EXHIBIT 4.13
JUNIOR SECURITY AGREEMENT
JUNIOR 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"); each of the Subsidiaries of the Company
identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages
hereto or that become "Subsidiary Guarantors" hereunder pursuant to Section 6.12
after the date hereof (individually, a "SUBSIDIARY GUARANTOR" and, collectively,
the "SUBSIDIARY GUARANTORS" and, together with the Company, individually a
"SECURING PARTY" and, collectively, the "SECURING PARTIES"); Citibank, N.A., as
collateral agent under the Non-Sharing Intercreditor Agreement referred to below
(in such capacity, the "COLLATERAL AGENT"); and HSBC Bank USA, a banking
corporation duly organized and validly existing under the laws of the State of
New York, as trustee under the 2009 Notes Indenture referred to below (in such
capacity, together with its successors in such capacity, the "TRUSTEE").
The Company, certain lenders (the "SOLUTIA LENDERS") and Citibank,
N.A., as administrative agent (in such capacity, together with its successors in
such capacity, 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
JUNIOR SECURITY AGREEMENT
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 the below-referenced Non-Sharing Intercreditor Agreement as
"Designated Letters of Credit" (collectively, the "DESIGNATED LETTERS OF
CREDIT"). 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 an Indenture dated as of July 9, 2002
(the "2009 NOTES INDENTURE") between the Company, SOI Funding Corp. and the
Trustee, pursuant to which SOI Funding Corp. has issued its 11.25% Senior
Secured Notes due 2009 (the "2009 NOTES"), in an aggregate principal amount of
$223,000,000 as of July 9, 2002, and which 2009 Notes have been assumed by the
Company pursuant to a Supplemental Indenture thereto, and guaranteed by the
Subsidiary Guarantors as provided in Section 10.01 thereof.
Pursuant to the Senior Non-Sharing Security and Guarantee Agreement
(as defined below), the Securing Parties have granted to the Collateral Agent
liens on certain of the property of the Securing Parties (the "SENIOR
COLLATERAL") as collateral security for the obligations of the Securing Parties
under the Solutia Credit Agreement, the Astaris Credit Agreement, the Co-gen
Guaranty Agreement, Hedging Obligations (as defined in the Junior Intercreditor
Agreement referred to below) and the Designated Letters of Credit.
In connection with the foregoing, the parties hereto wish to provide
for the grant by the Securing Parties to the Trustee of a lien on the Senior
Collateral, which liens the Trustee has agreed, on behalf of itself and each
holder of the 2009 Notes, pursuant to a Junior Intercreditor Agreement dated as
of the date hereof between the Securing Parties, the Collateral Agent and the
Trustee, shall be junior to the liens on the Senior Collateral granted to the
Collateral Agent pursuant to the Senior Non-Sharing Guarantee and Security
Agreement.
Accordingly, the parties hereto hereby agree as follows:
Section 1. DEFINITIONS. Terms defined in the Junior Intercreditor
Agreement are used herein as defined therein.
(a) The terms "ACCOUNTS", "INVENTORY" and "INVESTMENT PROPERTY" have
the respective meanings ascribed thereto in Article 9 of the Uniform Commercial
Code. The term
"FINANCIAL ASSETS" shall have the meaning ascribed thereto in Article 8 of the
Uniform Commercial Code.
(b) In addition, as used herein:
"APPLICABLE SECURED PARTY" means, (a) prior to the Senior Payment
Date, the Collateral Agent and (b) on and after the Senior Payment Date,
the Trustee.
"COLLATERAL" has the meaning assigned to such term in Section 3.
"COLLATERAL ACCOUNT" means, collectively, the Senior Collateral
Account and the Junior Collateral Account.
"COPYRIGHT COLLATERAL" means all material Copyrights, whether now
owned or hereafter acquired by any Securing Party, including each Copyright
identified in Annex 4.
"COPYRIGHTS" means all copyrights, copyright registrations and
applications for copyright registrations, including all renewals and
extensions thereof, the right to recover for all past, present and future
infringements thereof, and all other rights of any kind whatsoever accruing
thereunder or pertaining thereto.
"DOCUMENT" has the meaning assigned to such term in Section 3(g).
"EUROPE" means the countries of Austria, Benelux, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, Norway, Portugal, Spain, Sweden,
Switzerland and the United Kingdom.
"EVENT OF DEFAULT" has the meaning assigned to such term in the 2009
Notes Indenture.
"INSTRUMENTS" has the meaning assigned to such term in Section 3(d).
"INTELLECTUAL PROPERTY" means collectively, all Copyright Collateral,
all Patent Collateral and all Trademark Collateral, together with (a) to
the extent used in connection with production at the Mortgaged Facilities,
all inventions, processes, software, production methods, proprietary
information, know-how and trade secrets with respect to any of the
foregoing; (b) all licenses or user or other agreements granted to any
Securing Party with respect to any of the foregoing, including software
licenses, in each case whether now or hereafter owned or used including the
licenses or other agreements with respect to the Copyright Collateral, the
Patent Collateral or the Trademark Collateral, listed in Annex 7 and (c) to
the extent used in connection with production at the Mortgaged Facilities,
all information, data, plans, blueprints, specifications, designs,
drawings, recorded knowledge, surveys, engineering reports, test reports,
manuals, materials standards, processing standards, performance standards,
catalogs, computer and automatic machinery software and programs with
respect to any of the foregoing.
"ISSUERS" means, collectively, (a) the respective corporations,
partnerships or other entities identified under the names of the Securing
Parties on Annex 3 under the caption "Issuer" and (b) any other entity that
shall at any time be a Subsidiary Guarantor that is not a Restricted
Subsidiary.
"JUNIOR COLLATERAL ACCOUNT" has the meaning assigned to such term in
Section 4.01.
"JUNIOR SECURED OBLIGATIONS" means, collectively, (a) in the case of
the Company, the obligations of the Company to the Trustee and the 2009
Noteholders in respect of the 2009 Notes, (b) in the case of the Subsidiary
Guarantors, the obligations of the Subsidiary Guarantors in respect of the
2009 Notes pursuant to the guarantee thereof set forth in Section 10.01 of
the 2009 Notes Indenture (or a supplement thereto executed and delivered
pursuant to Section 4.19 thereof) and (c) in the case of all Securing
Parties, all present and future obligations of the Securing Parties to the
Junior Secured Parties, or any of them, hereunder.
"JUNIOR SECURED PARTIES" means, collectively, the Trustee and the 2009
Noteholders in respect of the 2009 Notes.
"MORTGAGED FACILITIES" means the manufacturing facilities of the
Company located in or near Decatur, Alabama, Pensacola, Florida, Indian
Orchard, Massachusetts, Trenton, Michigan, Greenwood, South Carolina and
Alvin, Texas and the production facility of CPFilms Inc. located in or near
Martinsville, Virginia.
"PATENT COLLATERAL" means all material Patents used in connection with
production at the Mortgaged Facilities, whether now owned or hereafter
acquired by any Securing Party, including each Patent identified in
Annex 5.
"PATENTS" means to the extent used, registered or applied for in the
United States of America or Europe all patents, including the inventions
and improvements described and claimed therein together with the reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, all income, royalties, damages and payments now or hereafter due
and/or payable under and with respect thereto, including damages and
payments for past or future infringements thereof, the right to xxx for
past, present and future infringements thereof.
"PLEDGED DEBT" means any Debt (as defined in the Solutia Credit
Agreement) of any Domestic Subsidiary (other than a Restricted Subsidiary)
held by any Securing Party.
"PLEDGED STOCK" has the meaning assigned to such term in Section 3(a).
"PERMITTED INVESTMENTS" shall mean: (a) direct obligations of the
United States of America, or of any agency thereof, or obligations
guaranteed as to principal and interest by the United States of America, or
of any agency thereof, in either case maturing not more than 90 days from
the date of acquisition thereof; (b) certificates of deposit or time
deposits issued by any bank or trust company organized under the laws of
the United States of America or any state thereof and having capital,
surplus and undivided profits of
at least $500,000,000, maturing not more than 90 days from the date of
acquisition thereof; (c) fully collateralized repurchase agreements with a
term of not more than 90 days for securities described in clause (a) of
this definition and entered into with a financial institution satisfying
the criteria described in clause (b) of this definition; and (d) commercial
paper rated A-1 or better or P-1 by Standard & Poor's Ratings Services, a
division of XxXxxx-Xxxx Companies, Inc., or Xxxxx'x Investors Services,
Inc., respectively, maturing not more than 90 days from the date of
acquisition thereof; in each case so long as the same (x) provide for the
payment of principal and interest (and not principal alone or interest
alone) and (y) are not subject to any contingency regarding the payment of
principal or interest.
"RESTRICTED ISSUERS" means, collectively, Monchem International, Inc.,
a corporation duly organized and validly existing under the laws of the
State of Delaware, Solutia Europe and Solutia UK Holdings Ltd., a
corporation organized under the laws of England and Wales.
"RESTRICTED SUBSIDIARY" has the meaning assigned to such term in the
Existing Note Indentures as in effect on the date hereof and without giving
effect to any modifications or supplements after the date hereof.
"SENIOR COLLATERAL ACCOUNT" means the Collateral Account established
pursuant to Section 4.01 of the Senior Non-Sharing Security and Guarantee
Agreement.
"SOLUTIA EUROPE" means Solutia Europe S.A./N.V., a corporation
organized under the laws of Belgium.
"STOCK COLLATERAL" has the meaning assigned to such term in Section
3(a)(ii).
"TRADEMARK COLLATERAL" means all material Trademarks, whether now
owned or hereafter acquired by any Securing Party, including each Trademark
identified in Annex 6. Notwithstanding the foregoing, the Trademark
Collateral does not and shall not include any Trademark that would be
rendered invalid, abandoned, void or unenforceable by reason of its being
included as part of the Trademark Collateral.
"TRADEMARKS" means, to the extent used, registered or applied for in
the United States of America or Europe, all trade names, trademarks and
service marks, logos, trademark and service xxxx registrations, and
applications for trademark and service xxxx registrations, including all
renewals of trademark and service xxxx registrations, all rights
corresponding thereto throughout the United States of America and Europe,
the right to recover for all past, present and future infringements
thereof, all other rights of any kind whatsoever accruing thereunder or
pertaining thereto, together, in each case, with the product lines and
goodwill of the business connected with the use of, and symbolized by, each
such trade name, trademark and service xxxx.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as in
effect from time to time in the State of New York.
Section 2. REPRESENTATIONS AND WARRANTIES. Each Securing Party
represents and warrants to the Junior Secured Parties that:
(a) TITLE AND PRIORITY. Such Securing Party is the sole beneficial
owner of the Collateral in which it purports to grant a security interest
pursuant to Section 3 and no Lien exists or will exist upon such Collateral
at any time, except for Liens permitted under Section 4.11 of the 2009
Notes Indenture and except for (x) the security interest in favor of the
Collateral Agent for the benefit of the Senior Secured Parties created
pursuant to the Senior Non-Sharing Security and Guarantee Agreement and (y)
the security interest in favor of the Trustee for the benefit of the Junior
Secured Parties created pursuant hereto. The security interest created
pursuant hereto constitutes a valid and perfected security interest in the
Collateral in which such Securing Party purports to grant a security
interest pursuant to Section 3, subject to the senior Lien created pursuant
to the Senior Non-Sharing Security and Guarantee Agreement, but subject to
no other equal or prior Lien except as expressly permitted by said Section
4.11 of the 2009 Notes Indenture.
(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 Securing Party as of the date hereof are correctly
set forth in Annex 1. Annex 1 correctly specifies (x) the place of business
of each Securing Party or, if such Securing Party has more than one place
of business, the location of the chief executive office of such Securing
Party, and (y) each location of the Securing Parties where in excess of
$5,000,000 of Inventory as of March 31, 2002 of the Securing Parties is
located.
(c) CHANGES IN CIRCUMSTANCES. Such Securing Party 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 Securing Party in Annex 3 is, and all other Pledged Stock in
which such Securing Party 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 PLEDGED STOCK. The Pledged Stock, if any, identified
under the name of such Securing Party in Annex 3 constitutes (i) in the
case of each Issuer other than a Restricted Issuer, 100% of all the issued
and outstanding shares of capital stock of whatever class of such Issuer
beneficially owned by such Securing Party on the date hereof (whether or
not registered in the name of such Securing Party) and (ii) in the case
of each Restricted Issuer, 65% of the issued and outstanding shares of
voting stock of such Restricted Issuer (it being understood that, in the
case of Solutia Europe, shares of treasury stock or stock of Solutia Europe
held by Solutia Europe shall not be deemed to be outstanding) and 100% of
all other issued and outstanding shares of capital stock of whatever class
of such Restricted Issuer beneficially owned by such Securing Party on the
date hereof (whether or not registered in the name of such Securing Party);
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.
(f) FAIR LABOR STANDARDS ACT. Any goods now or hereafter produced by
such Securing Party or any of its Subsidiaries in the United States of
America included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as
amended.
(g) INTELLECTUAL PROPERTY. Annexes 4, 5, and 6, respectively, set
forth under the name of such Securing Party a complete and correct list of
all material Copyrights, material Patents and material Trademarks (in each
case to the extent encompassed within the definition of "Intellectual
Property" in Section 1(b) hereof) owned by such Securing Party on the date
hereof, and all registrations listed in Annexes 4, 5, and 6, are properly
issued and in full force and effect. Annex 7 sets forth under the name of
such Securing Party all licenses and other user agreements pursuant to
which such Securing Party has been granted the right to use any Copyrights,
Patents or Trademarks owned by others and material to the business of such
Securing Party (and, in the case of Patents, used in connection with
production at the Mortgaged Facilities).
To such Securing Party's knowledge, (i) except as set forth in Annex
4, 5 or 6, there is no violation by others of any right of such Securing
Party with respect to any material Copyright, Patent or Trademark listed in
Annexes 4, 5, and 6, respectively, under the name of such Securing Party
and (ii) such Securing Party is not infringing in any material respect upon
any copyright, patent or trademark of any other Person by virtue of the
conduct of its business or, in the case of any such patent, use in
connection with production at any of such Securing Party's facilities, as
applicable; and no proceedings have been instituted or are pending against
such Securing Party or, to such Securing Party's knowledge, threatened, and
no claim against such Securing Party has been received by such Securing
Party, alleging any such violation, except as may be set forth in Annex 7.
As of the date hereof, such Securing Party does not own any Trademarks
registered in the United States of America to which the last sentence of
the definition of Trademark Collateral applies.
Section 3. COLLATERAL. Subject to the Lien of the Senior Non-Sharing
Security and Guarantee Agreement, as collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Junior Secured Obligations, each Securing Party hereby pledges and grants to
the Trustee, for the benefit of the Junior Secured Parties as
hereinafter provided, a security interest in all of such Securing Party's right,
title and interest in the following property, whether now owned by such Securing
Party or hereafter acquired and whether now existing or hereafter coming into
existence (all being collectively referred to herein as "COLLATERAL"):
(a) the shares of voting stock of the Issuers identified in Annex 3
under the name of such Securing Party 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 Securing Party
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 Securing Party 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");
PROVIDED that, notwithstanding the foregoing, the Stock Collateral of any
Restricted Issuer shall be limited to 65% of the issued and outstanding
shares of voting stock of such Restricted Issuer (it being understood that,
in the case of Solutia Europe, shares of treasury stock or stock of Solutia
Europe held by Solutia Europe shall not be deemed to be outstanding) and
100% of all other issued and outstanding shares of capital stock of
whatever class of such Issuer;
(b) the Pledged Debt;
(c) all Accounts and all Intellectual Property;
(d) all instruments, chattel paper (whether tangible or electronic) or
letters of credit (each as defined in the Uniform Commercial Code) of such
Securing Party evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of,
any of the Accounts, including (but not limited to) promissory notes,
drafts, bills of exchange and trade acceptances (herein collectively called
"INSTRUMENTS");
(e) all Inventory;
(f) each contract and other agreement of such Securing Party relating
to the sale or other disposition of Inventory;
(g) all documents of title (as defined in the Uniform Commercial Code)
or other receipts of such Securing Party covering, evidencing or
representing Inventory (herein collectively called "DOCUMENTS");
(h) all rights, claims and benefits of such Securing Party against any
Person arising out of, relating to or in connection with Inventory
purchased by such Securing Party, including any such rights, claims or
benefits against any Person storing or transporting such Inventory;
(i) all Investment Property and Financial Assets contained in the
Collateral Account;
(j) the balance from time to time in the Collateral Account; and
(k) all proceeds, products, offspring, accessions, rents, profits,
income, benefits, substitutions and replacements of and to any of the
Collateral and, to the extent related to any Collateral, all books,
correspondence, credit files, records, invoices and other papers, including
without limitation all tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Securing Party or
any computer bureau or service company from time to time acting for such
Securing Party;
PROVIDED that (i) Debt (as defined in the Existing Note Indentures), or shares
of stock, of any Restricted Subsidiary owned or held by the Company or any other
Restricted Subsidiary shall not be included as part of the Collateral under this
Agreement and (ii) licenses and other user agreements pursuant to which any
Securing Party has been granted the right to use any Copyrights, Patents or
Trademarks owned by others shall be included in the Collateral only to the
extent permitted under the applicable instruments pursuant to which such
licenses and user agreements are created or granted.
The Securing Parties hereto contemplate that the pledge of shares of
capital stock of Solutia Europe and Solutia UK Holdings Ltd. provided above may
be supplemented by one or more separate pledge agreements, executed and
delivered by the relevant Securing Parties in favor of the Trustee (each junior
to the corresponding pledge in favor of the Collateral Agent executed and
delivered pursuant to the Senior Non-Sharing Security and Guarantee Agreement),
which pledge agreements will provide for the pledge of shares in accordance with
the requirements of the law of Belgium or of England and Wales, as applicable;
upon the execution and delivery of any such pledge agreement, the provisions of
such pledge agreement shall supersede in their entirety the provisions of this
Agreement with respect to the shares of capital stock of Solutia Europe or
Solutia UK Holdings Ltd. pledged by such Securing Party hereunder.
Section 4. CASH PROCEEDS OF COLLATERAL.
4.01 JUNIOR COLLATERAL ACCOUNT. The Trustee will cause to be
established at a banking institution to be selected by the Trustee one or more
cash collateral accounts (collectively, the "JUNIOR 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 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 Trustee is the customer (as contemplated by Section
9-104(a)(3) of the Uniform Commercial Code) and
into which, at any time after the Senior Payment Date, there shall be deposited
from time to time the cash proceeds of any of the Collateral (including proceeds
of insurance thereon) that the Trustee requests pursuant to Section 4.02 be
delivered hereunder and into which a Securing Party may from time to time
deposit any additional amounts that any of them wishes to pledge to the Trustee
for the benefit of the Junior Secured Parties as additional collateral security
hereunder. The balance from time to time in the Junior Collateral Account shall
constitute part of the Collateral hereunder and shall not constitute payment of
the Junior Secured Obligations until applied as hereinafter provided. If at any
time following request by the Trustee pursuant to Section 4.02 no Event of
Default shall be continuing, the Trustee shall remit the collected balance
standing to the credit of the Junior Collateral Account to or upon the order of
the respective Securing Party as such Securing Party through the Company shall
from time to time instruct, PROVIDED that at any time during the continuance of
an Event of Default, the Trustee may in its discretion apply or cause to be
applied (subject to collection) the balance from time to time standing to the
credit of the Junior Collateral Account to the payment of any Junior Secured
Obligation then due and payable in the manner specified in Section 5.09. In
addition, the Company may at any time request that the balance from time to time
standing to the credit of the Junior Collateral Account be applied to the
payment of any Junior Secured Obligations then due and payable in the manner
specified in Section 5.09. The balance from time to time in the Junior
Collateral Account shall be subject to withdrawal only as provided herein.
4.02 PROCEEDS OF ACCOUNTS AND PLEDGED DEBT. If requested by the
Trustee at any time after the Senior Payment Date and after the occurrence and
during the continuance of an Event of Default, each Securing Party shall
instruct (i) all account debtors and other Persons obligated in respect of all
Accounts of such Securing Party to make all payments in respect of the Accounts
of such Securing Party either (a) directly to the Trustee (by instructing that
such payments be remitted to a post office box which shall be in the name and
under the control of the Trustee) or (b) to one or more other banks in the
United States of America (by instructing that such payments be remitted to a
post office box which shall be in the name and under the control of the Trustee)
under arrangements, in form and substance reasonably satisfactory to the
Trustee, pursuant to which such Securing Party shall have irrevocably instructed
such other bank (and such other bank shall have agreed) to remit all proceeds of
such payments directly to the Trustee for deposit into the Junior Collateral
Account and (ii) all Domestic Subsidiaries obligated in respect of all Pledged
Debt to make all payments in respect of the Pledged Debt directly to the
Trustee. All payments made to the Trustee, as provided in the preceding
sentence, shall be immediately deposited by the Trustee in the Junior Collateral
Account. In addition to the foregoing, each Securing Party agrees that, at any
time after the Senior Payment Date and after the occurrence and during the
continuance of an Event of Default, if the proceeds of any Collateral hereunder
(including the payments made in respect of Accounts and Pledged Debt)
shall be received by it, such Securing Party shall, upon the request of the
Trustee, as promptly as possible deposit such proceeds into the Junior
Collateral Account. Until so deposited, all such proceeds shall be held in trust
by such Securing Party for and as the property of the Trustee and shall not be
commingled with any other funds or property of such Securing Party.
4.03 INVESTMENT OF BALANCE IN JUNIOR COLLATERAL ACCOUNT. The cash
balance standing to the credit of the Junior Collateral Account shall be
invested from time to time in such Permitted Investments as the respective
Securing Party through the Company (or, after the occurrence and during the
continuance of a Default, the Trustee) shall determine, which Permitted
Investments shall be held in the name and be under the control of the Trustee
(and, if the Junior Collateral Account is a securities account, credited to the
Trustee), PROVIDED that at any time after the occurrence and during the
continuance of an Event of Default on or after the Senior Payment Date, the
Trustee may in its 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 to the payment of the Junior Secured Obligations then due and
payable in the manner specified in Section 5.09.
4.04 SENIOR COLLATERAL ACCOUNT. Prior to the Senior Payment Date, the
Collateral Agent agrees that the balance from time to time standing to the
credit of the Senior Collateral Account shall be held by the Collateral Agent
for the benefit, on a junior lien basis, of the Trustee and the 2009
Noteholders, PROVIDED that (i) prior to the Senior Payment Date, the Trustee
shall not have any right to give any instructions or consents with respect to
actions of the Collateral Agent relating to the Senior Collateral Account and
(ii) at any time after the Senior Payment Date, the Collateral Agent may in its
discretion (and shall, if requested by the Trustee) remit the balance then
standing to the credit of the Senior Collateral Account to the Trustee for
deposit into the Junior Collateral Account.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant
of the pledge and security interest pursuant to Section 3, the Securing Parties
hereby jointly and severally agree with each Junior Secured Party as follows:
5.01 DELIVERY AND OTHER PERFECTION. Each Securing Party shall:
(a) if any of the shares, securities, moneys or property required to
be pledged by such Securing Party under clauses (a)(i) or (a)(ii) of
Section 3 are received by such Securing Party forthwith, either (x)
transfer and deliver to the Applicable Secured Party such shares or
securities so received by such Securing Party (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 Applicable Secured Party, pursuant to the
terms of the Senior Non-Sharing Security and Guarantee Agreement or this
Agreement (as applicable), as part of the Senior Collateral (at any time
prior to the Senior Payment Date) or the Collateral (at any time after the
Senior Payment Date) or (y) take such other action as the Collateral Agent
pursuant to the Senior Non-Sharing Security and Guarantee Agreement (at all
times prior to the Senior Payment Date) or the Trustee (at any time on or
after the Senior Payment Date) shall deem reasonably necessary or
appropriate to duly record the Lien created hereunder in such shares,
securities, moneys or property in said clauses (a)(i) and (a)(ii);
(b) deliver and pledge to the Applicable Secured Party any and all
Instruments constituting part of the Collateral in which such Securing
Party purports to grant a security interest hereunder, endorsed and/or
accompanied by such instruments of assignment and transfer in such form and
substance as the Collateral Agent pursuant to the Senior Non-Sharing
Security and Guarantee Agreement (at all times prior to the Senior Payment
Date) or the Trustee (at any time on or after the Senior Payment Date) may
request; PROVIDED, that so long as no Event of Default shall have occurred
and be continuing, such Securing Party may retain for collection in the
ordinary course any Instruments received by such Securing Party in the
ordinary course of its business and the Applicable Secured Party shall,
promptly upon request of such Securing Party through the Company, make
appropriate arrangements for making any Instrument pledged by such Securing
Party available to such Securing Party for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the extent
deemed appropriate by the Collateral Agent pursuant to the Senior
Non-Sharing Security and Guarantee Agreement (at all times prior to the
Senior Payment Date) or the Trustee (at any time on or after the Senior
Payment Date), against trust receipt or like document);
(c) deliver and pledge to the Applicable Secured Party 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 Agent pursuant to the Senior
Non-Sharing Security and Guarantee Agreement (at all times prior to the
Senior Payment Date) or the Trustee (at any time on or after the Senior
Payment Date) may request;
(d) 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 pursuant
to the Senior Non-Sharing Security and Guarantee Agreement (at all times
prior to the Senior Payment Date) or the Trustee (at any time on or after
the Senior Payment Date)) to create, preserve, publish notice of, perfect,
validate or preserve the priority of the security interest granted pursuant
hereto or to enable the Applicable Secured Party 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 Applicable Secured Party or its nominee (and
the Trustee agrees that if any Stock Collateral is transferred into its
name or the name of its nominee, the Trustee will thereafter promptly give
to the respective Securing Party copies of any notices and communications
received by it with respect to the Stock Collateral pledged by such
Securing Party hereunder), PROVIDED that notices to account debtors in
respect of any Accounts or Instruments shall be subject to the provisions
of clause (h) below;
(e) keep accurate books and records relating to the Collateral, and
stamp or otherwise xxxx such books and records in such manner as the
Collateral Agent pursuant to the Senior Non-Sharing Security and Guarantee
Agreement (at all times prior to the Senior Payment Date) or the Trustee
(at any time on or after the Senior Payment Date) may reasonably require in
order to reflect the security interests granted by this Agreement;
(f) permit representatives of the Collateral Agent pursuant to the
Senior Non-Sharing Security and Guarantee Agreement (at all times prior to
the Senior Payment Date) and the Trustee (at any time on or after the
Senior Payment Date), upon reasonable notice, at any time during normal
business hours to inspect and make abstracts from its books and records
pertaining to the Collateral, and, during the continuance of an Event of
Default, permit representatives of the Collateral Agent pursuant to the
Senior Non-Sharing Security and Guarantee Agreement (at all times prior to
the Senior Payment Date) and the Trustee (at any time on or after the
Senior Payment Date) to be present at such Securing Party's place of
business to receive copies of all communications and remittances relating
to the Collateral, and forward copies of any notices or communications
received by such Securing Party with respect to the Collateral, all in such
manner as the Collateral Agent pursuant to the Senior Non-Sharing Security
and Guarantee Agreement (at all times prior to the Senior Payment Date) and
the Trustee (at any time on or after the Senior Payment Date) may
reasonably require;
(g) execute and deliver and, subject to the execution thereof by the
Trustee, cause to be filed, such continuation statements, and do such other
acts and things, as may be necessary to maintain the perfection of the
security interest granted pursuant hereto; and
(h) without limiting the provisions of Section 4.02 hereof, upon the
occurrence and during the continuance of any Default, upon request of the
Collateral Agent pursuant to the Senior Non-Sharing Security and Guarantee
Agreement (at all times prior to the Senior Payment Date) or the Trustee
(at any time on or after the Senior Payment Date), promptly notify (and
such Securing Party hereby authorizes the Trustee so to notify) each
account debtor in respect of any Accounts or Instruments that such
Collateral has been assigned to the Trustee hereunder, and that any
payments due or to become due in respect of such Collateral are to be made
directly to the Trustee.
5.02 SENIOR COLLATERAL. Prior to the Senior Payment Date, the
Collateral Agent agrees that all items of Senior Collateral (or instruments or
certificates evidencing the same) it holds in its possession pursuant to Section
6.01 of the Non-Sharing Security and Guarantee Agreement shall be held by the
Collateral Agent for the benefit, on a junior lien basis, of the Trustee and the
2009 Noteholders, PROVIDED that (i) prior to the Senior Payment Date, the
Trustee shall not have any right to give any instructions or consents with
respect to actions of the Collateral Agent relating to such Senior Collateral
(or instruments or certificates evidencing the same) and (ii) at any time after
the Senior Payment Date, the Collateral Agent may in its discretion (and shall,
if requested by the Trustee) remit all items of Senior Collateral to the
Trustee.
5.03 PRESERVATION OF RIGHTS. The Trustee shall not be required to take
steps necessary to preserve any rights against prior parties to any of the
Collateral.
5.04 SPECIAL PROVISIONS RELATING TO CERTAIN COLLATERAL.
(a) STOCK COLLATERAL.
(1) PERCENTAGE PLEDGED. The Securing Parties will cause the Stock
Collateral to constitute at all times (i) in the case of the Issuers other
than Restricted Issuers, 100% of all the total number of shares of capital
stock of each such Issuer then issued and outstanding and (ii) in the case
of the Restricted Issuers, 65% of the total number of shares of the voting
stock of the Restricted Issuers (it being understood that, in the case of
Solutia Europe, shares of treasury stock or stock of Solutia Europe held by
Solutia Europe shall not be deemed to be outstanding) and 100% of the total
number of shares of all other classes of capital stock of each Restricted
Issuer then issued and outstanding.
(2) VOTING AND OTHER RIGHTS. So long as no Event of Default shall have
occurred and be continuing, the Securing Parties 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 Solutia Credit Agreement or any other instrument or
agreement referred to herein or therein, PROVIDED that the Securing Parties
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
Solutia Credit Agreement or any such other instrument or agreement; and the
Collateral Agent shall execute and deliver to the Securing Parties or cause
to be executed and delivered to the Securing Parties all such proxies,
powers of attorney, dividend and other orders, and all such instruments,
without recourse, as the Securing Parties may reasonably request for the
purpose of enabling the Securing Parties to exercise the rights and powers
that they are entitled to exercise pursuant to this Section 5.04(a)(2).
(3) DIVIDENDS. Unless and until an Event of Default has occurred and
is continuing, the Securing Parties 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 Trustee or any other Junior Secured Party exercises any
available right to declare any Junior Secured 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 or the 2009 Notes
Indenture, all dividends and other distributions on the Stock Collateral
shall be paid directly to the Applicable Secured Party and retained by it
in the Collateral Account as part of the Stock Collateral, subject to the
terms of this Agreement, and, if the Collateral Agent pursuant to the
Senior Non-Sharing Security and Guarantee Agreement (at all times prior to
the Senior Payment Date) or the Trustee (at any time on or after the Senior
Payment Date) shall so request in writing, the Securing Parties jointly and
severally agree to execute and deliver to the Applicable Secured Party
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 Trustee shall, upon
request of the Securing Parties (except to the extent theretofore applied
to the Junior Secured Obligations), be returned by the Trustee to the
Securing Parties.
(b) INTELLECTUAL PROPERTY.
(1) For the purpose of enabling the Trustee to exercise rights and
remedies under Section 5.05 at such time as the Trustee shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose,
each Securing Party hereby grants to the Trustee, to the extent assignable,
an irrevocable, non-exclusive right (exercisable without payment of royalty
or other compensation to such Securing Party) to use, assign, license or
sublicense any of the Intellectual Property now owned or hereafter acquired
by such Securing Party, wherever the same may be located, including in such
right reasonable access to all media in which any of the Intellectual
Property may be recorded or stored and to all computer programs used for
the compilation or printout thereof.
(2) Notwithstanding anything contained herein to the contrary, the
Securing Parties will be permitted to exploit, use, enjoy, protect,
license, sublicense, assign, sell, dispose of or take other actions with
respect to the Intellectual Property in the ordinary course of the business
of the Securing Parties. In furtherance of the foregoing, unless an Event
of Default shall have occurred and be continuing the Trustee shall from
time to time, upon the request of the respective Securing Party, execute
and deliver any instruments, certificates or other documents, in the form
so requested, that such Securing Party through the Company shall have
certified are appropriate (in its judgment) to allow it to take any action
permitted above (including relinquishment of the right provided pursuant to
clause (1) immediately above as to any specific Intellectual Property).
Further, upon the payment in full of all of the Junior Secured Obligations
or earlier expiration of this Agreement or release of the Collateral, the
Trustee shall grant back to the Securing Parties the right granted pursuant
to clause (1) immediately above. The exercise of rights and remedies under
Section 5.05 by the Trustee shall not terminate the rights of the holders
of any licenses or sublicenses theretofore granted by the Securing Parties
in accordance with the first sentence of this clause (2).
(3) At all times prior to the Senior Payment Date, the Securing
Parties shall furnish to the Trustee copies of any statements and schedules
delivered pursuant to Section 6.04(b)(3) of the Senior Non-Sharing Security
and Guarantee Agreement to the Collateral Agent, and, upon any modification
of the Senior Non-Sharing Security and Guarantee Agreement to supplement
any of Annexes 4, 5 or 6 of the Senior Non-Sharing Security and Guarantee
Agreement, will similarly supplement Annexes 4, 5 and 6 hereto. At all
times on and after the Senior Payment Date, the Securing Parties will
furnish to the Trustee from time to time (but, unless a Default (as defined
in the 2009 Notes Indenture) shall have occurred and be continuing, no more
frequently than semi-annually) statements and schedules further identifying
and describing the Copyright Collateral, the Patent Collateral and the
Trademark Collateral, respectively, and such other reports in connection
with the Copyright Collateral, the Patent Collateral and the Trademark
Collateral as the Trustee may reasonably request, all in reasonable detail;
and promptly upon request of the Trustee, following receipt by the Trustee
of any statements, schedules or reports pursuant to this clause (3), modify
this Agreement by amending Annexes 4, 5 and/or 6, as the case may be, to
include any Copyright, Patent or Trademark that becomes part of the
Collateral under this Agreement.
5.05 EVENTS OF DEFAULT, ETC. During the period during which an Event
of Default shall have occurred and be continuing, but subject in each case to
the applicable provisions of the Junior Intercreditor Agreement:
(a) each Securing Party shall, at the request of the Trustee, assemble
the Collateral owned by it at such place or places, reasonably convenient
to both the Trustee and such Securing Party, designated in the Trustee's
request;
(b) the Trustee may make any reasonable compromise or settlement
deemed desirable with respect to any of the Collateral and may extend the
time of payment, arrange for payment in installments, or otherwise modify
the terms of, any of the Collateral;
(c) the Trustee shall have all of the rights and remedies with respect
to the 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 Collateral as if the Trustee were the
sole and absolute owner thereof (and each Securing Party agrees to take all
such action as may be appropriate to give effect to such right);
(d) the Trustee in its discretion may, in its name or in the name of
any Securing Party 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 Collateral, but shall be under no obligation to do
so; and
(e) the Trustee may, upon ten Business Days' prior written notice to
the Securing Parties of the time and place, with respect to the Collateral
or any part thereof which shall then be or shall thereafter come into the
possession, custody or control of the Trustee, the other Junior Secured
Parties or any of their respective agents, sell, lease, assign or otherwise
dispose of all or any part of such Collateral, at such place or places as
the 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
Trustee or any other Junior Secured Party or anyone else may be the
purchaser, lessee, assignee or recipient of any or all of the 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 Securing Parties, any such demand, notice and right or equity being
hereby expressly waived and released, to the fullest extent permitted by
law. In the event of any sale, assignment, or other disposition of any of
the Trademark Collateral, the goodwill connected with and symbolized by the
Trademark Collateral subject to such disposition shall be included, and the
Securing Parties shall supply to the Trustee or its designee, for inclusion
in such sale,
assignment or other disposition, all Intellectual Property relating to such
Trademark Collateral. The 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 Securing Parties recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Trustee may be compelled, with respect to any sale of all
or any part of the Collateral, to limit purchasers to those who will agree,
among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Securing Parties acknowledge that any such private sales may be at prices and on
terms less favorable to the 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 Trustee shall have no obligation to engage in
public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the Company 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 Collateral pursuant to Section 5.05 are insufficient
to cover the costs and expenses of such realization and the payment in full of
the Junior Secured Obligations, the Securing Parties shall remain liable for any
deficiency.
5.07 LOCATIONS; NAMES. Without at least 30 days' prior written notice
to the Trustee, no Securing Party 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 Trustee and the Junior Secured Parties shall
incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 5.05 conducted in a
commercially reasonable manner. Each Securing Party hereby waives any claims
against the Trustee or any other Junior Secured Party arising by reason of the
fact that the price at which the 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 Junior Secured Obligations, even if
the Trustee accepts the first offer received and does not offer the Collateral
to more than one offeree.
5.09 APPLICATION OF PROCEEDS. Except as otherwise herein expressly
provided, the proceeds of any collection, sale or other realization of all or
any part of the Collateral pursuant hereto, and any other cash at the time held
by the Trustee under this Section 5, shall be applied by the Trustee:
FIRST, to the payment of the costs and expenses of such collection,
sale or other realization, including reasonable out-of-pocket costs and
expenses of the Trustee and the
fees and expenses of its agents and counsel, and all expenses incurred and
advances made by the Trustee in connection therewith;
SECOND, to the payment in full of the Junior Secured Obligations in
such manner of application as required under the 2009 Notes Indenture; and
FINALLY, to the payment to the respective Securing Parties, or their
respective successors or assigns, or as a court of competent jurisdiction
may direct, of any surplus then remaining.
5.10 ATTORNEY-IN-FACT. Without limiting any rights or powers granted
by this Agreement to the Trustee while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any Event of
Default the Trustee is hereby appointed, subject to the rights of the Collateral
Agent under the Senior Non-Sharing Security and Guarantee Agreement, the
attorney-in-fact of each Securing Party for the purpose of carrying out the
provisions of this Section 5 and taking any action and executing any instruments
which the Trustee 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 Trustee shall be entitled under this Section 5 to make collections
in respect of the Collateral, the Trustee shall have the right and power to
receive, endorse and collect all checks made payable to the order of any
Securing Party representing any dividend, payment or other distribution in
respect of the 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 Securing Party shall (i) file such financing
statements and other documents in such offices as the Trustee may reasonably
request to perfect the security interests granted by Section 3 of this
Agreement, (ii) deliver to the Applicable Secured Party all certificates
evidencing any of the Pledged Stock, accompanied by undated stock powers duly
executed in blank, and, to the extent required by Section 3(b), all promissory
notes and other instruments evidencing any Pledged Debt identified in Annex 8
and (iii) execute and deliver such short form assignments or security agreements
relating to Collateral consisting of the Intellectual Property as the Collateral
Agent pursuant to the Senior Non-Sharing Security and Guarantee Agreement (at
all times prior to the Senior Payment Date) or the Trustee (at any time on or
after the Senior Payment Date) may reasonably request. Without limiting the
foregoing, each Securing Party consents that Uniform Commercial Code financing
statements may be filed describing the Collateral as set forth in Section 3.
5.12 TERMINATION. When all Junior Secured Obligations shall have been
paid in full, this Agreement shall terminate, and the Trustee shall forthwith
cause to be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the respective Securing
Party. The Trustee shall, at the expense of the Company, also execute and
deliver to the respective Securing Party upon such termination such Uniform
Commercial Code termination statements and such other documentation as shall be
reasonably requested by the respective Securing Party to effect the termination
and release of the Liens on the Collateral.
5.13 FURTHER ASSURANCES. Each Securing Party agrees that, from time to
time upon the written request of the Trustee, such Securing Party will execute
and deliver such further documents and do such other acts and things as the
Collateral Agent may reasonably request in order fully to effect the purposes of
this Agreement.
Section 6. MISCELLANEOUS.
6.01 NOTICES. All notices, requests, consents and demands hereunder
shall be in writing and telecopied or delivered to the respective parties hereto
pursuant to Section 6.01 of the Junior Intercreditor Agreement. All such
communications shall be deemed to have been given at the times specified in said
Section 6.01.
6.02 NO WAIVER. No failure on the part of the Trustee or any other
Junior 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 the Trustee or any
other Junior 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
Securing Party and the Trustee in accordance with the provisions of Section 6.03
of the Junior Intercreditor Agreement (or as otherwise provided in said Section
6.03), PROVIDED that no such amendment shall alter or impose any obligations
upon, or affect any of the rights of, the Collateral Agent hereunder without the
consent of the Collateral Agent. Any such amendment or waiver shall be binding
upon the Trustee, the Collateral Agent, each other Junior Secured Party and each
Securing Party.
6.04 EXPENSES. The Securing Parties jointly and severally agree to
reimburse each of the Trustee and the 2009 Noteholders for all reasonable costs
and expenses of the Trustee and the other Junior Secured Parties (including the
reasonable fees and expenses of legal counsel) in connection with (i) any
Default and any enforcement or collection proceeding resulting therefrom,
including all manner of participation in or other involvement with (w)
performance by the Trustee of any obligations of the Securing Parties in respect
of the Collateral that the Securing Parties have failed or refused to perform,
(x) bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation
proceedings, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement in respect of any of the Collateral, and
for the care of the Collateral and defending or asserting rights and claims of
the Trustee in respect thereof, by litigation or otherwise, including expenses
of insurance, (y) judicial or regulatory proceedings and (z) workout,
restructuring or other negotiations or proceedings (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 6.04, and all such costs and expenses shall be
Junior Secured Obligations entitled to the benefits of the collateral security
provided pursuant to Section 3.
6.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of each Securing
Party, the Collateral Agent,
the Trustee, each Junior Secured Party and each holder of any of the Junior
Secured Obligations (PROVIDED that no Securing Party shall assign or transfer
its rights or obligations hereunder without the prior written consent of the
Trustee).
6.06 NO DUTY ON THE PART OF THE COLLATERAL AGENT. Anything herein to
the contrary notwithstanding, the Collateral Agent shall not have any duty to
the Trustee or any other Junior Secured Party hereunder, other than (i) to hold
the balance from time to time standing to the credit of the Senior Collateral
Account as provided in Section 4.04 and (ii) to hold as bailee the shares,
securities, moneys, property, instruments, promissory notes and other items of
possessory Collateral on behalf of the Trustee and the other Junior Secured
Parties as provided in Section 5.02. Nothing herein shall be deemed to require
that the Collateral Agent first obtain the consent of the Trustee or any other
Junior Secured Party to release or terminate any Lien covering the Senior
Collateral.
6.07 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.
6.08 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.
6.09 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.
6.10 AGENTS AND ATTORNEYS-IN-FACT. The Trustee may employ agents and
attorneys-in-fact in connection herewith and shall not be responsible for the
negligence or willful misconduct of any such agents or attorneys-in-fact
selected by it with due care.
6.11 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.
6.12 ADDITIONAL SUBSIDIARY GUARANTORS. New Domestic Subsidiaries of
the Company formed or acquired by the Company after the date hereof and any
Domestic Subsidiary that ceases to be an "Immaterial Subsidiary" (as defined in
the Solutia Credit Agreement) which become a Subsidiary Guarantor under the 2009
Notes Indenture and grant Liens on any "Collateral" under and as defined in the
Senior Non-Sharing Security Documents, shall become a "Subsidiary Guarantor"
under this Agreement, by executing and delivering to the Collateral Agent and
the Trustee a Guarantee Assumption Agreement in the form of Exhibit A to the
Junior Intercreditor Agreement. 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 an "Securing
Party" for all purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Junior
Security 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
SUBSIDIARY GUARANTORS
CPFILMS INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Attorney-in-Fact
MONCHEM, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: President
MONCHEM INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: President
SOLUTIA SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: President
COLLATERAL AGENT
CITIBANK, N.A., as Collateral Agent
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
TRUSTEE
HSBC BANK USA, as Trustee
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
ANNEX 1
FILING DETAILS
TYPE OF
ORGANIZATION ORGANIZATIONAL PLACE OF BUSINESS OR FORMER
CURRENT LEGAL (CORPORATION, JURISDICTION ID LOCATION OF CHIEF LOCATION LEGAL
NAME (NO TRADE LIMITED LIABILITY OF NUMBER CURRENT MAILING EXECUTIVE OF NAME(s)
NAMES) COMPANY, ETC.) ORGANIZATION (IF APPLICABLE) ADDRESS OFFICER GOODS (IF ANY)
-----------------------------------------------------------------------------------------------------------------------------------
Solutia Inc. Corporation Delaware 2735025 575 Maryville 000 Xxxxxxxxx Xxxxx, XX Queeny Chemical
Centre Drive Centre Drive Cantonment, Company
Xx. Xxxxx, XX Xx. Xxxxx, XX XX
00000 00000 Xxxxxxx, XX
Xxxxx, XX
Xxxxxxxxx,
XX
Springfield,
MA
St. Louis,
MO
Trenton, MI
-----------------------------------------------------------------------------------------------------------------------------------
Solutia Corporation Delaware 2976482 575 Maryville 575 Maryville Not None
Systems, Inc. Centre Drive Centre Drive applicable
St. Louis, MO Xx. Xxxxx, XX
00000 63141
-----------------------------------------------------------------------------------------------------------------------------------
Monchem Corporation Delaware 2735035 The Corporation 575 Maryville Not None
International, Trust Company Centre Drive applicable
Inc. 0000 Xxxxxx Xx. Xxxxx, XX
Street 63141
Xxxxxxxxxx, XX
00000
-----------------------------------------------------------------------------------------------------------------------------------
Monchem, Inc. Corporation Delaware 2735322 The Corporation 575 Maryville Not None
Trust Company Centre Drive applicable
0000 Xxxxxx Xx. Xxxxx, XX
Street 63141
Xxxxxxxxxx, XX
00000
-----------------------------------------------------------------------------------------------------------------------------------
CPFilms Inc. Corporation Delaware 0312016 4210 The Great 0000 Xxx Xxxxx Xxxxxxxx, XX Courtaulds
Road Road Performance
Fieldale, VA Fieldale, VA Films, Inc.
24089 24089 Xxxxxx
Processing, Inc.
Hat Corporation
of America
-----------------------------------------------------------------------------------------------------------------------------------
JUNIOR SECURITY AGREEMENT
ANNEX 2
"NEW DEBTOR" EVENTS
None.
JUNIOR SECURITY AGREEMENT
ANNEX 3
PLEDGED STOCK
Solutia Inc.
NUMBER OF SHARES
ISSUER CERTIFICATE NO(S). REGISTERED OWNER PLEDGED
------------------------------------------------------------------------------------------
Monchem
International, Inc. 3 Solutia Inc. 6.5 shares of common
stock with par value
$1.00 each
------------------------------------------------------------------------------------------
Solutia Systems, Inc. 2 Solutia Inc. 100 shares of common
stock with par value
$0.01 each
------------------------------------------------------------------------------------------
Monchem International, Inc.
NUMBER OF SHARES
ISSUER CERTIFICATE NO(S). REGISTERED OWNER PLEDGED
----------------------------------------------------------------------------------------------------
Monchem, Inc. 3 Monchem International, Inc. 10 shares of common
stock with par value
$1.00 each
----------------------------------------------------------------------------------------------------
Solutia UK Holdings Ltd. 2 Monchem International, Inc. 4,602,926 ordinary
shares of L0.01 each
----------------------------------------------------------------------------------------------------
Solutia Europe S.A./N.V. No certificates, but Monchem International, Inc. 11,870 registered
shares are numbered shares without nominal
488,321 through value
500,190
----------------------------------------------------------------------------------------------------
JUNIOR SECURITY AGREEMENT
ANNEX 4
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
[To Come]
JUNIOR SECURITY AGREEMENT
ANNEX 5
LIST OF PATENTS AND PATENT APPLICATIONS
[To Come]
JUNIOR SECURITY AGREEMENT
ANNEX 6
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE XXXX REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE XXXX REGISTRATIONS
[To Come]
JUNIOR SECURITY AGREEMENT
ANNEX 7
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
[To Come]
JUNIOR SECURITY AGREEMENT
ANNEX 8
PLEDGED DEBT
[See Definition of "Pledged Debt"]
JUNIOR SECURITY AGREEMENT
- 2 -
SUBORDINATED INDEBTEDNESS SUBORDINATION AGREEMENT
- 3 -
SUBORDINATED INDEBTEDNESS SUBORDINATION AGREEMENT
