Exhibit 99.20
Execution version
COMMERCIAL RECEIVABLES PLEDGE AGREEMENT
DATED 17 FEBRUARY 2004
BETWEEN
SOLUTIA SERVICES INTERNATIONAL SCA/COMM.VA
AS PLEDGOR
AND
KBC BANK NV
AS PLEDGEE
Execution version
TABLE OF CONTENTS
1. DEFINITIONS.........................................................4
2. PLEDGE..............................................................5
3. RECEIVABLES.........................................................5
4. COLLECTION OF RECEIVABLES AND NOTIFICATION..........................7
5. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS........................9
6. CONTINUING SECURITY AND OTHER MATTERS..............................10
7. ENFORCEMENT........................................................11
8. APPLICATION OF PROCEEDS............................................11
9. DISCHARGE OF THE PLEDGE............................................12
10. DUTIES OF THE PLEDGEE..............................................12
11. RESPONSIBILITY OF THE PLEDGEE......................................12
12. EXPENSES...........................................................12
13. NOTICES............................................................13
14. GENERAL............................................................14
SIGNATORIES.............................................................16
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COMMERCIAL RECEIVABLES PLEDGE AGREEMENT
BETWEEN:
(1) SOLUTIA SERVICES INTERNATIONAL SCA/COMM.VA, a Belgian
"commanditaire vennootschap op aandelen/societe en commandite par
actions", having its registered office at Boondaelse Steenweg 6,
B-1050 Brussels, Belgium and registered at the Crossroads Bank for
Enterprises, under enterprise number 0460.483.546,
(the PLEDGOR);
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 PLEDGEE).
WHEREAS:
(A) Solutia Europe SA/NV (the ISSUER) and the Noteholders have agreed
to amend and restate the Issuer's euro 200,000,000 6.25 percent
Notes due 2005, as amended and restated, the euro 200,000,000
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 Issuer and the Noteholders party thereto (as amended,
modified or supplemented from time to time, the AGREEMENT OF
UNDERSTANDING). In connection with the Notes, the Issuer will enter
into the Fiscal Agency Agreement dated 11 February 2004 among the
Issuer, 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 Pledgor guaranty the prompt
payment and performance when due of all obligations of the Issuer
under the Credit Documents and grant a receivables pledge to the
Pledgee to secure its obligations to the Pledgee as provided herein
and undertake the obligations contemplated by this Agreement.
(C) Pursuant to Clause 2.1 of the Collateral Agency Agreement (as
defined below), the Pledgee shall be the joint creditor (together
with the relevant Noteholder) of each and every obligation of the
Pledgor, as guarantor, towards each of the Noteholders under the
Notes and the other Credit Documents to which the Pledgor is party,
and that accordingly the Pledgee will have its own independent
right to demand performance by the Pledgor of those obligations.
There is as a result a joint creditorship under New York law
between the Noteholders and the Pledgee with regard to the sums
owed under the Notes and the other Credit Documents.
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(D) In consideration of the agreements set forth herein and in the
Terms and Conditions of the Notes, the Agreement of Understanding
and the other Credit Documents, the Pledgor agrees to create a
first ranking pledge in respect of the Receivables (as defined
below) in favour of the Pledgee under the following terms (the
AGREEMENT).
THE PARTIES HAVE AGREED AS FOLLOWS:
1. DEFINITIONS
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires:
BANK ACCOUNTS means the bank and other accounts referred to in
Clause 3.1(e) of this Agreement;
COLLATERAL AGENCY AGREEMENT means the collateral agency agreement
dated 11 February 2004 among the Issuer, the Subsidiary Guarantors,
the Pledgee and the Noteholders party thereto, as amended, modified or
supplemented from time to time;
GROUP means Solutia, Inc. and its Subsidiaries and all Affiliates
owned by Solutia and its Subsidiaries;
INSURANCE RECEIVABLES means the insurance receivables referred to
in Clause 3.1 of this Agreement;
INTRA-GROUP RECEIVABLES means the intra-group receivables referred
to in Clause 3.1 of this Agreement and all sums owing to the
Pledgor by other members of the Group referred to in Clause 3.1 of
this Agreement;
NETTING ACCOUNTS means certain deposit accounts that may be opened
by SSI, acting as agent for itself and certain of its Affiliates,
for the purpose of facilitating the monthly settlement and payment,
in a manner consistent with past practice, of intercompany accounts
receivable and payable related to the provision of raw materials,
work in progress, finished goods and other business-related
property and allocated overhead items such as corporate buildings
and employee services, all in the ordinary course of business (the
NETTING), which accounts shall not hold any funds of SSI or any
other Credit Party that are unrelated to the Netting and have been
identified to the Collateral Agent as Netting Accounts.
PLEDGE means the pledge of the Receivables created or arising
pursuant to this Agreement;
PLEDGOR SUBSIDIARY GUARANTY means the Subsidiary Guaranty made by
the Pledgor in favour of the Pledgee on or about the date of this
Agreement;
RECEIVABLES means the receivables referred to in Clause 3.1 of this
Agreement and all sums owing to the Pledgor referred to in Clause
3.1 of this Agreement;
SECURED OBLIGATIONS means all present and future, actual and
contingent indebtedness, obligations, and liabilities of the
Pledgor to the Pledgee which may arise under, out of, or in
connection with the Collateral Agency Agreement, the Pledgor
Subsidiary Guaranty or any other Credit Document to which the
Pledgor is party;
SUBSIDIARIES means an entity of which a Person has direct or
indirect control or owns directly or indirectly more than 50% of
the voting capital or similar right of ownership and CONTROL for
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this purpose means the power to direct the management and the
policies of the entity whether through the ownership of voting
capital, by contract or otherwise;
TRADE RECEIVABLES means the trade receivables referred to in Clause
3.1(d) of this Agreement.
Unless defined in this Agreement, words and expressions defined in the Terms
and Conditions of Notes shall have the same meaning when used in this
Agreement.
In this 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 PLEDGEE, NOTEHOLDERS and PLEDGOR include their respective
successors, and, in the case of the Pledgee, 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 Agreement.
2. PLEDGE
The Pledgor hereby pledges, as a first ranking pledge (pand in eerste
rang/gage en premier rang), the Receivables, owed to it to the Pledgee as
security for the due performance of the Secured Obligations in accordance
with the Law of 5 May 1872 on commercial pledges (the PLEDGE).
3. RECEIVABLES
3.1 SCOPE
The Receivables are comprised of all claims (schuldvorderingen/creances),
present or future, actual or contingent, owing to the Pledgor in connection
with any of the following:
(a) Intra-group receivables. All sums owing to the Pledgor by other
members of the Group on any account and of any nature whatsoever,
including but not limited to all sums owing to the Pledgor under
the Solutia UK Note.
(b) Lawyers, bailiffs and claim collection agencies. All sums owing to
the Pledgor from its lawyers, bailiffs or claim collection agencies
in respect of any bad debt collection through such lawyers,
bailiffs or claim collection agencies.
(c) Loans and guarantees. All sums owing to the Pledgor from any
Person, and in particular from any affiliated company or associated
company, on account of loans, advances (whether in current account
or not) or other financial credits made or granted by the Pledgor,
or on account of any recourse (whether by way of subrogation or
otherwise) against any Person by reason of a guarantee or security
given by such Pledgor for such Person's liabilities.
(d) Trade receivables. All sums owing to the Pledgor from its present
or future customers in respect of goods and services supplied or to
be supplied.
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(e) Bank accounts. The balance from time to time, and as the case may
be, the final closing balance of the bank accounts listed in
Schedule 1-B, and any other account (whether a current account or a
deposit account, or any other type of account) held by the Pledgor
in any currency with any Person in Belgium or abroad, except for
Netting Accounts.
(f) Insurance receivables. All sums owing to the Pledgor from any
insurance company on account of any insurance policy (other than
any life, health, group insurance or similar insurance policy),
whether as insurance indemnities, refunds of premium or otherwise;
provided that this Clause 3.1(f) shall not include any insurance
receivable outstanding as of the date hereof the pledge of which
would violate the insurance contract between Pledgor and the
relevant insurance company.
3.2 INFORMATION
(a) The Pledgor represents and warrants to the Pledgee that Schedule 1
to this Agreement, is, as of the date hereof, the accurate and
complete list of all debtors and counter-parties against whom it
has claims contemplated in Clause 3.1.
(b) The Pledgor undertakes to promptly (but in any event within
10 Business Days) deliver to the Pledgee after the occurrence of an
Event of Default (or at such other time as the Pledgee may request)
an up-to-date, accurate and complete list of all debtors and
counter-parties against whom it has claims contemplated in Clause
3.1. Such list shall include the name of the debtor or
counter-party, its registered office or (if different) the address
of its place of business with which the relevant claims are
connected, and the nature of the claims concerned, and shall be
delivered in a standard computer readable format.
(c) The Pledgor shall from time to time promptly upon request (but in
any event within 10 Business Days) provide the Pledgee with the
following data in a standard computer readable format:
(i) a copy of all relevant contractual documentation in
respect of any Receivable, provided that, unless an Event
of Default has occurred and is continuing, such
documentation is not subject to a confidentiality
undertaking to which the Pledgor is bound;
(ii) all relevant details of the amounts currently owing under
any Receivable, provided that, unless an Event of Default
has occurred and is continuing, such information is not
subject to a confidentiality undertaking to which the
Pledgor is bound;
(iii) the amounts collected under any Receivable over the last
twelve months; and
(iv) such other data and information in relation to the
Receivables as from time to time may be requested by the
Pledgee, provided that, unless an Event of Default has
occurred and is continuing, such data and information are
not subject to a confidentiality undertaking to which the
Pledgor is bound.
(d) Schedule 1-D lists all Netting Accounts in existence on the date
hereof. The Pledgor will promptly (but in any event within
10 Business Days) notify the Pledgee in the event that it establishes
a Netting Account after the date hereof and identify such Netting
Account in such Notice.
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4. COLLECTION OF RECEIVABLES AND NOTIFICATION
4.1 RECEIVABLES
(a) As long as no Event of Default shall have occurred and is
continuing, the Pledgor shall be free to collect all amounts due
under the Receivables as it sees fit provided that the Pledgor
shall not be entitled to collect any amount under any Insurance
Receivable in excess of EUR 1,000,000.
(b) The Pledgor shall notify, without delay and in any event no later
than five (5) Business Days following the date hereof, the debtors
and counterparties listed on Schedule 1-A against whom it currently
holds Intra-Group Receivables of the fact that such Intra-Group
Receivables owing or to be owed from them have been pledged to the
Pledgee pursuant to this Agreement, and the Pledgor shall use its
best efforts to deliver to the Pledgee such debtors' and
counterparties' signed acknowledgements thereto no later than ten
(10) Business Days following the date hereof. Each such
notification shall be substantially in the form of Schedule 2 to
this Agreement. With respect to each Intra-Group Receivable arising
from debtors other than those listed in Schedule 1-A to this
Agreement (as said Schedule 1-A may be supplemented from time to
time pursuant to Clause 5.2 (e)) that the Pledgor acquires after
the date hereof, the Pledgor shall notify, without delay and in any
event no later than five (5) Business Days following the date of
such acquisition, the debtors and counterparties against whom it
holds such Intra-Group Receivables of the fact that such
Intra-Group Receivables owing from them have been pledged to the
Pledgee pursuant to this Agreement, and the Pledgor shall use its
best efforts to deliver to the Pledgee such debtors' and
counterparties' signed acknowledgements thereto no later than ten
(10) Business Days following the date of such acquisition. Each
such notification shall be substantially in the form of Schedule 2
to this Agreement. For the avoidance of doubt, the Pledgee shall
not have any obligation to obtain the debtors' and counterparties'
signed acknowledgement itself.
(c) Upon the occurrence of an Event of Default that is continuing, the
Pledgor shall immediately notify the debtors and counter parties
against whom it holds Trade Receivables of the fact that the Trade
Receivables owing from them have been pledged to the Pledgee
pursuant to this Agreement, and that such Receivables may only be
discharged by payment to the Pledgee. Such notification shall be
substantially in the form of Schedule 3 to this Agreement.
(d) As long as no Event of Default shall have occurred and is
continuing, the Pledgor shall be free to operate the Bank Accounts
and to collect any amounts due to it with respect to the Bank
Accounts. The Pledgor shall notify, without delay and in any event
no later than five (5) Business Days following the date hereof, the
Persons listed on Schedule 1-B at which it currently maintains Bank
Accounts of the fact that such Bank Accounts have been pledged to
the Pledgee pursuant to this Agreement, and the Pledgor shall use
its best efforts to deliver to the Pledgee such Persons' signed
acknowledgements thereto no later than ten (10) Business Days
following the date hereof which shall include a waiver of set-off
or pledge and the benefit of any 'unicity of account' or similar
provision, except with respect to the payment of its customary fees
and commissions in connection with ordinary course banking
services. Each such notification shall be substantially in the form
of Schedule 4 to this Agreement. With respect to each Person other
than as listed in Schedule 1-B (as said Schedule 1-B may be
supplemented from time to time pursuant to Clause 5.2 (e)) at which
the Pledgor maintains any other Bank Account after the date hereof,
the Pledgor shall notify, without delay and in any event no later
than five (5) Business Days following the date it opens such Bank
Account, such Persons of the fact that such Bank Accounts have been
pledged to the Pledgee pursuant to this Agreement, and the Pledgor
shall use its best efforts to deliver to the Pledgee such Persons'
signed acknowledgements thereto no later than ten (10) Business
Days following the date such Bank Accounts are opened which shall
include a waiver of set-off or pledge and the
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benefit of any 'unicity of account' or similar provision, except
with respect to the payment of its customary fees and commissions
in connection with ordinary course banking services. Each such
notification shall be substantially in the form of Schedule 4 to
this Agreement. For the avoidance of doubt, the Pledgee shall not
have any obligation to obtain the signed acknowledgement (including
a waiver of set-off or pledge) and the benefit of any "unicity of
account" or similar provision itself.
(e) The Pledgor shall notify, without delay and in any event no later
than ten (10) Business Days following the date hereof, the
counterparties to the insurance contracts listed on Schedule 1-C of
the fact that any Insurance Receivable owed or to be owed under
such insurance contracts have been pledged to the Pledgee pursuant
to this Agreement, and the Pledgor shall use its best efforts to
deliver to the Pledgee such counterparties' signed acknowledgements
thereto no later than twenty (20) Business Days following the date
hereof. Each such notification shall be substantially in the form
of Schedule 5 to this Agreement. With respect to any Insurance
Receivables owed or to be owed under insurance contracts other than
those listed in Schedule 1-C to this Agreement (as said Schedule
1-C may be supplemented from time to time pursuant to Clause 5.2
(e)) that the Pledgor enters into after the date hereof that are
subject to Clause 3.1(f), the Pledgor shall notify, without delay
and in any event no later than ten (10) Business Days following the
date of such entering into such insurance contracts, the
counterparties to such insurance contracts of the fact that such
Insurance Receivables owing or to be owed from them have been
pledged to the Pledgee pursuant to this Agreement, and the Pledgor
shall use its best efforts to deliver to the Pledgee such
counterparties' signed acknowledgements thereto no later than
twenty (20) Business Days following the date of such entering into
such insurance contracts. Each such notification shall be
substantially in the form of Schedule 5 to this Agreement. For the
avoidance of doubt, the Pledgee shall not have any obligation to
obtain the counterparties' signed acknowledgement itself.
(f) The Pledgor shall provide the Pledgee without delay with a copy of
any notification given pursuant to this Clause 4.1, together with
the adequate evidence of such notification having been sent and
received. For the avoidance of doubt, the Pledgee shall not have
any obligation to investigate or verify whether the Pledgor has
complied with any of its notification obligations.
(g) The Pledgee may give any notice required to be given pursuant to
this Clause 4.1 if the Pledgor has not given such notice within
five (5) or ten (10) Business Days as the case may be after the
Pledgor is required or at any time following the occurrence and
during the continuance of an Event of Default. For this purpose,
the Pledgor will deliver to the Pledgee simultaneously with the
execution of this Agreement, notifications in the form of Schedules
2, 3, 4 and 5 to this Agreement, duly printed on its letterhead and
duly executed by the Pledgor. Each notification made by the Pledgee
in accordance with this Clause 4.1 may be accompanied by a
photocopy of such notification. The Pledgee shall not be obligated
to give any notice in accordance with this Clause, except upon
instructions of the Requisite Noteholders.
4.2 RESPONSIBILITY OF THE PLEDGEE
The Pledgee shall have no responsibility in connection with the perfection
measures contemplated in this Clause 4 except for its gross negligence
(grove fout/faute grave) or wilful misconduct.
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5. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
5.1 REPRESENTATIONS AND WARRANTIES
Without prejudice and in addition to the representations and warranties of
the Pledgor under the Subsidiary Guaranty to which the Pledgor is party and
the other Credit Documents to which the Pledgor is party, the Pledgor
represents and warrants to the Pledgee and undertakes during the subsistence
of this Agreement as follows:
(a) it is a corporation duly incorporated and validly existing under
the laws of Belgium and is not in liquidation, with the power to
enter into this Agreement and to exercise its rights and perform
its obligations hereunder and that all corporate and other actions
required to authorise the execution and performance of this
Agreement have been duly taken;
(b) it owns the Receivables free and clear of any Liens, except for
Permitted Liens;
(c) as of the date hereof, none of the Receivables is subject to any
seizure or enforcement measure;
(d) all Receivables are capable of being pledged hereunder without the
consent of their respective debtors or counter-parties;
(e) the Pledgor has satisfied itself that it is in its own interest to
grant this Pledge for the due performance of the Secured
Obligations;
(f) this Agreement does not violate any law or regulation applicable to
it as of the date hereof, its constitutional documents or any
material contractual or other obligation binding upon it, that
would prevent it from pledging the Receivables;
(g) Schedule 1-A, as said Schedule 1-A may be supplemented from time to
time pursuant to the provisions of Clause 5.2(e), contains a true,
accurate and complete list of the names and addresses of all the
debtors and counterparties against whom it currently holds
Intra-Group Receivables and Trade Receivables; Schedule 1-B, as
said Schedule 1-B may be supplemented from time to time pursuant to
the provisions of Clause 5.2(e), contains a true, accurate and
complete list of the names and addresses of all Persons at which
the Pledgor currently maintains Bank Accounts; and all information
provided pursuant to Clause 3.2 of this Agreement is or will be
accurate and complete;
(h) the Pledge creates a valid and first ranking pledge of the
Receivables subject to no prior Lien created by Pledgor, except for
the pledge on the business created pursuant to the Floating Charge
Agreement and Permitted Liens imposed by mandatory operation of
law; and
(i) no floating charge (gage sur fonds de commerce/pand op handelszaak)
or similar foreign law security exists on its business, nor any
mandate with a view to the creation hereof except for the pledge on
the business created pursuant to the Floating Charge Agreement.
5.2 UNDERTAKINGS
(a) The Pledgor shall procure that no executory seizure (saisie
execution/uitvoerend beslag) is made on the Receivables, and that
any conservatory seizure (saisie conservatoire/bewarend beslag)
thereon is lifted within 60 days of it first being made.
(b) The Pledgor shall co-operate with the Pledgee and the Noteholders
and sign or cause to be signed all such further documents and take
all such further action as the Pledgee may from
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time to time reasonably request to perfect and protect the pledge
of the Receivables under Belgian law and to carry out the
provisions and purposes of this Agreement. The Pledgee shall not be
obligated to request any action under this Clause (b) except upon
written instructions from the Requisite Noteholders.
(c) The Pledgor shall not (i) dispose of the Receivables, except for
their collection in the ordinary course of business and for the
purpose of enforcement in accordance with the provisions of this
Agreement, (ii) create any other Lien in respect of the Receivables
(irrespective of whether ranking behind the pledge created hereby),
nor (iii) permit the existence or the subsistence of any such Lien,
except Permitted Liens.
(d) The Pledgor shall not take any steps, including without limitation
to the exercise of any right it has under any agreement under which
the Receivables arise, which may jeopardise or material adversely
affect the security interest constituted in this Agreement.
(e) Without delay and in any event no later than five (5) Business Days
following the date of acquisition of an Intra-Group Receivable
arising from a debtor or counterparty that is not listed on
Schedule 1-A (as supplemented from time to time), the Pledgor shall
deliver a written notice to the Pledgee, setting forth the name and
address of such additional debtor or counterparty (it being
understood that such written notice shall be deemed to supplement
Schedule 1-A annexed hereto for all purposes of this Agreement);
without delay and in any event no later than five (5) Business Days
following the date that the Pledgor opens any Bank Account at a
Person that is not listed on Schedule 1-B (as supplemented from
time to time), the Pledgor shall deliver a written notice to the
Pledgee, setting forth the name and address of such Person and the
account number of such Bank Account (it being understood that such
written notice shall be deemed to supplement Schedule 1-B annexed
hereto for all purposes of this Agreement); and without delay and
in any event no later than five (5) Business Days following the
date that the Pledgor enters into an insurance contract with a
Person that is not listed on Schedule 1-C (as supplemented from
time to time) and that is subject to Clause 3.1(f), the Pledgor
shall deliver a written notice to the Pledgee, setting forth the
name and address of such Person and the contract number of such
insurance contract (it being understood that such written notice
shall be deemed to supplement Schedule 1-C annexed hereto for all
purposes of this Agreement).
6. CONTINUING SECURITY AND OTHER MATTERS
6.1 CONTINUING SECURITY
(a) This Pledge shall be a continuing security for the due performance
of the Secured Obligations, and shall remain in force until
expressly released in accordance with Clause 9 of this Agreement.
(b) This pledge 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.
(c) This Pledge shall not be discharged or in any way prejudiced or
affected by any change in the constitution or status of the Pledgor
or any other Person or by any legal limitation, disability,
incapacity or other circumstances relating to the Pledgor or any
other Person, by any invalidity, illegality or unenforceability of
the obligations of the Pledgor or any other Person.
(d) The Pledgee or, as the case may be, Requisite Noteholders may at
any time without discharging or in any way affecting this Pledge
(a) grant the Pledgor any time or indulgence, (b) concur in any
moratorium of the Secured Obligations, (c) amend the terms and
conditions
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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, and (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 Pledgor or
for its account towards the Secured Obligations or any other
obligations of the Pledgor of the Pledgee's choice.
6.2 RIGHTS ADDITIONAL
All the rights of the Pledgee hereunder shall be in addition to any other
right vested in the Pledgee and all such rights may be exercised from time
to time and as often as the Pledgee may deem expedient. The Pledgor waives
any right it may have of first requiring the Pledgee to proceed against or
claim payment from any other party, or enforce any guarantee or security
before enforcing the Pledge.
6.3 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 Pledgor and the
Pledgee agree that in the event of novation of all or any part of the
Secured Obligations or the change or replacement of the Pledgee or the
Pledgor, this Pledge will be maintained, automatically and without any
further formality or consent, to secure the Secured Obligations as novated
and in favour of the Pledgee or a new pledgee.
7. ENFORCEMENT
7.1 Following the occurrence of an Event of Default that is continuing,
the Pledgee shall in particular have the right, subject to the
Collateral Agency Agreement and the Terms and Conditions of Notes,
to:
(i) enforce the Pledge in respect of any or all of the
Receivables, in accordance with applicable legal
provisions; and
(ii) apply any payments which may be received or receivable by
the Pledgee in respect of the Receivables to satisfaction
of the Secured Obligations and as provided in the
Collateral Agency Agreement; and
(iii) exercise all rights and remedies it possesses, and to act
generally in relation to the Receivables in such manner as
it shall determine within the limit of the applicable law
and its rights under this Agreement.
7.2 The Pledgee shall give the Pledgor not less than five (5) Business
Days notice prior to the time that it first initiates legal action
to enforce its remedies under this Agreement; provided that the
Pledgee shall not be required to give notice pursuant to this
sentence on more than one occasion subject to mandatory law
requirements.
7.3 The Pledgee shall have no responsibility in connection with the
enforcement measures of the Pledge under this Agreement, except in
case of its gross negligence (grove fout/faute grave) or wilful
misconduct.
8. APPLICATION OF PROCEEDS
8.1 All monies received by the Pledgee after the Pledge has become
enforceable shall be applied towards satisfaction of the Secured
Obligations, including any costs and expenses of the Pledgee in
accordance with Clause 4.1 of the Collateral Agency Agreement, but
without prejudice to the rights of the Pledgee to recover any
shortfall from the Pledgor.
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8.2 Should the proceeds of the enforcement of the Pledge be greater
than the outstanding amount of the Secured Obligations, the Pledgee
shall pay to the Pledgor any such excess.
9. DISCHARGE OF THE PLEDGE
9.1 This Pledge shall be discharged by, and only by, the express
release thereof granted by the Pledgee.
9.2 The Pledgee shall in accordance with the Collateral Agency
Agreement, grant an express release of this Pledge without delay
upon demand of the Pledgor, as soon as all Secured Obligations
shall have been fully and finally discharged.
9.3 Any release or discharge of the Pledge shall be null and void and
without effect if any payment received by the Pledgee and applied
towards satisfaction of all or part of the Secured Obligations
(a) is avoided or declared invalid as against the creditors
of the maker of such payment; or
(b) becomes repayable by the Pledgee to a third party; or
(c) proves not to have been effectively received by the Pledgee;
and the Pledgee shall be entitled to enforce the pledge as if such
release or discharge had not occurred.
10. DUTIES OF THE PLEDGEE
The Pledgee shall not be liable for any acts or omissions with respect to
the Receivables pledged 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 Pledgee. The
Pledgee shall not be under any obligation to the Pledgor to take any steps
necessary to preserve any rights in the Receivables against any other
parties but may do so at its option, and all expenses reasonably incurred in
connection therewith shall be for the account of the Pledgor and shall be
part of the Secured Obligations. If any such expenses are borne by the
Pledgee, the Pledgor shall on first demand reimburse the Pledgee therefor,
and its reimbursement obligation shall be part of the Secured Obligations.
11. RESPONSIBILITY OF THE PLEDGEE
The Pledgee shall not be responsible to any Noteholder for:
(i) the adequacy, accuracy or completeness of any recitals,
statements, representations or warranties contained in
this Agreement;
(ii) the adequacy, accuracy or completeness of any statement or
information (whether written or oral) made in or supplied
in connection with this Agreement; or
(iii) the legality, validity, effectiveness, adequacy or
enforceability of this Agreement.
12. EXPENSES
All expenses that the Pledgee may incur in connection with (i) the
administration of this 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 Receivables,
(iii) the exercise or enforcement
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of any of the rights of the Pledgee hereunder, or (iv) the failure by the
Pledgor to perform or observe any of the provisions hereof, shall be borne
by the Pledgor. All other expenses and duties reasonably incurred in
connection with this Agreement, in particular with regard to the
establishment and perfection of the Pledge and the granting of any release,
shall be borne by the Pledgor. The Pledgor shall on first demand reimburse
the Pledgee for any such expenses or duties paid by them, and the same shall
be part of the Secured Obligations.
13. NOTICES
13.1 COMMUNICATION IN WRITING
Any communication to be made under or in connection with this Agreement
shall be made in writing and, unless otherwise stated, may be made by fax or
letter.
13.2 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 Agreement is that identified with its name below or any other
substitute address(es), fax number or department or officer as any party may
notify to the other parties by not less than five Business Days' notice.
THE PLEDGOR: Solutia Services International SCA/Comm.VA
Boondaelse Steenweg 6
B-1050 Brussels
Belgium
Parc Scientifique Fleming
Rue Laid Burniat 3
B-1348 Louvain-la-Neuve
Belgium
Fax: +32 10 48 12 24
Attention: Legal Department
THE PLEDGEE: KBC Bank NV
Havenlaan 12
B-1080 Brussels
Belgium
Fax: +32 2 429 4920
Attention: Mr. Dirk De Bleser
13.3 DELIVERY
Any communication or document made or delivered by one Person to another
under or in connection with this Agreement will only be effective:
(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;
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(c) and, if a particular department or officer is specified as part of
its address details provided under Clause 13.2 (Addresses), if
addressed to that department or officer.
13.4 ENGLISH LANGUAGE
This Agreement is executed in English only, and no translation thereof shall
be binding on the parties hereto or consulted in order to interpret this
Agreement. Without prejudice to any other procedural rule applicable to any
dispute, any notice given under or in connection with this Agreement must be
in English.
14. GENERAL
14.1 NO WAIVER
No failure or delay by the Pledgee in exercising any right, power or remedy
under this 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 Agreement are cumulative and are not exclusive of any
remedies provided by law.
14.2 SEVERABILITY
Each of the provisions of this 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.
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 Agreement and which in its economic effect comes as close
as practicable to the provision being replaced.
14.3 DELEGATION OF POWERS
The Pledgee 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
Agreement in such manner, upon such terms and to such Person as the Pledgee
in its absolute discretion may think fit.
14.4 BENEFIT OF THIS AGREEMENT
This Agreement shall be binding on, and inure for the benefit of, the
Pledgor and the Pledgee and their respective successors and assigns.
14.5 ASSIGNMENT
The Pledgor may not assign or transfer any of its rights or obligations
under this Agreement, save prior agreement in writing of the Pledgee.
14.6 EVIDENCE OF THE SECURED OBLIGATIONS OWING BY THE PLEDGOR
A certificate by the Pledgee as to the amount and the terms and conditions
of the Secured Obligations owing to the Pledgee from the Pledgor is, prima
facie evidence of the matters to which it relates.
14.7 GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with
Belgian law.
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14.8 JURISDICTION
All disputes arising in connection with this Agreement shall be settled by
the courts of Brussels, without prejudice to the rights of the Pledgee to
take legal action before any other court of competent jurisdiction.
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SIGNATORIES
Made in 3 originals, of which one will be held by the Pledgor, one will be
held by counsel to the ad hoc committee of Noteholders and one will be held
by the Pledgee, on 17 February 2004.
SOLUTIA SERVICES INTERNATIONAL SCA/COMM.VA
AS PLEDGOR
/s/ Kristel Deroover
- -----------------------------------
Name: Kristel Deroover
Title: Attorney
- -----------------------------------
Name:
Title:
KBC BANK NV
AS PLEDGEE
/s/ Dirk De Bleser
- -----------------------------------
Name: Dirk De Bleser
Title: Head Operations & Accounting
- -----------------------------------
Name:
Title: