinated obligations of Sterling
limited to $150,000,000 aggregate principal amount (subject to Section 2.07 of
the Indenture). The Indenture imposes certain limitations on the incurrence of
additional indebtedness by Sterling and certain of its subsidiaries, the payment
of dividends on, and the redemption of, capital stock of Sterling and certain of
its Subsidiaries, the making of Investments, restrictions on distributions from
certain Subsidiaries, the use of proceeds from the sale of assets and Subsidiary
stock and transactions with affiliates. The Indenture also restricts the
ability of Sterling to consolidate or merge with or into, or to transfer all or
substantially all its assets to, another person.
5. Optional Redemption
-------------------
The Notes will be redeemable, at Sterling's option, in whole or in
part, at any time and from time to time on or after April 1, 2002, upon not less
than 30 nor more than 60 days' prior notice mailed by first-class mail to each
Holder's registered address, at the following redemption prices (expressed in
percentages of principal amount at maturity), plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on or after April 1 of the years
set forth below:
Redemption
Year Price
---- ----------
2002 . . . . . . . . 105.625%
2003 . . . . . . . . 103.750%
2004 . . . . . . . . 101.875%
2005 . . . . . . . . 100.000%
In addition, at any time and from time to time prior to April 1, 2000,
Sterling may redeem in the aggregate up to 35% of the original principal amount
of the Notes with the proceeds of one or more Public Equity Offerings following
which there is a Public Market, at a redemption price (expressed as a percentage
of principal amount) of 111.25%, plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that at least $97,500,000 aggregate principal amount of the
Notes must remain outstanding after each such redemption.
6. Notice of Redemption
--------------------
Notice of redemption shall be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Notes to be redeemed
at its registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption
B-4
price of and accrued interest on all Notes (or portions thereof) to be redeemed
on the redemption date is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied, on and after such
date interest ceases to accrue on such Notes (or such portions thereof) called
for redemption.
7. Put Provisions
--------------
Upon a Change of Control, any Holder of Notes will have the right to
cause Sterling to repurchase all or any part of the Notes of such Holder at a
purchase price equal to 101% of the principal amount of the Notes to be
repurchased plus accrued interest to the date of repurchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the interest payment date) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
-------------
The Notes are subordinated to Senior Debt. To the extent provided in
the Indenture, Senior Debt must be paid before the Notes may be paid. Sterling
agrees, and each Holder of a Note by accepting a Note agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give effect to such subordination provisions and appoints the Trustee as
attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
---------------------------------
The Notes are in registered form without coupons in denominations of
$1,000 (or, in the case of Securities sold to institutional "accredited
investors" as described in Rule 501(a) (1), (2), (3) or (7) under the Securities
Act in a transaction intended to be exempt from registration under the
Securities Act, minimum denominations of $500,000) and integral multiples of
$1,000. Holders of Notes may transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder of a Note, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Note selected for redemption (except,
in the case of a Note to be redeemed in part, the portion of the Note not to be
redeemed) or any Notes for a period of 15 days before a selection of Notes to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
---------------------
The registered Holder of this Note may be treated as the sole owner of
such Note for all purposes.
11. Unclaimed Money
---------------
Subject to applicable abandoned property law, if money for the payment
of principal or interest remains unclaimed for two years, the Trustee or Paying
Agent shall pay the money back to Sterling at its request unless an abandoned
property law designates another Person. After any such payment, Holders
entitled to the money must look only to Sterling and not to the Trustee or
Paying Agent for payment.
B-5
12. Discharge and Defeasance
------------------------
Subject to certain conditions, Sterling at any time may terminate some
or all of its obligations under the Notes and the Indenture if Sterling deposits
with the Trustee money or U.S. Government Obligations for the payment of
principal and interest on the Notes to redemption or maturity, as the case may
be.
13. Amendment; Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount outstanding of the Notes; and (ii) any
default or compliance with any provision may be waived with the written consent
of the Holders of a majority in principal amount of the Notes then outstanding.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Holder of a Note, Sterling and the Trustee may amend the Indenture or the
Notes to cure any ambiguity, omission, defect or inconsistency, or to comply
with Article VI of the Indenture, or to provide for uncertificated Notes, in
addition to or in place of certificated Notes, or to add guarantees with respect
to the Notes or add additional covenants or surrender rights and powers
conferred on Sterling, or to make any change that would provide additional
rights or benefits to the Holders of Notes or that does not adversely affect the
rights of any Holder of a Note or to comply with requirements of the SEC in
connection with the qualification of the Indenture under the TIA.
14. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest; (ii) default in payment of principal on the Notes at
maturity, upon redemption, upon declaration, upon required repurchase or
otherwise; (iii) failure by Sterling to comply with other covenants in the
Indenture or the Notes, in certain cases subject to notice and lapse of time;
(iv) certain accelerations (including failure to pay within any grace period
after final maturity) of other Debt of Sterling or any of its Subsidiaries if
the amount accelerated (or so unpaid) aggregates $10 million or more; (v)
certain events of bankruptcy or insolvency with respect to Sterling and its
Significant Subsidiaries; and (vi) certain judgments or decrees for the payment
of money in excess of $10 million. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Notes may declare all the Notes to be due and payable immediately. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Notes being due and payable immediately upon the occurrence of such Events
of Default.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Notes notice of any continuing Default (except a
Default in payment of principal or interest) if it determines that withholding
such notice is in the interest of the Holders of Notes.
B-6
15. Trustee Dealings with Sterling
------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with and collect obligations owed to it
by Sterling or its Affiliates and may otherwise deal with Sterling or its
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of Sterling or
the Trustee shall not have any liability for any obligations of Sterling under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of such obligations. By accepting a Note, each Holder of a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
17. Authentication
--------------
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the face of this Note.
18. Abbreviations
-------------
Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
-------------
Pursuant to the recommendation promulgated by the Committee on Uniform
Security Identification Procedures Sterling has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use such CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
__________________________
Sterling will furnish to any Holder of a Note upon written request and
without charge to such Holder of a Note a copy of the Indenture which contains
the text of this Note in larger type. Requests may be made to:
Sterling Chemicals, Inc.
0000 Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxx X. Xxxx
B-7
================================================================================
ASSIGNMENT FORM
To assign this Note, complete the form below:
I or we assign and transfer this Note to:
[Print or type assignee's name, address and zip code]
[Insert assignee's soc. sec. or tax I.D. No.]
and irremovably appoint ___________________ agent to transfer this Note
on the books of Sterling. The agent may substitute another to act for
him.
================================================================================
Date: ____________________ Your Signature: _____________________________
================================================================================
Sign exactly as your name appears on the face of this Note.
B-8
OPTION OF HOLDER OF NOTE TO ELECT PURCHASE
If you elect to have this Note purchased by Sterling pursuant to
Article IV or Section 5.07 of the Indenture, check the box:
[_]
If you elect to have only part of this Note purchased by Sterling
pursuant to Article IV or Section 5.07 of the Indenture, state the amount:
$___________________________
Date: ________________ Your Signature: _____________________________
(Sign exactly as your name
appears on the face of the
Note)
Signature Guarantee: _________________________________________________________
(Signature must be guaranteed by a member firm of the New
York Stock Exchange or a commercial bank or trust company)
B-9
