PLEDGE AGREEMENT by SOLUTIA INC. and THE SUBSIDIARIES PARTY HERETO, as Pledgors, and DEUTSCHE BANK TRUST COMPANY AMERICAS as Collateral Agent Dated as of March 17, 2010
Exhibit 10.4
by
and
THE SUBSIDIARIES PARTY HERETO,
as Pledgors,
as Pledgors,
and
DEUTSCHE BANK TRUST COMPANY AMERICAS
as Collateral Agent
as Collateral Agent
Dated as of March 17, 2010
TABLE OF CONTENTS
| Page | ||||||
SECTION 1.
|
Pledge | 1 | ||||
SECTION 2.
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Delivery of the Securities Collateral | 2 | ||||
SECTION 3.
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Representations, Warranties and Covenants | 3 | ||||
SECTION 4.
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Registration in Nominee Name; Denominations | 4 | ||||
SECTION 5.
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Voting Rights; Dividends and Interest, etc | 4 | ||||
SECTION 6.
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Remedies upon Event of Default | 5 | ||||
SECTION 7.
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Application of Proceeds of Sale | 7 | ||||
SECTION 8.
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Collateral Agent Appointed Attorney-in-Fact | 7 | ||||
SECTION 9.
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Waivers; Amendment | 7 | ||||
SECTION 10.
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Securities Act, etc | 8 | ||||
SECTION 11.
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Registration, etc | 8 | ||||
SECTION 12.
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Termination or Release | 9 | ||||
SECTION 13.
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Notices | 9 | ||||
SECTION 14.
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Further Assurances | 10 | ||||
SECTION 15.
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Binding Effect; Several Agreement | 10 | ||||
SECTION 16.
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Survival of Agreement; Severability | 10 | ||||
SECTION 17.
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GOVERNING LAW | 10 | ||||
SECTION 18.
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Counterparts | 10 | ||||
SECTION 19.
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Rules of Interpretation | 11 | ||||
SECTION 20.
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Jurisdiction; Consent to Service of Process | 11 | ||||
SECTION 21.
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WAIVER OF JURY TRIAL | 11 | ||||
SECTION 22.
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Additional Pledgors | 11 | ||||
SECTION 23.
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Financing Statements | 11 | ||||
SECTION 24.
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INTERCREDITOR AGREEMENT GOVERNS | 12 | ||||
SECTION 25.
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Conflicts | 12 | ||||
SCHEDULES
Schedule I
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Subsidiary Guarantors | |
Schedule II
|
Pledged Stock and Debt Securities |
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PLEDGE AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, this “Agreement”) dated as of March 17, 2010 among SOLUTIA
INC., a Delaware corporation (the “Borrower”), each Subsidiary of the Borrower listed on
Schedule I hereto (collectively, together with each Subsidiary that becomes a party hereto
pursuant to Section 22 of this Agreement, the “Subsidiary Guarantors” and, together with
the Borrower, the “Pledgors”), and DEUTSCHE BANK TRUST COMPANY AMERICAS (in such capacity,
together with its successors in such capacity, the “Collateral Agent”) as collateral agent
for the Secured Parties (as defined in the Credit Agreement referred to below).
R E C I T A L S
A. The Borrower, the Collateral Agent, Deutsche Bank Trust Company Americas, as administrative
agent (in such capacity and together with any successors in such capacity, the “Administrative
Agent”) for the Lenders (as defined herein), the lending institutions from time to time party
thereto (the “Lenders”) and the other agents party thereto have entered into that certain
Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), providing
for the making of Loans to the Borrower and the issuance of Letters of Credit pursuant to, and upon
the terms and subject to the conditions specified in, the Credit Agreement.
B. Each Subsidiary Guarantor has, pursuant to the Guarantee Agreement, dated as of the date
hereof, among other things, agreed to unconditionally guarantee the obligations of the Borrower
under the Credit Agreement.
C. The Borrower and each Subsidiary Guarantor will receive substantial benefits from the
execution, delivery and performance of the obligations of the Borrower under the Credit Agreement
and are, therefore, willing to enter into this Agreement.
D. Contemporaneously with the execution and delivery of this Agreement, the Borrower and the
Subsidiary Guarantors have executed and delivered to the Collateral Agent a Security Agreement (as
amended, restated, amended and restated, supplemented or otherwise modified from time to time, the
“Security Agreement”).
E. This Agreement is given by each Pledgor in favor of the Collateral Agent for the benefit of
the Secured Parties to secure the payment and performance of the Obligations.
Capitalized terms used herein and not defined herein shall have meanings assigned to such
terms in the Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Pledgor,
the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby and the
Collateral Agent hereby agree as follows:
SECTION 1. Pledge.
(a) The following liens are hereby granted:
(i) As collateral security for the payment and performance, in full of all the Obligations,
each Pledgor hereby pledges and grants to the Collateral Agent, for the ratable benefit of Secured
Parties, a lien on and security interest in and to all of the right, title and interest of
such Pledgor in, to and under (a) all the shares of capital stock and other Equity Interests owned
by it, including those listed on Schedule II hereto and any shares of capital stock and other
Equity Interests obtained in the future by such Pledgor and the certificates, if any, representing
all such shares or interests (collectively, the “Pledged Stock”); (b)(i) all debt
securities owned by it listed opposite the name of the Pledgor on Schedule II hereto, (ii) all debt
securities in the future issued to the Pledgor and (iii) all promissory notes and any other
instruments evidencing such debt securities (collectively, the “Pledged Debt Securities”
and together with the Pledged Stock, the “Pledged Securities”); (c) all payments of
principal or interest, dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of, in exchange for or upon the conversion of the
securities referred to in clauses (a) and (b) above; (d) all rights and privileges of the Pledgor
with respect to the securities and other property referred to in clauses (a), (b) and (c) above;
and (e) all proceeds of any and all of the foregoing (all the foregoing, collectively, the
“Securities Collateral”); provided, however, that, the term “Securities
Collateral” shall not include (i) to the extent such pledge would, in the good faith judgment of
the Pledgor reasonably be expected to result in material adverse tax consequences to the Borrower
or its Restricted Subsidiaries, more than 65% of the issued and outstanding shares of the Equity
Interests entitled to vote of any first tier Non-US Restricted Subsidiary; (ii) the Equity
Interests of any Excluded Subsidiary; (iii) the Equity Interests of any Excluded Joint Venture and
(iv) any Equity Interests or debt securities owned by such Pledgor if and to the extent that the
grant of the security interest shall, after giving effect to Sections 9-406, 9-407, 9-408 or 9-409
of the UCC (or any successor provision or provisions) or any other applicable law, (A) except in
the case of a Wholly Owned Subsidiary, constitute or result in the abandonment, invalidation or
unenforceability of any right, title or interest of such Pledgor therein, (B) except in the case of
a Wholly Owned Subsidiary, constitute or result in a breach or termination pursuant to the terms
of, or a default under, any such Equity Interest or debt securities, (C) be void or illegal under
any applicable governmental law, rule or regulation, or (D) except in the case of a Wholly Owned
Subsidiary, be prohibited by (i) the organizational documents of the issuer of such Equity
Interests or debt securities or (ii) agreements among the equity holders of the issuer of such
Equity Interests or debt securities.
(b) Upon delivery to the Collateral Agent, (a) any certificated Pledged Securities now or
hereafter included in the Securities Collateral shall be accompanied by stock powers duly executed
in blank or other similar instruments of transfer reasonably satisfactory to the Collateral Agent
and (b) all other property comprising part of the Securities Collateral shall be accompanied by
proper instruments of assignment duly executed by the applicable Pledgor. Each subsequent delivery
of Pledged Securities shall be accompanied by a schedule describing the securities then being
pledged hereunder, which schedule shall be attached hereto as a supplement to Schedule II and made
a part hereof. Each schedule so delivered shall supplement any prior schedules so delivered.
TO HAVE AND TO HOLD the Securities Collateral, together with all right, title, interest,
powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent for
the benefit of the Secured Parties; subject, however, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. Delivery of the Securities Collateral.
(a) Each Pledgor agrees to promptly deliver or cause to be delivered to the Collateral Agent
any and all certificates or other instruments or documents representing the Securities Collateral;
provided that only Pledged Debt Securities (other than intercompany Indebtedness owed to
any Pledgor by any Subsidiary) with a face amount in excess of $500,000 are required to be
delivered pursuant to this clause (a).
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(b) Each Pledgor will cause any Indebtedness for borrowed money owed to such Pledgor by any
Person to be evidenced by a duly executed promissory note that is pledged to the Collateral Agent
for the benefit of the Secured Parties and delivered to the Collateral Agent pursuant to the terms
hereof (provided that this clause (b) shall not apply to any such Indebtedness in an
aggregate principal amount less than $500,000 owing by any Person that is not a Subsidiary);
provided, that, except with respect to promissory notes representing Indebtedness
of more than $1,000,000, such promissory notes shall be required to be delivered to the Collateral
Agent only on each date on which financial statements are required to be delivered under Section
5.01 (a) or (b) of the Credit Agreement; provided further, that, to the extent that
any such promissory note constitutes an Intercompany Note and to the extent that any Pledgor is
required hereunder to deliver any such Intercompany Note to the Collateral Agent for purposes of
possession, such Pledgor’s obligations hereunder with respect to such delivery shall be deemed
satisfied by the delivery to the Collateral Agent of the Master Intercompany Note.
(c) If any Equity Interests now or hereafter acquired by any Pledgor constituting Pledged
Stock are uncertificated, such Pledgor shall comply with its obligations under Section 3.05(b) of
the Security Agreement.
SECTION 3. Representations, Warranties and Covenants. Each Pledgor hereby represents,
warrants and covenants, as to itself and the Securities Collateral pledged by it hereunder, to and
with the Collateral Agent that:
(a) as of the date hereof the Pledged Stock represents that percentage as set forth on
Schedule II of the issued and outstanding shares of each class of the capital stock or other
Equity Interests of the issuer with respect thereto;
(b) such Pledgor (i) is, as of the date hereof, the direct owner, beneficially and of
record, of the Pledged Securities indicated on Schedule II, (ii) holds the Pledged
Securities free and clear of all Liens, other than the Liens created hereunder and Liens
permitted by Section 6.02 of the Credit Agreement, (iii) will make no assignment, pledge,
hypothecation or transfer of, or create or permit to exist any security interest in or other
Lien on, the Securities Collateral, except as permitted by the Credit Agreement, and (iv)
subject to Section 2 and Section 5, will cause any and all Securities Collateral, whether
for value paid by such Pledgor or otherwise, to be promptly deposited with the Collateral
Agent and pledged or assigned hereunder;
(c) as of the date hereof, except as set forth in the proviso to Section 1(a)(i), the
Pledged Stock and Pledged Securities set forth on Schedule II constitute all of the shares
of capital stock and other Equity Interests and all debt securities owned by such Pledgor;
(d) such Pledgor (i) has the power and authority to pledge the Securities Collateral in
the manner hereby done or contemplated and (ii) will defend its title or interest thereto or
therein against any and all Liens (other than the Liens created by this Agreement or Liens
permitted by Section 6.02 of the Credit Agreement), however arising, of all Persons
whomsoever;
(e) by virtue of (i) the execution and delivery by the Pledgors of this Agreement, when
the Pledged Securities, certificates or other documents representing or evidencing the
Securities Collateral are delivered to the Collateral Agent in accordance with this
Agreement or (ii) in the case of uncertificated Equity Interests, the filing of a UCC
financing statement in such Pledgor’s jurisdiction of organization or formation, the
Collateral Agent will obtain a valid and perfected lien upon and first priority security
interest in such Pledged Securities as security for the payment and performance of the
Obligations subject only to Liens permitted by Section 6.02 of the Credit Agreement;
provided, however, that, for the avoidance of doubt, the representations
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set forth in this clause (e) shall not be made with respect to, or construed in
accordance with, the laws of any jurisdiction other than the United States, any State
thereof or the District of Columbia;
(f) all of the Pledged Stock issued by a corporation has been duly authorized and
validly issued and is fully paid and, to the extent applicable, nonassessable;
(g) all of the Pledged Debt Securities issued by any Pledgor have been duly authorized,
executed and delivered and are the enforceable obligations of the issuer thereof subject to
the effect of bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforceability of creditors’ rights generally and to general principles of equity,
regardless of whether considered in a proceeding in equity or at law; and
(h) all information set forth herein relating to the Pledged Securities is accurate and
complete in all material respects as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. The Collateral Agent, on behalf of
the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged
Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the
name of the Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent;
provided that the Collateral Agent shall only exercise such right to hold the Pledged
Securities in its own name as pledgee or the name of its nominee (as pledgee or as sub-agent) if an
Event of Default has occurred and is continuing. After the occurrence and during the continuance
of an Event of Default, each Pledgor will promptly provide the Collateral Agent with copies of any
written notices or other written communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. After the occurrence and during the continuance of any
Event of Default, the Collateral Agent shall at all times have the right to exchange the
certificates representing Pledged Securities for certificates of smaller or larger denominations
for any purpose consistent with this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc.
(a) Unless and until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall have the right to exercise any and all voting and/or other
consensual rights and powers inuring to an owner of Pledged Securities or any part thereof
for any purpose not inconsistent with the terms of this Agreement, the Credit Agreement and
the other Loan Documents; provided, however, that such Pledgor will not be
entitled to exercise any such right if the result thereof would reasonably be expected to
materially and adversely affect the rights and remedies of any of the Secured Parties under
this Agreement, the Credit Agreement or any other Loan Document or the ability of the
Collateral Agent or any other Secured Parties to exercise the same;
(ii) The Collateral Agent shall execute and deliver to each Pledgor, or cause to be
executed and delivered to each Pledgor, all such proxies, powers of attorney and other
instruments as such Pledgor may reasonably request for the purpose of enabling such Pledgor
to exercise the voting and/or consensual rights and powers it is entitled to exercise
pursuant to subparagraph (i) above and to receive the cash dividends it is entitled to
receive pursuant to subparagraph (iii) below; and
(iii) Subject to the next sentence, each Pledgor shall be entitled to receive and
retain any and all cash dividends, interest, principal and other amounts paid on the Pledged
Securities to
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the extent and only to the extent that such cash dividends, interest, principal and
other amounts are permitted by, and otherwise paid in accordance with, the terms and
conditions of the Credit Agreement, the other Loan Documents and applicable laws. All
noncash dividends, interest, principal and other amounts, and all dividends, interest,
principal and other amounts paid or payable in cash or otherwise in connection with a
partial or total liquidation or dissolution, return of capital, capital surplus or paid-in
surplus, and all other distributions (other than distributions referred to in the preceding
sentence) made on or in respect of the Pledged Securities, whether paid or payable in cash
or otherwise, whether resulting from a subdivision, combination or reclassification of the
outstanding capital stock of the issuer of any Pledged Securities or received in exchange
for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any
merger, consolidation, acquisition or other exchange of assets to which such issuer may be a
party or otherwise, shall be and become part of the Securities Collateral, and, if received
by any Pledgor, shall be promptly delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement); provided that dividends, interest,
principal and other amounts paid in cash shall be required to be delivered to the Collateral
Agent only after the occurrence and during the continuance of any Event of Default.
(b) Upon the occurrence and during the continuance of an Event of Default and following
written notice from the Collateral Agent to Pledgor, all rights of any Pledgor to dividends,
interest, principal or other amounts that such Pledgor is authorized to receive pursuant to
paragraph (a)(iii) above shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain
such dividends, interest, principal or other amounts. All dividends, interest, principal or other
amounts received by the Pledgor contrary to the provisions of this Section 5 shall be received in
trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of
such Pledgor and shall within five (5) Business Days after receipt thereof be delivered to the
Collateral Agent in the same form as so received (with any necessary endorsement). Any and all
money and other property paid over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be applied in accordance with the provisions of Section 7.
The Collateral Agent shall be under no obligation with respect to the investment of such cash
dividends, interest or principal, including, for the avoidance of doubt, any requirement to invest
such cash dividends, interest or principal in any class of investment, interest-bearing or
otherwise.
(c) Upon the occurrence and during the continuance of an Event of Default and following
written notice from the Collateral Agent to Pledgor, all rights of any Pledgor to exercise the
voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of
this Section 5, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section
5, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which
shall have the sole and exclusive right and authority to exercise such voting, managerial and
consensual rights and powers; provided that any failure by Collateral Agent to give such
written notice to Pledgor shall not limit or otherwise affect any of Collateral Agent’s rights and
remedies hereunder. After all Events of Default have been cured or waived, such Pledgor will have
the right to exercise the voting and consensual rights and powers that it would otherwise be
entitled to exercise pursuant to the terms of paragraph (a)(i) above and receive the payments,
proceeds, dividends, distributions, monies, compensation, property, assets, instruments or rights,
which it would be authorized to receive and retain pursuant to the terms of paragraph (a)(iii)
above.
SECTION 6. Remedies upon Event of Default. Upon the occurrence and during the continuance of
an Event of Default, subject to applicable regulatory and legal requirements, the Collateral Agent
may sell or otherwise dispose of the Securities Collateral, or any part thereof, at public or
private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem appropriate. Each such purchaser at any such
sale shall hold the property
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sold absolutely free from any claim or right on the part of any Pledgor, and, to the extent
permitted by applicable law, the Pledgors hereby waive all rights of redemption, stay, valuation
and appraisal any Pledgor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days’ prior written notice (which each Pledgor
agrees is reasonable notice within the meaning of Section 9-611 of the Uniform Commercial Code as
in effect in the State of New York or its equivalent in other jurisdictions (the “UCC”)) of
the Collateral Agent’s intention to make any sale or other disposition of such Pledgor’s Securities
Collateral. Such notice, in the case of a public sale, shall state the time and place for such
sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the Securities Collateral,
or portion thereof, will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such place or places as
the Collateral Agent may fix and state in the notice of such sale. At any such sale, the
Securities Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Securities Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such Securities Collateral
shall have been given. The Collateral Agent may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the time and place to
which the same was so adjourned. In case any sale of all or any part of the Securities Collateral
is made on credit or for future delivery, the Securities Collateral so sold may be retained by the
Collateral Agent until the sale price is paid in full by the purchaser or purchasers thereof, but
the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall
fail to take up and pay for the Securities Collateral so sold and, in case of any such failure,
such Securities Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by applicable law, private) sale made pursuant to this Section 6, any Secured Party may
bid for or purchase, free from any right of redemption, stay, valuation or appraisal on the part of
any Pledgor (all said rights being also hereby waived and released), the Securities Collateral or
any part thereof offered for sale and may make payment on account thereof by using any Obligation
then due and payable to such Secured Party from any Pledgor as a credit against the purchase price,
and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of
such property without further accountability to any Pledgor therefor. For purposes hereof, (a) a
written agreement to purchase the Securities Collateral or any portion thereof shall be treated as
a sale thereof, (b) the Collateral Agent shall be free to carry out such sale pursuant to such
agreement and (c) no Pledgor shall be entitled to the return of the Securities Collateral or any
portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall
have entered into such an agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose upon the
Securities Collateral and to sell the Securities Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding
by a court-appointed receiver.
Each Pledgor recognizes that, by reason of certain prohibitions contained in the Securities
Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time in effect being
called the “Federal Securities Laws”) and applicable state securities laws, the Collateral
Agent may be compelled, with respect to any sale of all or any part of the Securities Collateral
conducted without prior registration or qualification of such Securities Collateral under the
Federal Securities Laws and/or such state securities laws, to limit purchasers to those who will
agree, among other things, to acquire the Securities Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sale may be at prices and on terms less favorable than those obtainable
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through a public sale without such restrictions (including a public offering made pursuant to
a registration statement under the Federal Securities Laws) and, notwithstanding such
circumstances, each Pledgor agrees that the fact that any such sale is conducted as a private sale
shall not, in and of itself, cause such sale to not be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no obligation to engage in public sales
and no obligation to delay the sale of any Securities Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale requiring registration under
the Federal Securities Laws or under applicable state securities laws, even if such issuer would,
or should, agree to so register it. If the Collateral Agent determines to exercise its right to
sell any or all of the Securities Collateral, upon written request, each Pledgor shall and shall
cause each issuer of any Pledged Stock to be sold hereunder, each partnership and each limited
liability company, in each case, which is a Subsidiary of such Pledgor, from time to time to
furnish to the Collateral Agent all such information as the Collateral Agent may request in order
to determine the number and nature of interest, shares or other instruments included in the
Securities Collateral which may be sold by the Collateral Agent in exempt transactions under the
Federal Securities Laws and the rules and regulations of the Securities and Exchange Commission
thereunder, as the same are from time to time in effect.
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of Securities Collateral
pursuant to Section 6, as well as any Securities Collateral consisting of cash, shall be applied by
the Collateral Agent as provided in the Security Agreement.
SECTION 8. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor hereby appoints the
Collateral Agent the attorney-in-fact of such Pledgor for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument that the Collateral
Agent may deem reasonably necessary to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest, provided that the Collateral Agent shall only
take any action pursuant to such appointment upon the occurrence and during the continuation of an
Event of Default. Without limiting the generality of the foregoing, the Collateral Agent shall
have the right, upon the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Collateral Agent’s name or in the name of such Pledgor, to ask
for, demand, xxx for, collect, receive and give acquittance for any and all moneys due or to become
due under and by virtue of any Securities Collateral, to endorse checks, drafts, orders and other
instruments for the payment of money payable to the Pledgor representing any interest or dividend
or other distribution payable in respect of the Securities Collateral or any part thereof or on
account thereof and to give full discharge for the same, to settle, compromise, prosecute or defend
any action, claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise deal with, the same; provided,
however, that nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of
any payment received by the Collateral Agent, or to present or file any claim or notice, or to take
any action with respect to the Securities Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a result of the exercise
of the powers granted to them herein, and neither they nor their officers, directors, employees or
agents shall be responsible to any Pledgor for any act or failure to act hereunder, except for
their own gross negligence, willful misconduct or bad faith.
SECTION 9. Waivers; Amendment.
(a) No failure or delay of the Collateral Agent in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or power. The rights and
remedies of the Collateral Agent hereunder and of the other Secured Parties under the other Loan
Documents are cumulative
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and are not exclusive of any rights or remedies that they would otherwise have. No waiver of
any provisions of this Agreement or any other Loan Document or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand on any Pledgor in any case shall entitle such
Pledgor or any other Pledgor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into in accordance with Section 9.08 of
the Credit Agreement.
SECTION 10. Securities Act, etc. In view of the position of the Pledgors in relation to the
Pledged Securities, or because of other current or future circumstances, a question may arise under
the Federal Securities Laws or equivalent legislation in any other jurisdiction with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor understands that
compliance with the Federal Securities Laws or equivalent legislation in any other jurisdiction
might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent was
to attempt to dispose of all or any part of the Pledged Securities, and might also limit the extent
to which or the manner in which any subsequent transferee of any Pledged Securities could dispose
of the same. Similarly, there may be other legal restrictions or limitations affecting the
Collateral Agent in any attempt to dispose of all or part of the Pledged Securities under
applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect.
Each Pledgor recognizes that in light of such restrictions and limitations the Collateral Agent
may, with respect to any sale of the Pledged Securities, limit the purchasers to those who will
represent and agree, among other things, to acquire such Pledged Securities for their own account
for investment, and not with a view to the distribution or resale thereof, and upon consummation of
any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Securities Collateral so sold. Each Pledgor acknowledges and
agrees that any such sale might result in prices and other terms less favorable to the seller than
if such sale were a public sale without such restrictions. In the event of any such sale, the
Collateral Agent shall incur no responsibility or liability for selling all or any part of the
Pledged Securities at a price that the Collateral Agent, in its sole and absolute discretion, may
in good xxxxx xxxx reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were a public sale or if more than
a single purchaser were approached. The provisions of this Section 10 will apply notwithstanding
the existence of a public or private market upon which the quotations or sales prices may exceed
substantially the price at which the Collateral Agent sells.
SECTION 11. Registration, etc. Each Pledgor agrees that, upon the occurrence and during the
continuance of an Event of Default hereunder, if for any reason the Collateral Agent desires to
sell any of the Pledged Securities of the Borrower at a public sale, it will, at any time and from
time to time, upon the reasonable written request of the Collateral Agent, use its commercially
reasonable efforts to take or to cause the issuer of such Pledged Securities to take such action
and prepare, distribute, file and/or cause to become effective such documents as are required or
advisable in the reasonable opinion of counsel for the Collateral Agent to permit the public sale
of such Pledged Securities. Each Pledgor further agrees to indemnify, defend and hold harmless the
Collateral Agent, each other Secured Party, any underwriter and their respective officers,
directors, affiliates and controlling Persons (collectively, “indemnitees”) from and
against all loss, liability, expenses, costs of counsel (including, without limitation, reasonable
fees and out-of-pocket expenses to the Collateral Agent of legal counsel) and claims (including the
reasonable costs of investigation) that they may incur insofar as such loss, liability, expense or
claim arises out of or is based upon any alleged untrue statement of a material fact contained in
any prospectus (or any amendment or supplement thereto) or in any notification or offering
circular, or arises out of or is based upon any alleged omission to state a material fact required
to be stated therein or necessary
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to make the statements in any thereof not misleading, except insofar as the same may have been
caused by any untrue statement or omission based upon information furnished in writing to such
Pledgor or the issuer of such Pledged Securities by the Collateral Agent or any other Secured Party
expressly for use therein. Each Pledgor further agrees, upon such written request refereed to
above, to use its reasonable best efforts to qualify, file or register, or cause the issuer of such
Pledged Securities to qualify, file or register, any of the Pledged Securities under the Blue Sky
or other securities laws of such states as may be requested by the Collateral Agent and keep
effective, or cause to be kept effective, all such qualifications, filings or registrations. Each
Pledgor will bear all reasonable costs and expenses of carrying out its obligations under this
Section 11. Each Pledgor acknowledges that there is no adequate remedy at law for failure by it to
comply with the provisions of this Section 11 and that such failure would not be adequately
compensable in damages, and therefore agrees that its agreements contained in this Section 11 may
be specifically enforced.
SECTION 12. Termination or Release.
(a) This Agreement and the security interests granted hereby (i) shall automatically terminate
when all the Loan Obligations (other than unasserted contingent indemnification obligations or
other contingent obligations, in each case, not due and payable) have been paid in full and no
Letters of Credit are outstanding pursuant to the Credit Agreement unless arrangements reasonably
satisfactory to the Issuer have been made to eliminate the Issuer’s credit risk with respect to
such L/C Obligation and all Commitments have terminated (at which time the Collateral Agent shall
execute and deliver to each Pledgor, at such Pledgor’s expense, all UCC termination statements or
their equivalent in any other jurisdiction and other documents which such Pledgor shall reasonably
request to evidence such termination) and (ii) shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment in respect of any Obligation is
rescinded or must otherwise be restored by any Secured Party upon any bankruptcy or reorganization
of any Xxxxxxx or otherwise. Any execution and delivery of termination statements or documents
pursuant to this Section 12(a) shall be without recourse to or warranty by the Collateral Agent. A
Subsidiary Guarantor shall automatically be released from its obligations hereunder and the
Security Interests in the Collateral of such Subsidiary Guarantor shall be automatically released
in the event that (x) the Equity Interests of such Subsidiary Guarantor shall be sold, transferred
or otherwise disposed of pursuant to a transaction permitted under the Credit Agreement to a Person
that is not an Affiliate of Borrower such that such Person is no longer a Restricted Subsidiary of
Borrower or (y) such Subsidiary Grantor ceases to be a Restricted Subsidiary as a result of a
transaction permitted under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Securities Collateral that is
permitted under the Credit Agreement to any Person that is not a Loan Party, or upon the
effectiveness of any written consent to the release of the security interests granted hereby in any
Securities Collateral pursuant to Section 9.08 of the Credit Agreement, the security interests in
such Securities Collateral shall be automatically released.
(c) In connection with any termination or release pursuant to paragraph (a) or (b), the
Collateral Agent shall execute and deliver to any Pledgor, at such Pledgor’s expense, all
documents, including the certificates representing the applicable Pledged Securities that have been
delivered to the Collateral Agent or, in the event of any such certificate has been lost, mutilated
or destroyed, an affidavit of lost certificate, that such Pledgor shall reasonably request to
evidence such termination or release. Any execution and delivery of documents pursuant to this
Section 12 shall be without recourse to or warranty by the Collateral Agent.
SECTION 13. Notices. All communications and notices hereunder shall (except as otherwise
expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit
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Agreement. All communications and notices hereunder to any Subsidiary Guarantor shall be
given to it c/o the Borrower at the Borrower’s address as provided in Section 9.01 of the Credit
Agreement, with a copy to the Borrower.
SECTION 14. Further Assurances. Each Pledgor agrees to do such further acts and things, and
to execute and deliver such additional conveyances, assignments, agreements and instruments, as the
Collateral Agent may at any time reasonably request in writing in connection with the
administration and enforcement of this Agreement or with respect to the Securities Collateral or
any part thereof or in order to assure and confirm unto the Collateral Agent, its rights and
remedies hereunder.
SECTION 15. Binding Effect; Several Agreement. This Agreement shall be binding upon each
Pledgor and the Collateral Agent and their respective successors and permitted assigns, and shall
inure to the benefit of each Pledgor, the Collateral Agent and the other Secured Parties and their
respective permitted successors and assigns, except that no Pledgor shall have the right to assign
or transfer its rights or obligations hereunder or any interest herein or in the Securities
Collateral (and any such assignment or transfer shall be void) except as permitted by the Credit
Agreement or any other Loan Document. This Agreement shall be construed as a separate agreement
with respect to each Pledgor and may be amended, modified, supplemented, waived or released with
respect to any Pledgor without the approval of any other Pledgor and without affecting the
obligations of any other Pledgor hereunder.
SECTION 16. Survival of Agreement; Severability.
(a) All covenants, agreements, representations and warranties made by any Pledgor herein and
in the certificates or other instruments prepared or delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been relied upon by the
Collateral Agent and the other Secured Parties and shall survive the making by the Lenders of the
Loans, regardless of any investigation made by the Secured Parties or on their behalf, and shall
continue in full force and effect until this Agreement shall terminate.
(b) In the event any one or more of the provisions contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions. It is understood and agreed among the parties
that this Agreement shall create separate security interests in the Securities Collateral securing
the Obligations as provided in Section 1, and that any determination by any court with jurisdiction
that the security interest securing any Obligation or class of Obligations is invalid for any
reason shall not in and of itself invalidate the Security Interests securing any other Obligations
hereunder.
SECTION 17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 18. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall constitute a
single contract. Delivery of an executed counterpart of a signature page to this Agreement by
facsimile or other electronic transmission (e.g., “PDF” or “tif” via e-mail) shall be as effective
as delivery of a manually executed counterpart of this Agreement.
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SECTION 19. Rules of Interpretation. The rules of interpretation specified in the Credit
Agreement (including Section 1.03 thereof) shall be applicable to this Agreement. Section headings
used herein are for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 20. Jurisdiction; Consent to Service of Process.
(a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America for the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan
Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding
may be heard and determined in such New York State court or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or its properties in the
courts of any jurisdiction.
(b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement
or the other Loan Documents in any New York State or Federal court referred to in paragraph (a) of
this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner
provided for in Section 9.15 of the Credit Agreement. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 21. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS.
SECTION 22. Additional Pledgors. To the extent any Subsidiary shall be required to become a
Pledgor pursuant to any Loan Document, upon execution and delivery by the Collateral Agent and such
Subsidiary of an instrument in the form of Annex I attached to the Security Agreement, such
Subsidiary shall become a Pledgor hereunder with the same force and effect as if originally named
as a Pledgor herein. The execution and delivery of any such instrument shall not require the
consent of any other Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall
remain in full force and effect notwithstanding the addition of any new Pledgor as a party to this
Agreement.
SECTION 23. Financing Statements. Each Pledgor hereby irrevocably authorizes the Collateral
Agent at any time and from time to time to file in any relevant jurisdiction any initial financing
statements (including fixture filings) and amendments thereto that contain the information required
by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any
financing statement or amendment relating to the Securities Collateral, including (i) whether such
Pledgor is an organization, the type of organization and any organizational identification number
issued to such Pledgor
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and (ii) any financing or continuation statements or other documents without the signature of
such Pledgor where permitted by law, including the filing of a financing statement describing the
Securities Collateral as “all assets of the debtor whether now
owned or hereafter acquired”(or
using words of similar import). Each Pledgor agrees to provide all information described in the
immediately preceding sentence to the Collateral Agent promptly upon written request. Each Pledgor
hereby ratifies its authorization for the Collateral Agent to file in any relevant jurisdiction any
financing statements relating to the Collateral if filed prior to the date hereof.
SECTION 24. INTERCREDITOR AGREEMENT GOVERNS. Notwithstanding anything to the contrary
contained herein, the liens and security interest granted to the Collateral Agent and the exercise
of any right or remedy by the Collateral Agent hereunder, in each case, may become subject to the
provisions of the First Lien Intercreditor Agreement. In the event of any conflict between the
terms of the First Lien Intercreditor Agreement and the terms of this Agreement, the terms of the
First Lien Intercreditor Agreement shall govern and control.
SECTION 25. Conflicts. In the case of any conflict between this Agreement and the Credit
Agreement, the provisions of the Credit Agreement shall govern.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.
| SOLUTIA INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Executive Vice President, Chief Financial Officer and Treasurer | |||
| CPFILMS INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X Xxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
| FLEXSYS AMERICA CO. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X Xxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
| FLEXSYS AMERICA L.P. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X Xxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
| MONCHEM INTERNATIONAL, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X Xxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
| SOLUTIA BUSINESS ENTERPRISES INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X Xxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
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| SOLUTIA INTER-AMERICA, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X Xxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
| SOLUTIA OVERSEAS, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X Xxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
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| DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral Agent |
||||
| By: | /s/ Xxxx Xxxxxxxxx | |||
| Name: | Xxxx Xxxxxxxxx | |||
| Title: | Vice President | |||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | Director | |||
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