Exhibit 4.11
SHARING SECURITY AGREEMENT
SHARING SECURITY AGREEMENT dated as of July 25, 2002, between SOLUTIA
INC., a corporation duly organized and validly existing under the laws of the
State of Delaware (the "COMPANY"); CPFILMS INC. ("CPFILMS" and, individually, a
"SUBSIDIARY GUARANTOR"); each of the subsidiaries of the Company that become
"Subsidiary Guarantors" hereunder pursuant to Section 6.10 after the date hereof
(individually a "SUBSIDIARY GUARANTOR" and, collectively, with CPFilms, the
"SUBSIDIARY GUARANTORS" and, together with the Company, the "GRANTORS"); and
HSBC Bank USA, a banking corporation and trust company duly organized and
validly existing under the laws of the State of New York, as collateral trustee
(in such capacity, together with its successors in such capacity, the
"COLLATERAL TRUSTEE") for the Sharing Secured Parties (as defined in the Sharing
Intercreditor Agreement referred to below).
The Company, certain lenders (the "SOLUTIA LENDERS") and Citibank,
N.A., as administrative agent (in such capacity, together with its successors
and assigns, the "SOLUTIA ADMINISTRATIVE AGENT") are parties to a Second Amended
and Restated Credit Agreement dated as of July 25, 2002 (as modified and
supplemented and in effect from time to time, the "SOLUTIA CREDIT AGREEMENT"),
providing, subject to the terms and conditions thereof, for extensions of credit
(by means of loans and letters of credit) to be made by said lenders to the
Company and the other borrowers referred to therein in an aggregate principal or
face amount not exceeding $600,000,000. In addition, the Company may from time
to time be obligated to various of the Solutia Lenders (or their affiliates) in
respect of one or more Hedging Agreements permitted under Section 6.02(g)(v) of
the Solutia Credit Agreement.
Astaris LLC, a limited liability company organized under the laws of
Delaware ("ASTARIS"), certain lenders (the "ASTARIS LENDERS") and Bank of
America, N.A., as administrative agent (in such capacity, together with its
successors in such capacity, the "ASTARIS ADMINISTRATIVE AGENT"), are parties to
a Credit Agreement dated as of September 14, 2000 (as modified and supplemented
and in effect from time to time, the "ASTARIS CREDIT AGREEMENT"), providing,
subject to the terms and conditions thereof, for loans to be made by said
lenders to Astaris in an aggregate principal amount not exceeding $275,000,000.
The obligations of Astaris under the Astaris Credit Agreement have been
partially guaranteed by the Company pursuant to a Guaranty Agreement dated as of
September 14, 2000 (as modified and supplemented and in effect from time to
time, the "ASTARIS GUARANTY AGREEMENT") by the Company in favor of Astaris LLC
and in favor of the Astaris Lenders and the Astaris Administrative Agent.
The Company, State Street Bank and Trust Company, as trustee (in such
capacity, together with its successors in such capacity, the "CO-GEN TRUSTEE"),
certain financial institutions named as purchasers therein (collectively, the
"CO-GEN PURCHASERS") and Citibank, N.A., as agent for the Co-gen Purchasers (in
such capacity, together with its successors in such capacity, the "CO-GEN
AGENT"), are parties to an Amended and Restated Participation Agreement dated as
of April 24, 1998 (as modified and supplemented and in effect from time to time,
the "CO-GEN PARTICIPATION AGREEMENT"), providing, subject to the terms and
conditions thereof, for loans and investments to be made by the Co-gen
Purchasers to the Co-gen Trustee in an aggregate principal amount not exceeding
$33,000,000. The obligations of the Co-gen Trustee under the Co-gen
Participation Agreement have been guaranteed by the Company pursuant to an
Amended
and Restated Instrument Guaranty dated as of April 24, 1998 (as modified and
supplemented and in effect from time to time, the "CO-GEN GUARANTY AGREEMENT")
by the Company in favor of the Co-gen Trustee and the Co-gen Purchasers. In
addition, the Co-gen Trustee, as lessor, and the Company, as lessee, are party
to an Amended and Restated Lease dated as of April 24, 1998 (as modified and
supplemented and in effect from time to time, the "CO-GEN LEASE") pursuant to
which the Company agrees to make certain rent payments to the Co-gen Trustee in
consideration of the lease of the co-generation facility referred to therein,
which rent payments service the loans and investments made by the Co-gen
Purchasers.
In addition, certain of the Solutia Lenders may have issued letters of
credit for the account of the Company or a Subsidiary, or may in the future
issue letters of credit for the account of the Company, which are or will be
identified in this Agreement as "Designated Letters of Credit" (as defined in
the Sharing Intercreditor Agreement referred to below). It is contemplated that,
in connection herewith, such Solutia Lenders will execute and deliver a Letter
of Credit Override Agreement providing for certain common terms to be applicable
to such letters of credit.
The Company is also party to (a) an Indenture dated as of October 1,
1997 (the "1997 NOTES INDENTURE") between the Company and JPMorgan Chase Bank
(formerly known as The Chase Manhattan Bank), as trustee, pursuant to which the
Company has issued its 6.50% Notes due 2002, 7.375% Debentures due 2027 and
6.72% Debentures due 2037 in an aggregate outstanding principal amount of
$600,000,000 as of the date hereof and (b) a Fiscal Agency Agreement dated as of
February 11, 2000 (the "EURO NOTES AGREEMENT") between Solutia Europe S.A./N.V.,
the Company and Kreidietbank S.A. Luxembourgeoise, as Fiscal Agent, pursuant to
which Solutia Europe S.A./N.V. has issued its 6.25% Notes due 2005, guaranteed
by the Company in an aggregate principal amount of EURO200,000,000 as of the
date hereof.
Pursuant to the provisions of the 1997 Notes Indentures and the Euro
Notes Agreement, the Company in certain circumstances may not, and may not
permit any of its Restricted Subsidiaries (as defined therein) to, secure Debt
(as defined in the 1997 Notes Indenture and Euro Notes Agreement) with a lien on
any Principal Property (as defined below) or any shares of stock or indebtedness
of the Company or any such Restricted Subsidiary without equally and ratably
securing the notes, debentures and other instruments issued under the 1997 Notes
Indenture and the Euro Notes Agreement.
Accordingly, to induce the Solutia Lenders to enter into the Solutia
Credit Agreement as described above and to continue to extend credit under the
Solutia Credit Agreement, to induce the Astaris Lenders to enter into an
Amendment No. 3 to the Astaris Credit Agreement and to continue to extend credit
under the Astaris Credit Agreement, to induce the Co-gen Purchasers to continue
to extend credit and make investments under the Co-gen Participation Agreement
and to induce the Solutia Lenders to extend credit in respect of Designated
Letters of Credit and hedging agreements, the parties hereto hereby agree as
follows:
Section 1. DEFINITIONS.
(a) DEFINED TERMS. Terms defined in the Sharing Intercreditor
Agreement are used herein as defined therein. The term "INVESTMENT PROPERTY"
shall have the meaning assigned
to such term in Article 9 of the Uniform Commercial Code. The term "FINANCIAL
ASSETS" shall have the meaning assigned to such term in Article 8 of the Uniform
Commercial Code. In addition, as used herein, the following terms shall have the
following respective meanings:
"DOMESTIC SUBSIDIARY" means any Subsidiary of the Company organized
under the laws of any jurisdiction within the United States of America.
"FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
"ISSUERS" means, collectively, (a) the respective corporations,
partnerships or other entities identified under the names of the Grantors
on Annex 3 under the caption "Issuer" and (b) any other entity that shall
at any time be a Restricted Subsidiary of either of the Grantors.
"PLEDGED DEBT" means any Debt (as defined in the Existing Notes
Indentures) of any Restricted Subsidiary held by any Grantor.
"PLEDGED STOCK" has the meaning assigned to such term in Section 3(b).
"SHARED COLLATERAL" has the meaning assigned to such term in
Section 3.
"SHARING INTERCREDITOR AGREEMENT" means the Intercreditor and
Collateral Trust Agreement dated as of July [___], between the Company,
CPFilms, the Solutia Administrative Agent, the Astaris Administrative
Agent, the Co-gen Agent, the Collateral Agent and the Collateral Trustee.
"STOCK COLLATERAL" has the meaning assigned to such term in
Section 3(b)(ii).
(b) TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
Section 2. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants to the Collateral Trustee, the Collateral Agent, the Administrative
Agents, the Co-gen Agent, the Solutia Lenders, the Astaris Lenders, the Co-gen
Purchasers, the Term Loan Facility Lenders and the holders of the Senior Notes
of each Series that:
(a) TITLE AND PRIORITY. Such Grantor is the sole beneficial owner of
the Shared Collateral in which it purports to grant a security interest
pursuant to Section 3 and no Lien exists or will exist upon such Shared
Collateral at any time, except for Liens permitted under Section 6.02(a) of
the Solutia Credit Agreement and except for such security interest in favor
of the Collateral Agent for the benefit of the Sharing Secured Parties
created pursuant hereto. The security interest created pursuant hereto
constitutes a valid and perfected security interest in the Shared
Collateral in which such Grantor purports to grant a security interest
pursuant to Section 3, subject to no equal or prior Lien except as
expressly permitted by Section 6.02(a) of the Solutia Credit Agreement.
(b) NAMES, ETC. The full and correct legal name, type of organization,
jurisdiction of organization, organizational ID number (if applicable) and
mailing address of each Grantor as of the date hereof are correctly set
forth in Annex 1. Annex 1 correctly specifies the place of business of each
Grantor or, if such Grantor has more than one place of business, the
location of the chief executive office of such Grantor.
(c) CHANGES IN CIRCUMSTANCES. Such Grantor has not (i) within the
period of four months prior to the date hereof, changed its "location" (as
defined in Section 9-307 of the Uniform Commercial Code), (ii) except as
specified in Annex 1, heretofore changed its name, or (iii) except as
specified in Annex 2, heretofore become a "new debtor" (as defined in
Section 9-102(a)(56) of the Uniform Commercial Code) with respect to a
currently effective security agreement previously entered into by any other
Person.
(d) PLEDGED STOCK. The Pledged Stock, if any, identified under the
name of such Grantor in Annex 3 is, and all other Pledged Stock in which
such Grantor shall hereafter grant a security interest pursuant to Section
3 will be, duly authorized, validly issued, fully paid and non-assessable
and none of such Pledged Stock is or will be subject to any contractual
restriction, or any restriction under the charter, by-laws, or other
organizational document of the respective Issuer of such Pledged Stock,
upon the transfer of such Pledged Stock (except for any restriction
contained herein or under such organizational documents).
(e) OWNERSHIP OF PLEDGE STOCK. The Pledged Stock, if any, identified
under the name of such Grantor in Annex 3 constitutes all of the issued and
outstanding shares of capital stock of whatever class of such Issuer
beneficially owned by such Grantor on the date hereof (whether or not
registered in the name of such Grantor) and Annex 3 correctly identifies,
as at the date hereof, the respective Issuers of such Pledged Stock and the
respective class and par value of the shares constituting such Pledged
Stock and the respective number of shares (and registered owners thereof)
represented by each such certificate.
Section 3. SHARED COLLATERAL. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Sharing Obligations, each Grantor hereby pledges and grants to
the Collateral Trustee, for the benefit of the Sharing Secured Parties as
hereinafter provided, a security interest in and to all of such Grantor's right,
title and interest in, to and under the following property, whether now owned by
such Grantor or hereafter acquired and whether now existing or hereafter coming
into existence (all being collectively referred to herein as the "SHARED
COLLATERAL"):
(a) the Pledged Debt;
(b) the shares of voting stock of the Issuers identified in Annex 3
under the name of such Grantor and all other shares of capital stock of
whatever class of the Issuers together with all rights, privileges,
authority and power of such Issuer with respect to such shares, in each
case together with the certificates, instruments and agreements, if any,
evidencing the same (collectively, the "PLEDGED STOCK"), together with:
(i) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution
or return of capital upon or in respect of the Pledged Stock, or
resulting from a split-up, revision, reclassification or other like
change of the Pledged Stock or otherwise received in exchange
therefor, and any subscription warrants, rights, agreements or options
issued to the holders of, or otherwise in respect of, the Pledged
Stock; and
(ii) without affecting the obligations of such Grantor under any
provision prohibiting such action hereunder or under the Solutia
Credit Agreement, in the event of any consolidation or merger in which
an Issuer is not the surviving corporation, all shares of each class
of the capital stock of the successor corporation (unless such
successor corporation is such Grantor itself) formed by or resulting
from such consolidation or merger (the Pledged Stock, together with
all other certificates, shares, securities, properties or moneys as
may from time to time be pledged hereunder pursuant to this clause
(ii) and clause (i) above being herein collectively called the "STOCK
COLLATERAL");
(c) the Shared Collateral Account (as defined below) and the balance
from time to time therein; and
(d) all proceeds, profits, income, benefits, substitutions and
replacements of and to any of the Shared Collateral and, to the extent
related to any Shared Collateral, all books, correspondence, credit files,
records, invoices and other papers, including all tapes, cards, computer
runs and other papers and documents in the possession or under the control
of such Grantor or any computer bureau or service company from time to time
acting for such Grantor.
Section 4. CASH PROCEEDS OF SHARED COLLATERAL.
4.01 SHARED COLLATERAL ACCOUNT. The Collateral Trustee will cause to
be established at a banking institution to be selected by the Collateral Trustee
one or more cash collateral accounts (collectively, the "SHARED COLLATERAL
ACCOUNT"), which
(i) to the extent of all Investment Property or Financial Assets
(other than cash) shall be a "securities account" (as defined in Section
8-501 of the Uniform Commercial Code) in respect of which the Collateral
Trustee shall be the "entitlement holder" (as defined in Section
8-102(a)(7) of the Uniform Commercial Code) and
(ii) to the extent of any cash, shall be a deposit account in respect
of which the Collateral Trustee is the customer (as contemplated by
9-104(a)(3) of the Uniform Commercial Code),
into which there shall be deposited from time to time the cash proceeds of any
of the Shared Collateral (including dividends, distributions, interest, profits
and income thereon) required to be delivered to the Collateral Trustee pursuant
hereto and into which the Grantors may from time to time deposit any additional
amounts that any of them wishes to pledge to the Collateral Trustee for the
benefit of the Sharing Secured Parties as additional collateral security
hereunder. The balance from time to time in the Shared Collateral Account shall
constitute part of the Shared Collateral hereunder and shall remain in the
Shared Collateral Account until applied as hereinafter provided. The Collateral
Trustee may (and, if instructed by the Collateral Agent (or, if the Requisite
Sharing Secured Parties shall have assumed the right and authority of the
Collateral Agent as contemplated by Section 3.04(b) of the Sharing Intercreditor
Agreement, by the Requisite Sharing Secured Parties), shall) in its (or their)
discretion apply or cause to be applied (subject to collection) the balance from
time to time standing to the credit of the Shared Collateral Account to the
payment of Sharing Obligations in the manner specified in Section 5.09 to the
extent necessary to result in the payment of the Sharing Obligations then due
and payable. In addition, the Company may at any time request that the balance
from time to time standing to the credit of the Shared Collateral Account be
applied to the payment of Sharing Obligations in the manner specified in Section
5.09 to the extent necessary to result in the payment of the Sharing Obligations
then due and payable. The balance from time to time in the Shared Collateral
Account shall be subject to withdrawal only as provided herein.
4.02 PROCEEDS OF PLEDGED DEBT. If requested by the Collateral Trustee
(acting at the request or with the consent of the Collateral Agent or the
Requisite Secured Parties as provided in Section 3.04(b) of the Sharing
Intercreditor Agreement) at any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall instruct all Restricted
Subsidiaries obligated in respect of all Pledged Debt to make all payments in
respect of the Pledged Debt directly to the Collateral Trustee. All payments
made to the Collateral Trustee, as provided in the preceding sentence, shall be
immediately deposited by the Collateral Trustee in the Shared Collateral
Account. In addition to the foregoing, each Grantor agrees that, at any time
after the occurrence and during the continuance of an Event of Default, if the
proceeds of any Shared Collateral hereunder (including the payments made in
respect of Pledged Debt) shall be received by it, such Grantor shall, upon the
request of the Collateral Trustee, as
promptly as possible deposit such proceeds into the Shared Collateral Account.
Until so deposited, all such proceeds shall be held in trust by such Grantor for
and as the property of the Collateral Trustee and shall not be commingled with
any other funds or property of such Grantor.
4.03 INVESTMENT OF BALANCE IN SHARED COLLATERAL ACCOUNT. The cash
balance standing to the credit of the Shared Collateral Account shall be
invested from time to time in such Permitted Investments as the Collateral Agent
shall determine, which Permitted Investments shall be held in the name and be
under the control of the Collateral Trustee (and, if the Shared Collateral
Account is a securities account, credited to the Shared Collateral Account),
PROVIDED that at any time after the occurrence and during the continuance of an
Event of Default, the Collateral Trustee may (and, if instructed by the
Collateral Agent (or, if the Requisite Sharing Secured Parties shall have
assumed the right and authority of the Collateral Agent as contemplated by
Section 3.04(b) of the Sharing Intercreditor Agreement, by the Requisite Sharing
Secured Parties), shall) in its (or their) discretion at any time and from time
to time elect to liquidate any such Permitted Investments and to apply or cause
to be applied the proceeds thereof in the manner specified in Section 5.09 to
the extent necessary to result in the payment of the Sharing Obligations then
due and payable.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant
of the pledge and security interest pursuant to Section 3, the Grantors hereby
jointly and severally agree with the Sharing Secured Parties as follows:
5.01 DELIVERY AND OTHER PERFECTION. Each Grantor shall:
(a) if any of the shares, securities, moneys or property required to
be pledged by such Grantor under clauses (b)(i) or (b)(ii) of Section 3 are
received by such Grantor, forthwith either (x) transfer and deliver to the
Collateral Trustee such shares or securities so received by such Grantor
(together with the certificates for any such shares and securities duly
endorsed in blank or accompanied by undated stock powers duly executed in
blank), all of which thereafter shall be held by the Collateral Trustee,
pursuant to the terms of this Agreement, as part of the Shared Collateral
or (y) take such other action as the Collateral Agent or the Collateral
Trustee shall deem reasonably necessary or appropriate to duly record the
Lien created hereunder in such shares, securities, moneys or property in
said clauses (b)(i) and (b)(ii);
(b) deliver and pledge to the Collateral Trustee any and all
promissory notes or other instruments evidencing any of the Pledged Debt,
endorsed and/or accompanied by such instruments of assignment and transfer
in such form and substance as the Collateral Trustee may request;
(c) give, execute, deliver, file, register and record, authorize or
obtain all such financing statements, notices, instruments, documents,
agreements or other papers, and take such other action, as may be necessary
or desirable (in the reasonable judgment of the Collateral Agent) to
create, preserve, publish notice of, perfect, validate or preserve the
priority of the security interest granted pursuant hereto or to enable the
Collateral Trustee to exercise and enforce its rights hereunder with
respect to such pledge and security interest, including causing any or all
of the Stock Collateral to be transferred of
record into the name of the Collateral Trustee or its nominee (and the
Collateral Trustee agrees that if any Stock Collateral is transferred into
its name or the name of its nominee, the Collateral Trustee will thereafter
promptly give to the respective Grantor copies of any notices and
communications received by it with respect to the Stock Collateral pledged
by such Grantor hereunder);
(d) keep accurate books and records relating to the Shared Collateral,
and stamp or otherwise xxxx such books and records in such manner as the
Collateral Agent or the Collateral Trustee may reasonably require in order
to reflect the security interests granted by this Agreement; and
(e) permit representatives of the Collateral Agent or the Collateral
Trustee, upon reasonable notice, at any time during normal business hours
to inspect and make abstracts from its books and records pertaining to the
Shared Collateral and, during the continuance of an Event of Default,
permit representatives of the Collateral Trustee to be present at such
Grantor's place of business to receive copies of all communications and
remittances relating to the Shared Collateral, and forward copies of any
notices or communications received by such Grantor with respect to the
Shared Collateral, all in such manner as the Collateral Agent or Collateral
Trustee may reasonably require.
5.02 OTHER FINANCING STATEMENTS AND LIENS. Except as otherwise
permitted in Section 6.02(a) of the Solutia Credit Agreement, without the prior
written consent of the Collateral Trustee (granted with the authorization of the
Collateral Agent), no Grantor shall file or suffer to be on file, or authorize
or permit to be filed or to be on file, in any jurisdiction, any financing
statement or like instrument with respect to the Shared Collateral in which the
Collateral Trustee is not named as the sole secured party for the benefit of the
Sharing Secured Parties.
5.03 PRESERVATION OF RIGHTS. The Collateral Trustee shall not be
required to take steps necessary to preserve any rights against prior parties to
any of the Shared Collateral.
5.04 SPECIAL PROVISIONS RELATING TO STOCK COLLATERAL.
(1) PERCENTAGE PLEDGED. The Grantors will cause the Stock Collateral
to constitute at all times 100% of the total number of shares of each class of
capital stock of each Issuer then issued and outstanding.
(2) VOTING AND OTHER RIGHTS. So long as no Event of Default shall have
occurred and be continuing, the Grantors shall have the right to exercise all
voting, consensual and other powers of ownership pertaining to the Stock
Collateral for all purposes not inconsistent with the terms of this Agreement,
the Sharing Intercreditor Agreement, the Solutia Credit Agreement or any other
instrument or agreement referred to herein or therein, PROVIDED that the
Grantors jointly and severally agree that they will not vote the Stock
Collateral in any manner that results in a violation of the terms of this
Agreement, the Sharing Intercreditor Agreement, the Solutia Credit Agreement or
any such other instrument or agreement; and the Collateral Trustee shall execute
and deliver to the Grantors or cause to be executed and delivered to the
Grantors all such proxies,
powers of attorney, dividend and other orders, and all such instruments, without
recourse, as the Grantors may reasonably request for the purpose of enabling the
Grantors to exercise the rights and powers that they are entitled to exercise
pursuant to this Section 5.04(2).
(3) DIVIDENDS, ETC. Unless and until an Event of Default has occurred
and is continuing, the Grantors shall be entitled to receive and retain any
dividends on the Stock Collateral paid in cash out of earned surplus.
(4) RIGHTS FOLLOWING DEFAULT. If any Event of Default shall have
occurred, then so long as such Event of Default shall continue, and whether or
not the Collateral Trustee or any Sharing Secured Party exercises any available
right to declare any Sharing Obligation due and payable or seeks or pursues any
other relief or remedy available to it under applicable law or under or in
respect of this Agreement, the Sharing Intercreditor Agreement, the Solutia
Credit Agreement, the Astaris Guaranty Agreement, the Co-gen Participation
Agreement, the Co-gen Guaranty Agreement, the Co-gen Lease, the Designated
Letters of Credit, the Senior Notes Documents or any other agreement relating to
such Sharing Obligation, all dividends and other distributions on the Stock
Collateral shall be paid directly to the Collateral Trustee and retained by it
in the Shared Collateral Account as part of the Stock Collateral, subject to the
terms of this Agreement, and, if the Collateral Trustee shall so request in
writing, the Grantors jointly and severally agree to execute and deliver to the
Collateral Trustee appropriate additional dividend, distribution and other
orders and documents to that end, PROVIDED that if such Event of Default is
cured, any such dividend or distribution theretofore paid to the Collateral
Trustee shall, upon the request of the Grantors (except to the extent
theretofore applied to the Sharing Obligations), be returned by the Collateral
Trustee to the Grantors.
5.05 EVENTS OF DEFAULT, ETC. During the period during which an Event
of Default shall have occurred and be continuing:
(a) each Grantor shall, at the request of the Collateral Trustee,
assemble the Shared Collateral owned by it at such place or places,
reasonably convenient to both the Collateral Trustee and such Grantor,
designated in the Collateral Trustee's request;
(b) the Collateral Trustee may (acting at the request or with the
consent of the Collateral Agent or the Requisite Secured Parties as
provided in Section 3.04(b) of the Sharing Intercreditor Agreement) make
any reasonable compromise or settlement deemed desirable with respect to
any of the Shared Collateral and may extend the time of payment, arrange
for payment in installments, or otherwise modify the terms of, any of the
Shared Collateral;
(c) the Collateral Trustee shall have all of the rights and remedies
with respect to the Shared Collateral of a secured party under the Uniform
Commercial Code (whether or not the Uniform Commercial Code is in effect in
the jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under
the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including the right, to the fullest extent
permitted by applicable law, to exercise all voting, consensual and other
powers of ownership
pertaining to the Shared Collateral as if the Collateral Trustee were the
sole and absolute owner thereof (and each Grantor agrees to take all such
action as may be appropriate to give effect to such right);
(d) the Collateral Trustee in its discretion may, in its name or in
the name of any Grantor or otherwise, demand, xxx for, collect or receive
any money or property at any time payable or receivable on account of or in
exchange for any of the Shared Collateral, but shall be under no obligation
to do so; and
(e) the Collateral Trustee may (acting at the request or with the
consent of the Collateral Agent or the Requisite Secured Parties as
provided in Section 3.04(b) of the Sharing Intercreditor Agreement), upon
ten Business Days' prior written notice to the Grantors of the time and
place, with respect to the Shared Collateral or any part thereof which
shall then be or shall thereafter come into the possession, custody or
control of the Collateral Trustee, the Sharing Secured Parties or any of
their respective agents, sell, lease, assign or otherwise dispose of all or
any part of such Shared Collateral, at such place or places as the
Collateral Trustee deems best, and for cash or for credit or for future
delivery (without thereby assuming any credit risk), at public or private
sale, without demand of performance or notice of intention to effect any
such disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the
Collateral Trustee or any Sharing Secured Party or anyone else may be the
purchaser, lessee, assignee or recipient of any or all of the Shared
Collateral so disposed of at any public sale (or, to the extent permitted
by law, at any private sale) and thereafter to the fullest extent permitted
by law hold the same absolutely, free from any claim or right of whatsoever
kind, including any right or equity of redemption (statutory or otherwise),
of the Grantors, any such demand, notice and right or equity being hereby
expressly waived and released, to the fullest extent permitted by law. The
Collateral Trustee 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 the sale, and such sale may be
made at any time or place to which the sale may be so adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05 shall be applied in accordance with Section 5.09.
The Grantors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Collateral Trustee (acting at the request or with the
consent of the Collateral Agent or the Requisite Secured Parties as provided in
Section 3.04(b) of the Sharing Intercreditor Agreement) may be compelled, with
respect to any sale of all or any part of the Shared Collateral, to limit
purchasers to those who will agree, among other things, to acquire the Shared
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. The Grantors acknowledge that any such private
sales may be at prices and on terms less favorable to the Collateral Trustee
than those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agree that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Collateral Trustee shall have no obligation to
engage in public sales and no obligation to delay the sale of any Shared
Collateral for the period of time necessary to permit the respective Issuer or
issuer thereof to register it for public sale.
5.06 DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Shared Collateral pursuant to Section 5.05 are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Sharing Obligations, the Grantors shall remain liable for any
deficiency to the extent obligated under the respective Debt Instruments to
which the Grantors are party.
5.07 LOCATIONS; NAMES. Without at least 30 days' prior written notice
to the Collateral Agent and the Collateral Trustee, no Grantor shall change its
"location" (as defined in Section 9-307 of the Uniform Commercial Code) or
change its name from the name shown as its current legal name on Annex 1.
5.08 PRIVATE SALE. The Collateral Trustee and the Sharing Secured
Parties shall incur no liability as a result of the sale of the Shared
Collateral, or any part thereof, at any private sale pursuant to Section 5.05
conducted in a commercially reasonable manner. Each Grantor hereby waives any
claims against the Collateral Trustee or any Sharing Secured Party arising by
reason of the fact that the price at which the Shared Collateral may have been
sold at such a private sale was less than the price which might have been
obtained at a public sale or was less than the aggregate amount of the Sharing
Obligations, even if the Collateral Trustee accepts the first offer received and
does not offer the Shared Collateral to more than one offeree.
5.09 APPLICATION OF PROCEEDS OF SHARED COLLATERAL. The proceeds of any
collection, sale or other realization of all or any part of the Shared
Collateral pursuant hereto, and any other cash at the time held by the
Collateral Trustee under Section 4 or this Section 5, shall be applied by the
Collateral Trustee in the manner set forth in Section 4.01 of the Sharing
Intercreditor Agreement; PROVIDED that if the Sharing Intercreditor Agreement
shall not be in effect, such proceeds and cash shall be applied in the manner
set forth in Section 5.02 of the Non-Sharing Intercreditor Agreement.
5.10 ATTORNEY-IN-FACT. Without limiting any rights or powers granted
by this Agreement to the Collateral Trustee while no Event of Default has
occurred and is continuing, upon the occurrence and during the continuance of
any Event of Default the Collateral Trustee is hereby appointed the
attorney-in-fact of each Grantor for the purpose of carrying out the provisions
of this Section 5 and taking any action and executing any instruments which the
Collateral Trustee (acting at the request or with the consent of the Collateral
Agent or the Requisite Secured Parties as provided in Section 3.04(b) of the
Sharing Intercreditor Agreement) may reasonably deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, so long as the Collateral Trustee shall be entitled under this
Section 5 to make collections in respect of the Shared Collateral, the
Collateral Trustee shall have the right and power to receive, endorse and
collect all checks made payable to the order of any Grantor representing any
dividend, payment or other distribution in respect of the Shared Collateral or
any part thereof and to give full discharge for the same.
5.11 PERFECTION. Prior to or concurrently with the execution and
delivery of this Agreement, each Grantor shall (i) file such financing
statements and other documents in such offices as the Collateral Trustee may
request to perfect the security interests granted by Section 3 of this Agreement
and (ii) deliver to the Collateral Trustee all certificates evidencing any of
the Pledged Stock, accompanied by undated stock powers duly executed in blank,
and, to the extent required under Section 5.01(b), all promissory notes and
other instruments evidencing any Pledged Debt identified in Annex 4. Without
limiting the foregoing, each Grantor consents that Uniform Commercial Code
financing statements may be filed describing the Shared Collateral as set forth
in Section 3.
5.12 TERMINATION. This Agreement and the security interests granted
hereby shall cease to be effective
(a) with respect to the Senior Notes Obligations on the earlier of the
date (i) on which all the Senior Notes Obligations shall have been paid in
full to the holders thereof and (ii) that is ten days after the provisions
of the Senior Notes Documents that require equal and ratable security shall
be held to be invalid, void or unenforceable by the final judgment of a
court of competent jurisdiction, no longer subject to appeal or review and
(b) when all of the Non-Sharing Obligations have been paid in full,
all Designated Letters of Credit and Letters of Credit issued under the
Solutia Credit Agreement have expired or terminated and the Solutia
Commitments have been terminated and the Solutia Administrative Agent, the
Astaris Administrative Agent and the Co-gen Agent have each given written
notification thereof to the Collateral Trustee, or when the Collateral
Agent shall have authorized the release of the Liens created hereunder and
the termination of this Agreement pursuant to Section 7 of the Sharing
Intercreditor Agreement,
whereupon, in the case of the foregoing clause (b), the Collateral Trustee shall
forthwith cause to be assigned, transferred and delivered, against receipt but
without any recourse, warranty or representation whatsoever, any remaining
Shared Collateral and money received in respect thereof, to or on the order of
the respective Grantor. The Collateral Trustee shall, at the expense of the
Company, also execute and deliver to the respective Grantor upon such
termination such Uniform Commercial Code termination statements and such other
documentation as shall be reasonably requested by the respective Grantor to
effect the termination and release of the Liens on the Shared Collateral
Notwithstanding the foregoing (other than paragraph (a) of this
Section 5.12), any release of such Grantor or any Shared Collateral after the
occurrence and during the continuance of a Triggering Event (as defined in the
Sharing Intercreditor Agreement) shall be subject to the prior approval of the
Requisite Sharing Secured Parties.
5.13 FURTHER ASSURANCES. Each Grantor agrees that, from time to time
upon the written request of the Collateral Trustee, such Grantor will execute
and deliver such further documents and do such other acts and things as the
Collateral Trustee may reasonably request in order fully to effect the purposes
of this Agreement.
Section 6. MISCELLANEOUS.
6.01 NOTICES. All notices and other communications provided for herein
(a) to the Grantors, the Collateral Agent, the Solutia Administrative Agent, the
Astaris Administrative Agent, the Co-gen Agent, any Indenture Trustee or the
Collateral Trustee shall be in writing and shall be delivered to the intended
recipient as specified in Section 8.03 of the Sharing Intercreditor Agreement
and shall be deemed to have been given at the times specified in said Section
8.03, (b) to the Credit Agreement Secured Parties, shall be delivered to the
Collateral Agent, the Solutia Administrative Agent, the Astaris Administrative
Agent and the Co-gen Agent as provided above and (c) to the holders from time to
time of the Senior Notes, shall be delivered to the Indenture Trustees as
provided above.
6.02 NO WAIVER. No failure on the part of any Sharing Secured Party to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by any Sharing Secured Party of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein are cumulative
and are not exclusive of any remedies provided by law.
6.03 AMENDMENTS, ETC. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by each
Grantor and the Collateral Trustee in accordance with the provisions of Section
8.02 of the Sharing Intercreditor Agreement. Any such amendment or waiver shall
be binding upon the Sharing Secured Parties, each holder of any of the Sharing
Obligations and each Grantor.
6.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of each Grantor,
the Sharing Secured Parties and each holder of any of the Sharing Obligations
(PROVIDED that no Grantor shall assign or transfer its rights or obligations
hereunder without the prior written consent of the Collateral Trustee)
6.05 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.06 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.
6.07 CAPTIONS. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
6.08 AGENTS AND ATTORNEYS-IN-FACT. The Collateral Trustee may employ
agents and attorneys-in-fact in connection herewith and shall not be responsible
for the gross negligence or willful misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
6.09 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) the invalidity or unenforceability of any provision hereof
in any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
6.10 ADDITIONAL SUBSIDIARY GUARANTORS. As contemplated by Section
6.01(l) of the Solutia Credit Agreement, new domestic Restricted Subsidiaries of
the Company formed or acquired by the Company after the date hereof, are
required to become a "Subsidiary Guarantor" under this Agreement, by executing
and delivering to the Collateral Agent and the Collateral Trustee a Guarantee
Assumption Agreement in the form of Exhibit J to the Solutia Credit Agreement.
In addition, as contemplated by Section 4.19 of the 2009 Notes Indenture, any
such newly-formed or acquired domestic Restricted Subsidiary is required to
become a Guarantor under the 2009 Notes Indenture pursuant to a supplement to
the 2009 Notes Indenture. Accordingly, upon the execution and delivery of any
such Guarantee Assumption Agreement by any such Subsidiary, such new Subsidiary
shall automatically and immediately, and without any further action on the part
of any Person, become a "Subsidiary Guarantor" and a "Grantor" for all purposes
of this Agreement, and Annexes 1, 2, 3 and 4 hereto shall be deemed to be
supplemented in the manner specified in such Guarantee Assumption Agreement. In
addition, upon execution and delivery of any such Guarantee Assumption
Agreement, the new Subsidiary Guarantor makes the representations and warranties
set forth in Section 2 of the Sharing Intercreditor Agreement.
6.11 INCORPORATION BY REFERENCE. In acting hereunder, the Collateral
Trustee is entitled to all rights, privileges, protections, immunities and
indemnities provided to it under the Sharing Intercreditor Agreement.
Notwithstanding the foregoing, the Collateral Trustee shall not be obligated to
take any action hereunder without obtaining the request or direction of the
Collateral Agent or the Requisite Secured Parties as provided in Section 3.04(b)
of the Sharing Intercreditor Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
SOLUTIA INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President and Treasurer
CPFILMS INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
Title: Attorney-in-Fact
HSBC BANK USA, as Collateral Trustee
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Title: Xxxxxxx Xxxxxxxx
Name: Vice President
