Exhibit 10.7

EXECUTION VERSION

DOMESTIC PLEDGE AGREEMENT

Dated May 12, 2011

From

The Pledgors referred to herein

as Pledgors

To

MORGAN STANLEY SENIOR FUNDING, INC.

as Collateral Agent

 

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T A B L E O F C O N T E N T S

 

Section         Page  

Section 1.

   Grant of Security      2   

Section 2.

   Security for Obligations      3   

Section 3.

   Pledgors Remain Liable      3   

Section 4.

   Delivery and Control of Security Collateral      3   

Section 5.

   Representations and Warranties      4   

Section 6.

   Further Assurances      5   

Section 7.

   Post-Closing Changes      6   

Section 8.

   Voting Rights; Dividends; Etc.      6   

Section 9.

   Transfers and Other Liens; Additional Shares      7   

Section 10.

   Collateral Agent Appointed Attorney-in-Fact      7   

Section 11.

   Collateral Agent May Perform      8   

Section 12.

   Remedies      8   

Section 13.

   Indemnity and Expenses      9   

Section 14.

   Amendments; Waivers; Additional Pledgors; Etc.      9   

Section 15.

   Notices, Etc.      10   

Section 16.

   Continuing Security Interest; Assignments Under the Credit Agreement      10
  

Section 17.

   Release; Termination      10   

Section 18.

   Execution in Counterparts      11   

Section 19.

   Governing Law      11   

 

Schedules

          Schedule I    –    Location, Chief Executive Office, Type Of
Organization, Jurisdiction Of Organization, Organizational Identification Number
and Trade Names Schedule II    –    Pledged Equity and Pledged Debt

Exhibit

          Exhibit A    –    Form of Domestic Pledge Agreement Supplement

 

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DOMESTIC PLEDGE AGREEMENT

DOMESTIC PLEDGE AGREEMENT dated May 12, 2011 (this “Agreement”) made by SENSATA
TECHNOLOGIES B.V., a private limited liability company (besloten vennootschap
met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands
(the “BV Borrower”), and SENSATA TECHNOLOGIES HOLDING COMPANY US B.V., a private
limited liability company (besloten vennootschap met beperkte aansprakelijkheid)
incorporated under the laws of the Netherlands (the “BV Pledgor” and, together
with the BV Borrower, the “Pledgors”), to MORGAN STANLEY SENIOR FUNDING, INC.,
as collateral agent (together with any successor collateral agent appointed
pursuant to Article 9 of the Credit Agreement referred to below, the “Collateral
Agent”) for the Secured Parties (as defined in the Credit Agreement referred to
below).

PRELIMINARY STATEMENTS

The BV Borrower, SENSATA TECHNOLOGIES FINANCE, LLC, a Delaware limited liability
company (the “US Borrower” and together with the BV Borrower, the “Borrowers”)
and SENSATA TECHNOLOGIES INTERMEDIATE HOLDING B.V., a private limited liability
company (besloten vennootschap met beperkte aansprakelijkheid) incorporated
under the laws of the Netherlands, have entered into a Credit Agreement dated as
of May 12, 2011 (such agreement, as it may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
“Credit Agreement”) with the Lenders (as defined in the Credit Agreement), the
Initial L/C Issuer (as defined in the Credit Agreement), the Initial Swing Line
Lender (as defined in the Credit Agreement) and the Administrative Agent (as
defined in the Credit Agreement).

The Borrowers and their Subsidiaries have entered into or may from time to time
enter into lines of credit (committed or uncommitted) and other similar
arrangements (the “Bilateral Obligations”) with Lenders or their Affiliates and
certain other financial institutions as initially set forth on Schedule XII of
the Security Agreement and as such schedule may be amended from time to time
upon written notice by the Borrowers to the applicable Lenders or Affiliates and
certain other financial institutions (each, in such capacity, a “Bilateral
Provider”).

Each Pledgor is the owner of the shares of stock or other Equity Interests (as
defined in the Credit Agreement) (the “Initial Pledged Equity”) set forth
opposite such Pledgor’s name on and as otherwise described in Part I of Schedule
II hereto and issued by the Persons named therein and of the indebtedness (the
“Initial Pledged Debt”) set forth opposite such Pledgor’s name on and as
otherwise described in Part II of Schedule II hereto and issued by the obligors
named therein.

It is a condition precedent to the making of Loans by the Lenders and the
issuance of Letters of Credit by the L/C Issuer under the Credit Agreement and
the entry into Secured Hedge Agreements by the Hedge Banks from time to time
that the Pledgors shall have granted the security interest contemplated by this
Agreement. Each Pledgor will derive substantial direct and indirect benefit from
the transactions contemplated by the Loan Documents and from each Bilateral
Provider’s Bilateral Obligations.

Terms defined in the Credit Agreement and the Domestic Security Agreement, as
applicable, and not otherwise defined in this Agreement are used in this
Agreement as defined in the Credit Agreement and the Domestic Security
Agreement, as applicable. Further, unless otherwise defined in this Agreement or
in the Credit Agreement, terms defined in Article 8 or 9 of the UCC (as defined
below) are used in this Agreement as such terms are defined in such Article 8 or
9. “UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that, if

 

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perfection or the effect of perfection or non-perfection or the priority of the
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, “UCC” means the
Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

NOW, THEREFORE, in consideration of the premises and in order to induce (i) the
Lenders to make Loans and issue Letters of Credit under the Credit Agreement,
(ii) the Bilateral Providers to provide or continue to provide Bilateral
Obligations to time and (iii) the Hedge Banks to enter into Secured Hedge
Agreements from time to time, each Pledgor hereby agrees with the Collateral
Agent for the ratable benefit of the Secured Parties as follows:

Section 1. Grant of Security. Each Pledgor hereby grants to the Collateral
Agent, for the ratable benefit of the Secured Parties, a security interest in
such Pledgor’s right, title and interest in and to the following, in each case,
as to each type of property described below, whether now owned or hereafter
acquired by such Pledgor, wherever located, and whether now or hereafter
existing or arising (collectively, the “Collateral”):

(a) the following (collectively, the “Security Collateral”):

(i) the Initial Pledged Equity and the certificates, if any, representing the
Initial Pledged Equity, and all dividends, distributions, return of capital,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Initial
Pledged Equity and all warrants, rights or options issued thereon or with
respect thereto;

(ii) the Initial Pledged Debt and the instruments, if any, evidencing the
Initial Pledged Debt, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Initial Pledged Debt;

(iii) all additional shares of stock and other Equity Interests from time to
time acquired by such Pledgor in any manner (such shares and other Equity
Interests, together with the Initial Pledged Equity, being the “Pledged
Equity”), and the certificates, if any, representing such additional shares or
other Equity Interests, and all dividends, distributions, return of capital,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such shares
or other Equity Interests and all warrants, rights or options issued thereon or
with respect thereto; provided, however, that, except to the extent set forth on
Part I of Schedule II as of the Closing Date, Security Collateral shall not
include any Equity Interest in any corporation, partnership, limited liability
company or other business entity not organized under the laws of the United
States of America, any state thereof or the District of Columbia (a “Non-US
Entity”);

(iv) all additional indebtedness from time to time owed to such Pledgor by any
Domestic Subsidiary of the BV Borrower (such indebtedness, together with the
Initial Pledged Debt, being the “Pledged Debt”) and the instruments, if any,
evidencing such indebtedness, and all interest, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness; and

 

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(b) all proceeds of, collateral for and supporting obligations relating to, any
and all of the Collateral (including, without limitation, proceeds, collateral
and supporting obligations that constitute property of the types described in
clause (a) of this Section 1 and this clause (b)) and, to the extent not
otherwise included, all (A) payments under insurance (whether or not the
Collateral Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral and (B) cash.

Section 2. Security for Obligations. This Agreement secures, in the case of each
Pledgor, the payment of all Obligations, Cash Management Obligations, Secured
Hedge Obligations and Bilateral Obligations of such Pledgor now or hereafter
existing under the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
fees, premiums, penalties, indemnifications, contract causes of action, costs,
expenses or otherwise (all such Obligations being the “Secured Obligations”).
Without limiting the generality of the foregoing, this Agreement secures, as to
each Pledgor, the payment of all amounts that constitute part of the Secured
Obligations and would be owed by such Pledgor to any Secured Party under the
Loan Documents, but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving a Loan Party. Notwithstanding anything in this Agreement or the Credit
Agreement to the contrary, (i) the aggregate principal amount of all Bilateral
Obligations secured hereby shall not exceed $40,000,000 and (ii) to the extent
that Bilateral Obligations are cash collateralized or otherwise secured (other
than pursuant to this Agreement), such Bilateral Obligations shall not be
secured hereby. Not withstanding anything to the contrary contained herein, no
obligations shall be included in the definition of “Secured Obligations” to the
extent that, if included, this Agreement or any part hereof would constitute a
violation of the prohibition on financial assistance as contained in
Section 2:98c or 2:207c of the Dutch Civil Code (the “Prohibition”) and this
Agreement is only legally binding on a Pledgor to the extent it will not be in
violation of the Prohibition and all provisions of this Agreement will be
construed accordingly.

Section 3. Pledgors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Pledgor shall remain liable under the contracts and
agreements included in such Pledgor’s Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Pledgor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Pledgor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

Section 4. Delivery and Control of Security Collateral. (a) All certificates or
instruments representing or evidencing Security Collateral in excess of
$2,500,000 in principal amount individually shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance reasonably
satisfactory to the Collateral Agent. Upon the occurrence and during the
continuance of an Event of Default and pursuant to Section 8.02 of the Credit
Agreement, the Collateral Agent shall have the right, at any time, to
(i) transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Security Collateral and (ii) exchange certificates or
instruments representing or

 

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evidencing Security Collateral for certificates or instruments of smaller or
larger denominations; provided that the Collateral Agent provides written notice
to the applicable Pledgor.

(b) Upon the occurrence and during the continuance of an Event of Default,
promptly upon the request of the Collateral Agent, with respect to any Security
Collateral that constitutes an uncertificated security, the relevant Pledgor
will use commercially reasonable efforts to cause the issuer thereof either
(i) to register the Collateral Agent as the registered owner of such security or
(ii) to agree with such Pledgor and the Collateral Agent that upon receipt of a
notice of exclusive control following the occurrence and during the continuance
of an Event of Default, such issuer will comply with instructions with respect
to such security originated by the Collateral Agent without further consent of
such Pledgor, such agreement to be in form and substance reasonably satisfactory
to the Collateral Agent (such agreement being an “Uncertificated Security
Control Agreement”).

(c) Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent shall have the right to transfer to or to register in the name
of the Collateral Agent or any of its nominees any or all of the Security
Collateral, subject only to the revocable rights specified in Section 8(a). In
addition, the Collateral Agent shall have the right upon the occurrence and
during the continuance of an Event of Default to convert Security Collateral
consisting of financial assets held directly by the Collateral Agent to Security
Collateral consisting of financial assets credited to one or more of the
applicable Securities Accounts or the Collateral Account.

(d) Upon the request of the Collateral Agent upon the occurrence and during the
continuance of an Event of Default, each Pledgor will notify each issuer of
Security Collateral granted by it hereunder that such Security Collateral is
subject to the security interest granted hereunder.

Section 5. Representations and Warranties. Each Pledgor represents and warrants
as follows:

(a) Such Pledgor’s exact legal name, as defined in Section 9-503(a) of the UCC,
is correctly set forth in Schedule I hereto. Such Pledgor’s location, chief
executive office, type of organization, jurisdiction of organization and
organizational identification number, if any, is set forth in Schedule I hereto
and is accurate in all material respects.

(b) Such Pledgor is the legal and beneficial owner of the Collateral of such
Pledgor free and clear of any Lien, claim, option or right of others, except for
the security interest created under this Agreement or permitted under the Credit
Agreement. No effective financing statement or other instrument similar in
effect covering all or any part of such Collateral or listing such Pledgor or
any trade name of such Pledgor as debtor with respect to such Collateral is on
file in any recording office, except such as may have been filed in favor of the
Collateral Agent relating to the Loan Documents or as otherwise permitted under
the Credit Agreement.

(c) The Pledged Equity pledged by such Pledgor hereunder has been duly
authorized and validly issued and is fully paid and non-assessable (to the
extent such term is applicable). The Pledged Debt pledged by such Pledgor
hereunder has been duly authorized, authenticated or issued and delivered, is
the legal, valid and binding obligation of the issuers thereof, is not in
default and, to the extent applicable, is evidenced by one or more promissory
notes (which promissory notes have been delivered to the Collateral Agent to the
extent required hereunder).

(d) The Initial Pledged Equity pledged by such Pledgor constitutes the
percentage of the issued and outstanding Equity Interests of the issuers thereof
indicated on Schedule II hereto.

 

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(e) This Agreement creates in favor of the Collateral Agent for the benefit of
the Secured Parties a valid first priority security interest, except as
otherwise provided for under the Loan Documents, in the Collateral granted by
the Pledgors hereunder, securing the payment of the Secured Obligations. Each
Pledgor has authorized the Collateral Agent to file financing and continuation
statements under the UCC.

(f) No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or any other third party is
required for (i) the grant by such Pledgor of the security interest granted
hereunder or for the execution, delivery or performance of this Agreement by
such Pledgor, (ii) the perfection or maintenance of the security interest
created hereunder (including the first priority nature of such security
interest), except for the filing of financing and continuation statements under
the UCC, which financing statements have been duly filed and are in full force
and effect, and the actions described in Section 4 with respect to Security
Collateral, which actions have been taken and are in full force and effect or
(iii) the exercise by the Collateral Agent of its voting or other rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection with the
disposition of any portion of the Security Collateral by laws affecting the
offering and sale of securities generally.

Section 6. Further Assurances. (a) Each Pledgor agrees that from time to time,
at the expense of such Pledgor, such Pledgor will promptly execute and deliver,
or otherwise authenticate, all further instruments and documents, and take all
further commercially reasonable action that is necessary, or that the Collateral
Agent may reasonably request, in order to perfect and protect any pledge or
security interest granted or purported to be granted by such Pledgor hereunder
or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral of such Pledgor. Each Pledgor
further agrees that it shall, at the expense of such Pledgor, take any and all
commercially reasonable actions necessary to defend title to the Collateral
against all Persons and to defend the security interest created hereunder and
the priority thereof against any Lien prohibited under the Credit Agreement.

(b) Each Pledgor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, including, without
limitation, one or more financing statements indicating that such financing
statements cover all investment property (or words of similar effect) of such
Pledgor, regardless of whether any particular asset described in such financing
statements falls within the scope of the UCC or the granting clause of this
Agreement. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.

(c) Each Pledgor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral of
such Pledgor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.

(d) Upon notice by the Collateral Agent, the Borrower will furnish to the
Collateral Agent on or prior to the fifth anniversary of the date hereof (but
not more than six months prior thereto), an opinion of counsel, from outside
counsel reasonably satisfactory to the Collateral Agent, to the effect that all
financing or continuation statements have been filed, and all other action has
been taken to perfect continuously from the date hereof the security interest
granted hereunder.

 

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(e) Notwithstanding anything to the contrary in this Agreement or any other
Collateral Document, this Agreement shall be subject to the provisions of
Sections 6.12(a) and 6.12(c), as applicable, of the Credit Agreement.

Section 7. Post-Closing Changes. Each Pledgor agrees to promptly notify the
Collateral Agent in writing of any change to its legal name, type of
organization, jurisdiction of organization, organizational identification number
(if any) or location from those set forth in Schedule I hereto and shall take
all action reasonably required by the Collateral Agent for the purposes of
perfecting or protecting the security interest granted by this Agreement. Each
Pledgor will hold and preserve its records relating to the Collateral and will
permit representatives of the Collateral Agent at any reasonable time during
normal business hours to inspect and make abstracts from such records and other
documents, upon reasonable advance notice to such Pledgor; provided that,
excluding any such visits and inspections during the continuance of an Event of
Default, only the Collateral Agent may exercise rights under this Section 7 and
the Collateral Agent shall not exercise such rights more often than one (1) time
during any calendar year absent the existence of an Event of Default; provided
further that, upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent or any Secured Party (or any respective
representative or independent contractor) may do any of the foregoing at the
reasonable expense of such Pledgor at any time during normal business hours and
upon reasonable advance notice. If any Pledgor does not have an organizational
identification number and later obtains one, within thirty (30) days, it will
notify the Collateral Agent of such organizational identification number.

Section 8. Voting Rights; Dividends; Etc.

(a) So long as no Event of Default shall have occurred and be continuing and the
Collateral Agent has not given notice to the Borrower:

(i) Each Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Security Collateral of such Pledgor or any
part thereof for any purpose; provided, however, that such Pledgor will not
exercise or refrain from exercising any such right if such action would have a
material adverse effect on the value of the Security Collateral or any part
thereof or on the rights and remedies of the Collateral Agent or the other
Secured Parties under this Agreement or the ability of the Collateral Agent or
the other Second Parties to exercise the same.

(ii) Each Pledgor shall be entitled to receive and retain any and all dividends,
interest and other distributions paid in respect of the Security Collateral of
such Pledgor if and to the extent that the payment thereof is not otherwise
prohibited by the terms of the Loan Documents; provided, however, that any and
all dividends, interest and other distributions paid or payable other than in
cash in respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Security
Collateral, shall be, and shall be forthwith delivered to the Collateral Agent
to hold as, Security Collateral and shall, if received by such Pledgor, be
received in trust for the benefit of the Collateral Agent, be segregated from
the other property or funds of such Pledgor and be forthwith delivered to the
Collateral Agent as Security Collateral in the same form as so received (with
any necessary endorsement).

(iii) The Collateral Agent will execute and deliver (or cause to be executed and
delivered) to each Pledgor all such proxies and other instruments as such
Pledgor may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and other rights that it is

 

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entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.

(b) Upon the occurrence and during the continuance of an Event of Default and
following notice from the Collateral Agent to the Borrower:

(i) All rights of each Pledgor (x) to exercise or refrain from exercising the
voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 8(a)(i) shall, upon notice to such Pledgor by the
Collateral Agent, cease and (y) to receive the dividends, interest and other
distributions that it would otherwise be authorized to receive and retain
pursuant to Section 8(a)(ii) shall automatically cease, and all such rights
shall thereupon become vested in the Collateral Agent, which shall thereupon
have the sole right to exercise or refrain from exercising such voting and other
consensual rights and to receive and hold as Security Collateral such dividends,
interest and other distributions.

(ii) All dividends, interest and other distributions that are received by any
Pledgor contrary to the provisions of paragraph (i) of this Section 8(b) shall
be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of such Pledgor and shall be forthwith paid over to
the Collateral Agent as Security Collateral in the same form as so received
(with any necessary indorsement).

Section 9. Transfers and Other Liens; Additional Shares. (a) Each Pledgor agrees
that it will not (i) sell, assign or otherwise dispose of, or grant any option
with respect to, any of the Collateral, other than sales, assignments and other
dispositions of Collateral, and options relating to Collateral, permitted under
the terms of the Credit Agreement or (ii) create or suffer to exist any Lien
upon or with respect to any of the Collateral of such Pledgor except for the
pledge, assignment and security interest created under this Agreement and Liens
permitted under the Loan Documents.

(b) Each Pledgor agrees that it will (i) cause each issuer of the Pledged Equity
pledged by such Pledgor not to issue any Equity Interests or other securities in
addition to or in substitution for the Pledged Equity issued by such issuer,
except to such Pledgor (except for director’s qualifying shares and shares
issued to foreign nationals to the extent required by applicable law, or as
otherwise required by law), and (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional Equity
Interests or other securities (subject to Section 1(a)(iii) with respect to any
Equity Interest in any Non-US Entity).

Section 10. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor hereby
irrevocably appoints the Collateral Agent such Pledgor’s attorney-in-fact, with
full authority in the place and stead of such Pledgor and in the name of such
Pledgor or otherwise, from time to time, upon the occurrence and during the
continuance of a Event of Default, in the Collateral Agent’s reasonable
discretion, to take any action and to execute any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the provisions of this
Agreement, including, without limitation:

(a) to ask for, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral,

 

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(b) to receive, indorse and collect any drafts or other instruments or
documents, in connection with clause (a) above, and

(c) to file any claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the Collateral Agent with
respect to any of the Collateral.

Section 11. Collateral Agent May Perform. (a) If any Pledgor fails to perform
any agreement contained herein, the Collateral Agent may, but without any
obligation to do so, with notice (or upon the occurrence and during the
continuance of an Event of Default, without notice), itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by such Pledgor under
Section 13.

Section 12. Remedies. Subject to Section 8.02 of the Credit Agreement, if any
Event of Default shall have occurred and be continuing:

(a) The Collateral Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) and also may:
(i) without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Agent’s offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable; and (ii) exercise any and all rights and remedies of
any of the Pledgors under or in connection with the Collateral, or otherwise in
respect of the Collateral, including, without limitation, those set forth in
Section 9-607 of the UCC. Each Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days’ notice to such Pledgor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.

(b) Any cash held by or on behalf of the Collateral Agent and all cash proceeds
received by or on behalf of the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, or at any time thereafter applied (after payment of any
amounts payable to the Collateral Agent pursuant to Section 15) in whole or in
part by the Collateral Agent for the ratable benefit of the Secured Parties
against, all or any part of the Secured Obligations, as set forth in
Section 8.03 of the Credit Agreement.

(c) All payments received by Pledgor in respect of the Collateral shall be
received in trust for the benefit of the Collateral Agent, shall be segregated
from other funds of such Pledgor and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary
indorsement).

(d) Notwithstanding anything to the contrary in this Agreement, the exercise of
remedies by the Collateral Agent under this Agreement upon the occurrence and
during the continuance of an Event of Default shall be subject to Section 8.02
of the Credit Agreement.

 

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Section 13. Indemnity and Expenses. (a) Each Pledgor agrees to indemnify, defend
and save and hold harmless each Secured Party and each Representative Party (as
defined below) of any of the foregoing Persons (each, an “Indemnified Party”)
from and against, and shall pay on demand, any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction by
final judgment to have resulted from the gross negligence, bad faith or willful
misconduct of such Indemnitee or such Indemnitee’s Representative Parties or
(y) result from a claim brought by any Pledgor against an Indemnitee for breach
of such Indemnitee’s obligations under this Agreement, if such Pledgor has
obtained a final judgment in its favor on such claim as determined by a court of
competent jurisdiction. For purposes of this Section 13 “Representative Parties”
means, as to any Person, (i) such Person’s officers, directors and employees and
(ii) such Person’s Affiliates, agents, advisers and other representatives, in
each case to the extent acting at the direction of such Person.

(b) Each Pledgor will within 30 days of written demand pay to the Collateral
Agent the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and reasonable out-of-pocket expenses of its
counsel and of any experts and agents, that the Collateral Agent may incur in
connection with (i) the custody, preservation, use or operation of, or the sale
of, collection from or other realization upon, any of the Collateral of such
Pledgor, (ii) the exercise or enforcement of any of the rights of the Collateral
Agent or the other Secured Parties hereunder or (iii) the failure by such
Pledgor to perform or observe any of the provisions hereof.

Section 14. Amendments; Waivers; Additional Pledgors; Etc.

(a) No amendment or waiver of any provision of this Agreement, and no consent to
any departure by any Pledgor herefrom, shall in any event be effective unless
the same shall be in writing and signed by the Collateral Agent and the Pledgor,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No failure on the part of the
Collateral Agent or any other Secured Party to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.

(b) Upon the execution and delivery, or authentication, by any Person of a
pledge agreement supplement in substantially the form of Exhibit A hereto (each
a “Pledge Agreement Supplement”), (i) such Person shall be referred to as an
“Additional Pledgor” and shall be and become a Pledgor hereunder, and each
reference in this Agreement and the other Loan Documents to “Pledgor” shall also
mean and be a reference to such Additional Pledgor, and each reference in this
Agreement and the other Loan Documents to “Collateral” shall also mean and be a
reference to the Collateral of such Additional Pledgor, and (ii) the
supplemental schedules I and II attached to each Pledge Agreement Supplement
shall be incorporated into and become a part of and supplement Schedules I and
II, respectively, hereto, and the Collateral Agent may attach such supplemental
schedules to such Schedules; and each reference to such Schedules shall mean and
be a reference to such Schedules as supplemented pursuant to each Pledge
Agreement Supplement.

 

Domestic Pledge Agreement

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Section 15. Notices, Etc.

All notices and other communications provided for hereunder shall be either
(i) in writing (including telegraphic, telecopier or telex communication) and
mailed, telegraphed, telecopied, telexed or otherwise delivered or (ii) by
electronic mail (if electronic mail addresses are designated as provided below)
confirmed immediately in writing, in the case of the BV Borrower or the
Collateral Agent (as provided for the Administrative Agent thereunder),
addressed to it at its address specified in the Credit Agreement and, in the
case of each Pledgor other than the BV Borrower, addressed to it at its address
set forth opposite such Pledgor’s name on the signature pages hereto or on the
signature page to the Pledge Agreement Supplement pursuant to which it became a
party hereto; or, as to any party, at such other address as shall be designated
by such party in a written notice to the other parties. All such notices and
other communications shall be deemed to be given or made upon the earlier to
occur of (i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by courier, when signed for by or on behalf of the relevant
party hereto; (B) if delivered by mail, four (4) Business Days after deposit in
the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt
has been confirmed; and (D) if delivered by electronic mail, when delivered.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or of any Pledge Agreement Supplement or
Schedule hereto shall be effective as delivery of an original executed
counterpart thereof.

Section 16. Continuing Security Interest; Assignments Under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the latest of
(i) the payment in full in cash of the Secured Obligations (other than
(x) obligations with respect to Secured Hedge Agreements, (y) Cash Management
Obligations not yet due and payable and (z) the contingent obligations not yet
accrued and payable under the Loan Documents), (ii) the Maturity Date for the
Revolving Credit Facility, (iii) the Maturity Date for the Term Loan Facility
and (iv) the termination or expiration of all Letters of Credit, (b) be binding
upon each Pledgor, its successors and assigns and (c) inure, together with the
rights and remedies of the Collateral Agent hereunder, to the benefit of the
Secured Parties and their respective permitted successors, transferees and
assigns. Without limiting the generality of the foregoing subsection (c), any
Lender may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitments, the Loans owing to it and the Note or Notes, if
any, held by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
herein or otherwise, in each case as provided in Section 10.07 of the Credit
Agreement.

Section 17. Release; Termination. (a) Upon any sale, lease, transfer or other
disposition of any item of Collateral of any Pledgor in accordance with the
terms of the Loan Documents, the Collateral Agent will, at such Pledgor’s
expense, execute and deliver to such Pledgor such documents as such Pledgor
shall reasonably request to evidence the release of such item of Collateral from
the assignment and security interest granted hereby; provided, however, that
(i) such Pledgor shall have delivered to the Collateral Agent a written request
for release describing the item of Collateral and the terms of the sale, lease,
transfer or other disposition in reasonable detail, including, without
limitation, the price thereof and any expenses in connection therewith, together
with a form of release for execution by the Collateral Agent and a certificate
of such Pledgor to the effect that the transaction is in compliance with the
Loan Documents and as to such other matters as the Collateral Agent may
reasonably request and (ii) the proceeds of any such sale, lease, transfer or
other disposition required to be applied, or any payment to be made in
connection therewith, in accordance with Section 2.05 of the Credit Agreement
shall, to the extent so required, be paid or made to,

 

Domestic Pledge Agreement

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or in accordance with the instructions of, the Collateral Agent when and as
required under Section 2.05 of the Credit Agreement.

(b) Upon the latest of (i) the payment in full in cash of the Secured
Obligations (other than (x) obligations with respect to Secured Hedge
Agreements, (y) Cash Management Obligations not yet due and payable and
(z) contingent indemnification obligations not yet accrued and payable under the
Loan Documents), (ii) the Maturity Date for the Revolving Credit Facility,
(iii) the Maturity Date for the Term Loan Facility and (iv) the cash
collateralization, back-stop (on terms reasonably satisfactory to the Collateral
Agent), termination or expiration of all Letters of Credit, the pledge and
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Pledgor. Upon any such termination,
the Collateral Agent will, at the applicable Pledgor’s expense, execute and
deliver to such Pledgor such documents as such Pledgor shall reasonably request
to evidence such termination.

Section 18. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

Section 19. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

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IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.

 

SENSATA TECHNOLOGIES B.V. By   /s/ Geert Braaksma   Title: Director SENSATA
TECHNOLOGIES HOLDING       COMPANY US B.V. By   /s/ Geert Braaksma   Title:
Director Address for Notices: Kolthofsingel 8 7602 EM Almelo The Netherlands

 

Domestic Pledge Agreement

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Schedule I to the

Domestic Pledge Agreement

LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF ORGANIZATION, JURISDICTION OF

ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION NUMBER

 

Pledgor

   Location    Chief
Executive
Office    Type of
Organization    Jurisdiction of
Organization    Organizational
I.D. No.    Trade
Names

 

Domestic Pledge Agreement

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Schedule II to the

Domestic Pledge Agreement

PLEDGED EQUITY AND PLEDGED DEBT

Part I

 

Pledgor

   Issuer    Class of
Equity
Interest    Par Value    Certificate
No(s)    Number
of Shares    Percentage
of
Outstanding
Shares

Part II

 

Pledgor

   Debt
Issuer    Description of
Debt    Debt Certificate
No(s).    Final
Maturity    Outstanding
Principal
Amount

 

Domestic Pledge Agreement

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Exhibit A to the

Domestic Pledge Agreement

FORM OF DOMESTIC PLEDGE AGREEMENT SUPPLEMENT

[Date of Pledge Agreement Supplement]

Morgan Stanley Senior Funding, Inc.

as the Collateral Agent for the

Secured Parties referred to in the

Credit Agreement referred to below

1585 Broadway

New York, New York 10036

Attn: Todd Vannucci, Managing Director

SENSATA TECHNOLOGIES B.V.

Ladies and Gentlemen:

Reference is made to (i) the Credit Agreement dated as of May 12, 2011 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among SENSATA TECHNOLOGIES B.V., a besloten
vennootschap organized under the laws of the Netherlands (the “BV Borrower”),
SENSATA TECHNOLOGIES FINANCE, LLC, a Delaware limited liability company (the “US
Borrower” and together with the BV Borrower, the “Borrowers”) and SENSATA
TECHNOLOGIES INTERMEDIATE HOLDING B.V., a besloten vennootschap organized under
the laws of the Netherlands, the Lenders, the Initial L/C Issuer, the Initial
Swing Line Lender and Morgan Stanley Senior Funding, Inc., as administrative
agent, and (ii) the Pledge Agreement dated May 12, 2011 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Pledge
Agreement”) made by the Pledgors from time to time party thereto in favor of the
Collateral Agent for the Secured Parties. Terms defined in the Credit Agreement
or the Pledge Agreement and not otherwise defined herein are used herein as
defined in the Credit Agreement or the Pledge Agreement.

SECTION 1. Grant of Security. Subject to the terms and conditions set forth in
the Pledge Agreement, including provisions for the termination of security
interests granted and the release of Liens thereunder, the undersigned hereby
grants to the Collateral Agent, for the ratable benefit of the Secured Parties,
a security interest in, all of its right, title and interest in and to all of
the Collateral of the undersigned, whether now owned or hereafter acquired by
the undersigned, wherever located and whether now or hereafter existing or
arising, including, without limitation, the property and assets of the
undersigned set forth on the attached supplemental schedules to the Schedules to
the Pledge Agreement.

SECTION 2. Security for Obligations. The grant of a security interest in, the
Collateral by the undersigned under this Pledge Agreement Supplement and the
Pledge Agreement secures the payment of all Secured Obligations of the
undersigned now or hereafter existing under or in respect of the Loan Documents,
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of

 

Domestic Pledge Agreement

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action, costs, expenses or otherwise. Without limiting the generality of the
foregoing, this Pledge Agreement Supplement and the Pledge Agreement secure the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by the undersigned to any Secured Party under the Loan Documents, but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving a Loan Party.
Notwithstanding anything in this Pledge Agreement Supplement, the Pledge
Agreement or the Credit Agreement to the contrary, (i) the aggregate principal
amount of all Bilateral Obligations secured hereby shall not exceed $40,000,000
and (ii) to the extent that Bilateral Obligations are cash collateralized or
otherwise secured (other than pursuant to the Security Agreement), such
Bilateral Obligations shall not be secured hereby.

SECTION 3. Supplements to Pledge Agreement Schedules. The undersigned has
attached hereto supplemental Schedules I and II to Schedules I and II,
respectively, to the Pledge Agreement, and the undersigned hereby certifies, as
of the date first above written, that such supplemental schedules have been
prepared by the undersigned in substantially the form of the equivalent
Schedules to the Pledge Agreement and are complete and correct.

SECTION 4. Representations and Warranties. The undersigned hereby makes each
representation and warranty set forth in Section 5 of the Pledge Agreement (as
supplemented by the attached supplemental schedules) to the same extent as each
other Pledgor.

SECTION 5. Obligations Under the Pledge Agreement. The undersigned hereby
agrees, as of the date first above written, to be bound as a Pledgor by all of
the terms and provisions of the Pledge Agreement to the same extent as each of
the other Pledgors. The undersigned further agrees, as of the date first above
written, that each reference in the Pledge Agreement to an “Additional Pledgor”
or a “Pledgor” shall also mean and be a reference to the undersigned.

SECTION 6. Governing Law. This Pledge Agreement Supplement shall be governed by,
and construed in accordance with, the laws of the State of New York.

 

Very truly yours,

 

[NAME OF ADDITIONAL PLEDGOR] By       Title:           Address for notices:    
             

 

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