Exhibit 99.10
Execution copy
INSTRUCTIONS TO THE NOTARY
MORTGAGE AGREEMENT
(HYPOTHEEK OVEREENKOMST)
DATED 11 FEBRUARY 2004
BETWEEN
SOLUTIA EUROPE SA/NV
AS MORTGAGOR
AND
KBC BANK NV
AS MORTGAGEE
[NOTE: FOR TRANSLATION PURPOSES ONLY -
DEFINITIVE MORTGAGE AGREEMENT TO BE IN DUTCH]
Execution copy
TABLE OF CONTENTS
1. Definitions...................................................4
2. Mortgage......................................................4
3. Representations, warranties and undertakings..................6
4. Continuing security and other matters.........................7
5. Enforcement...................................................8
6. Application of proceeds.......................................8
7. Indemnity.....................................................8
8. Discharge of the mortgage.....................................9
9. Liability of Mortgagee........................................9
10. Expenses......................................................9
11. Responsibility of the Mortgagee..............................10
12. Notices......................................................10
13. General......................................................11
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MORTGAGE AGREEMENT
BETWEEN:
(1) SOLUTIA EUROPE SA/NV, a Belgian company limited by shares, having
its registered office at Boondaelse Steenweg 6, B-1050 Brussels,
Belgium and registered at the Crossroads Bank for Enterprises,
under enterprise number 0460.474.440,
(the MORTGAGOR);
AND:
(2) KBC BANK NV, a Belgian bank, with registered office at Havenlaan 2,
B-1080 Brussels, Belgium, registered at the Crossroads Bank for
Enterprises, under enterprise number 0462.920.226 and acting for
itself and as joint creditor pursuant to Clause 2.1 of the
Collateral Agency Agreement (as defined below),
(the MORTGAGEE).
WHEREAS:
(A) The Mortgagor and the Noteholders have agreed to amend and restate
the Mortgagor's euro 200,000,000 6.25 percent Notes due 2005, as
amended and restated, the euro 200,000,00 10.00 percent Senior
Secured Notes due 2008 (together with the Terms and Conditions of
Notes annexed thereto, as amended, modified or supplemented from
time to time, the NOTES and such Terms and Conditions of Notes, as
amended, modified or supplemented from time to time, the TERMS AND
CONDITIONS OF NOTES) pursuant to an Agreement of Understanding and
Restructuring dated 30 January 2004 among the Mortgagor and the
Noteholders party thereto (as amended, modified or supplemented
from time to time, the AGREEMENT OF UNDERSTANDING). In connection
with the Notes, the Mortgagor will enter into the Fiscal Agency
Agreement dated 11 February 2004 among the Mortgagor, Kredietbank
S.A. Luxembourgeoise as fiscal agent and paying agent, and KBC Bank
NV as principal paying agent (as amended, modified or supplemented
from time to time, the FISCAL AGENCY AGREEMENT). The Noteholders
and the Couponholders are entitled to the benefit of, are bound by
and are deemed to have notice of all of the provisions of the
Fiscal Agency Agreement.
(B) It is a requirement of the Agreement of Understanding and the Terms
and Conditions of Notes that the Mortgagor grant this Mortgage (as
defined hereunder) to the Mortgagee to secure its obligations to
the Mortgagee as provided herein and undertake the obligations
contemplated by this Mortgage Agreement.
(C) Pursuant to Clause 2.1 of the Collateral Agency Agreement (as
defined below), the Mortgagee shall be the joint creditor (together
with the relevant Noteholder) of each and every obligation of the
Mortgagor towards each of the Noteholders under the Notes and the
Other Credit Documents to which the Mortgagor is party, and
accordingly the Mortgagee will have its own independent right to
demand performance by the Mortgagor of those obligations. There is
as a result a joint creditorship under New York law between the
Noteholders and the Mortgagee with regard to the sums owed under
the Notes and the other Credit Documents.
(D) In consideration of the agreements set forth herein and in the
Terms and Conditions of Notes, the Agreement of Understanding and
the other Credit Documents, the Mortgagor agrees to grant this
Mortgage (as defined hereunder) to the Mortgagee under the
following terms (the MORTGAGE AGREEMENT).
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IT HAS BEEN AGREED AS FOLLOWS:
1. DEFINITIONS
1.1 DEFINITIONS
In this Mortgage Agreement, unless the context otherwise requires:
COLLATERAL AGENCY AGREEMENT means the collateral agency agreement
dated 11 February 2004 among the Mortgagor, the Subsidiary
Guarantors, the Mortgagee and the Noteholders party thereto, as
amended, modified or supplemented from time to time;
MORTGAGE means the mortgage (hypotheek) of the Property created or
arising pursuant to this Mortgage Agreement;
MORTGAGE MANDATE means the mortgage mandate (hypothecaire volmacht)
dated on or about the date of this Mortgage Agreement granted by
the Mortgagor to the Mortgagee, as amended, modified or
supplemented from time to time;
PROPERTY means the property described in Clause 2 of this Mortgage
Agreement;
SECURED OBLIGATIONS means all present and future actual and
contingent indebtedness, obligations, and liabilities of the
Mortgagor to the Mortgagee which may arise under, out of, or in
connection with the Collateral Agency Agreement, the Fiscal Agency
Agreement, the Notes, or any other Credit Document to which the
Mortgagor is party.
Unless defined in this Mortgage Agreement, words and expressions defined in
the Terms and Conditions of Notes shall have the same meaning when used in
this Mortgage Agreement.
In this Mortgage Agreement, each reference to a document will be deemed to
be a reference to such document as amended and/or supplemented by the
parties to such document from time to time.
1.2 SUCCESSORS AND ASSIGNS
The expressions MORTGAGEE, NOTEHOLDERS and MORTGAGOR include their
respective successors, and, in the case of the Mortgagee, its nominee or
such other Person as may from time to time be appointed Collateral Agent for
the Noteholders and, in the case of the Noteholders, their respective
transferees and assignees to whom any Note or any Secured Obligation shall
have been transferred.
1.3 HEADINGS
Clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this Mortgage
Agreement.
2. MORTGAGE
2.1 ENCUMBERED IMMOVABLE PROPERTY
The Mortgagor hereby irrevocable grants to the Mortgagee, acting in its
capacity of joint creditor, a mortgage (hypotheek/hypotheque) (in each case,
a MORTGAGE, and collectively, the MORTGAGES), as security for the Secured
Obligations, on all existing immovable property and rights described
hereafter that are owned by the Mortgagor as described hereafter and as will
be further specified in the mortgage deed (the PROPERTY).
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o Ghent site:
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- an industrial complex situated at Ottergemsesteenweg, 707;
- a long term lease on a parking lot situated at
Ottergemsesteenweg;
o Louvain-la-Neuve site:
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- buildings located at Laid Burniatstraat, 3, located on the
industrial site named "FLEMING"; and
- a long term lease on a parcel of land located at the above
mentioned industrial site.
The Mortgage shall not include a mortgage of the Mortgagee's immovable
property and rights in Ghent to the extent that such Mortgage would violate
the express and enforceable provisions of the Master Operating Agreement
effective as of 1 September 1997 between Monsanto Company and the Parent
including its appendixes between Monsanto Europe SA and the beneficiary
thereunder, binding on the Mortgagee under applicable law.
The Mortgage also includes all actual and future accessories regarded as
immovable, and all actual and future improvements, including, amongst
others, all erected or to be erected buildings.
2.2 AMOUNT
This Mortgage is granted up to the following amounts:
(i) in respect of principal EUR 40,000,000
(ii) three years of interest calculated at the rate of 18%, or
such other rate as may be agreed between the parties, in
accordance with article 87 of the Mortgage Law
pro memorie/memoire
(iii) for accessories such as retaining fees, reinvestment and
broken funding, costs for subrogation and inscription,
expenses and fees concerning collection of debt, costs and
fees concerning the perfection, foreclosure, release and
preservation of the security, estimate and file costs as
well as all amounts exceeding the above mentioned
principal, because of accounting matured interests,
retaining fees or unpaid negotiable instruments.
EUR 4,000,000
This Mortgage Agreement and the Mortgages which may result therefrom are
joined to and shall not impair the other personal or collateral security the
Mortgagee now has or in the future will have as security for the Secured
Obligations. The Mortgagee is entitled to release, reduce, amend or enforce
other security created or permitted pursuant to the Terms and Conditions of
Notes without notice to the Mortgagor in its capacity as mortgagor and this
will not reduce the obligations of the Mortgagor in any way.
2.3 RANKING
Without prejudice to the security interests created or permitted pursuant to
the Terms and Conditions of Notes and without limitations to the exceptions
provided therein, the Mortgagor confirms that the Property to be encumbered
by the mortgages granted pursuant to this Mortgage Agreement are and will
remain free and clear of any Liens, including any seizure, inscription,
contractual liens
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(voorrechten), transcriptions (kantmeldingen), with the exception of
Permitted Liens and all existing rights of way, easements and the like
granted to companies formerly affiliated with the Mortgagor in relation to
the property in Ghent.
3. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
3.1 REPRESENTATIONS AND WARRANTIES
Without prejudice and in addition to the representations and warranties of
the Mortgagor under the other Credit Documents to which the Mortgagor is
party, the Mortgagor represents and warrants to the Mortgagee and undertakes
during the subsistence of this Mortgage Agreement as follows:
(a) it is a naamloze vennootschap/societe anonyme duly established
under the laws of Belgium, validly existing and not in liquidation,
with power to enter into this Mortgage Agreement and to exercise
its rights and perform its obligations hereunder and all corporate
and other action required to authorise its execution and
performance of this Mortgage Agreement has been duly taken;
(b) it owns the Property free and clear of any Liens save for Permitted
Liens;
(c) as of the date hereof, neither the Property nor any part thereof is
subject to any seizure or other enforcement measure for more than
an aggregate amount of EUR 100,000;
(d) it maintains adequate insurance cover against risks normally
insured against by companies carrying on a similar business, and in
particular maintains all insurance required by statute;
(e) this Mortgage Agreement does not violate any material contractual
or other obligation binding upon the Mortgagor; and
(f) this Mortgage Agreement and the deed of this Mortgage Agreement
creates a valid first ranking contractual mortgage.
3.2 UNDERTAKINGS
The Mortgagor undertakes as follows:
(a) except as permitted under the Terms and Conditions of Notes and as
long as all Secured Obligations have not been unconditionally and
irrevocably discharged, it (i) shall not dispose in any way of the
Property other than in accordance with the provisions of this
Agreement, (ii) save for any Lien created pursuant to the Mortgage
Mandate, shall not create any other Lien (or mandate anyone to do
so) in respect of the Property and shall, save for Permitted Liens,
not permit the existence of any such Lien, and (iii) in general
shall not take any action that could intentionally negatively
influence the value of the Mortgage;
(b) it shall procure that no executory seizure (saisie
executoire/uitvoerend beslag) is made on the Property or any part
thereof and that any conservatory seizure (saisie
conservatoire/bewarend beslag) thereon is lifted within 60 days of
its first being made; and
(c) it shall co-operate with the Mortgagee and sign or cause to be
signed all such further documents and take all such further action
as the Mortgagee may from time to time reasonably request to
perfect and protect the Mortgage and to carry out the provisions
and purposes of this Mortgage Agreement. The Mortgagee shall not be
obligated to request any action under this Clause (c) except upon
written instructions from the Requisite Noteholders.
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4. CONTINUING SECURITY AND OTHER MATTERS
4.1 CONTINUING SECURITY
The security created by this Mortgage Agreement:
(a) shall be a continuing security for the Secured Obligations;
(b) shall be in addition to and shall not prejudice or affect, and may
be enforced by the Mortgagee without prior recourse to, any other
security interest or remedy;
(c) shall not be satisfied by any intermediate payment or satisfaction
of any part of the Secured Obligations or by any settlement of
accounts;
(d) shall not be discharged by the entry of any Secured Obligations
into any current account, in which case this pledge shall secure
any provisional or final balance of such current account up to the
amount in which the Secured Obligations were entered therein;
(e) shall not in any way be prejudiced or affected by any time or
waiver granted to, or composition with, the Mortgagor or any other
Person, by any amendment (however fundamental) or supplement to the
Terms and Conditions of Notes or any other document, by the taking,
variation, compromise, exchange, renewal or release of or refusal
or neglect to perfect or enforce any right, remedy or security over
the Property or by anything done or omitted which but for this
provision might operate to exonerate the Mortgagor;
(f) shall not in any way be prejudiced or affected by any change in the
constitution or status of the Mortgagor or any other Person or by
any legal limitation, disability, incapacity or other circumstances
relating to the Mortgagor or any other Person, by any invalidity,
illegality or unenforceability of the obligations of the Mortgagor
or any other Person; and
(g) the Mortgagee or, as the case may be, Requisite Noteholders may at
any time without discharging or in any way affecting this Mortgage
(a) grant the Mortgagor any time or indulgence, (b) concur in any
moratorium of the Secured Obligations, (c) amend the terms and
conditions of the Secured Obligations in accordance with the
provisions of the Terms and Conditions of Notes and the applicable
laws, (d) abstain from taking or perfecting any other security and
discharge any other security, (e) abstain from exercising any right
or recourse or from proving or claiming any debt and waive any
right or recourse, and (f) apply any payment received from the
Mortgagor or for its account towards the Secured Obligations or any
other obligations of the Mortgagor at the Mortgagee's choice.
4.2 RIGHTS ADDITIONAL
All the rights of the Mortgagee hereunder shall be in addition to any other
right vested in the Mortgagee and all such rights may be exercised from time
to time and as often as the Mortgagee may deem expedient. The Mortgagor
waives any right it may have of first requiring the Mortgagee (or any agent
on its behalf) to proceed against or claim payment from any other party, or
enforce any guarantee or security before enforcing the Mortgage.
4.3 NO SUBROGATION
Until all Secured Obligations have been unconditionally and irrevocably
discharged, the Mortgagor shall not by virtue of any payment made, security
realised or monies received hereunder for or on the account of the liability
of any other party:
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(a) be subrogated to any rights, security or monies held, received or
receivable by the Mortgagee or be entitled to any right of
contribution or indemnity; or
(b) claim, rank, prove or vote as a creditor of any party or its estate
in competition with the Mortgagee; or
(c) receive, claim or have the benefit of all payment, distribution or
security from or on account of any party, or exercise any right of
set-off as against such other party, other than as expressly
permitted by the Terms and Conditions of Notes.
4.4 PRESERVATION OF SECURITY IN THE EVENT OF NOVATION
In accordance with article 1278 of the Belgian Civil Code and without
prejudice to the scope of the Secured Obligations, the Mortgagor and the
Mortgagee agree that in the event of novation of all or any part of the
Secured Obligations or the change or replacement of the Mortgagee or the
Mortgagor, this Mortgage will be maintained, automatically and without any
further formality or consent, to secure the Secured Obligations as novated
and in favour of the Mortgagee or the new mortgagees.
4.5 SETTLEMENTS CONDITIONAL
Any release, discharge or settlement between the Mortgagor and the Mortgagee
shall be conditional upon no security disposition or payment to the
Mortgagee being void or set aside or ordered to be refunded and if such
condition shall not be fulfilled, the Mortgagee shall be entitled to enforce
the security created by this Mortgage Agreement as if such release,
settlement or discharge had not occurred and any such payment had not been
made.
5. ENFORCEMENT
(a) Following the occurrence of an Event of Default that is continuing,
the Mortgagee shall be entitled to enforce the security created by
this Mortgage Agreement, and to exercise all rights and remedies,
to the fullest extent permitted by law and the Collateral Agency
Agreement.
(b) All enforcement costs will be considered as accessories to the main
obligation and will be borne by the Mortgagor.
6. APPLICATION OF PROCEEDS
(a) Subject to the rights of any creditor with prior security or
preferential claims, the proceeds of the enforcement of the
security created by this Agreement shall be applied towards
satisfaction of the Secured Obligations in accordance with the
Collateral Agency Agreement.
(b) Should the proceeds of the enforcement of the Mortgage be greater
than the outstanding amount of the Secured Obligations, the
Mortgagee shall pay to the Mortgagor any such excess.
7. INDEMNITY
The Mortgagor shall fully indemnify and pay on demand to the Mortgagee in
respect of all liabilities and justified costs and expenses reasonably
incurred by the Mortgagee or any attorney, manager, agent or other Person
appointed by the Mortgagee, in the execution of any rights, powers or
discretions vested in it pursuant hereto, save for liabilities and expenses
arising from the gross negligence (faute grave/grove fout) or wilful
misconduct of the Mortgagee.
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8. DISCHARGE OF THE MORTGAGE
(a) This Mortgage shall be discharged by, and only by, the express
release thereof granted by the Mortgagee.
(b) Without delay when all Secured Obligations have been
unconditionally and irrevocably discharged, the Mortgagee shall
grant in accordance with the Collateral Agency Agreement, an
express release of this Mortgage in such form as will permit
de-registration thereof.
(c) Any release or discharge of the Mortgage shall be null and void and
without effect if any payment received by the Mortgagee and applied
towards satisfaction of all or part of the Secured Obligations
(i) is avoided or declared invalid as against the creditors of
the maker of such payment; or
(ii) becomes repayable by the Mortgagee to a third party; or
(iii) proves not to have been effectively received by the
Mortgagee;
and the Mortgagee shall be entitled to enforce the Mortgage as if
such release or discharge had not occurred.
9. LIABILITY OF MORTGAGEE
(a) The Mortgagee shall not be liable for any acts or omissions with
respect to the Property mortgaged hereunder or the enforcement or
the losses arising in connection with the exercise of any of its
rights, powers and discretions hereunder, save for liabilities and
expenses arising from the gross negligence (faute grave/grove fout)
or wilful misconduct of the Mortgagee.
(b) The Mortgagee shall not be under any obligation to the Mortgagor to
take any steps necessary to preserve any rights in the Property
against any other parties but may do so at its option, and all
reasonable expenses incurred in connection therewith shall be for
the account of the Mortgagor and shall be part of the Secured
Obligations.
(c) If any such expenses are borne by the Mortgagee, the Mortgagor
shall on first demand reimburse the Mortgagee therefor, and its
reimbursement obligation shall be part of the Secured Obligations.
10. EXPENSES
All expenses that the Mortgagee may incur in connection with (i) the
administration of this Mortgage Agreement as further provided in the
Collateral Agency Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realisation upon, any of the Property,
(iii) the exercise or enforcement of any of the rights of the Mortgagee
hereunder, or (iv) the failure by the Mortgagor to perform or observe any of
the provisions hereof, shall be borne by the Mortgagor. All other expenses
and duties reasonably incurred in connection with this Mortgage Agreement,
in particular with regard to the establishment and perfection of the
Mortgage, its enforcement and the granting of any release, shall be borne by
the Mortgagor. The Mortgagor shall on first demand reimburse the Mortgagee
for any such expenses or duties paid by it, and the same shall be part of
the Secured Obligations.
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11. RESPONSIBILITY OF THE MORTGAGEE
The Mortgagee shall not be responsible to any Noteholder for:
(i) the adequacy, accuracy or completeness of any recitals,
statements, representations or warranties contained in
this Mortgage Agreement;
(ii) the adequacy, accuracy or completeness of any statement or
information (whether written or oral) made in or supplied
in connection with this Mortgage Agreement; or
(iii) the legality, validity, effectiveness, adequacy or
enforceability of this Mortgage Agreement.
12. NOTICES
12.1 COMMUNICATION IN WRITING
Any communication to be made under or in connection with this Mortgage
Agreement shall be made in writing and, unless otherwise stated, may be made
by fax or letter.
12.2 ADDRESSES
The address(es) and fax number (and the department or officer, if any, for
whose attention the communication is to be made) of each party for any
communication or document to be made or delivered under or in connection
with this Mortgage Agreement is that identified with its name below or any
other substitute address, fax number or department or officer as any party
may notify to the other parties by not less than five Business Days' notice.
THE MORTGAGOR: Solutia Europe SA/NV
Boondaelse Steenweg 6
B-1050 Brussels
Belgium
Parc Scientifique Fleming
Rue Laid Burniat 3
B-1348 Louvain-la-Neuve
Belgium
Attention: Legal Department
Fax: +32 10 48 12 24
THE MORTGAGEE: KBC Bank NV
Havenlaan 12
B-1080 Brussels
Belgium
Attention: Mr. Dirk De Bleser
Fax: +32 2 429 4920
12.3 DELIVERY
Any communication or document made or delivered by one Person to another
under or in connection with this Mortgage Agreement will only be effective:
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(a) by way of fax, when received in legible form;
(b) if by way of letter, when it has been left at the relevant address
with acknowledgement of receipt or when it has been delivered to
the addressee by registered mail;
(c) and, if a particular department or officer is specified as part of
its address details provided under Clause 12.2 (Addresses), if
addressed to that department or officer.
12.4 ENGLISH LANGUAGE
Without prejudice to any other procedural rule applicable to any dispute,
any notice given under or in connection with this Mortgage Agreement must be
in English.
13. GENERAL
13.1 ELECTION OF DOMICILE
For the purpose of the inscription of this Mortgage at the mortgage registry
and for no other purposes, the Mortgagee hereby elects domicile in the
judicial district of [TO BE COMPLETED] at [TO BE COMPLETED].
13.2 NO WAIVER
No failure or delay by the Mortgagee in exercising any right, power or
remedy under this Mortgage Agreement shall operate as a waiver thereof nor
shall any single or partial exercise or waiver of any right, power or
remedy. The remedies provided in this Mortgage Agreement are cumulative and
are not exclusive of any remedies provided by law.
13.3 SEVERABILITY
(a) Each of the provisions of this Mortgage Agreement is several and
distinct from the others and if at any time one or more of such
provisions is or becomes invalid illegal or unenforceable the
validity, legality and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
(b) In case of any such illegality, invalidity or unenforceability, the
parties shall negotiate in good faith with a view to agree on the
replacement of such provision by a provision which is legal, valid
and enforceable and which is to the extent practicable in
accordance with the intents and purposes of this Mortgage Agreement
and which in its economic effect comes as close as practicable to
the provision being replaced.
13.4 DELEGATION OF POWERS
The Mortgagee shall be entitled, at any time and as often as may be
expedient, to delegate all or any of the powers and discretion vested in it
by, this Mortgage Agreement in such manner, upon such terms and to such
Person as the Mortgagee in its absolute discretion may think fit.
13.5 BENEFIT OF THIS MORTGAGE AGREEMENT
This Mortgage Agreement shall be binding on, and inure for the benefit of,
the Mortgagor and the Mortgagee and their respective successors and assigns.
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13.6 ASSIGNMENT
The Mortgagor may not assign or transfer any of its rights or obligations
under this Mortgage Agreement, save prior agreement in writing of the
Mortgagee.
13.7 EVIDENCE OF THE SECURED OBLIGATIONS OWING BY THE MORTGAGOR
A certificate by the Mortgagee as to the amount and the terms and conditions
of the Secured Obligations owing to the Mortgagee from the Mortgagor is,
prima facie evidence of the matters to which it relates.
13.8 FURTHER ACTION
The parties undertake to execute a notarial deed substantially in the form
of this Mortgage Agreement before notary Marcelis on 13 February 2004 at the
latest.
13.9 GOVERNING LAW
This Mortgage Agreement shall be governed by and interpreted in accordance
with Belgian law.
13.10 JURISDICTION
All disputes arising in connection with this Mortgage Agreement shall be
settled by the courts of Brussels, without prejudice to the rights of the
Mortgagee to take legal action before any other court of competent
jurisdiction.
13.11 FINAL PROVISIONS
The usual provisions in respect of a declaration relating to VAT shall
apply.
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Made in 3 originals, of which one will be held by the Mortgagor, one will be
held by the Mortgagee and one will be held by counsel to the ad hoc
committee of Noteholders, on 11 February 2004.
SOLUTIA EUROPE SA/NV
AS MORTGAGOR
/s/ Kristel DeRoover
- ----------------------
Name: Kristel DeRoover
Title: Attorney
KBC BANK NV
AS MORTGAGEE
/s/ Dirk De Bleser
- ----------------------
Name: Dirk De Bleser
Title: Head Operations
& Accounting
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