EXHIBIT 10.3
PLEDGE
AGREEMENT dated as of
August 10, 2001, between
Xxxxxxx X. Xxxxxxx (the
"Pledgor") and RESOLUTION
PERFORMANCE PRODUCTS LLC, a
Delaware limited liability
company (the "Company").
The Pledgor and Resolution Performance Products Inc., a
Delaware corporation and the Company's corporate parent ("RPP Inc."), are
parties to (i) a Participation Agreement, dated as of the date hereof, pursuant
to which the Pledgor purchased that number of shares of Common Stock, $1.00 par
value, of RPP Inc. set forth on the signature page hereto (the "Pledged
Shares"), for the per share purchase price set forth on the signature page
hereto and certain Junior Subordinated Notes, dated as of the date hereof, with
an aggregate initial principal amount set forth on the signature page hereto
(the "Pledged Notes"), for the per note purchase price set forth on the
signature page hereto; and (ii) a Non-Qualified Stock Option Agreement, dated as
of the date hereof, pursuant to which the Pledgor is receiving options to
purchase that amount of shares of Common Stock, $1.00 par value, of RPP Inc. set
forth on the signature page hereto (the "Pledged Options"), for the per option
exercise price set forth on the signature page hereto. The Pledgor shall also
pledge hereunder the shares received by the Pledgor upon exercise of any options
granted to such Pledgor by the Company (the "Pledged Option Shares"), which
initial amount is set forth on the signature page hereto. The Pledgor shall
pledge hereunder the Pledged Shares, the Pledged Notes, the Pledged Options, and
the Pledged Option Shares. As used herein, the Pledged Shares, the Pledged
Notes, the Pledged Options and the Pledged Option Shares shall be referred to
collectively as the "Pledged Securities." This Pledge Agreement provides the
terms and conditions upon which a Promissory Note executed by the Pledgor in
favor of the Company (the "Note") in partial payment for the purchase price of
the Pledged Securities is secured by a pledge to the Company of the Pledged
Securities.
NOW, THEREFORE, in consideration of the promises contained
herein and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, and in order to induce the Company to accept the
Note as payment for the Pledged Securities, the Pledgor and the Company hereby
agree as follows:
Section 1. Pledge.
The Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Securities as security for the
prompt and complete payment when due of the unpaid principal and of interest on
the Note.
Section 2. Delivery of Pledged Securities.
Upon the execution of this Pledge Agreement, the Pledgor shall
deliver to the Company the certificates representing the Pledged Securities,
together with duly executed forms of assignment sufficient to transfer title
thereto to the Company. Upon the exercise of any Pledged Option, in lieu of
delivering certificates to the Pledgor, the Company will retain the certificates
and such certificates will be subject to this Pledge Agreement.
Section 3. Voting Rights; Cash Distributions.
Notwithstanding anything to the contrary contained herein,
during the term of this Pledge Agreement until such time as there exists a
default in the payment of principal or interest on the Note or any other default
under the Note, the Pledgor shall be entitled to all voting rights with respect
to the Pledged Securities and shall be entitled to receive all cash
distributions paid in respect of the Pledged Securities. Upon the occurrence of
and during the continuance of any such default, the Company shall retain all
such cash distributions payable on the Pledged Securities as additional security
hereunder.
Section 4. Stock Dividends; Distributions etc.
If, while this Pledge Agreement is in effect, the Pledgor
becomes entitled to receive or receives any securities or other property in
addition to, in substitution of, or in exchange for any of the Pledged
Securities (whether as a distribution in connection with any recapitalization,
reorganization or reclassification, distributions or otherwise), the Pledgor
shall accept such securities or other property on behalf of and for the benefit
of the Company as additional security for the Pledgor's obligations under the
Note and shall promptly deliver such additional security to the Company together
with duly executed forms of assignment, and such additional security shall be
deemed to be part of the Pledged Securities hereunder.
Section 5. Default.
If the Pledgor defaults in the payment of the principal or
interest under the Note as it becomes due (whether upon demand, acceleration or
otherwise) or any other event of default under the Note occurs and has not been
remedied within the 10 day period provided in Section 3(a)(i) of the Note
(including the bankruptcy or insolvency of the Pledgor) (each such occurrence
shall be deemed a "Default"), the Company may exercise any and all of the
rights, powers and remedies of an owner of the Pledged Securities (including the
right to vote the shares and receive dividends and distributions with respect to
such shares) and shall have and may exercise without demand any and all the
rights and remedies granted to a secured party upon default under the Uniform
Commercial Code of the State of New York or otherwise available to the Company
under applicable law. Without limiting the foregoing, if the Pledgor Defaults,
the Company is authorized to sell, assign and deliver at its discretion, from
time to time, all or any part of the Pledged Securities at any private sale or
public auction, on not less than ten days written notice to the Pledgor, at such
price or prices and upon such terms as the Company may deem advisable. The
Pledgor shall have no right to redeem the Pledged Securities after any such sale
or assignment. At any such sale or auction, the Company or any other holder of
shares of the Company may bid for, and become the purchaser of, the whole or any
part of the Pledged Securities offered for sale. In case of any such sale, after
deducting the costs, attorneys' fees and other expenses of sale and delivery,
the remaining proceeds of such sale shall be applied to the principal of and
accrued interest on the Note; provided, however, that after payment in full of
the indebtedness evidenced by the Note, the balance of the proceeds of sale then
remaining shall be paid to the Pledgor and the Pledgor shall be entitled to the
return of any of the Pledged Securities remaining in the hands of the Company.
Section 6. Costs and Attorneys' Fees.
All costs and expenses, including reasonable attorneys' fees,
incurred in exercising any right, power or remedy conferred by this Pledge
Agreement or in the enforcement thereof, shall become part of the indebtedness
secured hereunder and shall be paid by the Pledgor or repaid from the proceeds
of the sale of the Pledged Securities hereunder.
Section 7. Payment of Indebtedness and Release of Pledged Securities.
Upon payment in full of the indebtedness evidenced by the
Note, the Company shall surrender the Pledged Securities to the Pledgor together
with all forms of assignment.
Section 8. Further Assurances.
The Pledgor agrees that at any time and from time to time upon
the written request of the Company, the Pledgor will execute and deliver such
further documents and do such further acts and things as the Company may
reasonably request in order to effect the purposes of this Pledge Agreement.
Section 9. Severability.
Any provision of this Pledge Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 10. No Waiver; Cumulative Remedies.
The Company shall not by any act, delay, omission or otherwise
be deemed to have waived any of its rights or remedies hereunder, and no waiver
shall be valid unless in writing, signed by the Company, and then only to the
extent therein set forth. A waiver by the Company of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Company would otherwise have on any future occasion. No failure
to exercise nor any delay in exercising on the part of the Company, any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights or remedies provided by law.
Section 11. Waivers, Amendments; Applicable Law.
This Pledge Agreement sets forth the entire agreement of the
parties hereto as to the subject matter hereof and supersedes all previous
agreements between the parties hereto, whether written, oral or otherwise. None
of the terms or provisions of this Pledge Agreement may be waived, altered,
modified or amended except by an instrument in writing, duly executed by the
parties hereto. This Pledge Agreement and all obligations of the Pledgor
hereunder shall together with the rights and remedies of the Company hereunder,
inure to the benefit of the Company and its successors and assigns. This Pledge
Agreement and the rights and obligations hereunder shall be governed by, and
construed in accordance with, the laws of the State of New York.
* * * * *
EXHIBIT-10.3
IN WITNESS WHEREOF, this Pledge Agreement has been executed as
of the date first above written.
/s/ Xxxxxxx X. Xxxxxxx
------------------------
Xxxxxxx X. Xxxxxxx
RESOLUTION PERFORMANCE PRODUCTS LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: CEO
Number of Pledged Shares: 545.4545
Per Share Price of
Pledged Shares: $275
Aggregate Initial Principal
Amount of Pledged Notes: $350,000
Per Note Price of
Pledged Notes: $1,000
Initial Number of Shares of
Common Stock for
Pledged Options: 5,100
Option Price for Options: $275
Number of Pledged
Option Shares: 5,100
