Exhibit 4.07
EXECUTION COPY
SECURITY SHARING AGREEMENT
THIS AGREEMENT is made this 12th day of March 1998
BETWEEN:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered off ice at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Company");
(2) NSM STEEL COMPANY LTD., a company incorporated under the laws of the
Cayman Islands and a wholly owned subsidiary of the Company ("SM Cayman")
and NSM STEEL (DELAWARE) INC., a company incorporated under the laws of
the State of Delaware, United States, and a wholly owned subsidiary of NSM
Cayman ("SM (Delaware)" and, together with NSM Cayman, the "Issuers");
(3) The financial institutions whose names appear on the signature pages
hereto (the "Thai Lenders"), represented by THE INDUSTRIAL FINANCE
CORPORATION OF THAILAND, a corporation duly organized and validly existing
under the laws of the Kingdom of Thailand having its registered office at
No. 1770 New Petchburi Road, Bangkok 10320, as Facility Agent for the Thai
Lenders (the "Thai Facility Agent");
(4) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33rd Street, 15th Floor, New York, NY 10001, having its branch
office in Bangkok, Thailand, located at 20 North Sathorn Road, Silom,
Bangrak, Bangkok 10500, acting (a) in its capacity as the Book-Entry
Depositary (the "Notes Depositary") pursuant to a Note Depositary
Agreement (the "Note Depositary Agreement"), and acting as a
representative of the holders of the Senior Mortgage Notes (the "Senior
Note Trustee"), and acting as a representative of the holders of the
Senior Subordinated Mortgage Notes (the "Senior Subordinated Note Trustee"
and, together with the Senior Note Trustee, the "Notes Trustees") and (b)
in its capacity as the Book-Entry Depositary (the "Debenture Depositary")
pursuant to a Debenture Depositary Agreement (the "Debenture Depositary
Agreement"), and acting as a representative of the holders of the
Debentures (the "Debenture Trustee" or the "Debenture Representative");
AND
(5) THE CHASE MANHATTAN BANK, as collateral agent (the "Collateral Agent").
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WHEREAS:
A. The Company and the Thai Lenders entered into a credit facility agreement
dated 27th September 1995 (the "CFA"), whereunder credit facilities of
Baht 3,300,000,000 (Thirty Three Thousand Million Baht) and
U.S.$308,000,000 (Three Hundred and Eight Million United States Dollars)
have been granted to the Company by the Thai Lenders and the Company has
provided and/or agreed to provide the Shared Collateral (as defined
hereunder) as a security for such facilities;
B. The Company intends to procure financing from abroad by (i) having the
Issuers issue U.S.$452,500,000 of indebtedness comprised of (a)
U.S.$249,000,000 principal amount at maturity (U.S.$225,594,000 gross
proceeds) of 12% Senior Mortgage Notes Due 2006 (the "Senior Mortgage
Notes"), (b) U.S.$203,500,000 principal amount at maturity
(U.S.$175,000,000 gross proceeds) of 121/4% Senior Subordinated Mortgage
Notes Due 2008, with warrants to purchase 128,834,356 (One Hundred Twenty
Eight Million, Eight Hundred Thirty Four Thousand, Three Hundred Fifty
Six) ordinary shares of the Company (excluding the warrants, the "Senior
Subordinated Mortgage Notes"); and (c) U.S.$53,133,016 principal amount at
maturity (U.S.$43,500,000 gross proceeds) of 123/4% Subordinated Second
Mortgage Debentures Due 2009 (the "Debentures") and (ii) increasing the
aggregate number of ordinary shares for the value of Baht 1,847,680,900
(Baht One Thousand Eight Hundred Forty Seven Million Six Hundred Eighty
Thousand and Nine Hundred) to be offered to specific foreign investors
(the "Capital Increase"). The Senior Mortgage Notes, the Senior
Subordinated Mortgage Notes, the Debentures and the Capital Increase shall
be collectively referred to as the "Additional Financing");
C. The Company has entered into an amendment to the CFA (the "CFA Amendment")
with the Thai Lenders on this 12th day of March 1998 for the amendment of
certain terms and provisions to facilitate the Company's Additional
Financing, including but not limited to, the right of the holders of the
Notes and the Debentures and the Thai Lenders to share the Shared
Collateral (the CFA and the CFA Amendment, collectively, the "Bank Credit
Facility");
D. The Company and the Secured Creditors have agreed to cause the Shared
Collateral to be shared to secure the Secured Indebtedness; and
E. The Parties hereto wish to enter into this Agreement providing for the
creation of security and the sharing of security among the Secured
Creditors and certain consultation procedures between and among them and
the Collateral Agent.
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IT IS AGREED as follows:
1. DEFINITIONS
Except as otherwise provided herein, words and expressions in this
Agreement shall have the respective meanings as defined in the Indentures
(as defined below):
"Actionable Default" means (i) any Event of Default for the Notes under
and as defined in the Indentures, (ii) any event of default under and as
defined in the Bank Credit Facility or (iii) any event of default in the
Debenture Indenture; provided that only those events which give the
applicable secured creditor the right to accelerate indebtedness or result
in the automatic acceleration of indebtedness, including after notice or
passage of time or both, shall be an Actionable Default.
"Closing Date" means the date on which the proceeds from the Additional
Financing, have been deposited with the Collateral Agent and all required
prepayments are made by the Company to the Thai Lenders in accordance with
the CFA Amendment.
"Credit Documents" means this Security Sharing Agreement, the Bank Credit
Facility, the Indentures, the Notes, the Debentures and the Security
Documents.
"Debenture Indenture" means the indenture for the Debentures.
"First Priority Secured Creditors" means any or all of the Thai Lenders
(including the Thai Facility Agent) and any or all of the holders of the
Notes (including the Notes Depositary and the Notes Trustees).
"Indentures" means the Notes Indentures and the Debenture Indenture.
"Land Mortgages" means the mortgages over all of the land, buildings and
structures owned by the Company granted to the Secured Creditors as
security for the Secured Indebtedness.
"Machinery Mortgages" means the mortgages over all of the machinery and
equipment owned by the Company granted to the Secured Creditors as
security for the Secured Indebtedness.
"Mortgaged Amounts" means the principal amount, expressed in Thai Baht, of
each of the Mortgages. At the Closing Date, the Mortgaged Amounts will be
set at an amount equal to the sum of the Secured Indebtedness secured
thereby expressed in US$ converted to Baht at a rate of Baht 75 to $1.00.
"Mortgaged Amounts Adjustment" means the obligation of the Company under
the Mortgages to cause the Mortgaged Amounts to be increased from time to
time at its own expense in order to maintain at all applicable times a
Mortgaged Amount based on an
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exchange rate of Baht to US$ that is no less than Baht 15 per US$1.00
higher than the actual exchange rate quoted at the close of business on
any business day by the Bank of Thailand (by way of example, if the actual
exchange rate quoted by the Bank of Thailand is Baht 65 per U.S.$1.00, the
Company would be obliged, subject to the proviso below, to cause the
Mortgaged Amounts to be increased to an amount equal to the Secured
Indebtedness secured thereby expressed in US$ converted to Baht at an
exchange rate of Baht 80 to US$1.00); provided, however, that the Company
need not undertake the adjustment described herein until such time as the
exchange rate of Baht to US$ upon which the Mortgaged Amount is then based
does not exceed the actual exchange rate quoted by the Bank of Thailand by
at least Baht 10 per US$1.00.
"Mortgages" means the Land Mortgages and the Machinery Mortgages.
"Notes" means the Senior Mortgage Notes and the Senior Subordinated
Mortgage Notes.
"Notes Indentures" means the indenture for the Senior Mortgage Notes dated
as of March 1, 1998, among the Company, the Issuers and the Senior Note
Trustee and the indenture for the Senior Subordinated Mortgage Notes dated
as of March 1, 1998, among the Company, the Issuers and the Senior
Subordinated Note Trustee.
"Notes Trustees" means the Senior Note Trustee and the Senior Subordinated
Note Trustee.
"Notice of Actionable Default" means a notice delivered to the Collateral
Agent stating that an Actionable Default has occurred, which describes
with reasonable particularity the nature of the Actionable Default and is
delivered to the Collateral Agent by (i) the Notes Trustees for the
holders of the Notes, acting pursuant to the Notes Indentures, (ii) the
Debenture Trustee for the holders of the Debentures (including the
Debenture Depositary), acting pursuant to the Debenture Indenture or (iii)
the Thai Facility Agent, acting upon the instructions of the holders of a
majority of the Outstanding Existing Indebtedness Obligations under the
Bank Credit Facility. A Notice of Actionable Default shall be deemed to
have been given when the notice referred to in the preceding sentence has
actually been received by a Responsible Officer of the Collateral Agent. A
notice of Actionable Default shall be deemed to be outstanding at all
times after such notice was given until the earlier of such time, if any,
as (x) the Collateral Agent has been notified by either Note Trustee, the
Debenture Representative or the Thai Facility Agent, as the case may be,
which delivered such notice, that such notice has been rescinded or waived
or (y) the Notes Trustees, the Debenture Trustee and the Thai Facility
Agent, if any, have determined, in accordance with the provisions
described under Section 4 hereof to rescind or waive such notice.
"Outstanding Debentures Obligations" means, at the time of any
determination, the sum of (i) the aggregate principal amount owed to the
holders of Debentures at such time and the aggregate amount of accrued and
unpaid interest thereon at such time and (ii) the
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aggregate amount of all other monetary obligations of the Company and the
Issuers that are accrued and owing at such time to the holders of
Debentures, including compensation, indemnification and expense
reimbursement obligations and premium and Additional Amounts, if any. From
and after the delivery of a Notice of Actionable Default that is
outstanding pursuant to this Agreement, such amounts shall be calculated
with respect to amounts due and owing under the Company's guarantee of the
Debentures pursuant to the Debenture Indenture, if greater than amounts
due and owing under the Debentures, from and after the delivery of a
Notice of Actionable Default.
"Outstanding Existing Indebtedness Obligations" means, at the time of any
determination, (i) the aggregate principal amount owed to the holders of
the Bank Credit Facility at such time and the aggregate amount of accrued
and unpaid interest thereon at such time and (ii) the aggregate amount of
all other monetary obligations of the Company and the Issuers that are
accrued and owing at such time to the holders of the Bank Credit Facility,
including compensation, indemnification and expense reimbursement
obligations and premium and Additional Amounts, if any.
"Outstanding Notes Obligations" means, at the time of any determination,
the sum of (i) the aggregate principal amount owed to the holders of Notes
at such time and the aggregate amount of accrued and unpaid interest
thereon at such time and (ii) the aggregate amount of all other monetary
obligations of the Company and the Issuers that are accrued and owing at
such time to the Trustees or the holders of Notes, including compensation,
indemnification and expense reimbursement obligations and premium and
Additional Amounts, if any. From and after the delivery of a Notice of
Actionable Default that is outstanding pursuant to this Agreement, such
amounts shall be calculated with respect to amounts due and owing under
the Guaranties, if greater than amounts due and owing under the Notes,
from and after the delivery of a Notice of Actionable Default.
"Responsible Officer," when used with respect to the Collateral Agent,
means any officer of the Collateral Agent with direct responsibility for
the administration of this Agreement.
"Second Priority Secured Creditors" means any or all of the holders of the
Debentures (including the Debenture Depositary).
"Secured Creditor(s)" means any or all of the Thai Lenders (including the
Thai Facility Agent), any or all of the holders of the Notes (including
the Notes Depositary and the Notes Trustees), and any or all of the
holders of the Debentures (including the Debenture Depositary and the
Debenture Trustee).
"Secured Creditors' Representatives" means the Thai Facility Agent for the
Thai Lenders, the Notes Depositary and the Trustees for the holders of the
Notes, and the Debenture Depositary and Debenture Trustee for the holders
of the Debentures.
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"Secured Indebtedness" means the Outstanding Notes Obligations, the
Outstanding Existing Indebtedness Obligations and the Outstanding
Debentures Obligations.
"Security Documents" means all the agreements, charges, documents and
instruments governing or creating the security interest in the Shared
Collateral for the benefit of the Secured Parties and shall in any event
include, without being limited to (i) this Agreement; (ii) Land and
Building Mortgage Agreement; (iii) the Machinery Pledge Agreement; (iv)
the Machinery Mortgage Agreement; (v) the Assignment of Insurance
Proceeds; (vi) the Conditional Assignment of Project Documents; (vii) the
Assignment of Operating Account, Note Sinking Fund Account and Revenue
Account; (viii) the Pledge of Operating Account and Revenue Account; (ix)
the Pledge of Permitted Investments; (x) the Assignment of Performance
Bonds; (xi) the Security Agreement governed by New York law with respect
to the offshore sub-account of the Revenue Account and the Notes Sinking
Fund Account; and (xii) any other documents relating to the Shared
Collateral and executed in connection with the foregoing; provided,
however, that, for purposes of this Agreement, the term "Security
Documents" shall not be construed to include any documents purporting to
create a security interest in the Notes DSR Account, the Offshore Reserve
Account or the outstanding ordinary or common shares of the Issuers.
"Shared Collateral" means all collateral previously granted and currently
held by the Thai Lenders and all other collateral of the Company that the
Thai Lenders shall have an interest in pursuant to the terms of the Bank
Credit Facility and the Security Documents and which shall, in no case,
include (i) the Co-Gen Facility, (ii) the Notes DSR Account, (iii) the
Offshore Reserve Account, (iv) the ordinary or common shares of the
Issuers, (v) receivables of the Company, (vi) inventory of the Company o
(vii) raw materials and work in progress of the Company.
"Total Secured Indebtedness" means without duplication, at any time of
determination, the sum of (i) the Outstanding Notes Obligations at such
time, (ii) the Outstanding Existing Indebtedness Obligations at such time
and (iii) the Outstanding Debentures Obligations at such time.
"Trustees" means collectively the Senior Note Trustee, the Senior
Subordinated Note Trustee and the Debenture Trustee.
1.2. Any reference in this Agreement to:
(a) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been or may from time
to time be, amended, varied, novated or supplemented; and
(b) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests.
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1.3. Words denominating the singular include the plural and vice versa.
1.4. Section headings are for reference only.
2. CREATION OF SECURITY
2.1. To secure the due and punctual payment by the Company of the Secured
Indebtedness, on or before the Closing Date, (i) the Thai Lenders hereby
agree to release the existing mortgage, pledge and/or any other rights
over the Shared Collateral currently held by them or their
representatives, and (ii) the Company hereby agrees to cause a security
interest in the Shared Collateral to be perfected for the benefit of the
Secured Creditors pursuant to the Security Documents.
2.2. All the parties hereto shall enter into the Security Documents
substantially in the forms attached to this Agreement as Exhibit 1, as
security for the Secured Indebtedness. Subject to Section 3.4(h) and the
terms of the Indentures, the Note Depositary Agreement and the Debenture
Depositary Agreement, the parties hereto shall arrange for all necessary
acts, including but not limited to the execution and delivery of
agreements and documents, submission and registration of same with the
competen authorities, to effect the creation and perfection of such
security by the Company.
3. THE COLLATERAL AGENT
3.1. Appointment.
Each of the Secured Creditors hereby irrevocably appoints and authorizes
the Collateral Agent as the Collateral Agent for and on its behalf:
(a) to execute and deliver all the Security Documents and any other
documents or notices related thereto which are provided for therein;
(b) to act as its Collateral Agent in connection with this Agreement and
the Security Documents;
(c) to exercise such rights, powers and discretions as are specifically
delegated to the Collateral Agent by the terms hereof and thereof
together with all such rights, powers and discretions as are
reasonably incidental hereto and thereto, provided that no implied
covenants or obligations shall be read into this Agreement or any
Security Document against the Collateral Agent; and
(d) to hold on their behalf monies from time to time deposited in the
Revenue Account, the Operating Account and the Notes Sinking Fund
Account.
3.2. Performance of the Collateral Agent.
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Subject to the provisions hereof, the Collateral Agent shall:
(a) cooperate with the Secured Creditors' Representatives and the
Company in the preparation, execution, and registration of the
Shared Collateral and Security Documents and accept and keep in
custody any or all of the Security Documents;
(b) promptly furnish each of the Secured Creditors copies of any notice
sent or document received by it to or from the Company or any third
parties under any of the Credit Documents to the extent not
furnished by the Company directly to any such Secured Creditors;
(c) promptly notify each of the Secured Creditors in writing of the
occurrence of any Event of Default or any default by the Company
under the Credit Documents which occurrence (a) is conveyed by
written notice of any of the Secured Creditors or the Company to a
Responsible Officer of the Collateral Agent, or (b) is actually
known to a Responsible Officer of the Collateral Agent;
(d) (i) subject to any contrary provisions of the Security Documents,
be authorized, but not obligated, to do such things as it may
from time to time consider necessary or desirable to preserve
its rights, and the rights of the Secured Creditors, under the
Security Documents; and
(ii) apply all amounts from time to time received by it in
accordance with this Agreement;
(e) refrain from acting in accordance with any instruction of any
Secured Creditor to institute or defend any judicial proceedings
arising out of or in connection with the Security Documents or any
other guarantee or security held from time to time for or on behalf
of the Secured Creditors in relation to the Security Documents, or
taking any other action until it has been indemnified and/or secured
to its satisfaction against any and all costs, claims, expenses
(including legal fees) and liabilities which it may expend or incur
in complying with the instructions;
(f) if it is unable to obtain instructions from or communicate with the
Secured Creditors after making reasonable attempts to do so, either
refrain from acting as Collateral Agent on behalf of them or take
such action on behalf of them as it in its absolute discretion deems
appropriate and shall not be liable to them as a result of any such
action or inaction; and
(g) refrain from acting in accordance with any instructions of any
Secured Creditor if, in its opinion, such instructions are contrary
to applicable laws or would involve it in personal liability against
which the indemnity or security referred to below would not provide
adequate protection.
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In any case, the Collateral Agent shall be entitled, in its sole discretion, to
refrain from taking any action in accordance with any instruction of any Secured
Creditor unless and until it is fully satisfied that such instruction is
legitimate, and until it has been indemnified to its satisfaction against any
and all costs, claims, expenses (including legal fees), losses, damages and
liabilities which it may expend, incur or suffer in complying with such
instruction.
3.3. Reliance.
In performing its duties hereunder, the Collateral Agent shall be entitled
(but not required) to:
(a) assume that (i) any representation made by the Company in connection
with this Agreement and the Security Documents is true; (ii) no
event which is or may become an event of default or a potential
event of default has occurred; and (iii) none of the parties to this
Agreement is in breach or default of their obligations thereunder or
under any security taken pursuant thereto unless a Responsible
Officer of the Collateral Agent directly responsible for the
administration of this Agreement has actual knowledge or actual
notice from any of the Secured Creditors or the Company to the
contrary;
(b) rely upon any written notice, certificate, opinion, telefax, order,
or other document (including, without limitation, any payment or
disbursement instruction) believed by it to be genuine concerning
all matters pertaining to this Agreement or any Security Documents
and its duties hereunder or thereunder (including as to the truth
and correctness of the statements and opinions contained therein)
and shall not be liable to any of the other parties hereto or the
holders of any Secured Indebtedness for any of the consequences of
such reliance (other than in the case of its gross negligence or
willful misconduct); and
(c) engage and pay and be reimbursed by the Issuers and the Company for
the advice or services of any lawyers, accountants, surveyors or
other experts whose advice or services its reliance upon it deems
necessary, expedient or desirable and may rely upon any advice so
obtained.
3.4. Liability.
The Collateral Agent shall not:
(a) be bound to inquire as to the occurrence of any event of default or
potential event of default or any breach of or default under this
Agreement or any of the Security Documents;
(b) be bound to disclose to any person any information relating to the
Company or any other person if such disclosure would or might in its
opinion constitute any breach
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of any contractual obligations or a violation of any applicable laws
or be grounds on which any person may bring legal action against
them;
(c) be responsible for the accuracy, genuineness or completeness of any
information, exhibit, representation, warranty, certificate or
report furnished hereunder or in connection with this Agreement
and/or any of the Security Documents;
(d) be bound to ascertain or ensure full compliance and observation of
any of the terms, conditions and covenants hereunder and/or under
this Agreement and/or any of the other Security Documents or to
inspect or verify any financial statements of the Company;
(e) be responsible for the due execution, delivery, legality, validity,
enforceability, adequacy or admissibility in evidence of this
Agreement and/or any of the Security Documents;
(f) be liable to the Company, the Secured Creditors or any other person
for any cost, charges, losses, liabilities or expenses arising from
or in connection with the enforcement of the Shared Collateral or
from any exercise or non-exercise by the Collateral Agent of any
right exercisable by it under this Agreement or the Security
Documents or from the performance or non-performance by the
Collateral Agent of any duty or obligation imposed upon it by this
Agreement or the Security Documents unless they shall be caused by
the Collateral Agent's own gross negligence or willful misconduct;
(g) be under any obligation to exercise any right, power or privilege
assigned or pledged to it or otherwise conferred on it by or
pursuant hereto or by any law or to make any inquiry as to the
nature or sufficiency of any payment received by it or to make any
claim or to take any other action to enforce any such right, power
or privilege or any amount which may become payable thereunder;
(h) be responsible for perfecting or maintaining the perfection of any
security interest or for preserving against third parties any
security interest or lien granted to it hereunder or under any
Security Document or for filing, recording, registering, refiling,
rerecording or reregistering any notice, instrument or document in
any public office at any time or times;
(i) be liable for any error of judgment made in good faith by an officer
of the Collateral Agent who is directly responsible for the
administration of this Agreement, unless it shall be proved that the
Collateral Agent was grossly negligent in ascertaining the pertinent
facts; or
(j) be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the instructions of Secured
Creditors authorized to be given to
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it hereby or by any Security Document, provided that, nothing in
this Agreement shall exempt the Collateral Agent from or indemnify
it against any liability which results from any gross negligence or
willful misconduct in relation to the exercise of its rights or any
performance of its duties under this Agreement;
3.5. Permitted Actions.
It is expressly declared as follows:
(a) the Collateral Agent may in relation to any of the Credit Documents
act on the advice or opinion of or any information obtained from any
lawyer, accountant, consultant, banker or any other expert with
relevant experience, whether obtained by the Company, the Collateral
Agent, any Secured Creditor or otherwise, and shall not be
responsible for any loss resulting from so acting;
(b) the Collateral Agent shall be at liberty to accept as sufficient
evidence of any act or matter a certificate signed by any authorized
directors of the Company and the Collateral Agent shall not be bound
in any such case to call for further evidence or be responsible for
any loss that may result from the Collateral Agent acting on such
certificate, unless it ought reasonably in the circumstances to have
known that the certificate of the Company was incorrect;
(c) the Collateral Agent shall be at liberty to hold or to place this
Agreement, any Security Documents, any relevant document of title to
any Shared Collateral and any other documents relating thereto with
any bank or company whose business includes undertaking the safe
custody of documents or any firm of lawyers considered by the
Collateral Agent to be of good reputation;
(d) the Collateral Agent shall not be bound to take any steps to
ascertain whether any event has occurred as a result of which the
Shared Collateral may become enforceable and, until a Responsible
Officer of the Collateral Agent has actual knowledge or actual
notice from any of the Secured Creditors or the Company to the
contrary, the Collateral Agent shall be entitled to assume that no
such event has occurred and that each of Secured Creditors and the
Company are observing and performing al the obligations on their
part contained in the Credit Documents;
(e) without prejudice to their right of indemnity given by law, the
Collateral Agent and every attorney, manager, agent, delegate or
other person properly appointed by them hereunder is hereby
indemnified by the Company against all liabilities and expenses
properly and reasonably incurred by them in the exercise or
enforcement of any rights, powers, authorities, or discretion vested
in them under or pursuant to this Agreement and against all actions,
proceedings, costs, claims and demands in respect to any matter or
thing done or omitted in any way relating to the Credit Documents
except for liabilities and expenses resulting from the gross
negligence
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or willful misconduct of the Collateral Agent. The Collateral Agent
may, in priority to any payment to the Secured Creditors, retain and
pay out of any moneys of the Company in its hands pursuant to the
Credit Documents the amount of any such liabilities and expenses.
The obligations of the Company under this Subsection shall survive
the termination of this Agreement and the resignation and removal of
the Collateral Agent;
(f) no provision of this Agreement or any Security Document shall
require the Collateral Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of
its duties hereunder or thereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it; and
(g) the Collateral Agent may, for purposes of determining Total Secured
Indebtedness and the amount of Indebtedness held by each Secured
Party, rely on certificates presented to the Collateral Agent by the
Thai Facility Agent, as to the indebtedness owed to the Thai
Lenders, the Trustees, as to indebtedness owed to the Senior
Mortgage Note Holders, the Senior Subordinated Mortgage Note Holders
and the holders of Debentures, respectively.
3.6. Litigation.
The Collateral Agent may, whenever it thinks fit, delegate by power of
attorney or otherwise to any person with relevant qualifications and
experience all or any of the rights, powers, authorities and discretions
vested in the Collateral Agent by this Agreement and the Security
Documents. The Collateral Agent shall not be responsible for any loss
incurred by any such delegate or sub-delegate appointed with due care by
it hereunder. The Collateral Agent will notify the Secured Creditors
promptly after making any such delegation.
3.7. Waiver.
The Collateral Agent may, but only if and in so far as, in its opinion,
the interest of the Secured Creditors shall not be materially prejudiced
thereby, waive or authorize on such terms and conditions as it shall deem
fit and proper, any breach or proposed breach of a minor or technical
nature by the Company, provided that the Collateral Agent shall not
exercise any powers conferred on it by this Sub-clause in contravention of
any express direction given by the Secured Creditors in accordance with
the provisions hereof. Any such waiver or authorization shall be binding
on the Secured Creditors and shall be notified to the Secured Creditors as
soon as practicable thereunder.
3.8. The Secured Creditors agree, ratably in accordance with their respective
Secured Indebtedness, to reimburse and indemnify the Collateral Agent to
the extent not actually
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reimbursed by the Company, and only after the Collateral Agent has
exhausted all reasonable efforts (including judicial action) to collect
from the Company, from and against all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs,
disbursements and expenses of any kind whatsoever whic may be incurred or
sustained by or imposed on or asserted against the Collateral Agent in
connection with this Agreement and/or the Security Documents and/or any
enforcement or preservation of the Secured Creditors' rights hereunder or
thereunder; provided that no Secured Creditors shall be liable for any
such liabilities resulting from the gross negligence or willful misconduct
of the Collateral Agent; provided further, that the Notes Depositary, the
Debenture Depositary and the Trustees shall have no liability under this
Section 3.8, other than to pay over to the Collateral Agent funds received
by them from their respective Noteholders or Debenture holders for
purposes of this Section 3.8.
3.9. (a) The Collateral Agent may resign its appointment hereunder at any
time without assigning any reason therefor by giving the Secured
Creditors and the Company not less than 90 days' prior written
notice of its intention to do so, provided that no such resignation
shall be effective until a successor for such Collateral Agent is
appointed in accordance with the succeeding provisions of this
Clause.
(b) If the Collateral Agent gives notice of its resignation pursuant to
(a) above, the Secured Creditors whose then outstanding Secured
Indebtedness in the aggregate exceeds sixty percent (60%) of the
then Total Secured Indebtedness, may appoint a reputable and
experienced bank or other financial institution as successor with
the approval of the Company, which will not be unreasonably withheld
so long as the proposed successor is administratively capable of
performing the role of such Collateral Agent. If no such successor
is appointed during the 90 day period of such notice, the retiring
Collateral Agent may appoint a reputable and experienced bank or
other financial institution as its successor. Any such appointment
shall take effect only upon notice thereof (which notice shall
specify the bank to which payments to such Collateral Agent shall be
made thereafter) being given to the Thai Lenders, the Thai Facility
Agent, the Trustees and the Company. The retiring Collateral Agent
shall do all such acts and things, subject to the payment of its
fees and charges, and execute and deliver all such documents as the
Company, any Secured Creditor or the successor Collateral Agent may
request to effect and perfect such assignment, delivery and transfer
to, as soon as practicable, the Collateral Agent.
(c) If a successor to a Collateral Agent is appointed under the
provisions of (b) above, then (i) the retiring Collateral Agent
shall be discharged from any obligation as such Collateral Agent but
shall remain liable for any obligations or liabilities to the
Secured Creditors incurred up to the date on which appointment of
its successor takes effect and (ii) its successor and each of the
other parties hereto shall have the
14
same rights and obligations among themselves as they would have had
if such successor had been an original party hereto.
3.10. Collateral Agent Fees and Expenses.
In consideration of the Collateral Agent's performances under this
Agreement and the Security Documents, the Company hereby agrees to pay to
the Collateral Agent reasonable compensation for its services rendered
hereunder and under the Security Documents as set forth in a separate fee
letter. The Company further agrees to pay and/or reimburse any actual
expenses incurred by the Collateral Agent in its performance of its duties
hereunder and under the Security Documents. The Company also agrees to
indemnify the Collateral Agent for, and to hold it harmless against, any
loss, liability or expense incurred without gross negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of its duties hereunder and under the Security Documents,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder or thereunder.
4. ENFORCEMENT AND OTHER ACTIONS
4.1. Notice of Actionable Default. The Collateral Agent shall promptly notify
in writing the Company, the Issuers and each Secured Creditors'
Representative that did not send such notice or certificate in the event
it shall receive any Notice of Actionable Default or certificate
rescinding or waiving a Notice of Actionable Default and shall promptly
notify the Secured Creditors' Representatives of any request by the
Company or the Issuers for any consent, waiver or amendment with respect
to any of this Agreement or any Security Document.
4.2. Actions Under Security Documents.
(a) The Collateral Agent shall not be obligated to take any action under
this Agreement or any of the Security Documents except for the
performance of such duties as are specifically set forth herein or
therein, it being the intention of the parties hereto that the
obligations of the Collateral Agent under this Agreement and the
Security Documents are ministerial in nature and that the Collateral
Agent shall not be required to exercise any discretion hereunder or
thereunder. Prior to taking any action hereunder or under any
Security Document that would otherwise require the Collateral Agent
to exercise any discretion, the Collateral Agent shall be entitled
to seek the direction of the Secured Creditors' Representatives and
shall be fully protected in acting in accordance with such
direction, except to the extent this Agreement or the Security
Documents authorize or require the Collateral Agent to act on the
basis of the direction of any other Person or Persons. Subject to
the provisions of Section 3 and this Section 4, (i) the Collateral
Agent shall take any action under or with respect to the Security
15
Documents that is requested by the Secured Creditors'
Representatives in accordance with the provisions of Section 4.3 and
which is not inconsistent with, or contrary to, the provisions of
this Agreement, the Indentures, the Notes, the Debentures, the Bank
Credit Facility or any Security Document and (ii) the Collateral
Agent may take, but shall have no obligation to take, any and all
such actions under the Security Documents or any of them or
otherwise as it shall deem to be in the best interests of the
Secured Creditors in order to maintain the Shared Collateral and
protect and preserve the Shared Collateral and the rights of the
Secured Creditors; provided, however, that, except as provided in
paragraph (b) below, the Collateral Agent shall not foreclose any
Lien on the Shared Collateral or exercise any other remedies
available to it under any Security Document with respect to the
Shared Collateral or any part thereof.
(b) The Collateral Agent shall proceed to foreclose upon the Liens of
the Security Documents, and any Secured Creditor shall otherwise
exercise any other remedies available to it under the Security
Documents with respect to the Shared Collateral or any part thereof
only if (i) the Collateral Agent has received a Notice of Actionable
Default that is outstanding pursuant hereto and has delivered such
notice to the Company, the Issuers and each other Secured Creditor's
Representative as specified in Section 4.1 and (ii) the Secured
Creditors' Representatives have agreed, in accordance with a meeting
held in accordance with Section 4.3, that the Collateral Agent or
such Secured Creditor should take such action and shall have,
pursuant to the resolution or resolutions adopted at such meeting,
given directions to the Collateral Agent or such Secured Creditor,
as the case may be, as to the precise actions to be taken in
connection with the foreclosure of such Liens. At the time the
Collateral Agent or such Secured Creditor, as the case may be, may
proceed to foreclose and enforce the Liens of the Security Documents
and the Indenture pursuant to the previous sentence, such event is
referred to as a "Foreclosure Event."
4.3. Meetings; Voting.
(a) After notification by the Collateral Agent of the receipt of a
Notice of Actionable Default pursuant to Section 4.1, upon the
request of any Secured Creditor's Representative within five
Business Days after delivery of such notice, the Collateral Agent
shall schedule a meeting of all Secured Creditors' Representatives
and the Collateral Agent to be held at the offices of the Collateral
Agent in Bangkok or another mutually convenient place; provided that
any Secured Creditor's Representative and the Collateral Agent may
participate at such meeting by telephone. At such meeting the
Secured Creditors' Representatives shall consult with one another in
an attempt to determine the course of conduct to be taken regarding
the Company, the Issuers, the collection of the Total Secured
Indebtedness and the exercise of rights and remedies under the
Security
16
Documents (including the rescission or waiver of any Notice of
Actionable Default and any action to be taken by the Collateral
Agent pursuant to Section 4.2). The Collateral Agent shall give, in
accordance with Section 12, the Secured Creditors' Representatives
at least five Business Days' notice of any such meeting, which
notice may be waived by the Secured Creditors' Representatives.
(b) Whenever it is necessary to make any decision of the Secured
Creditors whether at any meeting scheduled pursuant to Section
4.3(a) or otherwise, the Collateral Agent shall notify each Secured
Creditors' Representative entitled to participate therein of the
proposed decision, shall seek instructions from the applicable
Secured Creditors' Representatives regarding such decision and shall
notify all Secured Creditors' Representatives entitled to
participate in such decision of the results thereof. All decisions
shall be taken by Secured Creditors' Representatives on the vote of
the holders of more than 50%; of the Total Secured Indebtedness (the
"Required Holders"), where the number of votes to which each Secured
Creditor's Representative is entitled is, subject to the provisions
of Sections 6.1 and 6.2, equal to the percentage that the
Outstanding Debenture Obligations, the Outstanding Existing
Indebtedness Obligations or the Outstanding Notes Obligations, as
applicable to such Secured Creditor's Representative, at such time
bears to the Total Secured Indebtedness; provided that if an
Actionable Default exists and 60 days have elapsed since the
delivery of the Notice of Actionable Default relating to such
Actionable Default with any such default remaining unremedied or
unwaived, then the Required Holders shall consist of those holders
with more than 33 1/3% of the Total Secured Indebtedness, with the
33 1/3% number to be reduced to 10% if any such default remain
unremedied or unwaived for another 30 days after such 60 day period,
and the 10% number to be further reduced to 5% if any such default
remains unremedied or unwaived for another 60 days after such 30 day
period; provided further, that, for purposes of such calculation,
Outstanding Debenture Obligations shall be deemed to equal zero
during any period where an Actionable Default exists under any of
the Senior Note Indenture, the Senior Subordinated Note Indenture or
the Bank Credit Facility. Nothing herein shall prevent the holders
of the Debentures or the Notes from taking any action or pursuing
any rights or remedies available (in each case, other than in
respect of the Shared Collateral) under the related Indenture.
(c) No action shall be taken by any Secured Creditor with respect to the
Shared Collateral except actions taken in compliance with this
Section 4.3.
4.4. Records. The Collateral Agent shall maintain records in the English
language and in reasonable detail regarding matters decided under Section
4.3, determinations of the amounts of the outstanding obligations, the
allocation of deposits to the Collateral Accounts and any distributions
therefrom. The information contained in such records shall be made
available to any Secured Creditors' Representatives upon request.
17
4.5. Acts of the Secured Creditors.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action permitted or required by this Agreement to be
given or taken by the Secured Creditors' Representatives may be and,
at the request of the Collateral Agent, shall be embodied in and
evidenced by one or more instruments reasonably satisfactory in form
to the Collateral Agent and signed by or on behalf of such persons
and, except as otherwise expressly provided in any such instrument,
any such action shall become effective when such instrument or
instruments shall have been delivered to the Collateral Agent. The
instrument or instruments evidencing any action (and the action
embodied therein and evidenced thereby) are sometimes referred to
herein as an "Act" of the Person signing such instrument or
instruments. The Collateral Agent shall be entitled to rely
absolutely upon an Act of any Secured Creditor's Representative if
such Act purports to be taken by or on behalf of such person, and
nothing in this Section 4.5 or elsewhere in this Agreement shall be
construed to require any Secured Creditor's Representative to
demonstrate that it has been authorized to take any action that it
purports to be taking, the Collateral Agent being entitled to rely
conclusively, and being fully protected in so relying, on any Act of
such Secured Creditor's Representative.
(b) Upon the occurrence of an Actionable Default under the Notes, the
Debentures or the Bank Credit Facility, the applicable Trustee, or
the Thai Facility Agent, as applicable, shall be permitted, but not
required, to deliver a Notice of Actionable Default to the
Collateral Agent. Nothing in this Agreement or any Security Document
shall be construed or interpreted by any party hereto as requiring
the Trustees, the Debenture Representative or the Thai Facility
Agent, as the case may be, to deliver a Notice of Actionable Default
to the Collateral Agent upon the occurrence of an Actionable
Default.
4.6. Determination of Amounts of Obligations; Actionable Defaults.
Whenever the Collateral Agent is required to determine the existence or
amount of any of the Secured Indebtedness or any portion thereof or the
existence of any Actionable Default for any purposes of this Agreement, it
shall be entitled to make such determination on the basis of one or more
certificates of the applicable Trustee or the Thai Facility Agent, as the
case may be; provided, however, that if, notwithstanding the request of
the Collateral Agent, the applicable Trustee or the Thai Facility Agent,
as the case may be, shall fail or refuse within 14 days of such request to
certify as to the existence or amount of any Outstanding Obligations or
any portion thereof or the existence of any Actionable Default, the
Collateral Agent shall be entitled to determine such existence or amount
by such method as the Collateral Agent may, in its sole discretion,
determine, including by reliance upon a certificate of the Company or the
Issuers; provided further, however, that, promptly following any such
determination, the Collateral Agent shall notify the Trustees or the Thai
Facility Agent, as the case may be, of such determination and thereafter
shall
17
correct any error that the Trustees or the Thai Facility Agent, as the
case may be, brings to the attention of the Collateral Agent. The
Collateral Agent may rely conclusively, and shall be fully protected in so
relying, on any determination made by it in accordance with the provisions
of the preceding sentence (or as otherwise directed by a court of
competent jurisdiction) and, subject to Sections 3.3 and 3.4 hereof, shall
have no liability to the Company or the Issuer, the Trustees, the Thai
Facility Agent or any other Person as a result of any action taken by the
Collateral Agent based upon such determination prior to receipt of notice
of any error in such determination.
4.7. Transfer Notices. Notwithstanding anything herein or in any Security
Document to the contrary, the Collateral Agent shall have no obligation to
assume the obligations of the Company or Issuers under the Project
Documents upon delivery of a Transfer Notice (as defined in the
Conditional Assignment of Project Documents) but shall have the
unconditional right to require the appointment of a Designee (as defined
in the Conditional Assignment of Project Documents) for such purpose.
5. ACCOUNTS
The Company shall establish and maintain, as set forth in and pursuant to
the terms of Annex A, the accounts described in Annex A (the "Project
Accounts") into which shall (except as otherwise explicitly provided in
any Security Document) be deposited amounts received by the Company, in
each case pursuant to the terms and provisions set forth in Annex A
hereto.
6. PRIORITY OF RIGHTS; PROCEEDS OF ENFORCEMENT
6.1. Second Priority Creditors. Each holder of any Debenture agrees that (i)
the interests of the holders of Senior Notes, the holders of Senior
Subordinated Notes and the creditors under the Bank Credit Facility,
including their interests in any payments to be made from the proceeds of
any sale or other perfection or creation of any security interests or
Liens in the Shared Collateral on behalf of any Secured Creditor or the
incurrence of any such Notes or Indebtedness, shall be prior to the
interests of the holders of the Debentures in the Shared Collateral,
including their interests in any such payments, to the extent and in the
manner provided in Section 6.3 (and from time to time shall execute and
deliver any instruments or agreements as may be reasonably necessary or
desirable to confirm the same), (ii) at all times that a Default under the
Senior Notes or Senior Note Indenture, Senior Subordinated Notes or Senior
Subordinated Note Indenture or Bank Credit Facility has occurred and is
continuing, the holders of the Debentures shall refrain from taking any
action to foreclose upon, acquire title to (by bidding in at foreclosure
or otherwise), take possession of, liquidate or otherwise proceed against
any of the Shared Collateral, and (iii) in the event that the Company is
required to effect the Mortgage Amounts Adjustment, the interests of the
holders of the Senior Notes, the Senior Subordinated Notes and the
creditors under the Bank Credit Facility in the Mortgaged Amount,
including, without limitation, in any increase resulting from such
Mortgage Amounts Adjustment, shall
19
remain and be prior to the second priority interests of the holders of the
Debentures in any such increase and increased Mortgaged Amount (and from
time to time shall execute and deliver any instruments or agreements as
may be reasonably necessary or desirable to confirm the same).
6.2. Senior Subordinated Noteholders. Each holder of any Senior Subordinated
Note agrees that at all times that a Default has occurred and is
continuing under the Senior Notes or Senior Note Indenture, the holders of
the Senior Subordinated Notes shall (a) absent the consent of the holders
of a majority of the aggregate principal amount of Senior Notes
outstanding, refrain from taking any action toward collection of or
enforcement or otherwise exercise any rights of such holders of Senior
Subordinated Notes with respect to the Shared Collateral, whether pursuant
to applicable law, contract or otherwise, including any and all rights
concerning foreclosure upon the Shared Collateral and (b) shall (i) with
respect to any bankruptcy, insolvency, or similar proceeding, not be
entitled to vote with respect to the Shared Collateral or their rights
with respect thereto, whether pursuant to applicable law (including
applicable bankruptcy or insolvency law), contract (including the Senior
Subordinated Indenture), or otherwise, and (ii) in connection with any
vote in respect of the Shared Collateral (including in any bankruptcy,
insolvency or similar proceeding or otherwise), be deemed to have voted in
the same manner and to the same effect as the holders of a majority of the
aggregate principal amount of Senior Notes then outstanding, and the
holders of the Senior Subordinated Notes shall assign pursuant to this
Agreement such rights to vote to the holders of the Senior Notes for the
duration of any such Default for the purposes of effecting any such vote;
provided, that the foregoing provisions (A) will only apply to the holders
of the Senior Subordinated Notes so long as the amount owed to the holders
of the Senior Notes exceeds U.S.$50 million and (B) will not create any
contractual obligation on holders of the Senior Notes to take or refrain
from taking any action with respect to the Shared Collateral.
6.3. Distribution. The proceeds of any enforcement, collection or other
realization of all or any part of the Shared Collateral pursuant hereto
shall be paid to the Collateral Agent. Except as permitted herein, the
Collateral Agent shall deposit these proceeds into accounts it will
establish and maintain at its principal banking office in Bangkok for the
benefit of the Secured Creditors (the "Collateral Accounts"). The
Collateral Agent may appropriate and apply sums received by it in
connection with the enforceability of all outstanding Secured Indebtedness
to the credit of any of the accounts which have been established in the
name of the Collateral Agent, or over which the Collateral Agent holds a
security interest (provided that this provision shall apply only to
accounts that constitute Shared Collateral), on behalf of the Secured
Creditors or other sums the disposition of which it has the power to
control, in relation to this Agreement, the Bank Credit Facility, the
Indentures, the purchase agreement for the Debentures or any Security
Documents. Such proceeds shall be applied to the following order of
priority:
20
(a) first, in payment of all costs, charges, fees, expenses and
liabilities incurred and payments made by and indemnities owed to
(collectively, "costs") the Collateral Agent and any receiver,
attorney, agent, delegate, subdelegate or other person (each a
"receiver") appointed by the Collateral Agent in accordance with the
terms of this Agreement, any of the Bank Credit Facility, the
Indentures or any Security Document in connection with the
performance of its obligations hereunder or thereunder or the
execution or purported execution of any powers, authorities or
discretions vested in it or him pursuant hereto or thereto including
(without limitation to the foregoing) the remuneration of the
Collateral Agent;
(b) second, pro rata to each of the following: (i) the Notes Depositary
and the Notes Trustees, in payment for all Outstanding Notes
Obligations that consist of costs incurred in connection with the
administration of the Note Depositary Agreement and the Indentures
and (ii) the Thai Facility Agent, in payment for all Outstanding
Existing Indebtedness Obligations that consist of costs incurred in
connection with the administration of the Bank Credit Facility; and,
in each case, of every such receiver or other person payable
pursuant to the terms thereof;
(c) third, in payment of the following under the Bank Credit Facility,
the Note Indentures and the Notes, ratably to the respective
entitlements of the applicable Secured Creditors (as the case may
be) mentioned in the relevant subparagraph in the proportion that
the Secured Indebtedness owed to a Secured Creditor bears to the sum
of the Outstanding Notes Obligations and Outstanding Existing
Indebtedness Obligations:
(i) first, in payment of accrued fees, commissions and interest
(including default interest but, in the cases of default
interest accruing in relation to any unpaid sum denominated in
Baht, only that amount of default interest which would have
accrued had the rate of interest been no greater than the sum
of one per cent (1%) and the relevant interest rate payable to
the relevant First Priority Secured Creditor under the
relevant agreement) in respect thereof;
(ii) second, in payment of outstanding principal of the Secured
Indebtedness owed to the First Priority Secured Creditors;
(iii) third, the default interest charged on unpaid sums in excess
of the limit specified in clause 6.3(b)(i) above;
(d) fourth, to the Debenture Depositary and the Debenture Trustee, in
payment for all Outstanding Debentures Obligations consisting of
costs incurred in connection with the administration of the
Debenture Depositary Agreement and the Debenture Indenture;
21
(e) fifth, payment of accrued fees, commissions, interest (including
default interest) and principal to the Second Priority Secured
Creditors in respect of the Outstanding Debentures Obligations; and
(f) sixth, to the extent that any funds remain, to the Company.
(b) Except as otherwise explicitly set forth herein or in any Security
Document, the Collateral Agent shall deposit into the Collateral Accounts
all amounts received by it in its capacity as Collateral Agent (and not in
any other capacity) in respect of the Shared Collateral or the Security
Documents (including all monies received on account of any sale of or
other realization upon any of the Shared Collateral pursuant to any
Security Document or upon any Collateral Disposition or otherwise).
6.4. Conversion of Currencies.
For the purposes of Clause 6.3 conversion of amounts in U.S. Dollars or
Baht at any time shall be effected by applying the then average selling
rate of The Industrial Finance Corporation of Thailand and Thai Farmers
Bank Public Company Limited on the second business day prior to the day
that such relevant obligation becomes due.
7. DISTRIBUTION OF EXCESS PAYMENTS.
7.1. Subject to such payments being permissible under Thai law, if at any time
any one Secured Creditor (a "Recovering Creditor") obtains proceeds of any
of the Shared Collateral (whether by payment, the exercise of a right of
set-off or combination of accounts or otherwise but other than in
accordance with (i) the terms of subordination contained in the Senior
Subordinated Note Indenture or (ii) Section 6.1 above) resulting in such
Recovering Creditor's receipt of a greater proportion in respect o its pro
rata share (based on its Outstanding Note Obligations or Outstanding
Existing Indebtedness Obligations, as applicable) of the Total Secured
Indebtedness (the portion of such receipt or recovery giving rise to such
excess portion being herein called the "Excess Amount") than the
proportion thereof so received or recovered by any other Secured Creditor;
then,
(a) such Recovering Creditor shall pay to the Collateral Agent an amount
equal to such Excess Amount;
(b) there shall thereupon fall due from the Company to such Recovering
Creditor an amount equal to the amount paid out by such Recovering
Creditor pursuant to paragraph (a) above the amount so due being for
the purposes hereof treated as if it were an unpaid part of such
Creditor's portion of the relevant payment; and
(c) the Collateral Agent shall treat the amount received by it from such
Recovering Creditor pursuant to paragraph (a) above as if such
amount had been received by it from the Company in respect of the
relevant payment and shall pay the same to the
22
Secured Creditors (including such Recovering Creditor) pro rata to
their respective entitlements thereto.
7.2. If any sum (a "relevant sum") received or recovered by a Recovering
Creditor in respect of any amount owing to it by the Company becomes
repayable and is repaid by such Recovering Creditor then:
(a) each Secured Creditor which has received a share of such relevant
sum by reason of the implementation of Clause 7.1 shall pay to the
Collateral Agent for the account of such Recovering Creditor an
amount equal to its share of such relevant sum together with its
proportionate share of any interest or other sums paid to the
Company by the Recovering Creditor in respect of such relevant sum;
and
(b) there shall thereupon fall due from the Company to each Secured
Creditor an amount equal to the amount paid out by it pursuant to
paragraph (a) above, the amount so due being for the purposes
hereof, treated as if it were the sum payable to such Secured
Creditor against which such Secured Creditor's share of such
relevant sum was applied.
7.3. If any Secured Creditor exercises any right of set-off or similar right in
respect of any credit balance of any account in respect of amounts then
owing to such Secured Creditor under this Agreement, any other Security
Document or any other credit agreement, such Secured Creditor shall pay to
each of the other Secured Creditors an amount equal to the amount to which
those Secured Creditors would have been entitled had such credit balance
been applied in accordance with clause 7.1; provided tha the preceding
sentence shall not apply to amounts in the Notes DSR Account or the
Offshore Reserve Account. The Company shall indemnify the Secured
Creditors against any such payment and each loss, cost or expense incurred
or sustained by the Secured Creditors in relation thereto. The proceeds of
such indemnification shall also be treated as amounts received by such
Secured Creditor by application of rights of set-off to which this clause
applies. The other Secured Creditors shall be under no obligation to
exercise any right they may have to set off.
8. EXPENSES AND STAMP DUTY
8.1. The Company shall on demand of a Secured Creditor pay to such Secured
Creditor all reasonable costs, charges, losses, liabilities and expenses
expended, paid or incurred by such Secured Creditor (whether before or
after the Shared Collateral has became enforceable), including any tax
thereon and professional fees, in connection with this Agreement, any of
the Security Documents or the Shared Collateral or the exercise of any
rights exercisable under this Agreement with respect to the Shared
Collateral by the Thai Facility Agent, the Trustees, the Depositaries or
the Collateral Agent, as the case may be, including, without limitation,
all reasonable costs, charges, losses, liabilities and expenses
23
connected with the amendment, protection, realization, enforcement, waiver
or release of any provision of this Agreement, any of the Security
Documents or the Shared Collateral.
8.2. The Company shall pay promptly, and in any event before any penalty could
become payable, any stamp, documentary, registration or similar tax
payable in connection with the entry into, registration, performance or
enforcement of this Agreement or any of the Security Documents or in order
to render any of them admissible in evidence and shall indemnify the
Secured Creditors against any liability with respect to or resulting from
any delay in paying or omission to pay any such tax.
9. POWER OF ATTORNEY
9.1. Appointment. Each of the Secured Creditors hereby undertakes with the
Collateral Agent that it will, upon the request of the Collateral Agent at
any time, appoint the Collateral Agent as its attorney, on its behalf and
in its name or otherwise, at such time and in such manner as the
Collateral Agent may think fit (a) to do any of the things which it is
authorized to do under the Credit Documents in relation to the creation,
perfection, preservation or enforcement of the Shared Collateral and which
the Company fails duly to do, (b) to exercise all or any of the rights
conferred on it under this Agreement.
9.2. Ratification. Each of the Company, the Secured Creditors and the
Collateral Agent hereby ratifies and confirms and agrees to ratify and
confirm whatever the attorney so appointed shall do or purport to do in
the exercise or purported exercise of the power of attorney given pursuant
to Clause 9.1.
10. SECURITY UNAFFECTED
Neither the Shared Collateral nor the Secured Indebtedness thereby secured
shall be affected in any way by:
(a) any other encumbrance, guarantee or indemnity now or hereafter held
by the Collateral Agent or any other person in respect of the
Secured Indebtedness;
(b) any release of, amendment to, or enforcement or absence of
enforcement of any encumbrance, guarantee or indemnity, including
the Shared Collateral;
(c) the making or absence of any demand for payment of any liabilities
made on the Company or any other person whether by the Collateral
Agent, any other Secured Creditor or any other person;
(d) the commencement of the winding-up of the Company or any other
person;
(e) the illegality, invalidity or unenforceability of or any defect in
any provision of any document related to the Secured Indebtedness,
or any of the rights or obligations,
24
whether on the grounds of ultra vires, not being in the interests of
the Company or for any other reason whatsoever; or
(f) any agreement, guarantee, indemnity, payment or other transaction
which is capable of being avoided under or affected by any law
relating to bankruptcy, insolvency or winding-up or any release,
settlement or discharge given or made by the Collateral Agent on the
faith of any such transaction, and any such release, settlement or
discharge shall be deemed to be limited accordingly.
11. RELEASE AND REASSIGNMENT
Immediately after the Company and the Issuers have finally paid and
satisfied to a Secured Creditor in full any of the Secured Indebtedness,
the Collateral Agent shall, at the cost of the Company, release and
reassign to the remaining Secured Creditors and the Secured Creditors'
Representatives, the Collateral so released, unless all Secured
Indebtedness under the terms of this Agreement have been fully discharged,
in which event the Collateral Agent shall, at the request and cost of the
Company, promptly release and reassign, without warranty, to the Company
the rights, title and interest assigned to it under this Agreement or such
part of it as then remains assigned in favor of the respective Secured
Creditor and/or release the related encumbrances created pursuant hereto,
provided that any release, settlement, discharge or termination of this
Agreement and/or any such reassignment shall, unless otherwise agreed in
writing by the Thai Lenders or the Trustees as the case may be, be made
upo the express condition that such release, settlement, discharge,
termination and/or reassignment shall become void and of no effect if any
security or payment on the faith of which such release, settlement,
discharge, termination and/or reassignment is given or made shall at any
time thereafter be nullified or subject to an order or judgment. Prior to
executing any release or reassignment pursuant to this Section, the
Collateral Agent shall receive a certificate from the applicable Secured
Creditor stating that all Secured Indebtedness owing to such Secured
Creditor has been paid in full. Any release and reassignment delivered
pursuant to this Section shall be prepared by the Company.
To the extent that any Collateral is sold or otherwise transferred and
such sale or other transfer does not constitute a default or event of
default under the Bank Credit Facility, the Indentures, the Security
Documents, the Notes or the Debentures, such Collateral shall be sold or
otherwise transferred free and clear of the lien of the Security Documents
and the Collateral Agent shall be and hereby is authorized to take any
actions deemed appropriate in order to effect the foregoing.
12. NOTICES
Any notice or communication under or in connection with this Agreement to
the parties hereto shall be in writing and addressed as follows until
another address is filed with each of the parties hereto:
25
The Company
Nakornthai Strip Mill Public Company Limited
9, UM Tower, 16th Floor
Kwaeng Suanluang
Khet Suanluang
Bangkok, Thailand
Attn:
NSM Steel Company Ltd.
c/o NSM Thailand
Attn:
NSM Steel (Delaware) Inc.
c/o NSM Thailand
Attn:
The Thai Lenders via the Thai Facility Agent or at the address that appears
below their signature
The Thai Facility Agent
The Industrial Finance Corporation of Thailand
1770 New Petchburi Road,
Bangkok 10320
Attn:
The Collateral Agent
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attn: Valerie Dunbar, Global Trust Services
The Notes Depositary, the Debenture Depositary and the Trustees
The Chase Manhattan Bank
450 West 33rd Street, 15th floor
New York, NY 10001
Attn: Valerie Dunbar, Global Trust Services
26
13. SEVERABILITY
If at any time any one or more of the provisions of this Agreement becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
14. EFFECTIVENESS.
This Agreement will become effective on the Closing Date upon the
occurrence of the following:
(a) upon the Closing of the Additional Financing; and
(b) the Company has received the proceeds from the offering of the
Notes, the Debentures and the Capital Increase and such proceeds
have been deposited in the Project Accounts; and
(c) the Thai Lenders have received the prepayment in the amount of US$50
million plus past due interest of approximately US$8 million from
the offering of such Notes and Debentures; and
(d) the arrangement for the Notes Depositary and the Debenture
Depositary, as representative of the holders of the Notes and
Debentures, to share the Shared Collateral with the Thai Lenders in
accordance with this Agreement.
15. GOVERNING LAW
(a) This Agreement shall be governed and construed in accordance with
the laws of Thailand, except with respect to the Collateral Agent's
immunities and standard of care which shall be governed and
construed in accordance with the laws of the State of New York.
(b) Each of the parties hereto irrevocably agrees that the court in
Thailand shall have jurisdiction to hear and determine any suit,
action or proceeding, and to settle any disputes, which may arise
out of or in connection with this Agreement and, for such purposes,
irrevocably submits to the jurisdiction of such court. The Company
irrevocably waives any objection which it might now or hereafter
have to such court being nominated as such forum and agrees not to
claim that any such court is not a convenient or appropriate forum.
(c) The submission to the jurisdiction of the courts referred to in
subparagraph (b) shall not (and shall not be construed so as to)
limit the right of the Secured Creditors or any of them to take
proceedings against the Company in any other court of competent
jurisdiction, nor shall the taking of proceedings in any one or
27
more jurisdictions preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent
permitted by applicable law.
(d) The Company hereby consents generally, in respect of any legal
action or proceeding arising out of or in connection with this
Agreement, to the giving of any relief or the issue of any process
in connection with such action or proceeding, including, without
limitation, the making, enforcement or execution against any
property whatsoever (irrespective of its use or intended use) of any
order or judgment which may be made or given in such action or
proceeding.
(e) To the extent that the Company may in any jurisdiction claim for
itself or its assets immunity from suit, execution, attachment
(whether in aid of execution, before judgment or otherwise) or other
legal process, and to the extent that in any such jurisdiction there
may be attributed to itself or its assets such immunity (whether or
not claimed), the Company hereby irrevocably agrees not to claim and
hereby irrevocably waives such immunity to the full extent permitted
by laws of such jurisdiction.
16. SUCCESSOR COLLATERAL AGENT
A Successor Collateral Agent may be appointed at any time, upon the
written approval of the Company, the Trustees and the Thai Facility Agent,
such approval not to be unreasonably withheld; provided, however, that
such Successor Collateral Agent shall be a bank with an office in New
York, New York and Bangkok, Thailand, having combined Capital and surplus
equivalent to at least U.S. $500 million and authorized to perform the
functions of the Collateral Agent under this Agreement; and provided
furthe that, in the event a Thai court were not to recognize the standing
of the Collateral Agent to bring an enforcement action in respect of the
Shared Collateral on behalf of all the Secured Creditors, such approval
shall be deemed obtained for the appointment of the Notes Depositary as
Successor Collateral Agents; and provided still further that in such event
such approval shall be deemed obtained for the appointment, solely with
respect to the Debenture Trustee and the holders of the Debentures, of the
Debenture Depositary as Successor Collateral Agent.
17. AMENDMENTS
No modifications, waiver or amendment of any provision of this Agreement
or any Security Document shall in any event be effective unless the same
shall be in writing and signed by the Issuers, the Company and each
Secured Creditor's Representative, provided, however, that (i) no such
modification, waiver or amendment shall adversely affect any of the
Collateral Agent's right, immunities or rights to indemnification under
this Agreement or expand its duties or obligations under this Agreement
without the prior written consent of the Collateral Agent and (ii) no such
modification, waiver or amendment shall, except as set forth in the
Security Documents, (A) create any Lien on the Shared Collateral or
28
any part thereof or terminate any part of the security interest of the
Collateral Agent in all or substantially all of the Shared Collateral or
(B) deprive the holders of the Secured Indebtedness of any part of the
security afforded by the liens of the Security Documents, in each case
without the consent of (x) the Thai Facility Agent and the Note Trustees
(in each case acting at the direction of a majority of holders of the
Outstanding Existing Indebtedness Obligations or Outstanding Notes
Obligations, as the case may be) unless the Note Holders and the Lenders
shall have released the Issuers and the Company of their obligations under
the Security Documents and hereunder, and (y) the consent of the Debenture
Trustee (acting at the direction of a majority of the holders of the
outstanding Debenture Obligations); provided further, however, that, in
any event, no such modification, waiver or amendment shall deprive the
holders of the Debentures of their rights under the Security Documents
without the consent of the Debenture Trustee, acting at the direction of a
majority of the holders of outstanding Debentures Obligations.
18. BENEFIT OF THE AGREEMENT
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties
hereto; provided, however, that no Secured Creditor shall, without the
written consent of the other Secured Creditors, assign or otherwise
transfer any rights, interests, duties or obligations under the Credit
Documents unless (i) each assignee or transferee shall have agreed in
writing (which writing shall be reasonably satisfactory to each Secured
Creditor) to be bound by and comply with the terms of this Agreement to
the same extent as the assignor or transferor hereunder and (ii) such
writing shall have been delivered to each Secured Creditor.
19. COUNTERPARTS
This Agreement may be executed by the parties hereto in as many
counterparts as may be deemed necessary or convenient, and each such
counterpart, when so executed, shall be deemed an original and all such
counterparts shall constitute but one and the same agreement.
20. INCONSISTENCY
Notwithstanding any provision of this Agreement or the Security Documents
to the contrary, each of the parties hereto acknowledges and agrees solely
for the benefit of the parties hereto that in the event of any conflict
between the terms of this Agreement and the terms of any Security Document
with respect to the application of monies
21. NO WAIVER
No failure or delay on the part of any of the parties hereto in exercising
any right, power or privilege under this Agreement shall impair such
right, power or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or
29
partial exercise of any such right, power or privilege preclude other or
further exercise thereof or of any other right, power or privilege.
22. NO CONTRAVENTION
Each Secured Creditor hereby agrees not to act, or to refrain from acting,
in any manner in respect of the Bank Credit Facility, the Notes, the
Debentures or the Indentures that would be reasonably likely to contravene
the intercreditor arrangements established hereby or adversely affect the
practical realization by any of the Secured Creditors of the benefits
thereof.
30
IN WITNESS WHEREOF, the duly authorized representatives of the
parties hereto have executed this Agreement on the day and year first before
written.
THE INDUSTRIAL FINANCE CORPORATION OF
THAILAND,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
THAI FARMERS BANK PUBLIC COMPANY
LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
SIAM CITIBANK PUBLIC COMPANY LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
NAKORNTHAI STRIP MILL PUBLIC COMPANY
LIMITED,
By: /s/ Sawasdi Horrungruang
-----------------------------------
Title: President/CEO
Address:
31
SIAM CITY CREDIT FINANCE AND
SECURITIES PUBLIC COMPANY LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
FIRST CITY INVESTMENT FINANCE COMPANY
LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
IFCT FINANCE AND SECURITIES PUBLIC
COMPANY LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
32
THE GOVERNMENT SAVINGS BANK,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
FIRST BANGKOK CITY BANK PUBLIC COMPANY
LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
NAKORNTHON BANK PUBLIC COMPANY
LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
SCF FINANCE AND SECURITIES PUBLIC
COMPANY LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
33
NSM STEEL COMPANY LTD..
By: /s/ Sawasdi Horrungruang
-----------------------------------
Title: President/CEO
Address:
THE CHASE MANHATTAN BANK, as Notes
Depositary, Senior Note Trustee and
Senior Subordinated Note Trustee,
By: /s/ Valerie Dunbar
-----------------------------------
Title:
Address:
THE CHASE MANHATTAN BANK, as Debenture
Depositary and Debenture Trustee,
By: /s/ Valerie Dunbar
-----------------------------------
Title:
Address:
EXHIBIT 1
Form of Security Documents
EXHIBIT A
PROJECT ACCOUNTS
ARTICLE I
Definitions
SECTION 1.1. Definitions. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the Security
Sharing Agreement and the Indentures.
SECTION 1.2. Incorporation by Reference. Unless otherwise indicated
herein, each provision of the Security Sharing Agreement is specifically
incorporated by reference herein as if repeated in this Annex.
ARTICLE II
Protect Accounts
SECTION 2.1. Accounts. (a) There is hereby established and, at all
times hereafter until the trust created by the Security Sharing Agreement and
this Annex is terminated, there shall be maintained with the Collateral Agent at
the New York, New York corporate trust office of the Collateral Agent, a trust
account (the "Notes DSR Account") in the name of the Company and the Collateral
Agent under the control of the Collateral Agent for the benefit of the holders
of the Notes and the Debentures (the "Note Secured Creditors") into which there
shall be deposited by the Company, and the Company agrees to deposit (i)
$________ Issue Date, representing the sum of (a) the aggregate interest to be
payable on the Senior Notes on the first three Interest Payment Dates, (b) the
aggregate interest to be payable on the Senior Subordinated Notes on the first
two Interest Payment Dates and (c) the aggregate interest to be payable on the
Debentures on the first two interest payment dates, and (ii) from time to time
after the first three Interest Payment Dates, any amounts necessary cure any
deficiency in the required level of the Notes DSR Account as set forth in
Section 2.3(a). Income earned on Permitted Foreign Investments from amounts on
deposit in the Notes DSR Account shall accrue to the Revenue Account on the
first day of each calendar month. Amounts on deposit in the Notes DSR Account
shall at all times be maintained in U.S.$ at a Qualifying Financial Institution,
may only be invested in Permitted Foreign Investments and shall be disbursed by
the Collateral Agent in accordance with Section 2.3(a).
(b) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex is
terminated, there shall be maintained with
Annex A
Page 2
the Collateral Agent at the New York, New York corporate trust office of the
Collateral Agent, a trust account (the "Offshore Reserve Account") in the name
of the Company and the Collateral Agent under the control of the Collateral
Agent for the benefit of the holders of the Notes and the Debentures (the "Note
Secured Creditors") into which there shall be deposited by the Company, and the
Company agrees to deposit, (i) $_____ on the Issue Date, representing the
balance (not otherwise deposited in the Notes DSR Account or the Transaction
Expenses and Fees Account (as defined below)) of the Notes Net Proceeds,
together with the balance of the proceeds of the Debenture Offering and any
Equity Investment Proceeds, and (ii), from time to time, income earned on
Permitted Foreign Investments from amounts on deposit in the Offshore Reserve
Account. Amounts on deposit in the Offshore Reserve Account shall at all times
be maintained in U.S.$ at a Qualifying Financial Institution, may only be
invested in Permitted Foreign Investments and shall be disbursed by the
Collateral Agent in accordance with Section 2.3(b).
(c) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex is
terminated, there shall be maintained with the Collateral Agent at the New York,
New York corporate trust office of the Collateral Agent, a trust account (the
"Notes Sinking Fund Account") in the name of the Company and the Collateral
Agent under the control of the Collateral Agent for the benefit of the Secured
Creditors into which there shall be deposited by the Company, and the Company
agrees to deposit, (i) no later than the fifteenth day following the last day of
each fiscal quarter of the Company (based on the Company's fiscal year in effect
on the Issue Date), an amount equal to the Cash Flow Sweep Amount (such amount
to be simultaneously certified by the Company to the Collateral Agent), and
(ii), from time to time, income earned on Permitted Foreign Investments from
amounts on deposit in the Notes Sinking Fund Account. Amounts on deposit in the
Notes Sinking Fund Account shall at all times be maintained in U.S.$ at a
Qualifying Financial Institution, may only be invested in Permitted Foreign
Investments and shall be disbursed by the Collateral Agent in accordance with
Section 2.3(c).
(d) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the Bangkok,
Thailand office of the Collateral Agent, a trust account (the "US$ Revenue
Account") in the name of the Collateral Agent under the control of the
Collateral Agent for the benefit of the Secured Creditors into which there shall
be deposited by the Company, and the Company agrees to deposit, (i) (directly or
through an intermediate fund as described in Section 2.1(f) below) all revenues
with respect to products sold or services performed by the Company, all proceeds
with respect to insurance policies held by the Company for the benefit of the
Company and all other amounts received by the Company that are denominated in
US$ and are not otherwise required to be deposited in the Offshore Reserve
Account, and (ii), from time to time, income denominated in US$ earned on
Permitted Foreign Investments from amounts on deposit in the US$ Revenue
Account. Amounts on deposit in the US$ Revenue Account must be maintained in US$
at a Qualifying Domestic Financial Institution, may only be invested in
Permitted Foreign Investments (subject to applicable exchange controls) and
shall be disbursed by the Collateral Agent in accordance with Section 2.3(d).
Annex A
Page 3
(e) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the Bangkok,
Thailand office of the Collateral Agent, a trust account (the "Baht Revenue
Account") in the name of the Collateral Agent under the control of the
Collateral Agent for the benefit of the Secured Creditors into which there shall
be deposited by the Company, and the Company agrees to deposit, (i) (directly or
through an intermediate fund as described in Section 2.1(f) below) all revenues
with respect to products sold and services performed by the Company, all
proceeds with respect to insurance policies held by the Company for the benefit
of the Company and all other amounts received by the Company, in each case that
are denominated in Baht, and (ii), from time to time, income denominated in Baht
earned on Permitted Foreign Investments from amounts on deposit in the Baht
Revenue Account. Amounts on deposit in the Baht Revenue Account shall be
maintained at a Qualifying Domestic Financial Institution, may only be invested
in Permitted Foreign Investments (subject to applicable exchange controls) and
shall be disbursed by the Collateral Agent in accordance with Section 2.3(d).
(f) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the New York,
New York corporate trust office of the Collateral Agent, a trust account (the
"Offshore Sub-account" and, together with the US$ Revenue Account and the Baht
Revenue Account, the "Revenue Accounts") in the name of the Company and the
Collateral Agent under the control of the Collateral Agent for the benefit of
the Secured Creditors into which there shall be deposited by the Company, and
the Company agrees to deposit, (i) subject to any applicable exchange control
regulations, on or before the next Interest Payment Date an amount equal to the
sum of (a) the aggregate interest payable on the Notes on the such Interest
Payment Date and (b) the aggregate interest payable on the Debentures on the
such interest payment date, (c) on or before the fifteenth day following the
last day of each fiscal quarter of the Company (based on the Company's fiscal
year in effect on the Issue Date) any amount required to be deposited into the
Notes Sinking Fund Account applicable to the then current fiscal quarter, as
estimated in advance in good faith by the Company and certified to the
Collateral Agent; provided, however, that, notwithstanding the foregoing
provision, any sales proceeds denominated in Baht in the ordinary course of the
Company's business consistent with past practice need not be converted into
U.S.$ prior to the date such deposited proceeds may be used to pay U.S.$
denominated obligations or are otherwise deposited into the Notes Sinking Fund
Account, and (ii), from time to time, income earned on Permitted Foreign
Investments from amounts on deposit in the Offshore Sub-account. Amounts
deposited in the Offshore Sub-account must at all times be maintained in U.S.$
at a Qualifying Financial Institution, may only be invested in Permitted Foreign
Investments and shall be disbursed b the Collateral Agent in accordance with
Sections 2.3(d) and (e).
(g) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the Bangkok,
Thailand office of the Collateral Agent, a trust account (the "US$ Operating
Account") in the name of the Company under the control of the Company into which
there shall be deposited by the Company, and the Company agrees to deposit, on
the first day of each calendar month an amount such that, immediately after
giving effect to such deposit,
Annex A
Page 4
the balance of such account shall be equal to the sum of (i) the US$ denominated
capital expenditures and Working Capital Requirements of the Company during that
calendar month as estimated in advance in good faith by the Company and
certified to the Collateral Agent and (ii) any amount required to be paid during
such calendar month in connection with the US$ denominated portion of the Bank
Credit Facility. The US$ Operating Account shall be maintained at a Qualifying
Domestic Financial Institution and disbursed by the Company in accordance with
Section 2.3(e).
(h) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the Bangkok,
Thailand office of the Collateral Agent, a trust account (the "Baht Operating
Account" and, together with the US$ Operating Account, the "Operating Accounts")
in the name of the Company under the control of the Company into which there
shall be deposited by the Company, and the Company agrees to deposit, on the
first day of each calendar month an amount such that, immediately after giving
effect to such deposit, the balance of such account shall be equal to the sum of
(i) the Baht denominated capital expenditures and Working Capital Requirements
of the Company during that calendar month as estimated in advance in good faith
by the Company and certified to the Collateral Agent and (ii) any amount
required to be paid during such calendar month in connection with the Baht
denominated portion of the Bank Credit Facility. The Baht Operating Account
shall be maintained at a Qualifying Domestic Financial Institution and disbursed
by the Company in accordance with Section 2.3(e).
(i) There is hereby established and, at all times hereafter until
the date that is 60 days after the Issue Date, there shall be maintained with
the Collateral Agent at the New York, New York corporate trust office of the
Collateral Agent, a trust account (the "Transaction Expenses and Fees Account")
in the name of the Collateral Agent under the control of the Collateral Agent
for the benefit of the Note Secured Creditors into which there shall be
deposited by the Company, and the Company agrees to deposit, $35 million on the
Issue Date, representing the Company's best estimate of the expenses and fees
that it will be required to pay in connection with the Additional Financing.
Amounts on deposit in the Transaction Expenses and Fees Account must be
maintained in US$ and shall be disbursed by the Collateral Agent in accordance
with Section 2.3(f).
SECTION 2.2. Investment of Funds Deposited in Project Accounts.
Amounts on deposit in the Project Accounts shall be invested and reinvested from
time to time in such Permitted Foreign Investments as the Company shall direct
by written instruction to the Collateral Agent, which Permitted Foreign
Investments shall be held in the name and be under the control of the Collateral
Agent or a successor Collateral Agent as provided in Section 3.9 of the Sharing
Agreement. If the amounts on deposit in any of the Project Accounts are invested
in Cash Equivalents described in clause (v), (vii) or (viii) of the definition
thereof and the ratings thereof fall below the ratings that are indicated in
such clause, either the Company or a majority of the holders of Outstanding
Notes Obligations, in the case of amounts on deposit in the Notes DSR Account or
the Offshore Reserve Account, or a majority of the holders of the Total Secured
Indebtedness, in the case of any other Account, shall direct the Collateral
Agent in writing to reinvest such amounts in another Permitted Foreign
Investment. In order to provide the Collateral Agent, for the benefit of the
Note Secured Creditors or the Secured Creditors, as the
Annex A
Page 5
case may be, with a perfected security interest in any Permitted Foreign
Investment, each Permitted Foreign Investment shall be either:
(A) evidenced by negotiable certificates or instruments, or if
nonnegotiable then issued in the name of the Collateral Agent, which
(together with any appropriate instrument of transfer) are delivered to,
and held by, the Collateral Agent or any agent thereof in the State of New
York, United States; or
(B) in book-entry form and issued by the United States or any agency
thereof and backed by the full faith and credit of the United States, and
subject to pledge under applicable national or state law and Treasury
regulations and as to which appropriate measures shall have been taken for
perfection of the security interest; or
(C) in the case of a guaranteed investment contract, issued in the
name of the Collateral Agent (or any agent) and delivered to and held by
the Collateral Agent (or such agent).
Provided, however, that the provisions of the foregoing Sections 2.2(A), (B) and
(C) will not apply in the case of Permitted Foreign Investments in investment
funds when such Permitted Foreign Investments are (i) held by the Collateral
Agent and (ii) in the name of the Collateral Agent. In the absence of negligence
or willful misconduct, the Collateral Agent shall not be responsible for any
loss resulting from any such Permitted Foreign Investment. In addition, the
Collateral Agent has no obligation (i) to select or approve the terms
(including, without limitation, the rate of return or maturity) of any Permitted
Foreign Investment specified by the Company or determine whether its security
interest therein is perfected, (ii) to account to any person in connection with
those terms or the interest or other return in relation to those Permitted
Foreign Investments or amounts; or (iii) for anything done or omitted in
connection with the selection of those terms or renewal of those Permitted
Foreign Investments or amounts including, without limitation, any withdrawals or
realizations made before the maturity date of the Permitted Foreign Investments
or amounts, any failure to invest or reinvest any Permitted Investments or
amounts or any delays in doing so; provided, however, that nothing in this
paragraph will be taken to permit investment of funds in the Project Accounts
other than in Permitted Foreign Investments or to permit dealings with amounts
in the Project Accounts or with Permitted Foreign Investments otherwise than in
accordance with this Annex. Any investment direction by the Company shall be
accompanied by a certification that the requested investment constitutes a
Permitted Foreign Investment.
SECTION 2.3. Payments and Withdrawals from Project Accounts. (a) The Collateral
Agent shall withdraw funds from the Notes DSR Account and apply such amounts to
pay to the Paying Agent under the Indentures the interest due on the Notes and
the Debentures on the first two Interest Payment Dates after the Issue Date.
Thereafter, the balance in the Notes DSR Account shall at all times be at least
equal to the next interest payment on the Senior Notes. Notwithstanding the
preceding sentence, the Company shal have the right, assuming no other Event of
Default then exists, to cause amounts held in the Notes DSR Account to be
withdrawn to pay interest on the Notes and the Debentures even though such
withdrawal would reduce the amounts remaining in
Annex A
Page 6
the Notes DSR Account below the minimum level indicated above; provided,
however, that any withdrawal that would reduce such amounts below the required
level may only be made to the extent sufficient funds are not then available in
the Revenue Accounts to pay such interest; provided further that the minimum
required level for the Notes DSR Account must be replenished in full by the
Company within 30 days following any such withdrawal; provided further that the
Collateral Agent has received a written request for such payment at least three
business days prior to the requested date of such payment. If after a period of
30 days the Company shall have failed to replenish any deficiency in the Notes
DSR Account, the Collateral Agent shall so notify the Trustees. All withdrawals
from the Notes DSR Account must be paid directly to the Paying Agent under the
Indentures to apply to interest payments on the Notes or the Debentures, as the
case may be. At the time the Company delivers a request to the Collateral Agent
for a payment from the Notes DSR Account, it must also deliver a certificate
signed by the Paying Agent under the Indentures stating the amount of interest
payable by the Company on the relevant Interest Payment Date. In the event that
the Company fails to provide a certificate to the Collateral Agent in accordance
with the preceding sentence, the Collateral Agent may refuse to authorize the
payment from the Notes DSR Account until such a certificate is provided.
(b) The amounts held in the Offshore Reserve Account may be
withdrawn by the Company only to (i) fund Phase II Construction Costs that are
required to be paid by the Company; provided that amounts may only be withdrawn
to fund such costs payable to vendors domiciled in Thailand to the extent
sufficient funds are not then available in the Operating Accounts to fund such
costs and (ii) fund general corporate purposes, including operating expenses,
debt service and the Cogen Investment (hereinafter, "Working Capital
Requirements") to the extent sufficient funds are not then available in the
Revenue Account to fund such requirements; provided further that the Company may
only withdraw funds from the Offshore Reserve Account to fund Working Capital
Requirements up to a maximum of U.S.$70 million in the aggregate. If the
aggregate amount withdrawn from the Offshore Reserve Account since the Issue
Date for Working Capital Requirements exceeds U.S.$50 million, or if after
giving effect to any proposed withdrawal the aggregate amount withdrawn from the
Offshore Reserve Account for such purpose would exceed $50 million, then amounts
in excess of such U.S.$50 million may only be withdrawn to fund Working Capital
Requirements upon a request by the Company accompanied by a certificate to the
Collateral Agent from the Independent Engineer or another independent
engineering firm of suitably similar international reputation and experience
which is reasonably satisfactory to the Collateral Agent (a "Substitute
Independent Engineer") stating that the funds available to the Company in the
Offshore Reserve Account (after giving effect to the proposed withdrawal) are
sufficient to satisfy all of the Company's remaining required Phase II
Construction Costs through Phase II Completion. At Phase II Completion, any
remaining amounts in the Offshore Reserve Account (except to the extent then
required to replenish the Notes DSR Account) may, at the Company's option
demonstrated by a written request to the Collateral Agent (which shall certify
that Phase II Completion has occurred), be applied to (x) tender for a portion
of the Notes and Debentures then outstanding at 100% of Accreted Value or (y)
repay principal amounts outstanding under the Bank Credit Facility; provided
that if the Company achieves Profitable Operations as of any date prior to and
including December 31, 2001, the Company will as of such date have the further
option, demonstrated by a written request to the Collateral Agent, to apply any
amounts then remaining in the Offshore Reserve
Annex A
Page 7
Account (except to the extent then required to replenish the Notes DSR Account)
to the payment of Phase III Construction Costs. Notwithstanding the foregoing,
if the Company fails to achieve Profitable Operations prior to December 31,
2001, any remaining amounts in the Offshore Reserve Account must be used by the
Company to tender for the Notes and the Debentures at a price equal to 100% of
the Accreted Value thereof on the date of purchase (a "Stage III Tender"). Any
amounts remaining in the Offshore Reserve Account after a Stage III Tender will
be applied by the Company (x) first to replenish the Notes DSR Account (if
necessary) and (y) second to pay overdue interest, if any, and principal amounts
outstanding under the Bank Credit Facility. All requests by the Company for
withdrawals from the Offshore Reserve Account must be in writing and received by
the Collateral Agent at least three business days prior to the requested date of
such withdrawal. An such request shall set forth the purpose of such withdrawal,
shall certify, to the extent applicable, that the funds are to be used for Phase
III Construction Costs, Working Capital Requirements, repayment of amounts due
under the Bank Credit Facility, a Stage III Tender, to replenish the Notes DSR
Account or for any other purpose set forth herein, shall certify that such
withdrawal is for a purpose, for an amount and is to be paid to a payee
permitted hereby and that all conditions set forth herein to such withdrawal
have been complied with. The Company may not make any withdrawals from the
Offshore Reserve Account if, at the time it delivers a notice to the Collateral
Agent requesting such a withdrawal (i) there exists an Actionable Default
notified to the Collateral Agent by means of a Notice of Actionable Default or
(ii) the Company fails to provide to the Collateral Agent a certificate (a) from
the Independent Engineer dated no more than five days before the date of the
proposed withdrawal stating that the withdrawal is for the purpose of paying
Phase II Construction Costs required to be paid by the Company (if such is the
case) or (b) if the proposed withdrawal is for the purpose of funding Working
Capital Requirements, stating (i) how the funds are to be applied and (ii) that
the aggregate amount withdrawn from the Offshore Reserve Account since the Issue
Date to fund Working Capital Requirement, after giving effect to the proposed
withdrawal (1) does not exceed $50 million or (2) exceeds $50 million, in which
case the Company must also provide to the Collateral Agent a certificate of the
Independent Engineer stating that the funds available to the Company in the
Offshore Reserve Account (after giving effect to the proposed withdrawal) are
sufficient to satisfy all of the Company's Phase II Construction Costs through
Phase II Completion.
(c) The amounts held in the Notes Sinking Fund Account shall be used
to retire Notes and Debentures at maturity or to satisfy repurchase obligations
in respect of the Notes and the Debentures arising from the offers to repurchase
described under Sections 4.06, 4.07 or 4.10 of the Indentures. Notwithstanding
the foregoing, the Company or the Issuers may use amounts held in the Notes
Sinking Fund Account (i) during the period prior to the second anniversary of
the Issue Date and during any period where Profitable Operations have been
achieved and are continuing, to make payments of Phase III Construction Costs,
to fund working capital shortfalls, to invest in or acquire Additional Assets or
to purchase, redeem or otherwise acquire for value Secured Indebtedness of the
Company or the Issuers and (ii) at all other times, solely to purchase, redeem
or otherwise acquire for value Notes and Debentures or to make scheduled
principal or interest payments on Secured Indebtedness of the Company or the
Issuers. To make withdrawals from the Notes Sinking Fund Account, the Company
must provide to the Collateral Agent (i) if the requested date of the withdrawal
is within two years of the Issue Date
Annex A
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and the withdrawal is for a purpose other than the repurchase of outstanding
Notes or Debentures, a written request for withdrawal at least three Business
Days prior to the date of the proposed withdrawal, (ii) if the requested date of
the withdrawal is two years or more after the Issue Date and the withdrawal is
not for the purpose of repurchasing Notes or Debentures, the notice provided in
the preceding clause (i) accompanied by a certificate of the Chief Executive
Officer of the Company certifying that the Company has achieved Profitable
Operations, or (iii) if the purpose of the withdrawal is to repurchase
outstanding Notes or Debentures, the notice provided in clause (i) accompanied
by a certificate of the Chief Executive Officer stating the reasons therefore.
No withdrawals may be made by the Company from the Notes Sinking Fund Account
if, at the time the request for a withdrawal is delivered to the Collateral
Agent, there exists an Actionable Default notified to the Collateral Agent by
means of a Notice of Actionable Default.
(d) Amounts on deposit in the Revenue Accounts may be withdrawn by
the Company (i) to fund the Operating Accounts on the first day of each month as
provided in Section 2.1(g) and (h) above, (ii) to fund the Notes Sinking Fund
Account on or before the fifteenth day following the last day of each of the
Company's fiscal quarters (based on the fiscal year of the Company in effect on
the Issue Date), (iii) to fund Working Capital Requirements, (iv) at all times
after the first two Interest Payment Dates, to pay interest when due on the
Notes and the Debentures and, if necessary, to fund required amounts in the
Notes DSR Account, and (v) at all times after the attainment by the Company of
Profitable Operations, to fund cash dividends and distributions that may be made
by the Company as provided in the Indentures. All withdrawals by the Company
from the Revenue Accounts must be in writing to the Collateral Agent on three
Business Days notice stating (i) in all instances, the purpose of the withdrawal
and that such withdrawal is in accordance with the terms of this Annex, and (ii)
if for the purpose of funding the Operating Accounts, that the amount requested
is the Company's best estimate of the amounts required to be paid by the Company
in the calendar month immediately following the request, which estimate shall be
certified as such by the Chief Executive Officer and shall take account of any
funds remaining in the Operating Accounts at the end of the preceding calendar
month. All amount requested by the Company to be paid in respect of the Notes
Sinking Fund Account or as interest on the Notes or Debentures shall be paid
directly by the Collateral Agent to the Notes Sinking Fund Account or to the
Paying Agent under the Indentures. No withdrawals from the Revenue Accounts may
be made if, at the time the request for withdrawal is delivered to the
Collateral Agent, there exists an Actionable Default notified to the Collateral
Agent by means of a Notice of Actionable Default.
(e) The Collateral Agent shall on the first day of each calendar
month deposit into the Operating Accounts by withdrawal from the Revenue
Accounts an amount such that, immediately after giving effect to such deposits,
the combined balance of such accounts shall be equal to the sum of (i) the US$
and Baht denominated capital expenditures (including, in the case of the latter,
Phase II Construction Costs to be paid by the Company to vendors in Thailand)
and Working Capital Requirements of the Company during that calendar month as
estimated in advance in good faith by the Company and certified to the
Collateral Agent and (ii), in the case of the Baht Operating Account, any amount
required to be paid during such calendar month in connection with the Bank
Credit Facility. The Company shall be responsible for providing to the
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Collateral Agent its request for withdrawal of amounts to be deposited in the
Operating Accounts from the Revenue Accounts as provided above. As long as no
Actionable Default exists and has been noticed to the Collateral Agent by means
of a Notice of Actionable Default, no request or notice need be provided to the
Collateral Agent in respect of withdrawals from the Operating Accounts;
provided, however, that the Collateral Agent shall have the right at any time to
request and accounting of the Company of actual expenditures by the Company from
the Operating Accounts in any calendar month.
(f) The amounts in the Transaction Expenses and Fees Account shall
be disbursed by the Collateral Agent at the written direction of the Company to
pay all expenses and fees incurred by the Company in connection with the
Additional Financing, including but not limited to advisory fees and
disbursements and the fees and disbursements of counsel. Any amounts remaining
in the Transaction Expenses and Fees Account at the close of business in New
York, New York on the day that is 60 days after th Issue Date shall be credited
by the Collateral Agent to the Offshore Reserve Account.
SECTION 2.4. Distribution to the Company. Except as specifically set
forth in Section 2.3, so long as any amounts or obligations under the Secured
Indebtedness remain outstanding, the Collateral Agent shall not distribute any
amounts held in the Project Accounts to the Company.
SECTION 2.5. Certain Procedures. (a) Promptly after receipt from the
Company of a timely and substantively complete request for a payment or
withdrawal from an account, the Collateral Agent shall notify the Secured
Creditors' Representatives of its contents and of the amount of the withdrawal
requested.
(b) If a request for payment or withdrawal from an account is
received by the Collateral Agent after 4:00 p.m. New York time on any Business
Day, the Collateral Agent is not obliged to notify the Secured Creditors'
Representatives under clause 2.5(a) until the next Business Day.
(c) A request for payment or withdrawal from an Account is
irrevocable.
(d) A request for payment or withdrawal from a Project Account may
be delivered to the Collateral Agent by facsimile, in which case the Company
must deliver the original of such request to the Collateral Agent by posting it
within one Business Day of the date of the facsimile transmission. The Company
hereby acknowledges that the Collateral Agent is not bound to enquire whether
the facsimile transmission has been inaccurately transmitted or received, or
been sent by an unauthorized person.
(e) All withdrawal requests shall certify that the requested
withdrawal is for a purpose, for an amount and is to be paid to a payee
permitted hereby and that all conditions set forth herein for such withdrawal
have been complied with.
SECTION 2.6. Acknowledgment. The Company acknowledges that the
Collateral Agent (i) may refuse (but shall not be obligated to) to permit any
withdrawal from any Account
Annex A
Page 10
where it reasonably considers that the relevant withdrawal is not or may not be
authorized or permitted by this Annex or the relevant Credit Document and the
Collateral Agent will not be liable on any grounds to the Company or the Issuers
or any other person in consequence of that refusal, and (ii) is not liable for
loss or expense that may result from falsity, inaccuracy, insufficiency,
illegality or forgery of a request for a payment or withdrawal from an Account.
SECTION 2.7. General Operation of the Project Accounts. (a) The
Company irrevocably authorizes the Collateral Agent at any time and from time to
time including, if applicable, before the maturity of any of the amounts
standing to the credit of any Account, to withdraw any amounts from any Account,
to deposit or redeposit any amounts in any Account and to do all other things in
connection with the amounts standing to the credit of any Account to give effect
to the provisions of this Annex.
(b) The Company will promptly do all things which the Collateral
Agent may request, including the execution and delivery of any authorizations or
other documents, to enable the Collateral Agent to deal with the amounts
standing to the Credit of any Account or to deal with any Permitted Foreign
Investments in accordance with this Annex.
(c) The Collateral Agent has no obligation to ensure that the
Company applies withdrawals from any Account for the purposes permitted under
this Annex, but this does not derogate from any provision in this Annex or the
Security Sharing Agreement in relation to dealing with the Project Accounts.
(d) The Collateral Agent must ensure that no payment or transfer
from any of the Project Accounts is made if, as a result of that payment or
transfer, there would be a debit balance in the relevant Account.
(e) The Collateral Agent may rely on any certificate, statement or
notice provided under this Annex and which is signed or given by the persons
authorized to sign the same (including, without limitation, the Paying Agent,
any of the Secured Creditors' Representatives, the Independent Engineer or an
Officer or employee of any of those companies) as conclusive evidence of the
correctness of the matters contained in that certificate, statement or notice,
without any further enquiry as to its correctness.
(f) Notwithstanding any other provision herein to the contrary, the
Collateral Agent shall have a lien on the Project Accounts prior to that of any
other Person for payment of its fees, reimbursement of its expenses and payment
of its indemnities and in furtherance thereof, shall be entitled to withdraw
from any Project Account at any time any amounts necessary to pay such sums.