Exhibit 99.1
FINANCING AGREEMENT
DATED AS OF DECEMBER 19, 2003
BY AND AMONG
SOLUTIA INC. AND
SOLUTIA BUSINESS ENTERPRISES, INC.,
AS DEBTORS AND DEBTORS-IN-POSSESSION,
AS BORROWERS,
CERTAIN SUBSIDIARIES OF SOLUTIA INC. LISTED AS A GUARANTOR ON THE
SIGNATURE PAGES HERETO,
AS DEBTORS AND DEBTORS-IN-POSSESSION,
AS GUARANTORS,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
AS LENDERS,
ABLECO FINANCE LLC,
AS COLLATERAL AGENT,
WELLS FARGO FOOTHILL, INC.,
AS ADMINISTRATIVE AGENT AND AS JOINT LEAD ARRANGER,
AND
CONGRESS FINANCIAL CORPORATION (CENTRAL),
AS DOCUMENTATION AGENT AND AS JOINT LEAD ARRANGER
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; CERTAIN TERMS...................................................................2
Section 1.01 Definitions...............................................................2
Section 1.02 Terms Generally..........................................................34
Section 1.03 Accounting and Other Terms...............................................34
Section 1.04 Time References..........................................................35
ARTICLE II THE LOANS..................................................................................35
Section 2.01 Commitments..............................................................35
Section 2.02 Making the Loans.........................................................36
Section 2.03 Repayment of Loans; Evidence of Debt.....................................40
Section 2.04 Interest.................................................................40
Section 2.05 Reduction of Commitment; Prepayment of Loans.............................41
Section 2.06 Fees.....................................................................46
Section 2.07 Securitization...........................................................47
Section 2.08 Taxes....................................................................47
ARTICLE III LETTER OF CREDIT ACCOMMODATIONS...........................................................50
Section 3.01 Letter of Credit Guaranty................................................50
Section 3.02 Participations...........................................................52
Section 3.03 Letter of Credit Accommodations..........................................53
ARTICLE IV SECURITY AND ADMINISTRATIVE PRIORITY.......................................................55
Section 4.01 Pre-Petition Obligations.................................................55
Section 4.02 Acknowledgment of Security Interests.....................................55
Section 4.03 Binding Effect of Documents..............................................55
Section 4.04 Collateral; Grant of Lien and Security Interest..........................55
Section 4.05 Administrative Priority..................................................57
Section 4.06 Grants, Rights and Remedies..............................................57
Section 4.07 No Filings Required......................................................57
Section 4.08 Survival.................................................................57
ARTICLE V FEES, PAYMENTS AND OTHER COMPENSATION.......................................................58
Section 5.01 Audit and Collateral Monitoring Fees.....................................58
Section 5.02 Payments; Computations and Statements....................................58
Section 5.03 Sharing of Payments, Etc.................................................59
Section 5.04 Apportionment of Payments................................................60
Section 5.05 Increased Costs and Reduced Return.......................................61
Section 5.06 Joint and Several Liability of the Borrowers.............................62
ARTICLE VI CONDITIONS TO LOANS........................................................................63
Section 6.01 Conditions Precedent to Interim Facility Effectiveness...................63
Section 6.02 Conditions Precedent to Final Facility Effectiveness.....................66
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Section 6.03 Conditions Precedent to All Loans and Letter of Credit Accommodations....68
Section 6.04 Conditions Precedent to the Carve-Out Term Loan B........................69
ARTICLE VII REPRESENTATIONS AND WARRANTIES............................................................70
Section 7.01 Representations and Warranties...........................................70
ARTICLE VIII COVENANTS OF THE LOAN PARTIES............................................................80
Section 8.01 Affirmative Covenants....................................................80
Section 8.02 Negative Covenants.......................................................92
Section 8.03 Financial Covenants.....................................................101
ARTICLE IX MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS AND OTHER COLLATERAL........................102
Section 9.01 Collection of Accounts; Management of Collateral........................102
Section 9.02 Collateral Custodian....................................................106
Section 9.03 Collateral Reporting....................................................106
Section 9.04 Accounts Covenants......................................................107
Section 9.05 Inventory Covenants.....................................................107
ARTICLE X EVENTS OF DEFAULT..........................................................................109
Section 10.01 Events of Default.......................................................109
ARTICLE XI AGENTS....................................................................................114
Section 11.01 Appointment.............................................................114
Section 11.02 Nature of Duties........................................................115
Section 11.03 Rights, Exculpation, Etc................................................115
Section 11.04 Reliance................................................................116
Section 11.05 Indemnification.........................................................116
Section 11.06 Agents Individually.....................................................116
Section 11.07 Successor Agent.........................................................117
Section 11.08 Collateral Matters......................................................117
Section 11.09 Agency for Perfection...................................................118
ARTICLE XII GUARANTY.................................................................................119
Section 12.01 Guaranty................................................................119
Section 12.02 Guaranty Absolute.......................................................119
Section 12.03 Waiver..................................................................120
Section 12.04 Continuing Guaranty; Assignments........................................120
Section 12.05 Subrogation.............................................................121
ARTICLE XIII MISCELLANEOUS...........................................................................122
Section 13.01 Notices, Etc............................................................122
Section 13.02 Amendments, Etc.........................................................124
Section 13.03 No Waiver; Remedies, Etc................................................124
Section 13.04 Expenses; Taxes; Attorneys' Fees........................................124
Section 13.05 Right of Set-off........................................................126
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Section 13.06 Severability............................................................126
Section 13.07 Assignments and Participations..........................................126
Section 13.08 Counterparts............................................................129
Section 13.09 GOVERNING LAW...........................................................130
Section 13.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE...................130
Section 13.11 WAIVER OF JURY TRIAL, ETC...............................................131
Section 13.12 Consent by the Agents and Lenders.......................................131
Section 13.13 No Party Deemed Drafter.................................................131
Section 13.14 Reinstatement; Certain Payments.........................................131
Section 13.15 Indemnification.........................................................132
Section 13.16 Parent as Agent for Borrowers...........................................133
Section 13.17 Records.................................................................133
Section 13.18 Binding Effect..........................................................134
Section 13.19 Interest................................................................134
Section 13.20 Confidentiality.........................................................135
Section 13.21 Integration.............................................................136
Section 13.22 Collateral Agent, Administrative Agent and Documentation Agent as
Party-in-Interest.......................................................136
Section 13.23 Dutch Security Agreement................................................136
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SCHEDULES AND EXHIBITS
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Schedule 1.01(A) Lenders and Lenders' Commitments
Schedule 1.01(B) Cash Restructuring Charges
Schedule 3.01 Existing Letters of Credit
Schedule 3.03(d) Pre-Petition Letters of Credit
Schedule 7.01(e) Subsidiaries
Schedule 7.01(f) Litigation; Commercial Tort Claims
Schedule 7.01(i) ERISA
Schedule 7.01(l) Nature of Business
Schedule 7.01(o) Real Property
Schedule 7.01(q) Operating Lease Obligations
Schedule 7.01(r) Environmental Matters
Schedule 7.01(s) Insurance
Schedule 7.01(u) Bank Accounts
Schedule 7.01(v) Intellectual Property
Schedule 7.01(w) Material Contracts
Schedule 7.01(y) Employee and Labor Matters
Schedule 7.01(aa) Name; Jurisdiction of Organization; Organizational ID
Number; Chief Place of Business; Chief Executive
Office; FEIN
Schedule 7.01(bb) Collateral Locations
Schedule 8.01(a)(xix) Weekly Cash Flow Schedules
Schedule 8.01(q) Post-Closing Delivery
Schedule 8.02(a) Existing Liens
Schedule 8.02(c)(i) Permitted Dispositions
Schedule 8.02(e) Existing Investments
Schedule 8.02(k) Limitations on Dividends and Other Payment Restrictions
Schedule 8.02(m) Term Sheet for the Euro Restructuring
Schedule 8.03 Designated Business Segments
Schedule 9.01 Cash Management Banks and Cash Management Accounts
Exhibit A Form of Guaranty
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Borrowing Base Certificate
Exhibit D Form of Opinion of Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Interim Bankruptcy Court Order
Exhibit G Form of Intercompany Subordination Agreement
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FINANCING AGREEMENT
Financing Agreement, dated as of December 19, 2003, by and
among Solutia Inc., as a debtor and debtor-in-possession, a Delaware
corporation (the "Parent"), and Solutia Business Enterprises, Inc., as a
debtor and debtor-in-possession, a New York corporation, ("Solutia Business"
and together with the Parent, each a "Borrower" and collectively, the
"Borrowers"), each subsidiary of the Parent listed as a "Guarantor" on the
signature pages hereto, each as a debtor and debtor-in-possession (each a
"Guarantor" and collectively, the "Guarantors"), the lenders from time to
time party hereto (each a "Lender" and collectively, the "Lenders"), Ableco
Finance LLC, a Delaware limited liability company ("Ableco"), as collateral
agent for the Lenders (in such capacity, the "Collateral Agent"), Wells
Fargo Foothill, Inc., a California corporation ("Foothill"), as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), and Congress Financial Corporation (Central), an Illinois
corporation ("Congress"), as documentation agent for the Lenders (in such
capacity, the "Documentation Agent" and together with the Collateral Agent
and the Administrative Agent, each an "Agent" and collectively, the
"Agents").
RECITALS
WHEREAS, the Borrowers and the Guarantors have commenced
cases (the "Chapter 11 Cases") under Chapter 11 of Title 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court"), and the Borrowers and the
Guarantors have retained possession of their assets and are authorized under
the Bankruptcy Code to continue the operation of their businesses as
debtors-in-possession; and
WHEREAS, the Borrowers and the Guarantors have asked the
Lenders to make post-petition loans and advances to the Borrowers consisting
of (a) a term loan A in the aggregate principal amount of $50,000,000, (b) a
term loan B in the aggregate principal amount of $315,000,000, and (c) a
revolving credit facility in an aggregate principal amount not to exceed
$150,000,000 at any time outstanding, which revolving credit facility will
include a letter of credit subfacility for the issuance of letters of
credit, provided, that, until the Final Bankruptcy Court Order (as
hereinafter defined) shall have been entered by the Bankruptcy Court, no
loans or advances under the term loans or revolving credit facilities shall
be made other than up to $75,000,000 of the Term Loan B, plus a portion of
the Term Loan B equal to an aggregate principal amount up to $10,000,000
during the Carve-Out Expenses Period (as hereinafter defined) to fund the
payment of Carve-Out Expenses (as hereinafter defined). The Lenders have
severally, and not jointly, agreed to extend such credit to the Borrowers
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
Section 1.01 Definitions. As used in this Agreement, the
following terms shall have the respective meanings indicated below, such
meanings to be applicable equally to both the singular and plural forms of
such terms:
"Ableco" has the meaning specified therefor in the
preamble hereto.
"Account Debtor" means each debtor, customer or obligor in
any way obligated on or in connection with any Account.
"Accounts" means, as to each Loan Party, all present and
future rights of such Loan Party to payment of a monetary obligation,
whether or not earned by performance, (a) for property that has been or is
to be sold, leased, assigned, or otherwise disposed of, (b) for services
rendered or to be rendered, or (c) for a secondary obligation incurred or to
be incurred.
"Action" has the meaning specified therefor in Section
13.12.
"Additional Principal Properties" means the following
three Principal Properties located in: Decatur, Alabama, Greenwood, South
Carolina and Pensacola, Florida, and each of which are further identified as
an "Additional Principal Property" on Schedule 7.01(o).
"Administrative Agent" has the meaning specified therefor
in the preamble hereto.
"Administrative Agent's Account" means an account at a
bank designated by the Administrative Agent from time to time as the account
into which the Loan Parties shall make all payments to the Administrative
Agent for the benefit of the Agents and the Lenders under this Agreement and
the other Loan Documents.
"Administrative Borrower" has the meaning specified
therefor in Section 13.16.
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person.
For purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (i) vote 10% or more of the Capital Stock
having ordinary voting power for the election of directors of such Person or
(ii) direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. Notwithstanding anything herein to
the contrary, in no event shall any Agent or any Lender be considered an
"Affiliate" of any Loan Party.
"After Acquired Property" has the meaning specified
therefor in Section 8.01(m).
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"Agent" and "Agents" have the respective meanings
specified therefor in the preamble hereto.
"Agent Advances" has the meaning specified therefor in
Section 11.08(a).
"Agreed Administrative Expense Priorities" means those
administrative expenses with respect to the Borrowers and the Guarantors
and, with respect to sub-clause (ii) of clause "first", any official
committee appointed by the Bankruptcy Court, shall have the following order
of priority:
first, (i) amounts payable pursuant to 28 U.S.C.
Section 1930(a)(6) and any fees payable to the Clerk of
the Bankruptcy Court and (ii) the Carve-Out Expenses,
provided, that the amount entitled to priority under this
sub-clause (ii) of this clause first ("Priority
Professional Expenses") is funded with the proceeds of the
Carve-Out Term Loan B (inclusive of (a) any holdbacks
required by the Bankruptcy Court, (b) actual, documented
reasonable fees and expenses of a trustee payable under
Section 726(b) of the Bankruptcy Code, as required by the
Guidelines, and (c) reasonable and actual, documented
expenses of the members of the statutory creditors'
committee, if any);
second, all Obligations in accordance with
Section 4.05, and
third, all other allowed administrative
expenses.
"Agreement" means this Financing Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to
any of the foregoing, and shall refer to the Agreement as the same may be in
effect at the time such reference becomes operative.
"Assignment and Acceptance" means an assignment and
acceptance entered into by an assigning Lender and an assignee, and accepted
by the Collateral Agent, in accordance with Section 13.07 hereof and
substantially in the form of Exhibit E hereto or such other form acceptable
to the Collateral Agent.
"Astaris" means Astaris LLC, a Delaware limited liability
company.
"Astaris Agent" means Bank of America, N.A., in its
capacity as administrative agent for the Astaris Lenders.
"Astaris Credit Agreement" means the Five Year Credit
Agreement, dated as of September 14, 2000, among Astaris, the Astaris
Lenders and the Astaris Agent, as amended from time to time.
"Astaris Guaranty" means the Guaranty Agreement, dated
September 14, 2000, as amended prior to the Filing Date, made by the Parent
in favor of Astaris, the Astaris Lenders and the Astaris Agent, as amended
from time to time after the Filing Date in accordance with the terms and
provisions of this Agreement and the Bankruptcy Court Orders.
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"Astaris Lenders" means the lenders from time to time
party to the Astaris Credit Agreement.
"Authorized Officer" means, with respect to any Person,
the chief executive officer, chief financial officer, chief restructuring
officer, president, senior vice president, general counsel, treasurer,
assistant treasurer, controller or assistant controller of such Person.
"Availability" means, at any time, an amount equal to the
sum of (i) difference between (a) the lesser of (I) the Borrowing Base and
(II) the Total Revolving Credit Commitment and (b) the sum of (I) the
aggregate outstanding principal amount of all Revolving Loans and (II) all
Letter of Credit Obligations, and (ii) the amount of cash of the Loan
Parties deposited in a bank account subject to a Cash Management Agreement
or a Concentration Account Agreement.
"Avoidance Actions" means all causes of action arising
under Sections 542, 544, 545, 547, 548, 549, 550, 551, 553(b) or 724(a) of
the Bankruptcy Code and any proceeds therefrom.
"Avoided Payments" has the meaning specified therefor in
Section 2.05(c)(vii).
"Bankruptcy Code" means the United States Bankruptcy Code
(11 U.S.C. Section 101, et seq.), as amended, and any successor statute.
"Bankruptcy Court" has the meaning specified therefor in
the recitals hereto.
"Bankruptcy Court Orders" means the Interim Bankruptcy
Court Order and the Final Bankruptcy Court Order.
"Board" means the Board of Governors of the Federal
Reserve System of the United States.
"Board of Directors" means, with respect to any Person,
the board of directors (or comparable managers) of such Person or any
committee thereof duly authorized to act on behalf of the board.
"Book Value" means, with respect to any Inventory of any
Person, the lower of (i) cost (as reflected in the general ledger of such
Person before customary reserves established by such Person in good faith
and in accordance with GAAP) and (ii) market value, in each case, determined
in accordance with GAAP calculated on a first-in first-out basis.
"Borrower" and "Borrowers" have the respective meanings
specified therefor in the preamble hereto.
"Borrowing Base" means, at any time, the difference
between (i) the sum of (A) up to 85% of the value of the Net Amount of
Eligible Accounts at such time less the amount, if any, of the Dilution
Reserve plus (B) the sum of up to (x) 60% of the Book Value of the Eligible
Inventory constituting finished goods at such time plus (y) 40% of the Book
Value of the Eligible Inventory constituting raw materials at such time plus
(z) the lesser of (1) 40% of the Book Value of the Eligible Inventory
constituting the Designated Chemicals at such time and (2) $20,000,000 and
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(ii) such reserves as the Administrative Agent or the Documentation Agent
may deem appropriate in the exercise of their business judgment made in good
faith and exercised reasonably based upon the lending practices of the
Administrative Agent or the Documentation Agent consistent with the general
practices in the commercial finance industry.
"Borrowing Base Certificate" means a certificate signed by
an Authorized Officer of the Administrative Borrower and setting forth the
calculation of the Borrowing Base in compliance with Section 8.01(a)(vi),
substantially in the form of Exhibit C.
"Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks in New York City are authorized or
required to close.
"Capital Expenditures" means, with respect to any Person
for any period, the aggregate of all expenditures by such Person and its
Subsidiaries during such period that in accordance with GAAP are or should
be included in "property, plant and equipment" or in a similar fixed asset
account on its balance sheet, whether such expenditures are paid in cash or
financed and including all Capitalized Lease Obligations paid or payable
during such period; provided, that the term "Capital Expenditure" shall not
include (a) expenditures made in connection with the replacement,
substitution or restoration of assets or the purchase of any other assets
used or useful in the business of such Person (i) to the extent financed
from insurance proceeds paid on account of the loss of or damage to the
assets of any such Person or its Subsidiaries or (ii) with awards of
compensation arising from the taking by eminent domain or condemnation of
the assets of any such Person or its Subsidiaries, and (b) the purchase
price of equipment that is purchased simultaneously with the trade-in of
existing equipment to the extent that the gross amount of such purchase
price is reduced by the credit granted by the seller of such equipment for
the equipment being traded in at such time.
"Capital Guideline" means any law, rule, regulation,
policy, guideline or directive (whether or not having the force of law and
whether or not the failure to comply therewith would be unlawful) of any
central bank or Governmental Authority (i) regarding capital adequacy,
capital ratios, capital requirements, the calculation of a bank's capital or
similar matters, or (ii) affecting the amount of capital required to be
obtained or maintained by any Lender, any Person controlling any Lender, or
the L/C Issuer or the manner in which any Lender, any Person controlling any
Lender, or the L/C Issuer allocates capital to any of its contingent
liabilities (including letters of credit), advances, acceptances,
commitments, assets or liabilities.
"Capital Stock" means (i) with respect to any Person that
is a corporation, any and all shares, interests, participations or other
equivalents (however designated and whether or not voting) of corporate
stock, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership or other equity interests of such Person.
"Capitalized Lease" means, with respect to any Person, any
lease of real or personal property by such Person as lessee which is (i)
required under GAAP to be capitalized on the balance sheet of such Person or
(ii) a transaction of a type commonly known as a "synthetic lease" (i.e., a
lease transaction that is treated as an operating lease for accounting
purposes but with respect to which payments of rent are intended to be
treated as payments of principal and interest
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on a loan for Federal income tax purposes); provided that, the term
Capitalized Lease shall not include the Headquarters Lease.
"Capitalized Lease Obligations" means, with respect to any
Person, obligations of such Person and its Subsidiaries under Capitalized
Leases, and, for purposes hereof, the amount of any such obligation shall be
the capitalized amount thereof determined in accordance with GAAP.
"Carve-Out Expenses" means any payments permitted to be
made by the Bankruptcy Court in respect of fees and expenses of attorneys,
accountants and other professionals retained in the Chapter 11 Cases
pursuant to Sections 327, 328, 330, 331 and 1103 of the Bankruptcy Code.
"Carve-Out Expenses Period" means the period during the
continuance of an Event of Default hereunder or a default by any Borrower or
any Guarantor in any of their obligations under any of the Bankruptcy Court
Orders.
"Carve-Out Term Loan B" means that portion of the Term
Loan B, in an aggregate principal amount not exceeding $10,000,000 prior to
the Final Facility Effective Date and $15,000,000 on and after the Final
Facility Effective Date, the proceeds of which will be used solely to pay
Carve-Out Expenses during the Carve-Out Expenses Period.
"Cash Flow Schedules" has the meaning specified therefor
in Section 8.01(a)(xix).
"Cash Management Accounts" means those bank accounts of
each Loan Party listed on Schedule 9.01 that are maintained at one or more
Cash Management Banks listed on Schedule 9.01.
"Cash Management Agreements" means those certain cash
management service agreements, in form and substance satisfactory to the
Administrative Agent, each of which is among the applicable Loan Party, the
Administrative Agent and one of the Cash Management Banks.
"Cash Management Bank" has the meaning specified therefor
in Section 9.01(a).
"Change of Control" means each occurrence of any of the
following:
(a) the acquisition, directly or indirectly, by any
person or group (within the meaning of Section 13(d)(3) of the Exchange Act)
of beneficial ownership of more than 33% of the aggregate outstanding voting
power of the Capital Stock of the Parent;
(b) the Parent shall cease to have beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 100% of the aggregate voting power of the Capital Stock of
each other Loan Party, Solutia Europe, Solutia Dutch Newco and the
Subsidiaries of Solutia Dutch Newco, free and clear of all Liens (other than
any Liens granted under the Loan Documents and Permitted Liens), except to
the extent resulting from a transaction specifically permitted under Section
8.02(c); or
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(c) (i) any Loan Party consolidates or amalgamates
with or merges into another entity or conveys, transfers or leases all or
substantially all of its property and assets to another Person, or (ii) any
entity consolidates or amalgamates with or merges into any Loan Party in a
transaction pursuant to which the outstanding voting Capital Stock of such
Loan Party is reclassified or changed into or exchanged for cash, securities
or other property, other than (A) any such transaction described in this
clause (ii) in which either (x) in the case of any such transaction
involving the Parent, no person or group (within the meaning of Section
13(d)(3) of the Exchange Act) has, directly or indirectly, acquired
beneficial ownership of more than 33% of the aggregate outstanding voting
Capital Stock of the Parent or (y) in the case of any such transaction
involving a Loan Party other than the Parent, Solutia Europe, Solutia Dutch
Newco and the Subsidiaries of Solutia Dutch Newco, the Parent has beneficial
ownership, directly or indirectly, of 100% of the aggregate voting power of
all Capital Stock of the resulting, surviving or transferee entity and (B)
to the extent resulting from a transaction specifically permitted under
Section 8.02(c).
"Chapter 11 Cases" has the meaning specified therefor in
the recitals hereto.
"Collateral" has the meaning specified therefor in Section
4.04(a).
"Collateral Agent" has the meaning specified therefor in
the preamble hereto.
"Collections" means all cash, checks, notes, instruments
and other items of payment (including insurance proceeds, proceeds of cash
sales, rental proceeds and tax refunds) of the Loan Parties.
"Concentration Account" means the bank accounts of the
Loan Parties designated as the "Concentration Accounts" on Schedule 9.01
maintained at the Concentration Account Banks, into which cash received in
the Cash Management Accounts is wired as provided in Section 9.01.
"Concentration Account Agreement" means a control
agreement among any Loan Party, the Concentration Account Banks and the
Administrative Agent, in form and substance satisfactory to the Collateral
Agent and the Administrative Agent, applicable to the Concentration Account.
"Concentration Account Banks" means each of the banks
identified on Schedule 9.01 as a "Concentration Account Bank", or such other
Person or Persons as the Administrative Borrower (with the prior written
consent of the Administrative Agent) may designate from time to time.
"Congress" has the meaning specified therefor in the
preamble hereto.
"Consolidated EBITDA" means, with respect to any Person
for any period, the Consolidated Net Income of such Person and its
Subsidiaries for such period, plus (i) without duplication, the sum of the
following amounts of such Person and its Subsidiaries for such period to the
extent deducted in determining Consolidated Net Income of such Person for
such period: (A) Consolidated Net Interest Expense, (B) income tax expense,
(C) depreciation expense, and (D) amortization expense.
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"Consolidated Net Income" means, with respect to any
Person for any period, the net income (loss) of such Person and its
Subsidiaries for such period, determined on a consolidated basis and in
accordance with GAAP, but excluding from the determination of Consolidated
Net Income (without duplication) (a) any extraordinary or non recurring
gains or non-cash losses or gains or losses from Dispositions, (b) non-cash
restructuring charges and cash restructuring charges related to professional
and advisory fees in respect of the transaction contemplated by this
Agreement, (c) the cash charges set forth on Schedule 1.01(B) to the extent
that (i) the aggregate amount of such cash charges do not exceed
$102,000,000 and (ii) the aggregate amount of such cash charges do not
exceed $10,000,000 in 2003, $83,000,000 in 2004, and $38,000,000 in 2005,
(d) effects of discontinued operations, (e) interest income, and (f) income
from joint ventures.
"Consolidated Net Interest Expense" means, with respect to
any Person for any period, gross interest expense of such Person and its
Subsidiaries for such period determined on a consolidated basis and in
accordance with GAAP (including, without limitation, interest expense paid
to Affiliates of such Person), less (i) the sum of (A) interest income for
such period and (B) gains for such period on Hedging Agreements excluding
commodity, currency and equity Hedging Agreements (to the extent not
included in interest income above and to the extent not deducted in the
calculation of gross interest expense), plus (ii) the sum of (A) losses for
such period on Hedging Agreements excluding commodity, currency and equity
Hedging Agreements (to the extent not included in gross interest expense)
and (B) the upfront costs or fees for such period associated with Hedging
Agreements (to the extent not included in gross interest expense), in each
case, determined on a consolidated basis and in accordance with GAAP.
"Contingent Obligation" means, with respect to any Person,
any obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, (i) the direct or indirect
guaranty, endorsement (other than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of a primary obligor, (ii) the
obligation to make take-or-pay or similar payments, if required, regardless
of nonperformance by any other party or parties to an agreement, (iii) any
obligation of such Person, whether or not contingent, (A) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (B) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth
or solvency of the primary obligor, (C) to purchase property, assets,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (D) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect
thereof; provided, however, that the term "Contingent Obligation" shall not
include (x) customary indemnification obligations which are (I) provided in
the ordinary course to the directors, officers, employees, agents,
independent contractors or service providers of the Parent or any of its
Subsidiaries or (II) in connection with the sale or disposition of property,
(y) indemnification obligations given in the Indentures, and (z) any product
warranties extended in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation with respect to which such
Contingent Obligation is made (or,
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if less, the maximum amount of such primary obligation for which such Person
may be liable pursuant to the terms of the instrument evidencing such
Contingent Obligation) or, if not stated or determinable, the maximum
reasonably anticipated liability with respect thereto (assuming such Person
is required to perform thereunder), as determined by such Person in good
faith.
"CPFilms" means CPFilms Inc., a Delaware corporation.
"Current Value" has the meaning specified therefor in
Section 7.01(o)(ii).
"Default" means an event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"Designated A Business Segment" means the business segment
of the Parent and its Subsidiaries described on Part A of Schedule 8.03.
"Designated B Business Segment" means the business segment
of the Parent and its Subsidiaries described on Part B of Schedule 8.03.
"Designated C Business Segment" means the business segment
of the Parent and its Subsidiaries described on Part C of Schedule 8.03.
"Designated Chemicals" means chemicals acceptable to the
Administrative Agent classified as work-in-process in the books and records
of the Loan Parties and saleable in their current form in the ordinary
course of business.
"Dilution" means, as of any date of determination, a
percentage, based upon the experience of the immediately prior 12-month
period, that is the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts, advertising allowances, credits, or other dilutive
items with respect to the Accounts during such period, by (b) the Loan
Parties' gross billings during such period.
"Dilution Reserve" means, as of any date of determination,
an amount sufficient to reduce the advance rate against Eligible Accounts by
one percentage point for each percentage point by which Dilution is in
excess of 5.0%.
"Disposition" means any transaction, or series of related
transactions, pursuant to which any Person or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of any property or assets (whether
now owned or hereafter acquired) to any other Person, in each case, whether
or not the consideration therefor consists of cash, securities or other
assets owned by the acquiring Person, excluding any sales of Inventory in
the ordinary course of business on ordinary business terms.
"Documentation Agent" has the meaning specified therefor
in the preamble hereto.
"Dollar," "Dollars" and the symbol "$" each means lawful
money of the United States of America.
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"Domestic Subsidiary" means any Subsidiary of a Loan Party
that is organized under the laws of the United States or any state thereof.
"Eligible Accounts" means the Accounts of a Loan Party
which are, and at all times continue to be, acceptable to the Administrative
Agent in the exercise of its business judgment made in good faith and
exercised reasonably based upon lending practices of the Administrative
Agent consistent with the general practices in the commercial finance
industry. Eligible Accounts shall be calculated net of customer deposits and
unapplied cash remitted to any of the Loan Parties. In general, an Account
may be deemed to be eligible if: (i) delivery of the merchandise or the
rendition of the services has been completed with respect to such Account;
(ii) no return, rejection, repossession or dispute has occurred with respect
to such Account, the Account Debtor has not asserted any setoff, defense or
counterclaim with respect to such Account, and there has not occurred any
extension of the time for payment with respect to such Account without the
consent of the Administrative Agent, provided that, in the case of any
dispute, setoff, defense or counterclaim with respect to an Account, the
portion of such Account not subject to such dispute, setoff, defense or
counterclaim will not be ineligible solely by reason of this clause (ii);
(iii) such Account is lawfully owned by a Loan Party free and clear of any
Lien other than in favor of the Collateral Agent for the benefit of the
Agents and the Lenders and in favor of the 2009 Note Trustee for the benefit
of the 2009 Note Holders and otherwise continues to be in full conformity
with all representations and warranties made by a Loan Party to the Agents
and the Lenders with respect thereto in the Loan Documents; (iv) such
Account is unconditionally payable in Dollars within 90 days from the
invoice date and is not evidenced by a promissory note, chattel paper or any
other instrument or other document; (v) no more than 60 days have elapsed
from the invoice due date and no more than 90 days have elapsed from the
invoice date with respect to such Account; (vi) such Account is not due from
an Affiliate of a Loan Party; (vii) such Account does not constitute an
obligation of the United States or any other Governmental Authority (unless
all steps required by the Administrative Agent in connection therewith,
including notice to the United States Government under the Federal
Assignment of Claims Act or any action under any state statute comparable to
the Federal Assignment of Claims Act, have been duly taken in a manner
satisfactory to the Administrative Agent); (viii) the Account Debtor (or the
applicable office of the Account Debtor) with respect to such Account is
located in the United States, unless such Account is supported by a letter
of credit or other similar obligation satisfactory to the Administrative
Agent; (ix) the Account Debtor with respect to such Account is not also a
supplier to or creditor of a Loan Party, unless such Account Debtor has
executed a no-offset letter satisfactory to the Administrative Agent; (x)
not more than 25% of the aggregate amount of all Accounts of the Account
Debtor with respect to such Account have remained unpaid 60 days past the
invoice due date or 90 days past the invoice date or are otherwise not
Eligible Accounts; (xi) the Account Debtor with respect to such Account (A)
has not filed a petition for bankruptcy or any other relief under the
Bankruptcy Code or any other law relating to bankruptcy, insolvency,
reorganization or relief of debtors, made an assignment for the benefit of
creditors, had filed against it any petition or other application for relief
under the Bankruptcy Code or any such other law, (B) has not failed,
suspended business operations, become insolvent or called a meeting of its
creditors for the purpose of obtaining any financial concession or
accommodation or (C) has not had or suffered to be appointed a receiver or a
trustee for all or a significant portion of its assets or affairs; (xii)
such Accounts are not subject to collection by an outside claims processor;
(xiii) the otherwise Eligible Accounts of any Account Debtor do not exceed
10% of all Eligible Accounts (unless the Account Debtor is Shaw
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Industries Inc. or Mohawk Industries, in either of which cases to the extent
that the otherwise Eligible Accounts of such Account Debtor do not exceed
20% of all Eligible Accounts to the extent any terms related to such
Accounts have not changed or otherwise been modified from the terms
applicable thereto prior to the Filing Date), provided, that such percentage
as applied to a particular Account Debtor and its Affiliates are subject to
change by the Administrative Agent in its reasonable business judgment
(based upon its lending practices) if the creditworthiness of such Account
Debtor deteriorates; (xiv) such Account does not arise in a transaction
wherein goods are placed on consignment or are sold pursuant to a guaranteed
sale, a sale or return, a sale on approval, a bill and hold, or any other
terms by reason of which the payment by the Account Debtor may be
conditional; (xv) such Account is not from an Account Debtor that is located
in a state or jurisdiction (e.g., New Jersey, Minnesota, and West Virginia)
that requires, as a condition to access to the courts of such jurisdiction,
that a creditor qualify to transact business, file a business activities
report or other report or form, or take one or more other actions, unless
the applicable Loan Party has so qualified, filed such reports or forms, or
taken such actions (and, in each case, paid any required fees or other
charges), except to the extent such Loan Party may qualify subsequently as a
foreign entity authorized to transact business in such state or jurisdiction
and gain access to such courts, without incurring any cost or penalty viewed
by the Administrative Agent to be significant in amount, and such later
qualification cures any access to such courts to enforce payment of such
Account; (xvi) such Accounts with respect to which (A) the goods giving rise
to such Accounts have been shipped and billed to the Account Debtor or (B)
the services giving rise to such Account have been performed and billed to
the Account Debtor; (xvii) such Accounts do not represent a right to receive
progress payments and other advance billings that are due prior to the
completion of performance by the applicable Loan Party of the subject
contract for goods or services; and (xviii) the Administrative Agent is, and
continues to be, satisfied with the credit standing of the Account Debtor in
relation to the amount of credit extended and the Administrative Agent
believes, in its discretion, that the prospect of collection of such Account
is not impaired for any reason.
"Eligible Inventory" means all finished goods, raw
materials, work-in-process constituting the Designated Chemicals Inventory
of a Loan Party that meets all of the following specifications, provided
that such specifications may be fixed and revised from time to time by the
Administrative Agent in the exercise of its business judgment made in good
faith and exercised reasonably based upon lending practices of the
Administrative Agent consistent with the general practices in the commercial
finance industry: (i) such Inventory is lawfully owned by a Loan Party free
and clear of any existing Lien other than in favor of the Collateral Agent
for the benefit of the Agents and the Lenders and in favor of the 2009 Note
Trustee for the benefit of the 2009 Note Holders and otherwise continues to
be in full conformity with all representations and warranties made by a Loan
Party to the Agents and the Lenders with respect thereto in the Loan
Documents; (ii) such Inventory is not held on consignment and may be
lawfully sold; (iii) a Loan Party has the right to grant Liens on such
Inventory; (iv) such Inventory arose or was acquired in the ordinary course
of the business of a Loan Party and does not represent damaged, obsolete or
unsaleable goods; (v) no Account or document of title has been created or
issued with respect to such Inventory; (vi) such Inventory is located in one
of the locations in one of the continental United States that is either
owned by a Loan Party or listed on Schedule 7.01(bb) and such location has
Inventory with an aggregate Book Value of at least $100,000 or such other
locations in the continental United States as the Collateral Agent and the
Administrative Agent may approve in writing from time to time; (vii) such
Inventory does not consist of goods returned or
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rejected by a Loan Party's customers (other than goods that are undamaged
and resalable in the normal course of business); (viii) such Inventory is
not in-transit (except between locations specified on Schedule 7.01(bb);
(ix) such Inventory does not consist of goods that are slow moving,
work-in-process (other than the Designated Chemicals), supplies or goods
that constitute spare parts, packaging and shipping materials, bill and hold
goods or defective goods; (x) in the case of raw materials used in the
manufacture of finished goods, such raw materials have been acquired by the
Loan Parties during the previous twelve months; (xi) if such Inventory
consists of finished goods Inventory sold under a licensed trademark or if
such Inventory contains or uses a medium subject to a copyright (A) the
Collateral Agent shall have entered into a waiver letter, in form and
substance satisfactory to the Administrative Agent and the Collateral Agent,
with the licensor with respect to the rights of the Collateral Agent to use
the licensed trademark or copyright to sell or otherwise dispose of such
Inventory or (B) the Administrative Agent and the Collateral Agent shall
otherwise be satisfied, in their sole discretion, that the Collateral Agent
has rights to sell or dispose of such Inventory; and (xii) such Inventory is
and at all times shall continue to be acceptable to the Administrative
Agent.
"Employee Plan" means an employee benefit plan (other than
a Multiemployer Plan) covered by Title IV of ERISA and maintained (or that
was maintained at any time during the six (6) calendar years preceding the
date of any borrowing hereunder) for employees of any Loan Party or any of
its ERISA Affiliates or was contributed to or was required to be contributed
to by a Loan Party or any of its ERISA Affiliates.
"Environmental Actions" means any complaint, summons,
citation, notice of violation, directive, order, claim, litigation,
investigation, judicial or administrative proceeding, judgment, letter or
other written communication from any Person or Governmental Authority
involving violations of Environmental Laws or Releases of Hazardous
Materials (i) from any assets, properties or businesses owned or operated by
any Loan Party or any of its Subsidiaries or any corporate predecessor; or
(ii) onto any facilities which received Hazardous Materials generated by any
Loan Party or any of its Subsidiaries or any corporate predecessor.
"Environmental Laws" means the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq.,
as amended; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.
6901 et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. 7401 et seq.,
as amended; the Clean Water Act ("CWA"), 33 U.S.C. 1251 et seq., as amended;
the Occupational Safety and Health Act ("OSHA"), 29 U.S.C. 655 et seq., as
amended; Toxic Substances Control Act ("TSCA"), 15 U.S.C. 2601 et seq., as
amended; Hazardous Materials Transportation Act, 49 U.S.C. 5101 et seq., as
amended; the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"),
7 U.S.C. 136-136y et seq., as amended; the Emergency Planning and Community
Right-to-Know Act of 1986 (Title III of SARA or "EPCRA"); 42 U.S.C. 11001,
et seq., as amended, and any other foreign, federal, state, local or
municipal laws, statutes, regulations, guidance documents, rules having the
force of law or ordinances imposing liability or establishing standards of
conduct for the Release or Handling of Hazardous Materials and the
protection of the health, safety and the environment.
"Environmental Liabilities and Costs" means any monetary
obligations, losses, liabilities (including strict liability), damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all reasonable out-of-pocket fees, disbursements and
-12-
expenses of counsel, out-of-pocket expert and consulting fees and
out-of-pocket costs for environmental site assessments, remedial
investigation and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any Environmental Action brought by any
Governmental Authority, Person or any third party which relate to any
violations of Environmental Laws, Handling of Hazardous Materials, Remedial
Actions, Releases or threatened Releases of Hazardous Materials from or onto
(i) any property presently or formerly owned by any Loan Party or any of its
Subsidiaries or a corporate predecessor, or (ii) any facility that received
Hazardous Materials that were generated or Handled by any Loan Party or any
of its Subsidiaries or a corporate predecessor.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Environmental Permits" means any permits, licenses,
certificates, exemptions, authorizations, registrations or approvals
required by any Governmental Authority or under Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import, and
regulations thereunder, in each case, as in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means, with respect to any Person, any
trade or business (whether or not incorporated) which is a member of a group
of which such Person is a member and which would be deemed to be a
"controlled group" within the meaning of Sections 414(b), (c), (m) and (o)
of the Internal Revenue Code.
"Euro" or "(euro)" means the single currency of
participating member states of the European Union.
"Euro Indenture" means the Fiscal Agency Agreement, dated
as of February 11, 2000, by and between Solutia Europe, as issuer, the
Parent, as guarantor, Kredietbank S.A. Luxenbourgeoise, as fiscal agent and
KBC Bank NV, as paying agent, as the same may be amended, restated or
otherwise modified in accordance with the terms hereof.
"Euro Notes" means, collectively, the 6.25% Notes of
Solutia Europe in the original aggregate principal amount of 200,000,000
Euros issued pursuant to the Euro Indenture, as the same may from time to
time be amended, restated or otherwise modified in accordance with the terms
hereof.
"Euro Restructuring" means the restructuring of the
obligations evidenced by the Euro Notes issued pursuant to the Euro
Indenture pursuant to the terms and conditions set forth in Schedule 8.02(m)
or any other terms and conditions acceptable to the Required Lenders in
their sole discretion.
"Event of Default" means any of the events set forth in
Section 10.01.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
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"Existing Agents" means the Existing Collateral Agent,
Foothill, in its capacity as the administrative agent to the Existing
Lenders, and Congress, in its capacity as the documentation agent to the
Existing Lenders.
"Existing Collateral Agent" means Ableco, in its capacity
as the collateral agent to the Existing Agents and the Existing Lenders.
"Existing Credit Agreement" means the Financing Agreement,
dated as of October 8, 2003, as amended pursuant to Amendment No. 1 and
Waiver, dated as of October 27, 2003, among the Parent and Solutia Business,
as borrowers, each Subsidiary of the Parent listed as a "Guarantor" on the
signature pages thereto, the Existing Lenders and the Existing Agents.
"Existing Lenders" means the lenders party to the Existing
Credit Agreement.
"Existing Letters of Credit" has the meaning specified
therefore in Section 3.03(c).
"Extraordinary Receipts" means any cash received by the
Parent or any of its Subsidiaries not in the ordinary course of business
(and not consisting of proceeds described in Section 2.05(c)(iii)),
including, without limitation, (i) foreign, United States, state or local
tax refunds, (ii) pension plan reversions, (iii) proceeds of insurance, (iv)
judgments, proceeds of settlements or other consideration of any kind in
connection with any cause of action, (v) condemnation awards (and payments
in lieu thereof), (vi) indemnity payments and (vii) any purchase price
adjustment received in connection with any purchase agreement.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal to, for each day during such period, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fee Letter" means the Fee Letter, dated as of the Interim
Facility Effective Date, addressed to the Collateral Agent.
"Field Survey and Audit" means a field survey and audit of
the Loan Parties and an appraisal of the Collateral performed by auditors,
examiners and/or appraisers selected by the Agents, at the sole cost and
expense of the Borrowers.
"Filing Date" means December 17, 2003.
"Final Bankruptcy Court Order" means the final order of
the Bankruptcy Court with respect to the Borrowers and the Guarantors,
substantially in the form of the Interim Bankruptcy Court Order (modified to
reflect the repayment in full of the Pre-Petition Obligations and otherwise
acceptable to the Agents), as the same may be amended, modified or
supplemented from time to time with the express written joinder or consent
of the Agents, the Required Lenders and the Borrowers.
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"Final Bankruptcy Court Order Entry Date" means the date
on which the Final Bankruptcy Court Order shall have been entered by the
Bankruptcy Court.
"Final Facility Effective Date" has the meaning specified
therefor in Section 6.02.
"Final Maturity Date" means the date which is the earliest
of (i) December 19, 2005, (ii) earlier of the effective date and the date of
the substantial consummation (as defined in Section 1101(2) of the
Bankruptcy Code), in each case of a plan of reorganization in the Chapter 11
Cases that has been confirmed by an order of the Bankruptcy Court, (iii) the
date which is 30 days following the date of entry of the Interim Bankruptcy
Court Order if the Final Bankruptcy Court Order has not been entered by the
Bankruptcy Court on or prior to such date, and (iv) such earlier date on
which all Loans shall become due and payable in accordance with the terms of
this Agreement and the other Loan Documents.
"Final Period" means the period commencing on the Final
Facility Effective Date and ending on the Final Maturity Date.
"Financial Statements" means (i) the audited consolidated
balance sheet of the Parent and its Subsidiaries for the Fiscal Year ended
December 31, 2002, and the related consolidated statement of operations,
shareholders' equity and cash flows for the Fiscal Year then ended, and (ii)
the unaudited consolidated balance sheet of the Parent and its Subsidiaries
for the ten months ended October 31, 2003, and the related consolidated
statement of operations, shareholder's equity and cash flows for the ten
months then ended.
"Fiscal Year" means the fiscal year of the Parent and its
Subsidiaries ending on December 31 of each year.
"Fixed Charge Coverage Ratio" means, with respect to any
Person for any period, the ratio of (i) the difference between (A)
Consolidated EBITDA of such Person and its Subsidiaries for such period, and
(B) Capital Expenditures (excluding the interest portion of Capital Lease
Obligations included in Capital Expenditures) made by such Person and its
Subsidiaries during such period, to (ii) the sum of (A) all principal of
Indebtedness of such Person and its Subsidiaries scheduled to be paid or
prepaid during such period to the extent there is an equivalent permanent
reduction in the commitments thereunder, plus (B) Consolidated Net Interest
Expense of such Person and its Subsidiaries, other than any one-time,
non-cash write-offs of fees related to the replacement of the Existing
Credit Agreement during such period, plus (C) income taxes paid or payable
by such Person and its Subsidiaries during such period, plus (D) cash
dividends or distributions paid by such Person and its Subsidiaries (other
than, in the case of any Loan Party, dividends or distributions paid by such
Loan Party to any other Loan Party) during such period, plus (E)
restructuring charge, and KERP payments paid or payable in cash by such
Person during such period. In determining the Fixed Charge Coverage Ratio
for a particular period (w) pro forma effect will be given to: (1) the
incurrence, repayment or retirement of any Indebtedness by such Person and
its Subsidiaries since the first day of such period as if such Indebtedness
were incurred, repaid or retired on the first day of such period and (2) the
acquisition (whether by purchase, merger or otherwise) or disposition
(whether by sale, merger or otherwise) of any property or assets acquired or
disposed of by such Person and its Subsidiaries since the first day of such
period, as if such acquisition or disposition occurred on
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the first day of such period; (x) interest on Indebtedness bearing a
floating interest rate will be computed as if the rate at the time of
computation had been the applicable rate for the entire period; (y) if such
Indebtedness bears, at the option of such Person and its Subsidiaries, a
fixed or floating rate of interest, interest thereon will be computed by
applying, at the option of such Person, either the fixed or floating rate;
and (z) the amount of Indebtedness under a revolving credit facility will be
computed based upon the average daily balance of such Indebtedness during
such period.
"Foothill" has the meaning specified therefor in the
preamble hereto.
"Foreign Subsidiary" means any Subsidiary of a Loan Party
that is not a Domestic Subsidiary.
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States, applied on a basis consistent
with that used by the Parent in the Financial Statements, provided that for
the purpose of Section 8.03 hereof and the definitions used therein, "GAAP"
shall mean generally accepted accounting principles in effect on the date
hereof and consistent with those used in the preparation of the Financial
Statements, provided, further, that if there occurs after the date of this
Agreement any change in GAAP that affects in any respect the calculation of
any covenant contained in Section 8.03 hereof, the Collateral Agent and the
Administrative Borrower shall negotiate in good faith amendments to the
provisions of this Agreement that relate to the calculation of such covenant
with the intent of having the respective positions of the Lenders and the
Borrowers after such change in GAAP conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon, the covenants in Section 8.03 hereof shall
be calculated as if no such change in GAAP has occurred.
"Good Faith Belief of Stay" means, solely with respect to
any property where a Loan Party does not conduct any operations, a
reasonable and good faith belief by such Loan Party that the enforcement of
an Environmental Law, Environmental Permit or Environmental Order will be
stayed as result of the Chapter 11 Cases, provided that, a belief will not
constitute a "Good Faith Belief of Stay" if (a) any legal action or
proceeding seeking any enforcement of an Environmental Law, Environmental
Permit or Environmental Order is determined adversely to such Loan Party
provided that such legal action or proceeding is not otherwise stayed
pending an appeal, or (b) with respect to any property that is in the
control of a Loan Party, any Governmental Authority performs or attempts to
perform a Remedial Action at such property, imposes or seeks to impose an
Environmental Lien on such property, or seizes or attempts to seize any such
property as a result of the breach of any Environmental Law, Environmental
Permit or Environmental Order.
"Governmental Authority" means any nation or government,
any Federal, state, city, town, municipality, county, local or other
political subdivision thereof or thereto and any department, commission,
board, bureau, instrumentality, agency or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
"Guaranteed Obligations" has the meaning specified
therefor in Section 12.01.
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"Guarantor" means (i) each Subsidiary of the Parent listed
as a "Guarantor" on the signature pages hereto, and (ii) each other Person
which guarantees, pursuant to Section 8.01(b) or otherwise, all or any part
of the Obligations.
"Guaranty" means (i) the guaranty of each Guarantor party
hereto contained in ARTICLE XII hereof, and (ii) each guaranty substantially
in the form of Exhibit A, made by any other Guarantor in favor of the Agents
and the Lenders pursuant to Section 8.01(b) or otherwise.
"Guidelines" means the Guidelines for Financing Requests
effective under General Order No. M-274 of the Bankruptcy Court dated
September 9, 2002.
"Handle" means any manner of generating, accumulating,
storing, treating, disposing of, transporting, transferring, labeling,
handling, manufacturing or using, as any of such terms may further be
defined in any Environmental Law, any Hazardous Materials.
"Hazardous Material" means (a) any element, compound or
chemical that is defined or regulated as a contaminant, pollutant, toxic
pollutant, toxic or hazardous substance, extremely hazardous substance or
hazardous waste or special waste under Environmental Laws or which is
present in the environment in such quantity or state that it contravenes any
Environmental Law; (b) petroleum and its refined products; (c)
polychlorinated biphenyls; (d) any substance exhibiting a hazardous waste
characteristic, including, without limitation, corrosivity, ignitability,
toxicity or reactivity as well as any radioactive or explosive materials;
and (e) any asbestos containing materials.
"Headquarters Lease" means the lease of the Parent of its
corporate worldwide headquarters located at 575 Maryville Centre Drive, St.
Louis, Missouri 63141.
"Hedging Agreement" means any interest rate, foreign
currency, commodity or equity swap, collar, cap, floor or forward rate
agreement, or other agreement or arrangement designed to protect against
fluctuations in interest rates or currency, commodity or equity values
(including, without limitation, any option with respect to any of the
foregoing and any combination of the foregoing agreements or arrangements),
and any confirmation executed in connection with any such agreement or
arrangement.
"Highest Lawful Rate" means, with respect to any Agent or
any Lender, the maximum non-usurious interest rate, if any, that at any time
or from time to time may be contracted for, taken, reserved, charged or
received on the Obligations under laws applicable to such Agent or such
Lender which are currently in effect or, to the extent allowed by law, under
such applicable laws which may hereafter be in effect and which allow a
higher maximum non-usurious interest rate than applicable laws now allow.
"Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money; (ii)
all obligations of such Person for the deferred purchase price of property
or services (other than trade payables or other accounts payable incurred in
the ordinary course of such Person's business and not outstanding for more
than 90 days after the date such payable was created); (iii) all obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments or upon which interest payments are customarily made; (iv) all
reimbursement, payment or other obligations and
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liabilities of such Person created or arising under any conditional sales or
other title retention agreement with respect to property used and/or
acquired by such Person, even though the rights and remedies of the lessor,
seller and/or lender thereunder may be limited to repossession or sale of
such property; (v) all Capitalized Lease Obligations of such Person; (vi)
all obligations and liabilities, contingent or otherwise, of such Person, in
respect of letters of credit, acceptances and similar facilities; (vii) all
obligations and liabilities, calculated on a basis satisfactory to the
Collateral Agent and in accordance with accepted practice, of such Person
under Hedging Agreements; (viii) all Contingent Obligations; and (ix) all
obligations referred to in clauses (i) through (viii) of this definition of
another Person secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) a Lien upon
property owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness. The Indebtedness of any
Person shall include the Indebtedness of any partnership of or joint venture
in which such Person is a general partner or a joint venturer to the extent
such Person is liable for such Indebtedness.
"Indemnified Matters" has the meaning specified therefor
in Section 13.15.
"Indemnitees" has the meaning specified therefor in
Section 13.15.
"Indentures" means, collectively, the Euro Indenture, the
1997 Indenture and the 2009 Note Indenture.
"Insolvency Proceeding" means any proceeding commenced by
or against any Person under any provision of the Bankruptcy Code or under
any other bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, or extensions
generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"Intercompany Subordination Agreement" means an
Intercompany Subordination Agreement made by certain Foreign Subsidiaries of
the Loan Parties in favor of the Collateral Agent, for the benefit of the
Agents and the Lenders, substantially in the form of Exhibit G.
"Interim Bankruptcy Court Order" means the order of the
Bankruptcy Court with respect to the Borrowers and the Guarantors,
substantially in the form of Exhibit F hereto, as the same may be amended,
modified or supplemented from time to time with the express written joinder
or consent of the Agents, the Required Lenders and the Borrowers.
"Interim Bankruptcy Court Order Entry Date" means the date
on which the Interim Bankruptcy Court Order shall have been entered by the
Bankruptcy Court.
"Interim Facility Effective Date" means the date, on or
before December 19, 2003, on which all of the conditions precedent set forth
in Section 6.01 are satisfied.
"Interim Period" means the period commencing on the
Interim Facility Effective Date and ending on the earlier to occur of (i)
the Final Facility Effective Date and (ii) the Final Maturity Date.
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"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, (or any successor statute thereto) and the regulations
thereunder.
"Inventory" means, with respect to any Person, all goods
and merchandise of such Person, including, without limitation, all raw
materials, work-in-process, packaging, supplies, materials and finished
goods of every nature used or usable in connection with the shipping,
storing, advertising or sale of such goods and merchandise, whether now
owned or hereafter acquired, and all such other property the sale or other
disposition of which would give rise to an Account or cash.
"Krummrich Property" means the Principal Property located
in Sauget, Illinois.
"L/C Issuer" means Wells Fargo Bank, National Association,
or such other bank as the Administrative Agent may select in its sole and
absolute discretion.
"L/C Subfacility" means that portion of the Total
Revolving Credit Commitment equal to $150,000,000.
"Lease" means any lease of real property to which any Loan
Party or any of its Subsidiaries is a party as lessor or lessee.
"Lender" and "Lenders" have the respective meanings
specified therefor in the preamble hereto.
"Letter of Credit Accommodations" has the meaning
specified therefor in Section 3.01(a).
"Letter of Credit Application" has the meaning specified
therefor in Section 3.01(a).
"Letter of Credit Collateral Account" means a deposit
account (which may be non-interest bearing and may contain funds of the
Administrative Agent) with a bank acceptable to the Administrative Agent,
which account shall be under the sole dominion and control of the Collateral
Agent or the Administrative Agent and subject to a perfected, first priority
security interest in favor of the Collateral Agent or the Administrative
Agent, for the benefit of the Agents and the Lenders.
"Letter of Credit Fees" have the meaning specified
therefor in Section 3.03(b)(i).
"Letter of Credit Guaranty" means one or more guaranties,
indemnities, participations or arrangements by the Administrative Agent in
favor of the L/C Issuer pursuant to which the Administrative Agent
guarantees or otherwise is liable for the Borrowers' obligations to the L/C
Issuer or guarantees or relates to the Borrowers' obligations to the L/C
Issuer under a reimbursement agreement, Letter of Credit Application or
other document in respect of any Letter of Credit Accommodation.
"Letter of Credit Obligations" means, at any time and
without duplication, the sum of (i) the Reimbursement Obligations at such
time, plus (ii) all amounts for which the
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Administrative Agent may be liable with respect to Letter of Credit
Accommodations outstanding at such time, plus (iii) all amounts for which
the Administrative Agent may be liable to the L/C Issuer pursuant to any
Letter of Credit Guaranty.
"Liabilities" has the meaning specified therefor in
Section 2.07.
"Lien" means any mortgage, deed of trust, pledge, lien
(statutory or otherwise), security interest, charge or other encumbrance or
security or preferential arrangement of any nature, including, without
limitation, any conditional sale or title retention arrangement, any
Capitalized Lease and any assignment, deposit arrangement or financing lease
intended as, or having the effect of, security.
"Loan" means any loan made by an Agent or a Lender to the
Borrowers pursuant to ARTICLE II hereof, and includes, without limitation,
the Revolving Loans, the Term Loan A and the Term Loan B.
"Loan Account" means an account maintained hereunder by
the Administrative Agent on its books of account at the Payment Office, and
with respect to the Borrowers, in which the Borrowers will be charged with
all Loans made to, and all other Obligations incurred by, the Borrowers, and
may include sub-accounts for each of the Revolving Loans, the Term Loan A
and the Term Loan B.
"Loan Document" means this Agreement, any Guaranty, any
Pledge Agreement, the Intercompany Subordination Agreement, the Fee Letter,
the Interim Bankruptcy Court Order, the Final Bankruptcy Court Order, any
Mortgage, any Cash Management Agreement, any Concentration Account
Agreement, any Letter of Credit Application and any other agreement,
instrument, and other document executed and delivered pursuant hereto or
thereto or otherwise evidencing or securing any Loan, any Letter of Credit
Obligation or any other Obligation.
"Loan Party" means any Borrower and any Guarantor.
"Loan Servicing Fee" has the meaning specified therefor in
Section 2.06(a).
"Material Adverse Effect" means a material adverse effect
on any of (i) the operations, business, assets, properties or condition
(financial or otherwise) of any Borrower or of the Loan Parties taken as a
whole or of the Designated A Business Segment, the Designated B Business
Segment or Designated C Business Segment except for (a) the commencement of
the Chapter 11 Cases and events that result from the commencement of the
Chapter 11 Cases, and (b) Solutia Europe and its Subsidiaries, (ii) the
ability of any Loan Party to perform any of its obligations under any Loan
Document to which it is a party, (iii) the legality, validity or
enforceability of this Agreement or any other Loan Document, (iv) the rights
and remedies of any Agent or any Lender under any Loan Document, or (v) the
validity, perfection or priority of a Lien in favor of the Collateral Agent
for the benefit of the Agents and the Lenders on any of the Collateral with
an aggregate fair market value in excess of $1,000,000.
"Material Contract" means, (i) with respect to any Loan
Party, (A) each contract or agreement to which such Loan Party or any of its
Domestic Subsidiaries is a party involving aggregate consideration payable
to or by such Loan Party or such Domestic Subsidiary of
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$10,000,000 or more (other than purchase orders in the ordinary course of
the business of such Loan Party or such Domestic Subsidiary and other than
contracts that by their terms may be terminated by such Loan Party or
Domestic Subsidiary in the ordinary course of its business upon less than 60
days' notice without penalty or premium) and (B) all other contracts or
agreements material to the business, operations, condition (financial or
otherwise), performance or properties of the Loan Parties and their Domestic
Subsidiaries taken as a whole, and (ii) the Euro Indenture, the Euro Notes
and the other contracts or agreements related thereto.
"Moody's" means Moody's Investors Service, Inc. and any
successor thereto.
"Mortgage" means a mortgage (including, without
limitation, a leasehold mortgage), deed of trust or deed to secure debt, in
form and substance reasonably satisfactory to the Collateral Agent, made by
a Loan Party in favor of the Collateral Agent for the benefit of the Agents
and the Lenders, securing the Obligations and delivered to the Collateral
Agent pursuant to Section 6.01(e), Section 8.01(b), Section 8.01(m) or
otherwise.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which any Loan Party or any of its
ERISA Affiliates has contributed to, or has been obligated to contribute, at
any time during the preceding six (6) years.
"New Lending Office" has the meaning specified therefor in
Section 2.08(d).
"Net Amount of Eligible Accounts" means the aggregate
unpaid invoice amount of Eligible Accounts less, without duplication, sales,
excise or similar taxes, returns, discounts, chargebacks, claims, advance
payments, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed with respect to such Eligible
Accounts.
"Net Cash Proceeds" means, (i) with respect to any
Disposition by any Person or any of its Subsidiaries, the amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred
consideration) by or on behalf of such Person or such Subsidiary, in
connection therewith after deducting therefrom only (A) the amount of any
Indebtedness secured by any Lien permitted by Section 8.02(a) on any asset
(other than Indebtedness assumed by the purchaser of such asset) which is
required to be, and is, repaid in connection with such Disposition (other
than Indebtedness under this Agreement), (B) expenses related thereto
incurred by such Person or such Subsidiary in connection therewith, (C)
transfer taxes paid to any taxing authorities by such Person or such
Subsidiary in connection therewith, (D) net income taxes to be paid in
connection with such Disposition (after taking into account any tax credits
or deductions directly arising from or as a result of such Disposition and
any tax sharing arrangements), and (E) any reserves for adjustments in
respect of the sale price of such assets and for future liabilities
established in accordance with GAAP and (ii) with respect to the issuance or
incurrence of any Indebtedness by any Person or any of its Subsidiaries, or
the sale or issuance by any Person or any of its Subsidiaries of any shares
of its Capital Stock, the aggregate amount of cash received (directly or
indirectly) from time to time (whether as initial consideration or through
the payment or disposition of deferred consideration) by or on behalf of
such Person or such Subsidiary in connection therewith, after deducting
therefrom only (A) expenses related thereto incurred by such Person or such
Subsidiary in connection therewith, (B) transfer taxes paid by such Person
or
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such Subsidiary in connection therewith and (C) net income taxes to be paid
in connection therewith (after taking into account any tax credits or
deductions and any tax sharing arrangements); in the case of each of clauses
(i) and (ii) above, to the extent, but only to the extent, that the amounts
so deducted are (x) actually paid to a Person that, except in the case of
out-of-pocket expenses, is not an Affiliate of such Person or any of its
Subsidiaries and (y) properly attributable to such transaction or to the
asset that is the subject thereof.
"1997 Indenture" means the Indenture, dated as of October
1, 1997, by and between the Parent and the 1997 Trustee, as the same may
from time to time be amended, restated or otherwise modified in accordance
with the terms hereof.
"1997 Trustee" means JPMorgan Chase Bank, formerly known
as The Chase Manhattan Bank, a New York banking corporation, as trustee for
the holders of the 1997 Debentures pursuant to the 1997 Indenture, together
with its permitted successors and assigns.
"Non-U.S. Lender" has the meaning specified therefor in
Section 2.08(d).
"Notice of Borrowing" has the meaning specified therefor
in Section 2.02(a).
"Obligations" means all present and future indebtedness,
obligations, and liabilities of each Loan Party to the Agents and the
Lenders, whether or not the right of payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured, unsecured, and whether or
not such claim is discharged, stayed or otherwise affected by any proceeding
referred to in Section 10.01, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, the Letter of
Credit Accommodations, or any other document made, delivered or given in
connection herewith or therewith. Without limiting the generality of the
foregoing, the Obligations of each Loan Party under the Loan Documents
include (a) the obligation to pay principal, interest, charges, expenses,
fees, attorneys' fees and disbursements, indemnities and other amounts
payable by such Person under the Loan Documents, and (b) the obligation of
such Person to reimburse any amount in respect of any of the foregoing that
any Agent or any Lender (in its sole discretion) may elect to pay or advance
on behalf of such Person.
"Operating Lease Obligations" means all obligations for
the payment of rent for any real or personal property under leases or
agreements to lease (including the Headquarters Lease), other than
Capitalized Lease Obligations.
"Other Taxes" has the meaning specified therefor in
Section 2.08(b).
"Paid in Full" means (i) the Total Commitment shall have
been terminated, (ii) all principal of the Loans, interest thereon and all
other Obligations shall have been paid in full in cash or otherwise
satisfied in a manner acceptable to the Agents and the Lenders in their sole
discretion, and (iii) the Administrative Agent shall have received cash
collateral (or, at the Administrative Agent's option, a letter of credit
issued for the account of the relevant Borrower and at such Borrower's
expense, in form and substance reasonably satisfactory to the Administrative
Agent, by an issuer reasonably acceptable to the Administrative Agent and
payable to the Administrative Agent as beneficiary) in such amounts as the
Administrative Agent determines are reasonably necessary to secure the
Administrative Agent and the Lenders from
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loss, cost, damage or expense, including reasonable attorneys' fees and
expenses, in connection with any Contingent Obligations, including any
Letter of Credit Obligations and checks or other payments provisionally
credited to the Obligations and/or as to which the Administrative Agent or
any Lender has not yet received final payment in full and in cash. All
Letter of Credit Accommodations shall be cash collateralized (or supported
by a letter of credit as described in the preceding sentence) by an amount
equal to one hundred five percent (105%) of the amount of the Letter of
Credit Accommodations then existing plus the aggregate amount of any Letter
of Credit Fees payable in connection therewith through the end of the latest
expiration date of any such Letter of Credit Accommodation.
"Parallel Debt" has the meaning specified therefor in
Section 13.23.
"Parent" has the meaning specified therefor in the
preamble hereto.
"Participant Register" has the meaning specified therefor
in Section 13.07(b)(v).
"Payment Office" means the Administrative Agent's office
located at 2450 Colorado Avenue, Suite 3000 West, Santa Monica, California,
or at such other office or offices of the Administrative Agent as may be
designated in writing from time to time by the Administrative Agent to the
other Agents and the Administrative Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation or
any successor thereto.
"Period" means the Interim Period or the Final Period.
"Permitted Indebtedness" means:
(a) any Indebtedness owing to any Agent and any
Lender under this Agreement and/or the other Loan Documents;
(b) any Indebtedness existing on the Filing Date;
(c) Indebtedness evidenced by Capitalized Lease
Obligations entered into after the Filing Date in order to finance Capital
Expenditures made by the Loan Parties in accordance with the provisions of
Section 8.02(g), which Indebtedness, when aggregated with the principal
amount of all Indebtedness incurred under this clause (c) and clause (d) of
this definition, does not exceed $5,000,000 at any time outstanding;
(d) Indebtedness secured by a Lien permitted by
clause (e) of the definition of "Permitted Lien";
(e) Indebtedness permitted under Section 8.02(e);
(f) the following intercompany Indebtedness: (i)
Indebtedness of any Loan Party to any other Loan Party, to the extent such
Indebtedness is (A) evidenced by a promissory note or other written
agreement or instrument, each with terms and provisions acceptable to the
Collateral Agent, and (B) pledged to the Collateral Agent pursuant to this
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Agreement and/or the Pledge Agreement; (ii) Indebtedness of any Foreign
Subsidiary to any other Foreign Subsidiary; and (iii) unsecured Indebtedness
of any Loan Party owing to any Foreign Subsidiary resulting from loans or
advances made by a Foreign Subsidiary to a Loan Party to the extent (A) such
Indebtedness is subject to the Intercompany Subordination Agreement or such
other subordination provisions acceptable to the Collateral Agent and (B) no
payments are required thereunder or otherwise made by any such Loan Party to
any such Subsidiary;
(g) unsecured Indebtedness under any Hedging
Agreement of any Loan Party or any Foreign Subsidiary entered into in the
ordinary course of business and not for speculative purposes;
(h) Indebtedness related to bank overdrafts or
similar extensions of credit made available to any Foreign Subsidiary to the
extent the aggregate principal amount of such Indebtedness outstanding at
any time does not exceed $1,000,000 and no such amount is outstanding for
more than 3 consecutive Business Days;
(i) other than the Letter of Credit Accommodations,
(x) letters of credit that are set forth on Schedule 3.01 and which are
outstanding on the Filing Date and (y) letter of credit that are issued
after the Filing Date, in an aggregate stated amount for all such letters of
credit under this subclause (y) not in excess of $10,000,000 outstanding at
any time;
(j) other unsecured Indebtedness of the Loan Parties
in an aggregate principal amount outstanding at any time not exceeding
$1,000,000; and
(k) guaranties by the Subsidiaries of Solutia Europe
of the obligations evidenced by the Euro Notes pursuant to the Euro
Restructuring.
"Permitted Investments" means (i) marketable direct
obligations issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case, maturing within six months from
the date of acquisition thereof; (ii) commercial paper, maturing not more
than 270 days after the date of issue rated P-1 by Moody's or A-1 by
Standard & Poor's; (iii) certificates of deposit maturing not more than 270
days after the date of issue, issued by commercial banking institutions and
money market or demand deposit accounts maintained at commercial banking
institutions, each of which is a member of the Federal Reserve System and
has a combined capital and surplus and undivided profits of not less than
$500,000,000; (iv) repurchase agreements having maturities of not more than
90 days from the date of acquisition which are entered into with major money
center banks included in the commercial banking institutions described in
clause (iii) above and which are secured by readily marketable direct
obligations of the United States Government or any agency thereof, (v) money
market accounts maintained with mutual funds having assets in excess of
$2,500,000,000; and (vi) tax exempt securities rated A or better by Moody's
or A+ or better by Standard & Poor's.
"Permitted Liens" means:
(a) Liens securing the Obligations;
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(b) Liens for taxes, assessments and governmental
charges the payment of which is not required under Section 8.01(b);
(c) (i) Liens imposed by law, such as carriers',
warehousemen's, mechanics', materialmen's and other similar Liens arising in
the ordinary course of business and securing obligations (other than
Indebtedness for borrowed money) that are not overdue by more than 30 days
or are being contested in good faith and by appropriate proceedings promptly
initiated and diligently conducted, or as to which payment and enforcement
is stayed under the Bankruptcy Code or pursuant to orders of the Bankruptcy
Court, and a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor and (ii) the Specified
Mechanics Lien;
(d) Liens existing on the Filing Date, as described
on Schedule 8.02(a) (other than the Liens described in clauses (i) and (l)
below), but not the extension of coverage thereof to other property or the
extension of maturity (other than as a result of the filing of the Chapter
11 Cases), refinancing or other modification of the terms thereof or the
increase of the Indebtedness secured thereby;
(e) (i) purchase money Liens on equipment acquired or
held by any Loan Party or any of its Subsidiaries after the Filing Date in
the ordinary course of its business to secure the purchase price of such
equipment or Indebtedness incurred solely for the purpose of financing the
acquisition of such equipment or (ii) Liens existing on such equipment at
the time of its acquisition; provided, however, that (A) no such Lien shall
extend to or cover any other property of any Loan Party or any of its
Subsidiaries and (B) the aggregate principal amount of Indebtedness secured
by any or all such Liens shall not exceed at any one time outstanding
$5,000,000;
(f) deposits and pledges of cash securing (i)
obligations incurred in respect of workers' compensation, unemployment
insurance or other forms of governmental insurance or benefits, (ii) the
performance of bids, tenders, leases, contracts (other than for the payment
of money) and statutory obligations, (iii) obligations on surety or appeal
bonds, but only to the extent such deposits or pledges are incurred or
otherwise arise in the ordinary course of business and secure obligations
not past due or as to which payment and enforcement is stayed under the
Bankruptcy Code as pursuant to orders of the Bankruptcy Code, or (iv)
obligations to any utility company or other Person in a similar line of
business made in the ordinary course of business and securing obligations
not past due, or (v) (x) the letters of credit identified on Schedule 3.01
and (y) the letters of credit described in subclause (i)(y) of the
definition of Permitted Indebtedness;
(g) (i) easements, zoning restrictions, covenants,
conditions and restrictions of record, leasehold interests and similar
encumbrances on real property and minor irregularities in the title thereto
that do not (x) secure obligations for the payment of money or (y)
materially impair the value of such property or its use by any Loan Party or
any of its Subsidiaries in the normal conduct of such Person's business, or
(ii) Liens of Landlords arising under real property leases of any Loan Party
or any of its Subsidiaries to the extent such Liens arise in the ordinary
course of business and do not secure any past due obligation for the payment
of money;
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(h) Liens securing Indebtedness permitted by
subsection (c) of the definition of Permitted Indebtedness;
(i) the 2009 Pre-Petition Liens;
(j) the 2009 Post-Petition Liens;
(k) Liens on the assets of Solutia Europe and its
Subsidiaries granted in favor of the holders of the Euro Notes to secure the
Indebtedness evidenced by the Euro Notes pursuant to the Euro Restructuring,
which Liens on such assets are specifically described on Schedule 8.02(m),
provided, that, with respect to the Solutia UK Holdings Note pledged to the
holders of the Euro Notes, such note, prior to being pledged to such
holders, will be amended or otherwise modified so that the maturity date
applicable thereto shall occur on a date that is not earlier than December
2008; and
(l) the Liens on the Collateral securing the
Pre-Petition Obligations.
"Permitted Priority Liens" means all Permitted Liens other
than (i) prior to the Final Facility Effective Date, Liens permitted under
clauses (b), (c), (j) and, solely with respect to the Liens on the
Collateral constituting the Principal Properties, (l), of the definition of
the term "Permitted Lien" and (ii) after the Final Facility Effective Date,
the Liens permitted under clauses (b), (c), (i), (j) and (l) of the
definition of the term "Permitted Lien".
"Person" means an individual, corporation, limited
liability company, partnership, association, joint-stock company, trust,
unincorporated organization, joint venture or other enterprise or entity or
Governmental Authority.
"Plan" means any Employee Plan or Multiemployer Plan.
"Pledge Agreement" means any pledge agreement or similar
agreement or instrument made by a Loan Party, Solutia Dutch Newco or Solutia
UK Holdings, in favor of the Collateral Agent for the benefit of the Agents
and the Lenders, providing for a pledge by such Loan Party, Solutia Dutch
Newco or Solutia UK Holdings, as the case may be, of, among other things,
all of the Capital Stock of any directly owned Domestic Subsidiary and all
of the non-voting Capital Stock and 65% of all of the voting Capital Stock
of any directly owned Foreign Subsidiary and of Solutia UK Holdings and
Solutia UK Investments, in each case, in substantially the same form and
substance as the pledge agreements or similar agreements or instruments that
secure the Pre-Petition Obligations and otherwise in form and substance
satisfactory to the Agents.
"Post-Default Rate" means a rate of interest per annum
equal to the rate of interest otherwise in effect from time to time pursuant
to the terms of this Agreement plus 3.0%, or, if a rate of interest is not
otherwise in effect, the greater of (i) the Reference Rate plus 12.125% and
(ii) 16.375%.
"Pre-Petition Letters of Credit" has the meaning specified
therefor in Section 3.03(d).
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"Pre-Petition Loan Parties" means each of the Loan Parties
that are party to the Existing Credit Agreement.
"Pre-Petition Obligations" means all indebtedness,
obligations (including obligations in respect of any letters of credit) and
liabilities of the Borrowers and the Guarantors to the Existing Agents and
the Existing Lenders incurred prior to the Filing Date arising from or
related to the Existing Credit Agreement and the other agreements,
instruments and other documents related thereto plus fees, expenses,
indemnities and reimbursement obligations due thereunder and interest
thereon accruing both before and after the Filing Date to the extent
allowable under the Bankruptcy Code, whether such indebtedness, obligations
or liabilities are direct or indirect, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising.
"Principal Properties" means the "Principal Properties" as
defined in the 1997 Indenture or the Euro Indenture and which are identified
as a "Principal Property" on Schedule 7.01(o).
"Priority Professional Expenses" means those expenses
entitled to a priority as set forth in sub-clause (ii) of the clause "first"
of the definition of the term "Agreed Administrative Expense Priorities".
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make
Revolving Loans and receive payments of interest, fees, and principal with
respect thereto, the percentage obtained by dividing (i) such Lender's
Revolving Credit Commitment, by (ii) the Total Revolving Credit Commitment,
provided, that, if the Total Revolving Credit Commitment has been reduced to
zero, the numerator shall be the aggregate unpaid principal amount of such
Lender's Revolving Loans and its interest in the Letter of Credit
Obligations and the denominator shall be the aggregate unpaid principal
amount of all Revolving Loans and Letter of Credit Obligations,
(b) with respect to a Lender's obligation to make a
Term Loan A and receive payments of interest, fees, and principal with
respect thereto, the percentage obtained by dividing (i) such Lender's Term
Loan A Commitment, by (ii) the Total Term Loan A Commitment, provided, that,
if the Total Term Loan A Commitment has been reduced to zero, the numerator
shall be the aggregate unpaid principal amount of such Lender's Term Loan A
and the denominator shall be the aggregate unpaid principal amount of the
Term Loan A,
(c) with respect to a Lender's obligation to make a
Term Loan B and receive payments of interest, fees, and principal with
respect thereto, the percentage obtained by dividing (i) such Lender's Term
Loan B Commitment, by (ii) the Total Term Loan B Commitment, provided, that,
if the Total Term Loan B Commitment has been reduced to zero, the numerator
shall be the aggregate unpaid principal amount of such Lender's Term Loan B
and the denominator shall be the aggregate unpaid principal amount of the
Term Loan B, and
(d) with respect to all other matters (including,
without limitation, the indemnification obligations arising under Section
11.05), the percentage obtained by dividing (i) the sum of such Lender's
Revolving Credit Commitment, Term Loan A Commitment and Term
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Loan B Commitment, by (ii) the sum of the Total Revolving Credit Commitment,
the Total Term Loan A Commitment and the Total Term Loan B Commitment,
provided, that, if any of such Lender's Revolving Credit Commitment, Term
Loan A Commitment or Term Loan B Commitment shall have been reduced to zero,
such Lender's Revolving Credit Commitment, Term Loan A Commitment or Term
Loan B Commitment, as the case may be, shall be deemed to be the aggregate
unpaid principal amount of such Lender's Revolving Loans (including Agent
Advances), Term Loan A or Term Loan B, as the case may be, and its interest
in the Letter of Credit Obligations and if any of the Total Revolving Credit
Commitment, Total Term Loan A Commitment or Total Term Loan B Commitment
shall have been reduced to zero, the Total Revolving Credit Commitment,
Total Term Loan A Commitment or Total Term Loan B Commitment, as the case
may be, shall be deemed to be the aggregate unpaid principal amount of all
Revolving Loans (including Agent Advances), the Term Loan A and the Term
Loan B and Letter of Credit Obligations.
"Rating Agencies" has the meaning specified therefor in
Section 2.07.
"Receivables" means all of the following now owned or
hereafter arising or acquired property of each Loan Party: (i) all Accounts;
(ii) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (iii) all payment intangibles of such Loan Party; (iv) letters of
credit, indemnities, guarantees, security or other deposits and proceeds
thereof issued payable to any Loan Party or otherwise in favor of or
delivered to any Loan Party in connection with any Account; or (v) all other
accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to any Loan Party, whether
from the sale and lease of goods or other property, licensing of any
property (including intellectual property or other general intangibles),
rendition of services or from loans or advances by any Loan Party or to or
for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Loan Party) or otherwise associated with
any Accounts, Inventory or general intangibles of any Loan Party (including,
without limitation, choses in action, causes of action, tax refunds, tax
refund claims, any funds which may become payable to any Loan Party in
connection with the termination of any Plan or other employee benefit plan
and any other amounts payable to any Loan Party from any Plan or other
employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds
thereof, casualty or any similar types of insurance and any proceeds thereof
and proceeds of insurance covering the lives of employees on which any Loan
Party is a beneficiary).
"Reference Bank" means JPMorgan Chase Bank, its successors
or any other commercial bank designated by the Administrative Agent to the
Administrative Borrower from time to time.
"Reference Rate" means the rate of interest publicly
announced by the Reference Bank in New York, New York from time to time as
its reference rate, base rate or prime rate. The reference rate, base rate
or prime rate is determined from time to time by the Reference Bank as a
means of pricing some loans to its borrowers and neither is tied to any
external rate of interest or index nor necessarily reflects the lowest rate
of interest actually charged by the Reference Bank to any particular class
or category of customers. Each change in the Reference
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Rate shall be effective from and including the date such change is publicly
announced as being effective.
"Register" has the meaning specified therefor in Section
13.07(b)(ii).
"Registered Loan" has the meaning specified therefor in
Section 13.07(b)(ii).
"Regulation T", "Regulation U" and "Regulation X" mean,
respectively, Regulations T, U and X of the Board or any successor, as the
same may be amended or supplemented from time to time.
"Reimbursement Obligations" means the obligation of each
Borrower to reimburse the Administrative Agent or any Lender for amounts
payable by the Administrative Agent or any Lender under a Letter of Credit
Guaranty in respect of any drawing made under any letter of credit issued in
connection therewith, together with interest thereon as provided in Section
2.04.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, seeping,
migrating, dumping or disposing of any Hazardous Material (including the
abandonment or discarding of barrels, containers and other closed
receptacles containing any Hazardous Material) into the indoor or outdoor
environment, including, without limitation, the movement of Hazardous
Materials through or in the ambient air, soil, surface or ground water, or
property.
"Remedial Action" means all actions taken to (i) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate or in any other
way address Hazardous Materials in the indoor or outdoor environment; (ii)
prevent or minimize a Release or threatened Release of Hazardous Materials
so they do not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; (iii) perform pre-remedial
studies and investigations and post-remedial operation and maintenance
activities; or (iv) perform any other actions authorized by 42 U.S.C.
Section 9601.
"Reportable Event" means an event described in Section
4043 of ERISA (other than the commencement of the Chapter 11 Cases and any
event not subject to the provision for 30-days' notice to the PBGC under the
regulations promulgated under such Section).
"Required Lenders" means the Required Revolving Loan
Lenders and the Required Term A/B Lenders.
"Required Revolving Loan Lenders" means the Revolving Loan
Lenders whose Pro Rata Shares (as defined under clause (a) of such
definition) of the Revolving Credit Commitments aggregate at least 51%.
"Required Term A/B Lenders" means (i) the Term Loan A
Lenders whose Pro Rata Share (as defined under clause (b) of such
definition) of the Term Loan A Commitments aggregate at least 51% and (ii)
the Term Loan B Lenders whose Pro Rata Share (as defined under clause (c) of
such definition) of the Term Loan B Commitments aggregate at least 51%.
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"Revolving Credit Commitment" means, with respect to each
Lender, the commitment of such Lender to make Revolving Loans to the
Borrowers in the amount set forth opposite such Lender's name in Schedule
1.01(A) hereto, as such amount may be terminated or reduced from time to
time in accordance with the terms of this Agreement.
"Revolving Loan" means a loan made by a Lender to the
Borrowers pursuant to Section 2.01(a)(i).
"Revolving Loan Lender" means a Lender with a Revolving
Credit Commitment, a Revolving Loan or a Letter of Credit Obligation.
"SEC" means the Securities and Exchange Commission or any
other similar or successor agency of the Federal government administering
the Securities Act.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect from time to time.
"Securitization" has the meaning specified therefor in
Section 2.07.
"Securitization Parties" has the meaning specified
therefor in Section 2.07.
"Settlement Agreement" means the Global Settlement
Agreement (and the related settlement agreements), among the Parent, the
Retiree Representatives named therein and Pharmacia Corporation, a Delaware
corporation and successor by merger to Monsanto Corporation, a Delaware
corporation, which agreement was entered into and approved by each of the
United States District Court for the Northern District of Alabama (Southern
Division) in the matter entitled Tolbert, et al. v. Monsanto Company, et al.
(Civil Action No. 01-C-1407-S) and the Circuit Court of Etowah County,
Alabama in the matter entitled Abernathy, et al. v. Monsanto Company, et al.
(Civil Action No. CV-01-832 (Etowah County) and related and consolidated
cases) on September 9, 2003 and September 12, 2003, respectively.
"Settlement Period" has the meaning specified therefor in
Section 2.02(d)(i).
"Significant Subsidiary" means each Subsidiary of the
Parent that:
(a) accounted for at least 5% of consolidated
revenues of the Parent and its Subsidiaries or 5% of consolidated earnings
of the Parent and its Subsidiaries before interest and taxes, in each case
for the fiscal quarter of the Parent ending on the last day of the last
fiscal quarter of the Parent immediately preceding the date as of which any
such determination is made;
(b) has assets which represent at least 5% of the
consolidated assets of the Parent and its Subsidiaries as at the last day of
the last fiscal quarter of the Parent immediately preceding the date as of
which any such determination is made; or
(c) is a Loan Party.
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"Solutia Business Concentration Account" means the
depository account identified as the "Solutia Business Concentration
Account" on Schedule 9.01.
"Solutia Dutch Newco" means Solchem Netherlands C.V.
"Solutia Europe" means Solutia Europe SA/NV, a Belgium
limited liability company.
"Solutia UK Holdings" means Solutia UK Holdings Ltd., a
company organized under the laws of England and Wales.
"Solutia UK Holdings Note" means the obligation of Solutia
UK Holdings, dated as of December 31, 2002, made in favor of Solutia
Services Int. Comm. VA/SCA, a Belgium corporation, in an aggregate principal
amount equal to (euro)69,000,000.
"Solutia UK Investments" means Solutia U.K. Investments
Ltd., a company organized under the laws of Newport, Gwent, South Wales and
the United Kingdom.
"Solutia Therminol Investment" means the investment by
Solutia Chemical Co. Ltd. Suzhou in Solutia Therminol Co. Ltd., which shall
be accomplished, first, by a dividend from Solutia Chemical Co. Ltd. Suzhou
to Solutia Greater China, Inc. and, second, by a corresponding capital
contribution from Solutia Greater China, Inc. into Solutia Therminol Co.
Ltd. Suzhou, it being understood that such investment will involve no
transfer of cash from the United States.
"Specified Mechanics Lien" means the mechanic's and
materialman's lien of Fluor Enterprises, Inc., f/k/a Fluor Daniel, Inc.
referred to in the Final Judgment (including the Settlement Agreement and
Mutual Release) entered in the case entitled Fluor Enterprises, Inc., f/k/a/
Fluor Daniel, Inc. v. Solutia, Inc., Civil Action No G-01-074, in the United
States District Court for the Southern District of Texas, Galveston
Division, securing Indebtedness on the Interim Facility Effective Date in a
principal amount not exceeding $10,000,000, plus accrued interest.
"Standard & Poor's" means Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. and any successor
thereto.
"Subsidiary" means, with respect to any Person at any
date, any corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity
(i) the accounts of which would be consolidated with those of such Person in
such Person's consolidated financial statements if such financial statements
were prepared in accordance with GAAP or (ii) of which more than 50% of (A)
the outstanding Capital Stock having (in the absence of contingencies)
ordinary voting power to elect a majority of the board of directors or other
managing body of such Person, (B) in the case of a partnership or limited
liability company, the interest in the capital or profits of such
partnership or limited liability company or (C) in the case of a trust,
estate, association, joint venture or other entity, the beneficial interest
in such trust, estate, association or other entity business is, at the time
of determination, owned or controlled directly or indirectly through one or
more intermediaries, by such Person.
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"Term Loan A" means, collectively, the loans made by the
Term Loan A Lenders to the Borrowers on the Final Facility Effective Date
pursuant to Section 2.01(a)(ii).
"Term Loan A Commitment" means with respect to each Term
Loan A Lender, the commitment of such Lender to make a Term Loan A to the
Borrowers in the amount set forth opposite such Lender's name in Schedule
1.01(A) hereto, as such amount may be terminated or reduced from time to
time in accordance with the terms of this Agreement.
"Term Loan A Lender" means a Lender with a Term Loan A
Commitment (or a Lender that holds all or any portion of the unpaid
principal amount of the Term Loan A).
"Term Loan B" means, collectively, the loans made by the
Term Loan B Lenders to the Borrowers on the Interim Facility Effective Date
and the Final Facility Effective Date pursuant to Section 2.01(a)(iii).
"Term Loan B Lender" means a Lender with a Term Loan B
Commitment (or a Lender that holds all or any portion of the unpaid
principal amount of the Term Loan B).
"Term Loan B Commitment" means with respect to each Term
Loan B Lender, the commitment of such Lender to make a Term Loan B to the
Borrowers in the amount set forth opposite such Lender's name in Schedule
1.01(A) hereto, as such amount may be terminated or reduced from time to
time in accordance with the terms of this Agreement, provided, that, solely
for purposes of making, and (except as otherwise agreed to by and among the
Lenders) payments with respect to, a Term Loan B during the Interim Period,
the commitment of each such Lender is equal to the amount set forth opposite
such Lender's name in Schedule 1.01(A) hereto under the heading "Interim
Term Loan B Commitment", as such amount may be terminated or reduced from
time to time in accordance with the terms of this Agreement.
"Term Loans" means, collectively, the Term Loan A and the
Term Loan B.
"Term Loan Commitment" means with respect to each Term
Loan Lender, such Term Loan Lender's Term Loan A Commitment and Term Loan B
Commitment.
"Term Loan Lenders" means the Term Loan A Lenders and the
Term Loan B Lenders.
"Term Loan Obligations" means any Obligations with respect
to the Term Loans (including, without limitation, the principal thereof, the
interest thereon, and the fees and expenses specifically related thereto).
"Termination Event" means (i) a Reportable Event with
respect to any Employee Plan, (ii) any event that causes any Loan Party or
any of its ERISA Affiliates to incur liability under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
4971 or 4975 of the Internal Revenue Code, (iii) the filing of a notice of
intent to terminate an Employee Plan or the treatment of an Employee Plan
amendment as a termination under Section 4041 of ERISA, (iv) the institution
of proceedings by the PBGC to terminate an Employee Plan, or (v) any other
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any
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Employee Plan; provided, however, that no Termination Event shall be deemed
to have occurred as a result of the commencement of the Chapter 11 Cases.
"Title Insurance Policy" means a mortgagee's loan policy,
in form and substance reasonably satisfactory to the Collateral Agent,
together with all endorsements made from time to time thereto, issued by or
on behalf of a title insurance company satisfactory to the Collateral Agent,
insuring the Lien created by a Mortgage in an amount and on terms
satisfactory to the Collateral Agent, delivered to the Collateral Agent.
"Transferee" has the meaning specified therefor in Section
2.08(a).
"Total Commitment" means, for any Period, the sum of the
Total Revolving Credit Commitment and the Total Term Loan Commitment for
such Period.
"Total Revolving Credit Commitment" means the sum of the
amounts of the Lenders' Revolving Credit Commitments.
"Total Term Loan A Commitment" means the sum of the
amounts of the Lenders' Term Loan A Commitments.
"Total Term Loan B Commitment" means the sum of the
amounts of the Lenders' Term Loan B Commitments.
"Total Term Loan Commitment" means the sum of the amounts
of the Lenders' Term Loan A Commitments and Term Loan B Commitments.
"2009 Note Holders" means the Persons from time to time
holding the 2009 Notes and bound by the 2009 Note Subordination Agreement.
"2009 Note Indenture" means the Indenture, dated as of
July 9, 2002, as amended by the Supplemental Indenture, dated as of July 25,
2002, the Second Supplemental Indenture, dated as of October 24, 2002, and
the Third Supplemental Indenture, dated as of October 8, 2003, by and among
the Parent, as successor in interest to SOI Funding Corp., the subsidiary
guarantors signatory thereto, and the 2009 Note Trustee, as the same may
from time to time be further amended, restated or otherwise modified in
accordance with the terms hereof.
"2009 Note Trustee" means HSBC Bank USA, a New York
banking corporation, as trustee for the 2009 Note Holders pursuant to the
2009 Note Indenture, together with its permitted successors and assigns.
"2009 Notes" means, collectively, the 11.25% Senior
Secured Notes of the Parent in the original aggregate principal amount of
$223,000,000 issued pursuant to the 2009 Note Indenture, as the same may
from time to time be amended, restated or otherwise modified in accordance
with the terms hereof.
"2009 Post-Petition Liens" means Liens on certain
Collateral granted in favor of the 2009 Note Trustee, for the benefit of the
2009 Note Holders, to secure the Indebtedness evidenced by the 2009 Notes to
the extent such Liens are (a) granted after the Final Facility
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Effective Date, and (b) subordinated in writing to the Liens on the
Collateral securing the Obligations on terms and conditions acceptable to
the Agents and the Required Lenders, which subordination terms and
conditions may be contained in a written agreement among the Collateral
Agent and the 2009 Note Trustee or in a Bankruptcy Court order, in each
case, in form and substance satisfactory to the Agents and the Required
Lenders in the exercise of their sole discretion.
"2009 Pre-Petition Liens" means Liens on the Collateral
(excluding the Principal Properties) granted in favor of the 2009 Note
Trustee, for the benefit of the 2009 Note Holders, to secure the
Indebtedness evidenced by the 2009 Notes to the extent such Liens are (a)
perfected on the Filing Date, and (b) subordinated to the Liens on the
Collateral securing the Pre-Petition Obligations pursuant to the Amended,
Restated and Novated Junior Intercreditor Agreement, dated as of October 8,
2003, among the Existing Collateral Agent, on behalf of the Existing Agents
and the Existing Lenders, the 2009 Note Trustee, on behalf of the 2009 Note
Holders, and the Loan Parties (as defined in the Existing Credit Agreement).
"Uniform Commercial Code" has the meaning specified
therefor in Section 1.03.
"Unused Line Fee" has the meaning specified therefor in
Section 2.06(a).
"WARN" has the meaning specified therefor in Section
7.01(y).
Section 1.02 Terms Generally. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires
otherwise, (a) any definition of or reference to any agreement, instrument
or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein), (b) any reference herein to
any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references
herein to Articles, Sections, Exhibits and Schedules shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to, this
Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any right or interest in or
to assets and properties of any kind whatsoever, whether real, personal or
mixed and whether tangible or intangible. References in this Agreement to
"determination" by any Agent include good faith estimates by such Agent (in
the case of quantitative determinations) and good faith beliefs by such
Agent (in the case of qualitative determinations).
Section 1.03 Accounting and Other Terms. Unless otherwise
expressly provided herein, each accounting term used herein shall have the
meaning given it under GAAP applied on a basis consistent with those used in
preparing the Financial Statements. All terms used in this Agreement which
are defined in Article 8 or Article 9 of the Uniform Commercial Code as in
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effect from time to time in the State of New York (the "Uniform Commercial
Code") and which are not otherwise defined herein shall have the same
meanings herein as set forth therein, provided that terms used herein which
are defined in the Uniform Commercial Code as in effect in the State of New
York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as any
Agent may otherwise determine.
Section 1.04 Time References. Unless otherwise indicated
herein, all references to time of day refer to Eastern Standard Time or
Eastern daylight saving time, as in effect in New York City on such day. For
purposes of the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the
words "to" and "until" each means "to but excluding"; provided, however,
that with respect to a computation of fees or interest payable to any Agent,
any Lender or the L/C Issuer, such period shall in any event consist of at
least one full day.
ARTICLE II
THE LOANS
Section 2.01 Commitments. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth:
(i) each Revolving Loan Lender severally agrees
to make Revolving Loans to the Borrowers at any time and from time to time
from the Final Facility Effective Date to the Final Maturity Date, or until
the earlier reduction of its Revolving Credit Commitment to zero in
accordance with the terms hereof, in an aggregate principal amount of
Revolving Loans at any time outstanding not to exceed the amount of such
Lender's Revolving Credit Commitment;
(ii) each Term Loan A Lender severally agrees to
make a Term Loan A to the Borrowers on the Final Facility Effective Date in
an aggregate principal amount not to exceed the amount of such Lender's Term
Loan A Commitment; and
(iii) each Term Loan B Lender severally agrees
to make (x) a Term Loan B to the Borrowers on the Interim Facility Effective
Date and on the Final Facility Effective Date in an aggregate principal
amount not to exceed the amount of such Lender's Term Loan B Commitment and
(y) all or a portion of the Carve-Out Term Loan B during the Carve-Out
Expenses Period, in an aggregate principal amount not to exceed such Term
Loan B Lender's Pro Rata Share (as defined under clause (c) of such
definition) of such Carve-Out Term Loan B.
(b) Notwithstanding the foregoing,
(i) the aggregate principal amount of
Revolving Loans outstanding at any time to the Borrowers shall not exceed
the difference between (A) the lesser of (x) the Total Revolving Credit
Commitment and (y) the then current Borrowing Base and (B) the aggregate
Letter of Credit Obligations;
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(ii) the aggregate principal amount of the Term
Loan A made on the Final Facility Effective Date shall not exceed the Total
Term Loan A Commitment;
(iii) on the Interim Facility Effective Date,
the aggregate principal amount of the Term Loan B (excluding any Term Loan B
constituting a Carve-Out Term Loan B) shall not exceed $75,000,000;
(iv) on the Final Facility Effective Date, the
aggregate principal amount of the Term Loan B, together with the aggregate
principal amount of the Term Loan B made on the Interim Facility Effective
Date (but excluding any Term Loan B constituting a Carve-Out Term Loan B)
shall not exceed $300,000,000;
(v) during the Carve-Out Expenses Period, the
aggregate principal amount of the portion of the Term Loan B constituting
the Carve-Out Term Loan B shall not exceed, prior to the Final Facility
Effective Date, $10,000,000, and, on and after the Final Facility Effective
Date, $15,000,000;
(vi) the Revolving Credit Commitment shall
automatically and permanently be reduced to zero on the Final Maturity Date;
(vii) within the foregoing limits, the Borrowers
may borrow, repay and reborrow Revolving Loans, on or after the Final
Facility Effective Date and prior to the Final Maturity Date, subject to the
terms, provisions and limitations set forth herein, provided that, prior to
the Final Facility Effective Date, the Revolving Loan Lenders shall not be
obligated to make any Revolving Loans available to the Borrowers; and
(viii) any principal amount of the Term Loans
which is repaid or prepaid may not be reborrowed.
Section 2.02 Making the Loans. The Administrative Borrower
shall give the Administrative Agent prior telephonic notice (immediately
confirmed in writing, in substantially the form of Exhibit B hereto (a
"Notice of Borrowing")), not later than 12:00 noon (New York City time) on
the date which is five (5) Business Days prior to the date of the proposed
Loan if such Loan is a Term Loan and on shorter notice as the Administrative
Agent is willing to accommodate from time to time with respect to any
Revolving Loans, but in no event later than 1:00 p.m. (New York City time)
on the borrowing date of the proposed Revolving Loan, it being understood
that so long as Foothill acts as the Administrative Agent, if the amount of
any proposed Revolving Loan does not exceed the amount available on the
Revolving Loan at such time, Foothill, acting as the Administrative Agent,
may make such proposed Loan on the Business Day of the borrowing request).
Such Notice of Borrowing shall be irrevocable and shall specify (i) the
principal amount of the proposed Loan, which, in the case of the Term Loan
A, shall fully utilize the Total Term Loan A Commitment on the Final
Facility Effective Date, and, in the case of the Term Loan B, shall utilize
a portion of the Total Term Loan B Commitment equal to $75,000,000 on the
Interim Facility Effective Date, may utilize a portion of the Total Term
Loan B Commitment for the Carve-Out Term Loan B during the Carve-Out
Expenses Period in an amount not to exceed $10,000,000 if such period occurs
prior to the Final Facility Effective Date, and $15,000,000 if such period
occurs on and after the Final Facility
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Effective Date to pay Carve-Out Expenses, and shall utilize the remaining
amount of the Total Term Loan B Commitment, other than in an amount equal to
the unused amount available for the Carve-Out Term Loan B, not utilized on
the Interim Facility Effective Date on the Final Facility Effective Date,
(ii) the use of the proceeds of such proposed Loan, (iii) the proposed
borrowing date, which must be a Business Day, and with respect to the
Revolving Loans, must be on or after the Final Facility Effective Date, in
the case of the Term Loan A, must be the Final Facility Effective Date and
in the case of the Term Loan B, must be either the Interim Facility
Effective Date or the Final Facility Effective Date or, in the case of the
portion of the Term Loan B constituting the Carve-Out Term Loan B, to pay
the Carve-Out Expenses during the Carve-Out Expenses Period, (iv) whether
the Loan is a Revolving Loan, Term Loan A or Term Loan B or a combination
thereof. The Administrative Agent and the Lenders may act without liability
upon the basis of written, telecopied or telephonic notice believed by the
Administrative Agent in good faith to be from the Administrative Borrower
(or from any Authorized Officer thereof designated in writing purportedly
from the Administrative Borrower to the Administrative Agent). Each Borrower
hereby waives the right to dispute the Administrative Agent's record of the
terms of any such telephonic Notice of Borrowing. The Administrative Agent
and each Lender shall be entitled to rely conclusively on any Authorized
Officer's authority to request a Loan on behalf of the Borrowers until the
Administrative Agent receives written notice to the contrary. The
Administrative Agent and the Lenders shall have no duty to verify the
authenticity of the signature appearing on any written Notice of Borrowing.
(b) Each Notice of Borrowing pursuant to this Section
2.02 shall be irrevocable and the Borrowers shall be bound to make a
borrowing in accordance therewith. Each Revolving Loan shall be made in a
minimum amount of $100,000 and shall be in an integral multiple of $100,000.
(c) (i) Except as otherwise provided in this
subsection 2.02(c), all Loans under this Agreement during any Period shall
be made by the Lenders simultaneously and proportionately to their Pro Rata
Shares of the Total Revolving Credit Commitment or the applicable Total Term
Loan Commitment, it being understood that no Lender shall be responsible for
any default by any other Lender in that other Lender's obligations to make a
Loan requested hereunder, nor shall the Revolving Credit Commitment of any
Lender be increased or decreased as a result of the default by any other
Lender in that other Lender's obligation to make a Loan requested hereunder,
and each Lender shall be obligated to make the Loans required to be made by
it by the terms of this Agreement regardless of the failure by any other
Lender.
(ii) Notwithstanding any other provision of this
Agreement, and in order to reduce the number of fund transfers among the
Borrowers, the Agents and the Lenders, the Borrowers, the Agents and the
Lenders agree that the Administrative Agent may (but shall not be obligated
to), and the Borrowers and the Lenders hereby irrevocably authorize the
Administrative Agent to, fund, on behalf of the Revolving Loan Lenders,
Revolving Loans pursuant to Section 2.01, subject to the procedures for
settlement set forth in subsection 2.02(d); provided, however, that (a) the
Administrative Agent shall in no event fund any such Revolving Loans if the
Administrative Agent shall have received written notice from the Collateral
Agent or the Required Lenders on the Business Day prior to the date of the
proposed Revolving Loan that one or more of the conditions precedent
contained in Section 6.03 will not be satisfied at the time of the proposed
Revolving Loan, and (b) the Administrative Agent shall not otherwise be
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required to determine that, or take notice whether, the conditions precedent
in Section 6.03 have been satisfied. If the Administrative Borrower gives a
Notice of Borrowing requesting a Revolving Loan and the Administrative Agent
elects not to fund such Revolving Loan on behalf of the Revolving Loan
Lenders, then promptly after receipt of the Notice of Borrowing requesting
such Revolving Loan, the Administrative Agent shall notify each Revolving
Loan Lender of the specifics of the requested Revolving Loan and that it
will not fund the requested Revolving Loan on behalf of the Revolving Loan
Lenders. If the Administrative Agent notifies the Revolving Loan Lenders
that it will not fund a requested Revolving Loan on behalf of the Revolving
Loan Lenders, each Revolving Loan Lender shall make its Pro Rata Share of
the Revolving Loan available to the Administrative Agent, in immediately
available funds, in the Administrative Agent's Account no later than 3:00
p.m. (New York City time) (provided that the Administrative Agent requests
payment from such Revolving Loan Lender not later than 1:00 p.m. (New York
City time)) on the date of the proposed Revolving Loan. The Administrative
Agent will make the proceeds of such Revolving Loans available to the
Borrowers on the day of the proposed Revolving Loan by causing an amount, in
immediately available funds, equal to the proceeds of all such Revolving
Loans received by the Administrative Agent in the Administrative Agent's
Account or the amount funded by the Administrative Agent on behalf of the
Revolving Loan Lenders to be deposited in an account designated by the
Administrative Borrower.
(iii) If the Administrative Agent has notified
the Revolving Loan Lenders that the Administrative Agent, on behalf of such
Revolving Loan Lenders, will not fund a particular Revolving Loan pursuant
to subsection 2.02(c)(ii), the Administrative Agent may assume that each
such Revolving Loan Lender has made such amount available to the
Administrative Agent on such day and the Administrative Agent, in its sole
discretion, may, but shall not be obligated to, cause a corresponding amount
to be made available to the Borrowers on such day. If the Administrative
Agent makes such corresponding amount available to the Borrowers and such
corresponding amount is not in fact made available to the Administrative
Agent by any such Revolving Loan Lender, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Revolving
Loan Lender together with interest thereon, for each day from the date such
payment was due until the date such amount is paid to the Administrative
Agent, at the Federal Funds Rate for three Business Days and thereafter at
the Reference Rate. During the period in which such Revolving Loan Lender
has not paid such corresponding amount to the ADMINISTRATIVE Agent,
notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, the amount so advanced by the Administrative Agent to
the Borrowers shall, for all purposes hereof, be a Revolving Loan made by
the Administrative Agent for its own account. Upon any such failure, the
Borrowers shall, upon demand by the Administrative Agent, repay such amount
to the Administrative Agent for its own account.
(iv) Nothing in this subsection 2.02(c) shall be
deemed to relieve any Lender from its obligations to fulfill its Revolving
Credit Commitment hereunder or to prejudice any rights that the Agents or
the Borrowers may have against any Lender as a result of any default by such
Lender hereunder.
(v) Notwithstanding anything contained in this
Section 2.02, the Administrative Agent shall not be obligated to make any
Term Loans hereunder on behalf of
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any Term Loan Lender unless it has received immediately available funds from
such Term Loan Lender in the amount of such Term Loan Lender's Pro Rata
Share of such Term Loan.
(d) (i) With respect to all periods for which the
Administrative Agent has funded Revolving Loans pursuant to subsection
2.02(c), on Friday of each week, or if the applicable Friday is not a
Business Day, then on the following Business Day, or such shorter period as
the Administrative Agent may from time to time select (any such week or
shorter period being herein called a "Settlement Period"), the
Administrative Agent shall notify each Revolving Loan Lender of the unpaid
principal amount of the Revolving Loans outstanding as of the last day of
each such Settlement Period. In the event that such amount is greater than
the unpaid principal amount of the Revolving Loans outstanding on the last
day of the Settlement Period immediately preceding such Settlement Period
(or, if there has been no preceding Settlement Period, the amount of the
Revolving Loans made on the date of such Revolving Loan Lender's initial
funding), each Revolving Loan Lender shall promptly (and in any event not
later than 2:00 p.m. (New York City time) if the Administrative Agent
requests payment from such Lender not later than 12:00 noon (New York City
time) on such day) make available to the Administrative Agent its Pro Rata
Share of the difference in immediately available funds. In the event that
such amount is less than such unpaid principal amount, the Administrative
Agent shall promptly pay over to each Revolving Loan Lender its Pro Rata
Share of the difference in immediately available funds. In addition, if the
Administrative Agent shall so request at any time when a Default or an Event
of Default shall have occurred and be continuing, or any other event shall
have occurred as a result of which the Administrative Agent shall determine
that it is desirable to present claims against the Borrowers for repayment,
each Revolving Loan Lender shall promptly remit to the Administrative Agent
or, as the case may be, the Administrative Agent shall promptly remit to
each Revolving Loan Lender, sufficient funds to adjust the interests of the
Revolving Loan Lenders in the then outstanding Revolving Loans to such an
extent that, after giving effect to such adjustment, each such Revolving
Loan Lender's interest in the then outstanding Revolving Loans will be equal
to its Pro Rata Share thereof. The obligations of the Administrative Agent
and each Revolving Loan Lender under this subsection 2.02(d) shall be
absolute and unconditional. Each Revolving Loan Lender shall only be
entitled to receive interest on its Pro Rata Share of the Revolving Loans
which have been funded by such Revolving Loan Lender.
(ii) In the event that any Revolving Loan Lender
fails to make any payment required to be made by it pursuant to subsection
2.02(d)(i), the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Revolving Loan Lender together with
interest thereon, for each day from the date such payment was due until the
date such amount is paid to the Administrative Agent, at the Federal Funds
Rate for three Business Days and thereafter at the Reference Rate. During
the period in which such Revolving Loan Lender has not paid such
corresponding amount to the Administrative Agent, notwithstanding anything
to the contrary contained in this Agreement or any other Loan Document, the
amount so advanced by the Administrative Agent to the Borrowers shall, for
all purposes hereof, be a Revolving Loan made by the Administrative Agent
for its own account. Upon any such failure by a Revolving Loan Lender to pay
the Administrative Agent, the Borrowers shall, upon demand by the
Administrative Agent, repay such amount to the Administrative Agent for its
own account. Nothing in this subsection 2.02(d)(ii) shall be deemed to
relieve any Revolving Loan Lender from its obligation to fulfill its
Revolving Credit Commitment hereunder or to prejudice any rights that the
Administrative Agent or the
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Borrowers may have against any Revolving Loan Lender as a result of any
default by such Revolving Loan Lender hereunder.
Section 2.03 Repayment of Loans; Evidence of Debt. (a) (i)
The outstanding principal of the Term Loan A shall be due and payable
monthly on the first day of each calendar month commencing on April 1, 2004
in an amount equal to $833,333, and ending on the Final Maturity Date in an
amount equal to an amount necessary to repay in full the unpaid principal
amount of the Term Loan A.
(ii) The outstanding principal of the Term Loan
B (including, without limitation, the outstanding Carve-Out Term Loan B)
shall be due and payable on the Final Maturity Date, provided, that, any
Carve-Out Term Loan B made after the Final Maturity Date, shall be payable
upon demand.
(iii) The outstanding principal of all Revolving
Loans shall be due and payable on the Final Maturity Date.
(b) Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing the Indebtedness of the
Borrowers to such Lender resulting from each Loan made by such Lender,
including the amounts of principal and interest payable and paid to such
Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts
in which it shall record (i) the amount of each Loan made hereunder, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrowers to each Lender hereunder and (iii) the amount of
any sum received by the Administrative Agent hereunder for the account of
the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained
pursuant to paragraph (b) or (c) of this Section shall be prima facie
evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect
the obligation of the Borrowers to repay the Loans in accordance with the
terms of this Agreement.
(e) Any Lender may request that Loans made by it be
evidenced by a promissory note. In such event, the Borrowers shall execute
and deliver to such Lender a promissory note payable to the order of such
Lender (or, if requested by such Lender, to such Lender and its registered
assigns) in a form furnished by the Collateral Agent and reasonably
acceptable to the Administrative Borrower. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including
after assignment pursuant to Section 13.07) be represented by one or more
promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and
its registered assigns).
Section 2.04 Interest. (a) Loans.
(i) Each Revolving Loan shall bear interest on
the principal amount thereof from time to time outstanding, from the date of
such Loan until such principal
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amount becomes due, at a rate per annum equal to the greater of (i) the
Reference Rate plus 2.00% and (ii) 6.25%.
(ii) Each Term Loan A and Term Loan B shall bear
interest on the principal amount thereof from time to time outstanding, from
the date of such Term Loan until such principal amount becomes due, at a
rate per annum equal to the greater of (i) the Reference Rate plus 9.125%
and (ii) 13.375%.
(b) Default Interest. To the extent permitted by law,
upon the occurrence and during the continuance of an Event of Default, the
principal of, and all accrued and unpaid interest on, all Loans, fees,
indemnities, outstanding Reimbursement Obligations or any other Obligations
of the Loan Parties under this Agreement and the other Loan Documents, shall
bear interest, from the date such Event of Default occurred until the date
such Event of Default is cured or waived in writing in accordance herewith,
at a rate per annum equal at all times to the Post-Default Rate.
(c) Interest Payment. Interest on each Loan shall be
payable monthly, in arrears, on the first day of each month, commencing on
the first day of the month following the month in which such Loan is made
and at maturity (whether upon demand, by acceleration or otherwise).
Interest at the Post-Default Rate shall be payable on demand. Each Borrower
hereby authorizes the Administrative Agent to, and the Administrative Agent
may, from time to time, charge the Loan Account pursuant to Section 5.02
with the amount of any interest payment due hereunder.
(d) General. All interest shall be computed on the
basis of a year of 360 days for the actual number of days, including the
first day but excluding the last day, elapsed.
Section 2.05 Reduction of Commitment; Prepayment of Loans.
(a) Reduction of Commitments.
(i) (A) The Total Revolving Credit Commitment
shall terminate on the Final Maturity Date. The Borrowers may, without
premium or penalty, reduce the Total Revolving Credit Commitment to an
amount (which may be zero) not less than the sum of (I) the aggregate unpaid
principal amount of all Revolving Loans then outstanding, (II) the aggregate
principal amount of all Revolving Loans not yet made as to which a Notice of
Borrowing has been given by the Administrative Borrower under Section 2.02,
(III) the Letter of Credit Obligations at such time, and (IV) the stated
amount of all Letter of Credit Accommodations not yet issued as to which a
request has been made and not withdrawn.
(B) The Total Term Loan A Commitment
shall terminate on the Final Facility Effective Date.
(C) The Total Term Loan B Commitment
shall terminate on the Final Facility Effective Date, provided, that, if any
Obligations remain outstanding on and after the Final Facility Effective
Date, a portion of the Total Term Loan B Commitment equal to the difference
between (x) $15,000,000 and (y) the aggregate principal amount of the
Carve-Out Term Loan B that have been made whether or not all or any portion
of
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such Carve-Out Term Loan B remains outstanding, shall not terminate on the
Final Facility Effective Date but shall, notwithstanding anything in this
Agreement to the contrary, terminate on the earlier of (I) the date
that all of the Obligations are Paid in Full and (II) December 19, 2006.
(ii) Each such voluntary reduction of the Total
Revolving Credit Commitment pursuant to Section 2.05(a)(i)(A) shall be in an
amount which is an integral multiple of $10,000,000 (unless the Total
Revolving Credit Commitment in effect immediately prior to such reduction is
less than $10,000,000), shall be made by providing not less than five (5)
Business Days' prior written notice to the Administrative Agent and the
Collateral Agent and shall be irrevocable. Once reduced, the Total Revolving
Credit Commitment may not be increased. Each such reduction of the Total
Revolving Credit Commitment shall reduce the applicable Revolving Credit
Commitment of each Lender holding such commitment proportionately in
accordance with its Pro Rata Share thereof.
(iii) In addition, if the Loan Parties prepay
the Revolving Loans pursuant to a mandatory prepayment described in Section
2.05(c)(vii), the Total Revolving Credit Commitment shall be permanently
reduced in an amount corresponding to the Revolving Loans being prepaid.
Each reduction of the Total Revolving Credit Commitment, shall reduce the
applicable Revolving Credit Commitment of each Lender holding such
commitment proportionately in accordance with its Pro Rata Share thereof.
(b) Optional Prepayment.
(i) Revolving Loans. The Borrowers may, at any
time, prepay without penalty or premium the principal of any Revolving Loan,
in whole or in part.
(ii) Term Loans. After the Final Facility
Effective Date, the Borrowers may, upon at least five (5) Business Days'
prior written notice to the Administrative Agent and the Collateral Agent,
prepay without penalty or premium the principal of any Term Loan A or Term
Loan B, in whole or in part; provided, that, notwithstanding the foregoing,
except in connection with the repayment in full of all of the Obligations,
the Borrowers may not voluntarily prepay all or any portion of the Term Loan
A or the Term Loan B if (A) immediately after giving effect to such
prepayment, Availability would be less than $10,000,000 or (B) immediately
before or immediately after giving effect to such prepayment, an Event of
Default shall have occurred and be continuing.
(iii) Prepayment In Full. The Borrowers may,
upon at least five (5) Business Days prior written notice to the
Administrative Agent and the Collateral Agent, terminate this Agreement by
paying to the Administrative Agent, in cash, the Obligations (including
either (A) providing cash collateral to be held by the Administrative Agent
in an amount equal to 105% of the aggregate undrawn amount of all
outstanding Letter of Credit Accommodations or (B) causing the original
Letter of Credit Accommodations to be returned to the Administrative Agent),
in full. If the Administrative Borrower has sent a notice of termination
pursuant to this clause (iii), then the Lenders' obligations to extend
credit hereunder shall terminate and the Borrowers shall be obligated to
repay the Obligations (including either (A) providing cash collateral to be
held by the Administrative Agent in an amount equal to 105%
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of the aggregate undrawn amount of all outstanding Letter of Credit
Accommodations or (B) causing the original Letter of Credit Accommodations
to be returned to the Administrative Agent), in full, on the date set forth
as the date of termination of this Agreement in such notice.
(c) Mandatory Prepayment.
(i) (A) The Borrowers will, at any time,
immediately prepay the Revolving Loans when the aggregate principal amount
of all Revolving Loans plus the outstanding amount of all Letter of Credit
Obligations exceeds the Borrowing Base, to the full extent of any such
excess. On each day that any Revolving Loans or Letter of Credit Obligations
are outstanding, the Borrowers shall hereby be deemed to represent and
warrant to the Agents and the Lenders that the Borrowing Base calculated as
of such day equals or exceeds the aggregate principal amount of all
Revolving Loans and Letter of Credit Obligations outstanding on such day.
(B) If at any time after the Borrowers
have complied with the first sentence of paragraph (A) of this Section
2.05(c)(i), the aggregate Letter of Credit Obligations is greater than the
then current Borrowing Base, the Borrowers shall provide cash collateral to
the Administrative Agent in an amount equal to 105% of such excess, which
cash collateral shall be deposited in the Letter of Credit Collateral
Account and, provided that no Event of Default shall have occurred and be
continuing, returned to the Borrowers, at such time as the aggregate Letter
of Credit Obligations plus the aggregate principal amount of all outstanding
Revolving Loans no longer exceeds the then current Borrowing Base.
(C) The Borrowers will immediately prepay
the outstanding principal amount of the Term Loans in the event that the
Total Revolving Credit Commitment is terminated for any reason.
(ii) Prior to the Final Facility Effective Date,
in the absence of an Event of Default, any funds transferred to or deposited
in the Administrative Agent's Account, will be returned to the Borrowers in
accordance with the terms of the Interim Bankruptcy Court Order. On and
after the Final Facility Effective Date, the Administrative Agent shall on
each Business Day apply all funds transferred to or deposited in the
Administrative Agent's Account, to the payment, in whole or in part, of the
outstanding principal amount of the Revolving Loans; provided, that, (A)
such funds shall be applied to the outstanding principal amount of the Term
Loan A and/or the Term Loan B (x) in the absence of a continuing Event of
Default, to the extent such application is specifically provided for in
Section 2.05(d), and (y) during the existence of an Event of Default, in
accordance with Section 5.04(b), and (B) if no Revolving Loans remain
outstanding after the application of such funds to repay any outstanding
Revolving Loans, such funds are not required to be applied to the Term Loan
A and the Term Loan B pursuant to clause (A) of this proviso and no Event of
Default has occurred and is continuing, the remaining funds received in the
Administrative Agent's Account shall, within two (2) Business Days, be
returned by the Administrative Agent to the Borrowers.
(iii) Immediately upon any Disposition by any
Loan Party or its Subsidiaries (other than a Disposition of assets of
Solutia Europe or any of its Subsidiaries), the Borrowers shall prepay the
outstanding principal amount of the Loans in an amount equal to
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100% of the Net Cash Proceeds received by such Person in connection with
such Disposition. Nothing contained in this subsection (iii) shall permit
any Loan Party or any of its Subsidiaries to make a Disposition (including,
without limitation, a Disposition of assets of Solutia Europe or any of its
Subsidiaries) of any property other than in accordance with Section 8.02(c).
Any payments required to be made under this subsection (iii) shall be
applied as set forth in Section 2.05(d).
(iv) Upon the receipt by any Loan Party or any
of its Subsidiaries (other than by Solutia Europe or any of its
Subsidiaries) of any Extraordinary Receipts after the Final Facility
Effective Date, the Borrowers shall prepay the outstanding principal amount
of the Loans in an amount equal to 100% of such Extraordinary Receipts, net
of any reasonable expenses incurred in collecting such Extraordinary
Receipts. Any payments required to be made under this subsection (iv) shall
be applied as set forth in Section 2.05(d).
(v) Simultaneously with the receipt by any Loan
Party or any of its Subsidiaries (other than by Solutia Europe or any of its
Subsidiaries) of any tax refund or the proceeds of any judgment, settlement
or other consideration of any kind in connection with any cause of action
arising under the Bankruptcy Code or otherwise (including Avoidance Actions
but excluding any Avoided Payments), the Borrowers shall prepay the
outstanding principal amount of the Loans in an amount equal to 100% of the
net proceeds received. Any payments required to be made under this
subsection (v) shall be applied as set forth in Section 2.05(d).
(vi) If any Loan Party receives a return of any
cash collateral pledged by it to support letters of credit or other similar
credit instruments, the Borrowers shall prepay the outstanding principal
amount of the Loans in an amount equal 100% of such cash. Any payments
required to be made under this subsection (vi) shall be applied as set forth
in Section 2.05(d).
(vii) In the event that the Lenders are required
to repay or disgorge to the Borrowers, or any representatives of the
Borrowers' estate, and have repaid, all or any portion of the Pre-Petition
Obligations authorized and directed to be repaid pursuant to the Interim
Financing Order or the Final Financing Order, as the case may be, or any
payment on account of the Pre-Petition Obligations made to any Lender is
rescinded for any reason whatsoever, including, but not limited to, as a
result of any Avoidance Action, or any other action, suit, proceeding or
claim brought under any other provision of the Bankruptcy Code or any
applicable state law, or any other similar provisions under any other state
or federal statutory or common law (all such amounts being hereafter
referred to as the "Avoided Payments"), then, in such event, the Borrowers
shall prepay the outstanding principal amount of the Loans in an amount
equal to 100% of such Avoided Payments immediately upon receipt of the
Avoided Payments by the Borrowers or any representative of the Borrowers'
estate. Any payment required to be made under this subsection (vii) shall be
applied as set forth in Section 2.05(d).
(viii) Notwithstanding the foregoing, (A) in
connection with a Disposition under Section 2.05(c)(iii) or receipt of
insurance proceeds or condemnation awards pursuant to Section 2.05(c)(iv),
up to $5,000,000 in the aggregate in any 12-month period of the Net Cash
Proceeds from such Disposition and Extraordinary Receipts from such
insurance
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proceeds or condemnation awards, as the case may be, received by any Loan
Party or any of its Subsidiaries in connection therewith shall not be
required to be applied to the prepayment of the Loans on such date to the
extent such proceeds are used to replace, repair or restore the properties
or assets used in any Loan Party's or any of its Subsidiaries' business in
respect of which such Net Cash Proceeds or Extraordinary Receipts, as the
case may be, were paid, provided that, (x) no Default or Event of Default
has occurred and is continuing on the date such Person receives such Net
Cash Proceeds or such Extraordinary Receipts, (y) the Administrative
Borrower delivers a certificate to the Agents within 5 days after such
Disposition or 10 days after the date of such loss, destruction or taking,
as the case may be, stating that such proceeds shall be used to replace,
repair or restore any such properties or assets to be used in any Loan
Party's or any of its Subsidiaries' business within a period specified in
such certificate not to exceed 90 days after the receipt of such proceeds
(which certificate shall set forth estimates of the proceeds to be so
expended) and (z) such proceeds are deposited in an account subject to the
sole dominion of the Administrative Agent; and if all or any portion of such
proceeds not so applied to the prepayment of the Loans are not used in
accordance with the preceding sentence within the period specified in the
relevant certificate furnished pursuant hereto or there shall occur a
Default or Event of Default, such remaining portion shall be applied to the
Loans as required by Section 2.05(c)(iii) or Section 2.05(c)(iv), as
applicable, on the last day of such specified period or immediately, in the
case of a Default or Event of Default; and (B) the Borrowers shall not be
required to make a prepayment under Section 2.05(c)(iii) or Section
2.05(c)(iv) (other than with respect to any event described in Section
2.05(c)(iii) or Section 2.05(c)(iv) for which the Loans would be required to
be prepaid under Section 2.05(d) in the absence of this clause (B), to the
extent of the required prepayment to the Loans), unless the aggregate amount
of Net Cash Proceeds received as a result of the events described in such
Sections exceeds $2,500,000 and any such required prepayment under such
Sections shall be limited to the Net Cash Proceeds and Extraordinary
Receipts, net of any reasonable expenses incurred in connection with such
Extraordinary Receipts, exceeding $2,500,000.
(ix) Without limiting any other provision of
this Agreement or any other Loan Document permitting or requiring prepayment
of Loans in whole or in part, the Borrowers shall prepay the Loans in full
without premium or penalty on the date which is 30 days following the entry
of the Interim Facility Bankruptcy Court Order in the event the Final
Bankruptcy Court Order shall not have been entered on or before such date.
(d) Application of Payments. If at any time in the
absence of a continuing Event of Default, the prepayments required under
Section 2.05(c) shall be applied as follows:
(i) the proceeds from any prepayment pursuant to
any Disposition of any Account or Inventory or any insurance policy or
condemnation award with respect to Inventory or any event described in
Section 2.05(c)(vi), shall be applied to the Revolving Loans until paid in
full;
(ii) the proceeds from any prepayment pursuant
to a Disposition of all or substantially all of the assets or Capital Stock
of any Person or any insurance which Disposition or proceeds of insurance
includes both (x) Accounts or Inventory and (y) other assets, shall be
applied as follows: (A) an amount equal to the book value of such
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Accounts and Inventory, or, if greater, the amount of Revolving Loans or
Letter of Credit Accommodations supported by such assets determined using
the effective advance rate under the Borrowing Base against such Accounts
and Inventory (determined at the time of such Disposition or event resulting
in such insurance proceeds) shall be applied to the Revolving Loans until
paid in full, and (B) the remaining proceeds shall be applied first, to the
Term Loan B until paid in full, second, to the Term Loan A until paid in
full, and third, to the Revolving Loans until paid in full;
(iii) the proceeds from any prepayment event set
forth in Section 2.05(c)(iii) (other than with respect to Dispositions
described in paragraphs (i) or (ii) above), Section 2.05(c)(iv) (other than
proceeds from any insurance policy or condemnation award with respect to
Inventory) or Section 2.05(c)(v) shall be applied first, to the Term Loan B
until paid in full, second, to the Term Loan A until paid in full, and,
third, to the Revolving Loans until paid in full; and
(iv) the proceeds from any prepayment event set
forth in Section 2.05(c)(vii) shall be applied first, to the Revolving Loans
until paid in full, second, to the Term Loan B until paid in full, and,
third, to the Term Loan A until paid in full.
(e) Availability Requirements. Notwithstanding
anything to the contrary contained herein, if Availability would be less
than $10,000,000 immediately after giving effect to any prepayment of the
Term Loan A or the Term Loan B pursuant to Section 2.05(d)(ii) or Section
2.05(d)(iii), no such prepayment of the Term Loan A or the Term Loan B shall
be made and such amounts shall be applied to the repayment of the Revolving
Loans and, if no Revolving Loans remain outstanding and in the absence of a
continuing Event of Default, the Administrative Agent shall return such
amounts to the Borrowers within two (2) Business Days.
(f) Cumulative Prepayments. Except as otherwise
expressly provided in this Section 2.05, payments with respect to any
subsection of this Section 2.05 are in addition to payments made or required
to be made under any other subsection of this Section 2.05.
Section 2.06 Fees.
(a) Loan Servicing Fee. From and after the Interim
Facility Effective Date and until the later of (i) the Final Maturity Date
and (ii) the date on which all Obligations are Paid in Full, the Borrowers
shall pay to the Administrative Agent, for the account of the Agents, in
accordance with a written agreement among the Agents, a non-refundable loan
servicing fee (the "Loan Servicing Fee") equal to $150,000 each quarter,
which shall be deemed fully earned when paid and which shall be due and
payable on the Interim Facility Effective Date (which payment on the Interim
Facility Effective Date shall be pro-rated based on the number of days
remaining in the calendar quarter in which the Interim Facility Effective
Date occurs) and quarterly in advance thereafter on the first day of each
calendar quarter commencing on January 1, 2004.
(b) Unused Line Fee. From and after the Final
Facility Effective Date and until the Final Maturity Date, the Borrowers
shall pay to the Administrative Agent for the account of the Lenders, in
accordance with a written agreement among the Agents and the Lenders, an
unused line fee (the "Unused Line Fee"), which shall accrue at the rate per
annum of 0.75% on
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the excess, if any, of the Total Revolving Credit Commitment over the sum of
the average principal amount of all Revolving Loans and Letter of Credit
Obligations outstanding from time to time and shall be due and payable
monthly in arrears on the first day of each month, commencing on the first
day of the month immediately following the Final Facility Effective Date.
(c) Fee Letter. From and after the Interim Facility
Effective Date, the Borrowers shall pay to the Administrative Agent, for the
account of the Agents and the Lenders, in accordance with a written
agreement among the Agents and the Lenders, the fees specified in the Fee
Letter, at the times specified for payment therein.
Section 2.07 Securitization. The Loan Parties hereby
acknowledge that the Lenders and their Affiliates may sell or securitize the
Loans (a "Securitization") through the pledge of the Loans as collateral
security for loans to the Lenders or their Affiliates or through the sale of
the Loans or the issuance of direct or indirect interests in the Loans,
which loans to the Lenders or their Affiliates or direct or indirect
interests will be rated by Moody's, Standard & Poor's or one or more other
rating agencies (the "Rating Agencies"). The Loan Parties shall cooperate
with the Lenders and their Affiliates to effect the Securitization
including, without limitation, by (a) amending this Agreement and the other
Loan Documents, and executing such additional documents, as reasonably
requested by the Lenders in connection with the Securitization, provided
that (i) any such amendment or additional documentation does not impose
material additional costs on the Loan Parties and (ii) any such amendment or
additional documentation does not materially adversely affect the rights, or
materially increase the obligations, of the Loan Parties under the Loan
Documents or change or affect in a manner adverse to the Loan Parties the
financial terms of the Loans, (b) providing such information as may be
reasonably requested by the Lenders in connection with the rating of the
Loans or the Securitization, and (c) providing in connection with any rating
of the Loans a certificate (i) agreeing to indemnify the Lenders and their
Affiliates, any of the Rating Agencies, or any party providing credit
support or otherwise participating in the Securitization (collectively, the
"Securitization Parties") for any losses, claims, damages or liabilities
(the "Liabilities") to which the Lenders, their Affiliates or such
Securitization Parties may become subject insofar as the Liabilities arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in any Loan Document or in any writing delivered
by or on behalf of any Loan Party to the Lenders in connection with any Loan
Document or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and such indemnity shall survive any
transfer by the Lenders or their successors or assigns of the Loans and (ii)
agreeing to reimburse the Lenders and their Affiliates for any legal or
other expenses reasonably incurred by such Persons in connection with
defending the Liabilities.
Section 2.08 Taxes. Any and all payments by any Loan Party
hereunder or under any other Loan Document shall be made free and clear of
and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding (i) taxes imposed on (or measured by) the net
income of any Lender, any Agent or the L/C Issuer (or any transferee or
assignee thereof, including a participation holder (any such entity, a
"Transferee")) by the United States of America or by the jurisdiction in
which such Lender, such Agent or the L/C Issuer is organized or has its
principal
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lending office or (ii) any branch profits taxes imposed by the United States
of America (all such nonexcluded taxes, levies, imposts, deductions, charges
withholdings and liabilities, collectively or individually, "Taxes"). If any
Loan Party shall be required to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender, any Agent or the L/C Issuer (or any
Transferee), (A) the sum payable shall be increased by the amount (an
"additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.08) such Lender, such Agent or the L/C Issuer (or such Transferee)
shall receive an amount equal to the sum it would have received had no such
deductions been made, (B) such Loan Party shall make such deductions and (C)
such Loan Party shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, each Loan Party agrees to pay to the
relevant Governmental Authority in accordance with applicable law any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that arise from any payment made hereunder
or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement, the Letter of Credit Accommodations or any other
Loan Document ("Other Taxes"). Each Loan Party shall deliver to each Lender,
each Agent and the L/C Issuer official receipts in respect of any Taxes or
Other Taxes payable hereunder promptly after payment of such Taxes or Other
Taxes.
(c) The Loan Parties hereby, jointly and severally,
indemnify and agree to hold each Lender, each Agent and the L/C Issuer
harmless from and against Taxes and Other Taxes (including, without
limitation, Taxes and Other Taxes imposed on any amounts payable under this
Section 2.08) paid by such Lender, such Agent or the L/C Issuer (or such
Transferee), whether or not such Taxes or Other Taxes were correctly or
legally asserted. Such indemnification shall be paid within 10 days from the
date on which any such Lender, any such Agent or the L/C Issuer makes
written demand therefor specifying in reasonable detail the nature and
amount of such Taxes or Other Taxes.
(d) Each Lender (or Transferee) that is organized
under the laws of a jurisdiction other than the United States, any State
thereof or the District of Columbia (a "Non-U.S. Lender") shall deliver to
the Administrative Borrower and the Agents two properly completed and duly
executed copies of either U.S. Internal Revenue Service Form W-8BEN or Form
W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Internal
Revenue Code with respect to payments of "portfolio interest", a Form
W-8BEN, or any subsequent versions thereof or successors thereto (and, if
such Non-U.S. Lender delivers a Form W-8, a certificate representing that
such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the
Internal Revenue Code, is not a 10-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Internal Revenue Code) of any Borrower and is
not a controlled foreign corporation related to a Borrower (within the
meaning of Section 864(d)(4) of the Internal Revenue Code)), in each case
claiming complete exemption from U.S. Federal withholding tax on payments by
the Loan Parties under this Agreement. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement
(or, in the case of a Transferee that is a participation holder, on or
before the date such participation holder becomes a Transferee hereunder)
and on or before the date, if any, such Non-U.S. Lender changes its
applicable lending office by designating a different lending office (a "New
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Lending Office"). In addition, each Non-U.S. Lender shall deliver such forms
within 20 days after receipt of a written request therefor from the
Administrative Borrower or any Agent. Notwithstanding any other provision of
this Section 2.08, a Non-U.S. Lender shall not be required to deliver after
the date hereof any form pursuant to this Section 2.08 that such Non-U.S.
Lender is not legally able to deliver.
(e) The Loan Parties shall not be required to
indemnify any Non-U.S. Lender, or pay any additional amounts to any Non-U.S.
Lender, in respect of United States Federal withholding tax pursuant to this
Agreement to the extent that (i) the obligation to withhold amounts with
respect to United States Federal withholding tax existed on the date such
Non-U.S. Lender became a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on the date such participation
holder became a Transferee hereunder) or, with respect to payments to a New
Lending Office, the date such Non-U.S. Lender designated such New Lending
Office with respect to a Loan; provided, however, that this clause (i) shall
not apply to the extent the indemnity payment or additional amounts any
Transferee, or any Lender (or Transferee) through a New Lending Office,
would be entitled to receive (without regard to this clause (i)) do not
exceed the indemnity payment or additional amounts that the Person making
the assignment, participation or transfer to such Transferee, or such Lender
(or Transferee) making the designation of such New Lending Office, would
have been entitled to receive in the absence of such assignment,
participation, transfer or designation, (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender to comply with the provisions of paragraph (d) above or (iii) the
obligation to pay such additional amounts does not result from a change in
applicable tax law (including, without limitation, applicable judicial
decisions, statutes, regulations or other administrative interpretations)
occurring after the date hereof.
(f) Any Lender, any Agent or the L/C Issuer (or
Transferee) claiming any indemnity payment or additional payment amounts
payable pursuant to this Section 2.08 shall (subject to legal and regulatory
restrictions) file any certificate or document reasonably requested in
writing by the Administrative Borrower or change the jurisdiction of its
applicable lending office if the making of such a filing or change would
avoid the need for or reduce the amount of any such indemnity payment or
additional amount which may thereafter accrue, would not require such
Lender, such Agent or the L/C Issuer (or Transferee) to disclose any
information such Lender, such Agent or the L/C Issuer (or Transferee) deems
confidential and would not, in the sole determination of such Lender, such
Agent or the L/C Issuer (or Transferee), be otherwise disadvantageous to
such Lender, such Agent or the L/C Issuer (or Transferee).
(g) If any Lender, any Agent or the L/C Issuer (or a
Transferee) shall become aware that it is entitled to claim a refund from a
Governmental Authority in respect of Taxes or Other Taxes with respect to
which any Loan Party has paid additional amounts, pursuant to this Section
2.08, it shall promptly notify the Administrative Borrower of the
availability of such refund claim and shall, within 30 days after receipt of
a request by the Administrative Borrower, make a claim to such Governmental
Authority for such refund at the Loan Parties' expense. If any Lender, any
Agent or the L/C Issuer (or Transferee) receives a refund (including
pursuant to a claim for refund made pursuant to the preceding sentence) in
respect of any Taxes or Other Taxes with respect to which any Loan Party has
paid additional amounts pursuant to this Section 2.08, it shall within 30
days from the date of such receipt pay over such refund to the
Administrative
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Borrower, net of all out-of-pocket expenses of such Lender, such Agent or
the L/C Issuer (or Transferee).
(h) The obligations of the Loan Parties under this
Section 2.08 shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
ARTICLE III
LETTER OF CREDIT ACCOMMODATIONS
Section 3.01 Letter of Credit Guaranty.
(a) In order to assist the Borrowers in establishing
or opening letters of credit (each, a "Letter of Credit Accommodation"),
which shall not have expiration dates later than the Final Maturity Date,
with the L/C Issuer, from time to time after the Final Facility Effective
Date to the Final Maturity Date, the Borrowers will request the
Administrative Agent to join in the applications for such Letter of Credit
Accommodations and/or guarantee payment or performance of such Letter of
Credit Accommodations and any drafts thereunder through the issuance of a
Letter of Credit Guaranty, thereby lending the Administrative Agent's credit
to that of the Borrowers, and the Administrative Agent has agreed to do so.
The Administrative Agent shall have no obligation to assist the Borrowers in
establishing or opening any Letter of Credit Accommodations prior to the
Final Facility Effective Date. These arrangements shall be coordinated by
the Administrative Agent, subject to the terms and conditions set forth
below. The Administrative Agent shall not be required to be the issuer of
any Letter of Credit Accommodation. The Borrowers will be the account
parties for the application of each Letter of Credit Accommodation, which
shall be in form and substance satisfactory to the Administrative Agent and
the L/C Issuer or on a computer transmission system approved by the
Administrative Agent and the L/C Issuer, or such other written form or
computer transmission system as may from time to time be approved by the
Administrative Agent and the L/C Issuer, and shall be duly completed in a
manner and at a time reasonably acceptable to the Administrative Agent,
together with such other certificates, agreements, documents and other
papers and information as the Administrative Agent and the L/C Issuer may
reasonably request, which shall include, without limitation, the requested
date of issuance and the name and address of the beneficiary (the "Letter of
Credit Application"). In the event of any conflict between the terms of any
Letter of Credit Application and this Agreement, for purposes of this
Agreement, the terms of this Agreement shall control.
(b) The aggregate Letter of Credit Obligations shall
not at any time exceed lowest of (i) the difference between (A) the Total
Revolving Credit Commitment and (B) the aggregate principal amount of all
Revolving Loans then outstanding, (ii) the difference between (A) the
Borrowing Base and (B) the aggregate principal amount of all Revolving Loans
then outstanding, and (iii) the L/C Subfacility. In addition, the terms and
conditions of all Letter of Credit Accommodations and all changes or
modifications thereof by the Borrowers and/or the L/C Issuer shall in all
respects be subject to the prior approval of the Administrative Agent in its
reasonable business judgment; provided, however, that (i) the expiry date of
all Letter of Credit Accommodations shall be no later than the Final
Maturity Date and (ii) the Letter of Credit
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Accommodations and all documentation connection therewith shall be in form
and substance reasonably satisfactory to the Administrative Agent and the
L/C Issuer.
(c) If the Administrative Agent is obligated to
advance funds under a Letter of Credit Guaranty or in connection with a
Letter of Credit Accommodation, the Administrative Agent may immediately
reimburse such disbursement by charging the Loan Account as set forth below.
In the event that the Administrative Agent does not charge the Loan Account,
the Borrowers shall, upon demand by the Administrative Agent, immediately
reimburse such disbursement to the Administrative Agent by paying to it an
amount equal to such disbursement not later than 12:00 noon (New York City
time) on the date that such disbursement is made, if the Borrowers (or the
Administrative Borrower on behalf of the Borrowers) shall have received
written or telephone notice of such disbursement prior to 11:00 a.m. (New
York City time) on such date, or, if such notice has not been received by
the Borrowers (or the Administrative Borrower on behalf of the Borrowers)
prior to such time on such date, then no later than 12:00 noon (New York
City time) on the Business Day that the Borrowers (or the Administrative
Borrower on behalf of the Borrowers) receives such notice, if such notice is
received prior to 11:00 a.m. (New York City time) on the date of receipt. In
the absence of such reimbursement, the Administrative Agent shall have the
right, without notice to the Borrowers, to charge the Loan Account with the
amount of such disbursement and the Administrative Agent shall have the
right, without notice to the Borrowers, to charge the Loan Account with the
amount of any and all other Indebtedness, liabilities and obligations of any
kind (including indemnification for breakage costs, capital adequacy and
reserve requirement charges) incurred by the Administrative Agent or the
Revolving Loan Lenders under the Letter of Credit Guaranty or incurred by
the L/C Issuer with respect to a Letter of Credit Accommodation at the
earlier of (i) payment by the Administrative Agent or the Revolving Loan
Lenders under the Letter of Credit Guaranty or (ii) the occurrence of any
Default or Event of Default. Any amount charged to the Loan Account shall be
deemed a Revolving Loan hereunder made by the Revolving Loan Lenders to the
Borrowers, funded by the Administrative Agent on behalf of the Revolving
Loan Lenders and subject to Section 2.02. Any charges, fees, commissions,
costs and expenses charged to the Administrative Agent for the Borrowers'
account by the L/C Issuer in connection with or arising out of Letter of
Credit Accommodations or transactions relating thereto will be charged to
the Loan Account in full when charged to or paid by the Administrative Agent
and, when charged, shall be conclusive on the Borrowers absent manifest
error. Each of the Revolving Loan Lenders and the Borrowers agree that the
Administrative Agent shall have the right to make such charges regardless of
whether any Default or Event of Default shall have occurred and be
continuing or whether any of the conditions precedent in Section 6.03 have
been satisfied. If any such reimbursement of disbursements made by the
Administrative Agent is not made by the Administrative Agent by charging the
Loan Account and the Borrowers (or the Administrative Borrower on behalf of
the Borrowers) request and are entitled to obtain a Revolving Loan to
reimburse such disbursements on the date such reimbursement is due, such
reimbursement shall be made no later than the time that the Administrative
Agent makes the proceeds of the Revolving Loan available to the Borrowers.
(d) The Borrowers understand that the Letter of
Credit Guaranties may require the Administrative Agent and/or the Lenders to
indemnify the L/C Issuer for certain costs or liabilities arising out of
claims by the Borrowers against such L/C Issuer. The Borrowers
unconditionally and jointly and severally indemnify each Agent and each
Lender and holds each Agent and each Lender harmless from any and all loss,
claim or liability incurred by any Agent or
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any Lender arising from any transaction or occurrences relating to Letter of
Credit Accommodations, any drafts or acceptances thereunder, the Collateral
relating thereof, and all Obligations in respect thereto, including any such
loss or claim due to any action taken by the L/C Issuer, other than for any
such loss, claim or liability arising out of the gross negligence or willful
misconduct of the L/C Issuer, any Agent or any Lender as determined by a
final judgment of a court of competent jurisdiction. The Borrowers further
agree to jointly and severally hold each Agent and each Lender harmless from
any errors of omission, negligence or misconduct by the L/C Issuer. The
Borrowers agree to be bound by the L/C Issuer's regulations and
interpretations of any Letter of Credit Accommodation that is the subject of
a Letter of Credit Guaranty and opened to or for the Borrowers' account or
by the Administrative Agent's interpretations of any Letter of Credit
Accommodation issued for the Borrowers' account, even though such
interpretation may be different from the Borrowers' own, and the Borrowers
understand and agree that the Lenders, the Agents and the L/C Issuer shall
not be liable for any error, negligence, or mistake, whether of omission or
commission, in following the Borrowers' instructions or those contained in
the Letter of Credit Accommodation or any modifications, amendments, or
supplements thereto. The Borrowers' unconditional obligations to each Agent,
each Lender and the L/C Issuer with respect to Letter of Credit
Accommodations hereunder shall not be modified or diminished for any reason
or in any manner whatsoever, other than as a result of such Agent's, such
Lender's or the L/C Issuer's gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction. The
Borrowers agree that any charges incurred by the Administrative Agent or the
L/C Issuer for the Borrowers' account hereunder may be charged to the Loan
Account.
(e) Upon any payments made to the L/C Issuer under
the Letter of Credit Guaranty, the Administrative Agent or the Revolving
Loan Lenders, as the case may be, shall, without prejudice to their rights
under this Agreement (including that such unreimbursed amounts shall
constitute Revolving Loans hereunder), acquire by subrogation, any rights,
remedies, duties or obligations granted or undertaken by the Borrowers in
favor of the L/C Issuer in any application for Letter of Credit
Accommodations, any standing agreement relating to Letter of Credit
Accommodations or otherwise, all of which shall be deemed to have been
granted to the Administrative Agent and the Revolving Loan Lenders and apply
in all respects to the Administrative Agent and the Revolving Loan Lenders
and shall be in addition to any rights, remedies, duties or obligations
contained herein.
Section 3.02 Participations.
(a) Immediately upon issuance by the L/C Issuer of
any Letter of Credit Accommodation pursuant to this Agreement, each
Revolving Loan Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Administrative Agent,
without recourse or warranty, an undivided interest and participation, to
the extent of such Revolving Loan Lender's Pro Rata Share, in all
obligations of the Administrative Agent in such Letter of Credit
Accommodation including, without limitation, all Reimbursement Obligations
of the Borrowers with respect thereto pursuant to the Letter of Credit
Guaranty or otherwise.
(b) In the event that the Administrative Agent makes
any payment in respect of the Letter of Credit Guaranty and the Borrowers
shall not have repaid such amounts to the Administrative Agent, the
Administrative Agent shall charge the Loan Account in the amount
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of the Reimbursement Obligation, in accordance with Section 3.01(c) and
Section 5.02 of this Agreement.
(c) The obligations of a Revolving Loan Lender to
make payments to the Administrative Agent for the account of the
Administrative Agent, the Revolving Loan Lenders or the L/C Issuer with
respect to a Letter of Credit Accommodation shall be irrevocable, without
any qualification or exception whatsoever and shall be made in accordance
with the terms and conditions of this Agreement under all circumstances,
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of
this Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense
or other right which the Borrowers or any other Loan Party may have at any
time against a beneficiary named in such Letter of Credit Accommodation or
any transferee of such Letter of Credit Accommodation (or any Person for
whom any such transferee may be acting), any Agent, any Lender, or any other
Person, whether in connection with this Agreement, such Letter of Credit
Accommodation, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the Borrowers or
any other Loan Party or any other party and the beneficiary named in such
Letter of Credit Accommodation;
(iii) any draft, certificate or any other
document presented under such Letter of Credit Accommodation proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of any of the Loan
Documents;
(v) any failure by any Agent to provide any
notices required pursuant to this Agreement relating to such Letter of
Credit Accommodation;
(vi) any payment by the L/C Issuer under such
Letter of Credit Accommodation against presentation of a draft or
certificate which does not comply with the terms of such Letter of Credit
Accommodation; or
(vii) the occurrence of any Default or Event of
Default.
Section 3.03 Letter of Credit Accommodations.
(a) The Administrative Borrower may, upon reasonable
notice in advance of such issuance but, in any event, not later than 12:00
noon, New York City time, at least two (2) Business Days in advance of the
issuance thereof, request the Administrative Agent to assist the Borrowers
in establishing or opening a Letter of Credit by delivering to the
Administrative Agent, with a copy to the L/C Issuer, a Letter of Credit
Application, together with any necessary related documents. The
Administrative Agent shall not provide support, pursuant to the Letter of
Credit Guaranty, if the Administrative Agent shall have received written
notice from the Collateral Agent or the Required Lenders on the Business Day
immediately preceding the
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proposed issuance date for such Letter of Credit that one or more of the
conditions precedent in Section 6.03 will not have been satisfied on such
date, and the Administrative Agent shall not otherwise be required to
determine that, or take notice whether, the conditions precedent set forth
in Section 6.03 have been satisfied.
(b) (i) The Borrowers shall pay to the Administrative
Agent for the account of the Lenders in accordance with a written agreement
among the Agents and the Lenders (A) for any Letter of Credit Accommodation
issued hereunder, a non-refundable fee equal to 6.00% per annum of the
stated amount of such Letter of Credit Accommodation, payable, annually in
advance, on the date such Letter of Credit Accommodation is issued and (B)
for any amendment to an existing Letter of Credit Accommodation that
increases the stated amount of such Letter of Credit Accommodation, a
non-refundable fee equal to 6.00% per annum of the increase in the stated
amount of such Letter of Credit Accommodation, payable on the date of such
increase (the "Letter of Credit Fees"), except that (x) the Administrative
Agent may, and upon the written direction of the Required Revolving Loan
Lenders shall, require the Borrowers to pay the Administrative Agent such
Letter of Credit Fee, at a rate equal to 3.0% plus the per annum rate
otherwise applicable thereto on such daily outstanding balance for: (I) the
period from and after the date of termination hereof until all Obligations
shall have been Paid in Full (notwithstanding entry of a judgment against
any Borrower) and (II) the period from and after the date of the occurrence
of an Event of Default for so long as such Event of Default is continuing as
determined by the Collateral Agent and the Administrative Agent, (y) the
Borrowers shall not be obligated to pay any Letter of Credit Fees for any
Letter of Credit Accommodation issued during the 90-day period after October
8, 2003 to replace a letter of credit of the Borrowers supported by the
Pre-Petition Letter of Credit issued for the benefit of Citibank, N.A.,
except for such Letter of Credit Fees that accrue during the period after
the original expiration date of such Pre-Petition Letter of Credit issued
for the benefit of Citibank, N.A. and (z) the Borrowers shall not be
obligated to pay any Letter of Credit Fees for any Pre-Petition Letter of
Credit for any period after the Filing Date to the extent the Borrowers paid
the Letter of Credit Fees for such Pre-Petition Letters of Credit prior to
the Filing Date for such period.
(ii) L/C Issuer Charges. The Borrowers shall pay
to the Administrative Agent any and all customary charges assessed by the
L/C Issuer in connection with the issuance, administration, amendment,
payment or cancellation of Letter of Credit Accommodations.
(c) Charges to the Loan Account. The Borrowers hereby
authorize the Administrative Agent to, and the Administrative Agent may,
from time to time, charge the Loan Account pursuant to Section 3.01(c) and
Section 5.02 of this Agreement with the amount of any Letter of Credit
Accommodation fees or charges due under this Section 3.03.
(d) Existing Letters of Credit. Schedule 3.03(d)
hereto contains a list of all letters of credit outstanding on the Filing
Date pursuant to the Existing Credit Agreement. For the period from and
after the Final Facility Effective Date, each such letter of credit set
forth on Schedule 3.03(d), including any extension or renewal thereof that
remains outstanding on the Final Facility Effective Date (each, as amended
from time to time in accordance with the terms thereof and hereof, a
"Pre-Petition Letter of Credit") shall constitute a "Letter of Credit
Accommodation" issued for the account of the Borrowers, as the case may be,
for all purposes of this Agreement,
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including, without limitation, calculations of Availability, the Borrowing
Base, Letter of Credit Fees, Letter of Credit Obligations and Reimbursement
Obligations.
ARTICLE IV
SECURITY AND ADMINISTRATIVE PRIORITY
Section 4.01 Pre-Petition Obligations. Each of the
Pre-Petition Loan Parties hereby acknowledges, confirms and agrees that the
Pre-Petition Loan Parties are indebted to the Existing Agents and the
Existing Lenders for the Pre-Petition Obligations, as of December 17, 2003,
(a) in the aggregate principal amount of not less than $285,677,102.42 in
respect of Pre-Petition Obligations constituting loans under the Existing
Credit Agreement and (b) in the aggregate amount of not less than
$51,328,435.00 in respect of Pre-Petition Obligations related to the
Pre-Petition Letters of Credit, in each case, together with interest accrued
and accruing thereon in respect of such loans, and costs, expenses, fees
(including attorneys' fees), indemnities, reimbursement obligations and
other charges now or hereafter owed by the Pre-Petition Loan Parties to the
Existing Agents and the Existing Lenders, all of which are unconditionally
owing by the Pre-Petition Loan Parties to the Existing Agents and the
Existing Lenders, without offset, defense or counterclaim of any kind,
nature and description whatsoever.
Section 4.02 Acknowledgment of Security Interests. As of
the Filing Date, each of the Loan Parties hereby acknowledges, confirms and
agrees that the Existing Agents and the Existing Lenders have valid,
enforceable and perfected first priority and senior liens upon and security
interests in all of the Collateral (as defined in the Existing Credit
Agreement) pursuant to the Existing Credit Agreement and the other Loan
Documents (as defined in the Existing Credit Agreement) as in effect on the
Filing Date to secure all of the Pre-Petition Obligations.
Section 4.03 Binding Effect of Documents. Each of the Loan
Parties hereby acknowledges, confirms and agrees that: (a) each of the
Existing Credit Agreement and the other Loan Documents (as defined in the
Existing Credit Agreement) to which it is a party is in full force and
effect as of the date hereof, (b) the agreements and obligations of each of
the Pre-Petition Loan Parties contained in the Existing Credit Agreement and
the other Loan Documents (as defined in the Existing Credit Agreement)
constitute the legal, valid and binding obligations of each of the
Pre-Petition Loan Parties enforceable against it in accordance with their
respective terms and the Pre-Petition Loan Parties have no valid defense,
offset or counterclaim to the enforcement of such obligations and (c) the
Existing Agents and the Existing Lenders are and shall be entitled to all of
the rights, remedies and benefits provided for in the Existing Credit
Agreement and the other Loan Documents (as defined in the Existing Credit
Agreement), except as clauses (b) and (c) above are subject to the automatic
stay under the Bankruptcy Code upon commencement of the Chapter 11 Cases.
Section 4.04 Collateral; Grant of Lien and Security
Interest.
(a) As security for the full and timely payment and
performance of all of the Obligations:
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(i) each of the Parent and CPFilms hereby as of
the Interim Bankruptcy Court Order Entry Date, assigns, pledges and grants
to the Collateral Agent, for the benefit of the Lenders, a security interest
in and to and Lien on all of the Principal Properties (including, without
limitation, the Additional Principal Properties, but excluding the Krummrich
Property) which it owns, and all cash and non-cash proceeds thereof, and
(ii) each of the Loan Parties hereby, as of the
Final Bankruptcy Court Order Entry Date, assigns, pledges and grants (or
causes the assignment, pledge and grant in respect of any indirectly owned
assets) to the Collateral Agent, for the benefit of the Lenders, a security
interest in and to and Lien on all of the property, assets or interests in
property or assets of such Person, of any kind or nature whatsoever, real or
personal, now existing or hereafter acquired or created, including, without
limitation, all property of the "estate" (within the meaning of the
Bankruptcy Code), and all accounts, inventory, goods, contract rights,
instruments, documents, chattel paper, general intangibles, payment
intangibles, letters of credit, letter-of-credit rights, supporting
obligations, machinery and equipment, real property (including all Principal
Properties), fixtures, leases, all of the Capital Stock (whether such
Capital Stock is voting or non-voting Capital Stock) in any of its direct
Domestic Subsidiaries, all of the non-voting Capital Stock in any of its
direct Foreign Subsidiaries, Solutia UK Holdings and Solutia UK Investments,
the voting Capital Stock in any of its direct Foreign Subsidiaries, Solutia
UK Holdings and Solutia UK Investments limited to 65% of all of the
outstanding voting Capital Stock of such Foreign Subsidiary, all of its
Capital Stock or other equity interests in Astaris LLC, Flexsys
International L.P. (formerly known as Flexsys America LP), Quimica "M" S.A.
de C.V. and in all other joint venture, partnership or limited liability
company interests or other similar interests of such Loan Party in Persons
that are not its Subsidiaries directly owned by such Loan Party, 65% of the
intercompany note made by Solutia UK Investments in favor of Solutia UK
Holdings in an aggregate principal amount of approximately
(pounds)87,000,000, money, investment property, deposit accounts, all
commercial tort claims and all causes of action arising under the Bankruptcy
Code or otherwise (including, without limitation, all Avoidance Actions and
the proceeds thereof and all Avoided Payments), and all cash and non-cash
proceeds, rents, products and profits of any of collateral described above
(all property of the Loan Parties subject to the security interest referred
to in this Section 4.04(a) being hereafter collectively referred to as the
"Collateral").
(b) Upon entry of the Interim Bankruptcy Court Order
or Final Bankruptcy Court Order, as the case may be, the Liens and security
interests in favor of the Collateral Agent referred to in Section 4.04(a)
hereof shall be valid and perfected Liens and security interests in the
Collateral, prior to all other Liens and security interests in the
Collateral, other than for the Permitted Priority Liens. Such Liens and
security interests and their priority shall remain in effect until all
Obligations shall have been Paid in Full (other than indemnification
obligations for which no claim has been asserted).
(c) Notwithstanding anything herein to the contrary
(i) all proceeds received by the Agents and the Lenders from the Collateral
subject to the Liens granted in this Section 4.04 and in each other Loan
Document and by the Bankruptcy Court Orders shall be subject to the prior
payment of expenses to the extent set forth in clause "first" of the
definition of
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the term "Agreed Administrative Expense Priorities", and (ii) no Person
entitled to such expenses shall be entitled to sell or otherwise dispose of
any Collateral.
Section 4.05 Administrative Priority. Subject to the
Bankruptcy Court Orders, each of the Borrowers and Guarantors agrees for
itself that the Obligations of such Person shall constitute allowed
administrative expenses in the Chapter 11 Cases, having priority over all
administrative expenses of and unsecured claims against such Person now
existing or hereafter arising, of any kind or nature whatsoever, including,
without limitation, all administrative expenses of the kind specified in, or
arising or ordered under, Sections 105, 326, 328, 503(b), 506(c), 507(a),
507(b), 546(c) and 1114 of the Bankruptcy Code, subject only to the prior
payment of expenses to the extent set forth in clause "first" of the
definition of the term "Agreed Administrative Expense Priorities".
Section 4.06 Grants, Rights and Remedies. The Liens and
security interests granted pursuant to Section 4.04(a) hereof and the
administrative priority granted pursuant to Section 4.05 hereof may be
independently granted by the Loan Documents and by other Loan Documents
hereafter entered into. This Agreement, the Bankruptcy Court Orders and such
other Loan Documents supplement each other, and the grants, priorities,
rights and remedies of the Agents and the Lenders hereunder and thereunder
are cumulative.
Section 4.07 No Filings Required. The Liens and security
interests referred to herein shall be deemed valid and perfected by entry of
the Interim Bankruptcy Court Order or the Final Bankruptcy Court Order, as
the case may be, and entry of the Interim Bankruptcy Court Order shall have
occurred on or before the date of any Loan or the issuance of any Letter of
Credit Accommodations and entry of the Final Bankruptcy Court Order shall
have occurred on or before the date of any Revolving Loan, Term Loan A or
the issuance of any Letter of Credit Accommodations. The Collateral Agent
shall not be required to file any financing statements, mortgages, notices
of Lien or similar instruments in any jurisdiction or filing office or to
take any other action in order to validate or perfect the Lien and security
interest granted by or pursuant to this Agreement, the Interim Bankruptcy
Court Order or the Final Bankruptcy Court Order, as the case may be, or any
other Loan Document.
Section 4.08 Survival. The Liens, lien priority,
administrative priorities and other rights and remedies granted to the
Agents and the Lenders pursuant to this Agreement, the Bankruptcy Court
Orders and the other Loan Documents (specifically including, but not limited
to, the existence, perfection and priority of the Liens and security
interests provided herein and therein, and the administrative priority
provided herein and therein) shall not be modified, altered or impaired in
any manner by any other financing or extension of credit or incurrence of
Indebtedness by any Borrower or any Guarantor (pursuant to Section 364 of
the Bankruptcy Code or otherwise), or by any dismissal or conversion of any
of the Chapter 11 Cases, or by any other act or omission whatsoever. Without
limitation, notwithstanding any such order, financing, extension,
incurrence, dismissal, conversion, act or omission:
(a) except for the expenses to the extent set forth
in clause "first" of the definition of the term "Agreed Administrative
Expense Priorities" as set forth in Section 4.05, no costs or expenses of
administration which have been or may be incurred in the Chapter 11 Cases or
any conversion of the same or in any other proceedings related thereto, and
no priority claims, are
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or will be prior to or on parity with any claim of the Agents and the
Lenders against any Borrower or any Guarantor in respect of any Obligation,
provided that, for the avoidance of doubt, without affecting the priority of
payment specified herein or therein, the Borrowers and the Guarantors may
make the administrative expense claim payments expressly specified in
Section 8.02(s)(iv) in accordance with the terms thereof;
(b) the Liens in favor of the Agents and the Lenders
set forth in Section 4.04(a) hereof shall constitute valid and perfected
first priority Liens and security interests, subject only to Permitted
Priority Liens to which such Liens and security interests may be subordinate
and junior, and shall be prior to all other Liens and security interests,
now existing or hereafter arising, in favor of any other creditor or any
other Person whatsoever; and
(c) the Liens in favor of the Agents and the Lenders
set forth herein and in the other Loan Documents shall continue to be valid
and perfected without the necessity that the Collateral Agent file financing
statements, mortgages or otherwise perfect its Lien under applicable
non-bankruptcy law.
ARTICLE V
FEES, PAYMENTS AND OTHER COMPENSATION
Section 5.01 Audit and Collateral Monitoring Fees. The
Borrowers acknowledge that pursuant to Section 8.01(f), representatives of
the Agents may visit any or all of the Loan Parties and/or conduct audits,
inspections, valuations and/or field examinations of any or all of the Loan
Parties at any time and from time to time in a manner so as not to unduly
disrupt the business of the Loan Parties. The Borrowers agree to pay (a)
$1,500 per day per examiner plus the examiner's out-of-pocket costs and
reasonable expenses incurred in connection with all such visits, audits,
inspections, valuations and field examinations and (b) the cost of all
visits, audits, inspections, valuations and field examinations conducted by
a third party on behalf of the Agents; provided, that, in the absence of a
Default or Event of Default, the Borrowers shall not be obligated to pay for
more than (x) four financial audits in any 12 month period, (y) four
inventory appraisals and one real property and fixed assets appraisal in any
12 month period, and (z) one enterprise valuation in any 12 month period,
and, after the occurrence and during the continuance of a Default or Event
of Default, the Borrowers shall pay for all audits, appraisals and
enterprise valuations.
Section 5.02 Payments; Computations and Statements. (a)
The Borrowers will make each payment under this Agreement not later than
12:00 noon on the day when due, in lawful money of the United States of
America and in immediately available funds, to the Administrative Agent's
Account. All payments received by the Administrative Agent after 12:00 noon
on any Business Day will be credited to the Loan Account on the next
succeeding Business Day. All payments shall be made by the Borrowers without
set-off, counterclaim, deduction or other defense to the Agents and the
Lenders. Except as provided in Section 2.02(c), after receipt, the
Administrative Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal ratably to the Lenders in
accordance with their Pro Rata Shares and like funds relating to the payment
of any other amount payable to any Lender to such Lender, in each case to be
applied in accordance with the terms of this Agreement, provided that the
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Administrative Agent will cause to be distributed all interest and fees
received from or for the account of the Borrowers not less than once each
month and in any event promptly after receipt thereof. The Lenders and the
Borrowers hereby authorize the Administrative Agent to, and the
Administrative Agent may, from time to time, charge the Loan Account of the
Borrowers with any amount due and payable by the Borrowers under any Loan
Document. Each of the Lenders and the Borrowers agrees that the
Administrative Agent shall have the right to make such charges whether or
not any Default or Event of Default shall have occurred and be continuing or
whether any of the conditions precedent in Section 6.03 have been satisfied.
Any amount charged to the Loan Account of the Borrowers shall be deemed a
Revolving Loan hereunder made by the Revolving Loan Lenders to the
Borrowers, funded by the Administrative Agent on behalf of the Lenders and
subject to Section 2.02(c). The Lenders and the Borrowers confirm that any
charges which the Administrative Agent may so make to the Loan Account of
the Borrowers as herein provided will be made as an accommodation to the
Borrowers and solely at the Administrative Agent's discretion, provided that
the Administrative Agent shall from time to time upon the request of the
Collateral Agent (to the extent there exists no Event of Default and such
charge does not exceed the then current Availability) or the Documentation
Agent, charge the Loan Account of the Borrowers with any amount due and
payable under any Loan Document. Whenever any payment to be made under any
such Loan Document shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in the computation of
interest or fees, as the case may be. All computations of fees shall be made
by the Administrative Agent on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such fees are payable. Each determination
by the Administrative Agent of an interest rate or fees hereunder shall be
conclusive and binding for all purposes in the absence of manifest error.
(b) The Administrative Agent shall provide the
Administrative Borrower, promptly after the end of each calendar month, a
summary statement (in the form from time to time used by the Administrative
Agent) of the opening and closing daily balances in the Loan Account of the
Borrowers during such month, the amounts and dates of all Loans made to the
Borrowers during such month, the amounts and dates of all payments on
account of the Loans to the Borrowers during such month and the Loans to
which such payments were applied, the amount of interest accrued on the
Loans to the Borrowers during such month, any Letter of Credit
Accommodations issued by the L/C Issuer for the account of the Borrowers
during such month, specifying the face amount thereof, the amount of charges
to the Loan Account and/or Loans made to the Borrowers during such month to
reimburse the Lenders for drawings made under Letter of Credit
Accommodations, and the amount and nature of any charges to the Loan Account
made during such month on account of fees, commissions, expenses and other
Obligations. All entries on any such statement shall be presumed to be
correct and, thirty (30) days after the same is sent, shall be final and
conclusive absent manifest error.
Section 5.03 Sharing of Payments, Etc. Except as provided
in Section 2.02(c), if any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) on account of any Obligation in excess of its share of payments
in accordance with the terms of this Agreement, such Lender shall forthwith
purchase from the other Lenders such participations in such similar
obligations held by them as shall be necessary to cause such purchasing
Lender to share the excess payment with the other Lenders in
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accordance with and to the extent required by the terms of this Agreement;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an
amount equal to such Lender's ratable share (according to the proportion of
(a) the amount of such Lender's required repayment to (b) the total amount
so recovered from the purchasing Lender of any interest or other amount paid
by the purchasing Lender in respect of the total amount so recovered). The
Borrowers agree that any Lender so purchasing a participation from another
Lender pursuant to this Section 5.03 may, to the fullest extent permitted by
law, exercise all of its rights (including the Lender's right of set-off)
with respect to such participation as fully as if such Lender were the
direct creditor of the Borrowers in the amount of such participation.
Section 5.04 Apportionment of Payments. Subject to Section
2.02(c) and to the written agreement among the Agents and the Lenders:
(a) All payments of principal and interest in respect
of outstanding Loans, all payments in respect of the Letter of Credit
Obligations, all payments of fees (other than the fees set forth in Section
2.06 hereof, and the Fee Letter, the Letter of Credit Fees provided for in
Section 3.03(b) and the audit and collateral monitoring fee provided for in
Section 5.01, in each case, to the extent set forth in a written agreement
among the Agents and the Lenders) and all other payments in respect of any
other Obligations, shall be allocated by the Administrative Agent among such
of the Lenders as are entitled thereto, in proportion to their respective
Pro Rata Shares or otherwise as provided herein or, in respect of payments
not made on account of Loans or Letter of Credit Obligations, as designated
by the Person making payment when the payment is made.
(b) After the occurrence and during the continuance
of an Event of Default, the Administrative Agent may, and upon the direction
of the Documentation Agent or the Required Revolving Loan Lenders shall,
apply all payments in respect of any Obligations and all proceeds of the
Collateral: (i) first, ratably to pay the Obligations in respect of any fees
(including any fees or charges assessed by the L/C Issuer), expense
reimbursements, indemnities and other amounts then due to the Agents or the
L/C Issuer until paid in full; (ii) second, ratably to pay the Obligations
in respect of any fees (including Letter of Credit Fees payable to the
Revolving Loan Lenders), expense reimbursements and indemnities then due to
the Revolving Loan Lenders until paid in full; (iii) third, ratably to pay
interest due in respect of the Agent Advances until paid in full; (iv)
fourth, ratably to pay principal of the Agent Advances until paid in full;
(v) fifth, ratably to pay interest due in respect of the Revolving Loans and
Letter of Credit Obligations until paid in full; (vi) sixth, ratably to pay
principal of the Revolving Loans and Letter of Credit Obligations (or, to
the extent such Letter of Credit Obligations are contingent, to provide cash
collateral in an amount equal to 105% of such Letter of Credit Obligations)
until paid in full; (vii) seventh, ratably to pay the Obligations in respect
of any fees, expense reimbursements and indemnities then due to the Term
Loan A Lenders and Term Loan B Lenders until paid in full; (viii) eighth,
ratably to pay interest due in respect of the Term Loan A and the Term Loan
B until paid in full; (ix) ninth, ratably to pay principal of the Term Loan
A and the Term Loan B until paid in full; and (x) tenth, to the ratable
payment of all other Obligations then due and payable.
(c) In each instance, so long as no Event of Default
has occurred and is continuing, Section 5.04(b) shall not be deemed to apply
to any payment by the Borrowers
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specified by the Administrative Borrower to the Administrative Agent to be
for the payment of the principal of or interest on the Term Loan A or the
Term Loan B or other related Obligations then due and payable under any
provision of this Agreement or the payment of all or part of the principal
of the Term Loan A or the Term Loan B in accordance with the terms and
conditions of Section 2.05(d).
Section 5.05 Increased Costs and Reduced Return. (a) If
any Lender, any Agent or the L/C Issuer shall have determined that the
adoption or implementation of, or any change in, any law, rule, treaty or
regulation, or any policy, guideline or directive of, or any change in, the
interpretation or administration thereof by, any court, central bank or
other administrative or Governmental Authority, or compliance by any Lender,
any Agent or the L/C Issuer or any Person controlling any such Lender, any
such Agent or the L/C Issuer with any directive of, or guideline from, any
central bank or other Governmental Authority or the introduction of, or
change in, any accounting principles applicable to any Lender, any Agent or
the L/C Issuer or any Person controlling any such Lender, any such Agent or
the L/C Issuer (in each case, whether or not having the force of law), shall
(i) subject any Lender, any Agent or the L/C Issuer, or any Person
controlling any such Lender, any such Agent or the L/C Issuer to any tax,
duty or other charge with respect to this Agreement or any Loan made by such
Lender or such Agent or any Letter of Credit Accommodation issued by the L/C
Issuer, or change the basis of taxation of payments to any Lender, any Agent
or the L/C Issuer or any Person controlling any such Lender, any such Agent
or the L/C Issuer of any amounts payable hereunder (except for taxes on the
overall net income of any Lender, any Agent or the L/C Issuer or any Person
controlling any such Lender, any such Agent or the L/C Issuer), (ii) impose,
modify or deem applicable any reserve, special deposit or similar
requirement against any Loan, any Letter of Credit Accommodation or against
assets of or held by, or deposits with or for the account of, or credit
extended by, any Lender, any Agent or the L/C Issuer or any Person
controlling any such Lender, any such Agent or the L/C Issuer or (iii)
impose on any Lender, any Agent or the L/C Issuer or any Person controlling
any such Lender, any such Agent or the L/C Issuer any other condition
regarding this Agreement or any Loan or Letter of Credit Accommodation, and
the result of any event referred to in clauses (i), (ii) or (iii) above
shall be to increase the cost to any Lender, any Agent or the L/C Issuer of
making any Loan, issuing, guaranteeing or participating in any Letter of
Credit Accommodation, or agreeing to make any Loan or issue, guaranty or
participate in any Letter of Credit Accommodation, or to reduce any amount
received or receivable by any Lender, any Agent or the L/C Issuer hereunder,
then, upon demand by any such Lender, any such Agent or the L/C Issuer, the
Borrowers shall pay to such Lender, such Agent or the L/C Issuer such
additional amounts as will compensate such Lender, such Agent or the L/C
Issuer for such increased costs or reductions in amount; provided, that the
Borrowers shall not be required to compensate any Lender, any Agent or the
L/C Issuer for any amounts incurred more than 180 days prior to the date
such Person notifies the Administrative Borrower that it intends to claim
such compensation therefor.
(b) If any Lender, any Agent or the L/C Issuer shall
have determined that any Capital Guideline or the adoption or implementation
of, or any change in, any Capital Guideline by the Governmental Authority
charged with the interpretation or administration thereof, or compliance by
any Lender, any Agent or the L/C Issuer or any Person controlling such
Lender, such Agent or the L/C Issuer with any Capital Guideline or with any
request or directive of any such Governmental Authority with respect to any
Capital Guideline, or the implementation of, or
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any change in, any applicable accounting principles (in each case, whether
or not having the force of law), either (i) affects or would affect the
amount of capital required or expected to be maintained by any Lender, any
Agent or the L/C Issuer or any Person controlling such Lender, such Agent or
the L/C Issuer, and any Lender, any Agent or the L/C Issuer determines that
the amount of such capital is increased as a direct or indirect consequence
of any Loans made or maintained, Letter of Credit Accommodations issued or
any guaranty or participation with respect thereto, any Lender's, any
Agent's or the L/C Issuer's or any such other controlling Person's other
obligations hereunder, or (ii) has or would have the effect of reducing the
rate of return on any Lender's, any Agent's or the L/C Issuer's any such
other controlling Person's capital to a level below that which such Lender,
such Agent or the L/C Issuer or such controlling Person could have achieved
but for such circumstances as a consequence of any Loans made or maintained,
Letter of Credit Accommodations issued, or any guaranty or participation
with respect thereto or any agreement to make Loans, to issue Letter of
Credit Accommodations or such Lender's, such Agent's or the L/C Issuer's or
such other controlling Person's other obligations hereunder (in each case,
taking into consideration, such Lender's, such Agent's or the L/C Issuer's
or such other controlling Person's policies with respect to capital
adequacy), then, upon demand by any Lender, any Agent or the L/C Issuer, the
Borrowers shall pay to such Lender, such Agent or the L/C Issuer from time
to time such additional amounts as will compensate such Lender, such Agent
or the L/C Issuer for such cost of maintaining such increased capital or
such reduction in the rate of return on such Lender's, such Agent's or the
L/C Issuer's or such other controlling Person's capital; provided, that the
Borrowers shall not be required to compensate any Lender, any Agent or the
L/C Issuer for any amounts incurred more than 180 days prior to the date
such Person notifies the Administrative Borrower that it intends to claim
such compensation therefor.
(c) All amounts payable under this Section 5.05 shall
bear interest from the date that is ten (10) days after the date of demand
by any Lender, any Agent or the L/C Issuer until payment in full to such
Lender, such Agent or the L/C Issuer at the Reference Rate. A certificate of
such Lender, such Agent or the L/C Issuer claiming compensation under this
Section 5.05, specifying the event herein above described and the nature of
such event shall be submitted by such Lender, such Agent or the L/C Issuer
to the Administrative Borrower, setting forth the additional amount due and
an explanation of the calculation thereof, and such Lender's, such Agent's
or the L/C Issuer's reasons for invoking the provisions of this Section
5.05, and shall be final and conclusive absent manifest error.
Section 5.06 Joint and Several Liability of the Borrowers.
(a) Notwithstanding anything in this Agreement or any other Loan Document to
the contrary, each of the Borrowers hereby accepts joint and several
liability hereunder and under the other Loan Documents in consideration of
the financial accommodations to be provided by the Agents and the Lenders
under this Agreement and the other Loan Documents, for the mutual benefit,
directly and indirectly, of each of the Borrowers and in consideration of
the undertakings of the other Borrower to accept joint and several liability
for the Obligations. Each of the Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as
a co-debtor, joint and several liability with the other Borrower, with
respect to the payment and performance of all of the Obligations (including,
without limitation, any Obligations arising under this Section 5.06), it
being the intention of the parties hereto that all of the Obligations shall
be the joint and several obligations of each of the Borrowers without
preferences or distinction among them. If and to the extent that any of the
Borrowers shall fail to make any
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payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each
such event, the other Borrower will make such payment with respect to, or
perform, such Obligation. Subject to the terms and conditions hereof, the
Obligations of each of the Borrowers under the provisions of this Section
5.06 constitute the absolute and unconditional, full recourse Obligations of
each of the Borrowers, enforceable against each such Person to the full
extent of its properties and assets, irrespective of the validity,
regularity or enforceability of this Agreement, the other Loan Documents or
any other circumstances whatsoever.
(b) The provisions of this Section 5.06 are made for
the benefit of the Agents, the Lenders and their successors and assigns, and
may be enforced by them from time to time against any or all of the
Borrowers as often as occasion therefor may arise and without requirement on
the part of the Agents, the Lenders or such successors or assigns first to
marshal any of its or their claims or to exercise any of its or their rights
against any other Borrower or to exhaust any remedies available to it or
them against any other Borrower or to resort to any other source or means of
obtaining payment of any of the Obligations hereunder or to elect any other
remedy. The provisions of this Section 5.06 shall remain in effect until all
of the Obligations shall have been Paid in Full.
(c) Each of the Borrowers hereby agrees that it will
not enforce any of its rights of contribution or subrogation against the
other Borrower with respect to any liability incurred by it hereunder or
under any of the other Loan Documents, any payments made by it to the Agents
or the Lenders with respect to any of the Obligations or any Collateral,
until such time as all of the Obligations have been Paid in Full. Any claim
which any Borrower may have against any other Borrower with respect to any
payments to the Agents or the Lenders hereunder or under any other Loan
Documents are hereby expressly made subordinate and junior in right of
payment, without limitation as to any increases in the Obligations arising
hereunder or thereunder, until the Obligations shall have been Paid in Full.
ARTICLE VI
CONDITIONS TO LOANS
Section 6.01 Conditions Precedent to Interim Facility
Effectiveness. This Agreement shall become effective as of the Business Day
(the "Interim Facility Effective Date") when each of the following
conditions precedent shall have been satisfied in a manner satisfactory to
the Administrative Agent and the Collateral Agent:
(a) Interim Bankruptcy Court Order. The Interim
Bankruptcy Court Order shall have been entered by the Bankruptcy Court and
the Administrative Agent and the Collateral Agent shall have received a true
and complete copy of such order, and such order shall be in full force and
effect and shall not have been reversed, modified, amended, stayed or
vacated absent prior written consent of the Agents, the Required Lenders and
the Borrowers, which consent shall not be unreasonably withheld in the case
of ministerial amendments or modifications.
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(b) Payment of Fees, Etc. The Borrowers shall have
paid on or before the date of this Agreement all fees, costs, expenses and
taxes then payable pursuant to Section 2.06, the Fee Letter and Section
13.04.
(c) Representations and Warranties; No Event of
Default. The following statements shall be true and correct: (i) the
representations and warranties contained in ARTICLE VII and in each other
Loan Document, certificate or other writing delivered to any Agent, any
Lender or the L/C Issuer pursuant hereto or thereto on or prior to the
Interim Facility Effective Date are true and correct on and as of the
Interim Facility Effective Date as though made on and as of such date and
(ii) no Default or Event of Default shall have occurred and be continuing on
the Interim Facility Effective Date or would result from this Agreement or
the other Loan Documents becoming effective in accordance with its or their
respective terms.
(d) Legality. The making of the initial Loans or the
issuance of any Letter of Credit Accommodations shall not contravene any
law, rule or regulation applicable to any Agent, any Lender or the L/C
Issuer.
(e) Delivery of Documents. The Collateral Agent shall
have received on or before the Interim Facility Effective Date the
following, each in form and substance satisfactory to the Collateral Agent
and, unless indicated otherwise, dated on or as of the Interim Facility
Effective Date:
(i) a Mortgage, duly executed by the applicable
Loan Party, with respect to each Principal Property (including, without
limitation, each Additional Principal Property, but excluding the Krummrich
Property);
(ii) one or more Title Insurance Policies with
respect to the Principal Properties (including, without limitation, each
Additional Principal Property, but excluding the Krummrich Property), each
dated as of the Interim Facility Effective Date, which together shall
provide title insurance in an aggregate amount of not less than $85,000,000,
which Title Insurance Policies shall (A) insure the Collateral Agent that
the Mortgages covered by such Title Insurance Policies are valid and
enforceable first priority mortgage Liens on such Principal Properties, and
that such Mortgages purport to encumber free and clear of all defects and
encumbrances, except Permitted Priority Liens, (B) insure that the Mortgages
will retain their first Lien priority status (except as to customary items
noted in the endorsements) on such Principal Properties as Loans are
borrowed and re-borrowed pursuant to the terms set forth herein and (C)
otherwise be in form and substance satisfactory to the Collateral Agent;
(iii) the Fee Letter, duly executed by the
Borrowers and duly acknowledged by each other Loan Party;
(iv) a copy of the resolutions of each Loan
Party, certified as of the Interim Facility Effective Date by a Secretary or
an Assistant Secretary thereof, authorizing (A) the borrowings hereunder and
the transactions contemplated by the Loan Documents to which such Loan Party
is or will be a party, and (B) the execution, delivery and performance by
such Loan Party of each Loan Document to which such Loan Party is or will be
a party and the
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execution and delivery of the other documents to be delivered by such Person
in connection herewith and therewith;
(v) a certificate of a Secretary or an Assistant
Secretary of each Loan Party, certifying the names and true signatures of
the representatives of such Loan Party authorized to sign each Loan Document
to which such Loan Party is or will be a party and the other documents to be
executed and delivered by such Loan Party in connection herewith and
therewith, together with evidence of the incumbency of such authorized
officers;
(vi) to the extent required by the Collateral
Agent, a certificate of the appropriate official(s) of the state or other
applicable jurisdiction of organization and each state of foreign
qualification of each Loan Party certifying as to the subsistence in good
standing of, and the payment of taxes by, such Loan Party in such states or
other applicable jurisdiction and certified as of a recent date not more
than 30 days prior to the Interim Facility Effective Date, together, if
requested by the Collateral Agent, with confirmation by telephone or
telecopy (where available) on the Interim Facility Effective Date from such
official(s) as to such matters;
(vii) a copy of the charter and by-laws, limited
liability company agreement, operating agreement, agreement of limited
partnership or other organizational document of each Loan Party, together
with all amendments thereto, certified as of the Interim Facility Effective
Date by a Secretary or an Assistant Secretary of such Loan Party or a
certificate of a Secretary or an Assistant Secretary of such Loan Party
certifying that such documents delivered pursuant to the Existing Credit
Agreement remain in full force and effect and have not been amended or
otherwise modified;
(viii) an opinion of Gibson, Dunn & Crutcher
LLP, counsel to the Loan Parties, substantially in the form of Exhibit D;
(ix) a certificate of an Authorized Officer of
each Loan Party, certifying as to the matters set forth in subsection (c) of
this Section 6.01;
(x) a certificate of a Secretary or an Assistant
Secretary of the Administrative Borrower, certifying the names and true
signatures of the persons that are authorized to provide Notices of
Borrowing and all other notices under this Agreement and the other Loan
Documents;
(xi) a copy of the Financial Statements and the
financial projections described in Section 7.01(g)(ii) hereof, certified as
of the Interim Facility Effective Date as true and correct by an Authorized
Officer of the Parent, which certification, in the case of the financial
projections, shall certify that such projections have been prepared on a
reasonable basis and in good faith and are based on assumptions believed by
the Borrowers to be reasonable at the time made and from the best
information then available to the Borrowers; and
(xii) such other agreements, instruments,
approvals, opinions and other documents, each satisfactory to the Collateral
Agent in form and substance, as the Collateral Agent may reasonably request.
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(f) Material Adverse Effect. The Collateral Agent
shall have determined, in its sole judgment, that, no event or development
shall have occurred since October 8, 2003 which could have a Material
Adverse Effect.
(g) Priority. The Collateral Agent shall be satisfied
that it has been granted, and holds, for the benefit of the Lenders, a
perfected, first priority Lien on, and security interest in, all of the
Collateral described in Section 4.04(a)(i), subject only to Permitted
Priority Liens.
(h) Approvals. All consents, authorizations and
approvals of, and filings and registrations with, and all other actions in
respect of, any Governmental Authority or other Person required in
connection with the making of the Loans shall have been obtained and shall
be in full force and effect.
(i) Proceedings; Receipt of Documents. All
proceedings in connection with the making of the initial Loans or the
issuance of the initial Letter of Credit Accommodations and the other
transactions contemplated by this Agreement and the other Loan Documents,
and all documents incidental hereto and thereto, shall be satisfactory to
the Collateral Agent and its counsel, and the Collateral Agent and such
counsel shall have received all such information and such counterpart
originals or certified or other copies of such documents as the Collateral
Agent or such counsel may reasonably request.
Section 6.02 Conditions Precedent to Final Facility
Effectiveness. The obligation of any Agent or any Lender to make any Loan or
of the Administrative Agent to assist the Borrowers in establishing or
opening any Letter of Credit Accommodation during the Final Period shall
commence as of the Business Day (the "Final Facility Effective Date") when
each of the following conditions precedent shall have been satisfied in a
manner satisfactory to the Collateral Agent:
(a) Final Bankruptcy Court Order, Etc. The Final
Bankruptcy Court Order shall have been signed and entered by the Bankruptcy
Court within a date which is 30 days following the date of the entry of the
Interim Facility Bankruptcy Court Order, and the Collateral Agent shall have
received a true and complete copy of such order, and such order shall be in
full force and effect and shall not have been reversed, modified, amended,
stayed or vacated absent the prior written consent of the Agents, the
Required Lenders and the Borrowers, which consent shall not be unreasonably
withheld in the case of ministerial amendments or modifications.
(b) Payment of Fees, Etc. The Borrowers shall have
paid on or before such date all fees, costs, expenses and taxes then payable
pursuant to Section 2.06, and Section 13.04 and the Fee Letter.
(c) Representations and Warranties; No Event of
Default. The following statements shall be true and correct: (i) the
representations and warranties contained in ARTICLE VII and in each other
Loan Document, certificate or other writing delivered to the Agents or the
Lenders pursuant hereto or thereto on or prior to the Final Facility
Effective Date are true and correct on and as of the Final Facility
Effective Date as though made on and as of such date and (ii) no Default or
Event of Default shall have occurred and be continuing on the Final
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Facility Effective Date or would result from the making of Loans or the
issuance of any Letter of Credit Accommodation on such date.
(d) Liens; Priority. The Collateral Agent shall be
satisfied that it has been granted, and still continues to hold, for the
benefit of the Lenders, a perfected, first priority Lien on and security
interest in all of the Collateral, subject only to Permitted Priority Liens.
At the request of the Collateral Agent, the Collateral Agent shall receive
UCC, tax and judgment Lien searches and, solely with respect to the
Principal Properties, title reports, and other appropriate evidence,
evidencing the absence of any Liens or mortgages on the Collateral, except
Permitted Liens.
(e) Pre-Petition Obligations. The Pre-Petition
Obligations (other than indemnification obligations for which no claim has
been asserted) shall have been Paid in Full in full with the proceeds of the
initial Loans (and each Pre-Petition Letter of Credit shall be deemed
reissued as set forth in Section 3.03(d)) on the Final Facility Effective
Date.
(f) Availability. After giving effect to all Loans to
be made on the Final Facility Effective Date and the Letter of Credit
Accommodations to be issued on the Final Facility Effective Date, (i) the
Availability shall not be less than $10,000,000 (calculated without giving
effect to any cash of any Loan Party unless such cash has been delivered to
the Administrative Agent) and (ii) all liabilities of the Loan Parties shall
be in accordance with recent historical standards. The Administrative
Borrower shall deliver to the Collateral Agent a certificate of the chief
financial officer of the Administrative Borrower certifying as to the
matters set forth in clauses (i) and (ii) above and containing the
calculation of Availability.
(g) Cash Management. The Collateral Agent shall have
received such depository account, blocked account, lockbox account and
similar agreements and other documents, each in form and substance
satisfactory to the Collateral Agent and Administrative Agent, as such Agent
may request with respect to the Loan Parties' cash management system, which
will be consistent with the arrangements under the Existing Credit
Agreement.
(h) Title Insurance. A Title Insurance Policy with
respect to each of the Principal Properties, dated as of the Final Facility
Effective Date, providing title insurance in an aggregate amount of not less
than $515,000,000, in form and substance satisfactory to the Collateral
Agent.
(i) Pledge Agreements. (i) A Pledge Agreement, duly
executed by each Loan Party, together with the original stock certificates
representing (A) all of the Capital Stock of such Loan Party's directly
owned Domestic Subsidiaries, and (B) all of the non-voting Capital Stock,
and the voting Capital Stock equal to 65% of all of the outstanding voting
Capital Stock, of such Loan Party's directly owned Foreign Subsidiaries
(other than Vianova Resins Canada Inc., Solutia Colombia Ltd., Solutia GOM
India Coatings Materials Pty. Ltd., Solutia China Ltd.) and of Solutia UK
Holdings and Solutia UK Investments, and all intercompany promissory notes
evidencing Indebtedness owing to such Loan Parties (other than in the case
of the intercompany convertible bond made by Solutia Europe to Solutia
Investments LLC and Monchem International, Inc., which shall be limited to
65% of the interest of Solutia Investments LLC and Monchem International,
Inc. in such convertible bond (and which the Loan Parties will be
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permitted to convert a portion thereof in order to comply with capital
adequacy requirements under the laws of Belgium on terms and conditions
reasonably satisfactory to the Collateral Agent)), accompanied by undated
stock powers executed in blank and other proper instruments of transfer, and
(ii) Pledge Agreements, duly executed by (A) each of Monchem International,
Inc. and Solutia Investments, LLC in respect of its pledge of all of the
non-voting Capital Stock, and the voting Capital Stock equal to 65% of all
of the outstanding voting Capital Stock, of Solutia Europe, and in respect
of its pledge of 65% of its interest in the intercompany convertible bond
made by Solutia Europe to Solutia Investments LLC and Monchem International,
Inc., (B) each of Solutia Dutch Newco, Monchem International, Inc. and
Parent in respect of its pledge of all of the non-voting Capital Stock, and
the voting Capital Stock equal to 65% of all of the outstanding voting
Capital Stock, of Solutia UK Holdings, (C) Solutia UK Holdings in respect of
its pledge of (x) all of the non-voting Capital Stock, and the voting
Capital Stock equal to 65% of all of the outstanding voting Capital Stock,
of Solutia UK Investments and (y) 65% of the intercompany note made by
Solutia UK Investments to Solutia UK Holdings in an aggregate principal
amount of approximately (pounds)87,000,000, (D) Monchem International, Inc.
in respect of its pledge of all of the non-voting Capital Stock, and the
voting Capital Stock equal to 65% of all of the outstanding voting Capital
Stock, of Solutia Netherlands Holdings B.V. and (E) Solutia Dutch Newco in
respect of its pledge of all of the non-voting Capital Stock, and the voting
Capital Stock equal to 65% of all of the outstanding voting Capital Stock,
of Solutia Netherlands Holdings B.V. and of Solutia UK Holdings, which, in
the case of clauses (ii)(A), (ii)(B), (ii)(C), (ii)(D) and (ii)(E) above
complies with the requirements of law of Belgium, England and Wales and The
Netherlands, respectively, in each case, together with such legal opinions
as may be reasonably requested by, and in form and substance satisfactory
to, the Collateral Agent.
(j) Material Adverse Effect. The Agents shall have
determined, in its reasonable judgment, that no change having a Material
Adverse Effect shall have occurred and be continuing since the Interim
Facility Effective Date.
Section 6.03 Conditions Precedent to All Loans and Letter
of Credit Accommodations. The obligation of any Agent or any Lender to make
any Loan (other than a Carve-Out Term Loan B) or of the Administrative Agent
to assist the Borrowers in establishing or opening any Letter of Credit
Accommodation on or after the Interim Facility Effective Date is subject to
the fulfillment, in a manner satisfactory to the Administrative Agent, of
each of the following conditions precedent:
(a) Payment of Fees, Etc. The Borrowers shall have
paid all fees, costs, expenses and taxes then payable by the Borrowers
pursuant to this Agreement and the other Loan Documents, including, without
limitation, Section 2.06 and Section 13.04 hereof.
(b) Representations and Warranties; No Event of
Default. The following statements shall be true and correct, and the
submission by the Administrative Borrower to the Administrative Agent of a
Notice of Borrowing with respect to each such Loan, and the Borrowers'
acceptance of the proceeds of such Loan, and the issuance of each Letter of
Credit Accommodation, shall each be deemed to be a representation and
warranty by each Loan Party on the date of such Loan or the date of issuance
of such Letter of Credit Accommodation that: (i) the representations and
warranties contained in ARTICLE VII and in each other Loan Document,
certificate or other writing delivered to any Agent or any Lender pursuant
hereto or thereto on or
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prior to the date of such Loan or such Letter of Credit Accommodation are
true and correct on and as of such date as though made on and as of such
date, (ii) at the time of and after giving effect to the making of such Loan
and the application of the proceeds thereof or at the time of issuance of
such Letter of Credit Accommodation, no Default or Event of Default has
occurred and is continuing or would result from the making of the Loan to be
made, or the issuance of such Letter of Credit Accommodation to be issued,
on such date and (iii) the conditions set forth in this Section 6.02 have
been satisfied as of the date of such request.
(c) Legality. The making of such Loan (other than a
Carve-Out Term Loan B) or the issuance of such Letter of Credit
Accommodation shall not contravene any law, rule or regulation applicable to
any Agent, any Lender or the L/C Issuer.
(d) Notices. The Administrative Agent shall have
received a Notice of Borrowing pursuant to Section 2.02 hereof.
(e) Delivery of Documents. The Administrative Agent
and the Collateral Agent shall have received such other agreements,
instruments, approvals, opinions and other documents, each in form and
substance satisfactory to such Agents, as any such Agent may reasonably
request.
(f) Proceedings; Receipt of Documents. All
proceedings in connection with the making of such Loan (other than a
Carve-Out Term Loan B) or the issuance of such Letter of Credit
Accommodation and the other transactions contemplated by this Agreement and
the other Loan Documents, and all documents incidental hereto and thereto,
shall be satisfactory to the Administrative Agent and the Collateral Agent
and their counsel, and the Administrative Agent and the Collateral Agent and
such counsel shall have received all such information and such counterpart
originals or certified or other copies of such documents, in form and
substance satisfactory to the Administrative Agent and the Collateral Agent,
as such Agents or such counsel may reasonably request.
Section 6.04 Conditions Precedent to the Carve-Out Term
Loan B. Notwithstanding anything in this Agreement to the contrary, the
obligation of each Term Loan B Lender to make any Carve-Out Term Loan B to
fund payments of any Carve-Out Expenses during the Carve-Out Expenses Period
shall not be subject to the conditions set forth in Section 6.03 and shall
be subject to (a) the Administrative Agent and the Collateral Agent having
received a Notice of Borrowing pursuant to Section 2.02 hereof and (b) the
Administrative Agent and the Collateral Agent having received a certificate
of the Borrowers certifying the amount of Carve-Out Expenses to be paid, and
attaching thereto a copy of the Bankruptcy Court order approving the payment
of such Carve-Out Expense and the invoice with respect to such Carve-Out
Expense, each in form and substance satisfactory to such Agents.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 Representations and Warranties. Each Loan
Party hereby represents and warrants to the Agents, the Lenders and the L/C
Issuer as follows:
(a) Organization, Good Standing, Etc. Each Loan Party
(i) is a corporation, limited liability company or limited partnership duly
organized, validly existing and in good standing under the laws of the
state, province or other applicable jurisdiction of its organization except
to the extent that the failure to be in good standing could not reasonably
be expected to have a Material Adverse Effect, (ii) subject to the entry and
the terms of the Bankruptcy Court Orders, has all requisite power and
authority to conduct its business as now conducted and as presently
contemplated and, in the case of the Borrowers, to make the borrowings
hereunder, and to execute and deliver each Loan Document to which it is a
party, and to consummate the transactions contemplated thereby, and (iii) is
duly qualified to do business and is in good standing in each jurisdiction
in which the character of the properties owned or leased by it or in which
the transaction of its business makes such qualification necessary except to
the extent that the failure to be so qualified could not reasonably be
expected to have a Material Adverse Effect.
(b) Authorization, Etc. The execution, delivery and
performance by each Loan Party of each Loan Document to which it is or will
be a party, (i) have been duly authorized by all necessary action, (ii) do
not and will not contravene its charter or by-laws, its limited liability
company or operating agreement or its certificate of partnership or
partnership agreement, as applicable, or any applicable law or any
contractual restriction binding on or otherwise affecting it or any of its
properties (other than conflicts, breaches and defaults, the enforcement of
which will be stayed by virtue of the filing of the Chapter 11 Cases), or
any order or decree of any court or Governmental Authority (including,
without limitation, any order entered in the Chapter 11 Cases), (iii) do not
and will not result in or require the creation of any Lien (other than
pursuant to any Loan Document) upon or with respect to any of its material
properties, and (iv) do not and will not result in any material default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal
of any material permit, license, authorization or approval applicable to its
operations or any of its properties.
(c) Governmental Approvals. Except for the entry of
the Bankruptcy Court Orders, no authorization or approval or other action
by, and no notice to or filing with, any Governmental Authority is required
in connection with the due execution, delivery and performance by any Loan
Party of any Loan Document to which it is or will be a party.
(d) Execution and Binding Effect. Subject to the
entry of, and the terms of the Bankruptcy Court Orders, this Agreement and
each of the other Loan Documents, when delivered hereunder, is or will be,
duly and validly executed and delivered by each of the Loan Parties which is
a party hereto or thereto and constitutes legal, valid and binding
obligations of each of the Loan Parties which is a party hereto or thereto,
enforceable in accordance with the terms hereof or thereof.
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(e) Subsidiaries. Schedule 7.01(e) is a complete and
correct description of the name, jurisdiction of incorporation and ownership
of the outstanding Capital Stock of the Subsidiaries of the Parent in
existence on the date hereof. All of the issued and outstanding shares of
Capital Stock of such Subsidiaries have been validly issued and are fully
paid and nonassessable, and the holders thereof are not entitled to any
preemptive, first refusal or other similar rights. Except as indicated on
such Schedule, on the Interim Facility Effective Date all such Capital Stock
is owned by the Parent or one or more of its wholly-owned Subsidiaries, free
and clear of all Liens. Except as set forth on Schedule 7.01(e), there are
no outstanding debt or equity securities of the Parent or any of its
Subsidiaries and no outstanding obligations of the Parent or any of its
Subsidiaries convertible into or exchangeable for, or warrants, options or
other rights for the purchase or acquisition from the Parent or any of its
Subsidiaries, or other obligations of any Subsidiary to issue, directly or
indirectly, any shares of Capital Stock of any Subsidiary of the Parent.
Schedule 7.01(e) identifies, as of the Interim Facility Effective Date, each
Significant Subsidiary and each "Restricted Subsidiary" as such term is
defined under each of the Euro Indenture, the 1997 Indenture and the 2009
Note Indenture.
(f) Litigation; Commercial Tort Claims. Except as set
forth in Schedule 7.01(f), and excluding pre-petition litigations that are
stayed by 11 U.S.C. Section 362, (i) there is no pending or, to the best
knowledge of any Loan Party, threatened action, suit or proceeding affecting
any Loan Party or its properties before any court or other Governmental
Authority or any arbitrator that (A) if adversely determined, could
reasonably be expected to have a Material Adverse Effect or (B) relates to
this Agreement or any other Loan Document or any transaction contemplated
hereby or thereby and (ii) as of the Interim Facility Effective Date, none
of the Loan Parties holds any commercial tort claims in respect of which a
claim has been filed in a court of law or a written notice by an attorney
has been given to a potential defendant.
(g) Financial Condition.
(i) The Financial Statements, copies of which
have been delivered to each Agent and each Lender, fairly present, in all
material respects, the consolidated financial condition of the Parent and
its Subsidiaries as at the respective dates thereof and the consolidated
results of operations of the Parent and its Subsidiaries for the fiscal
periods ended on such respective dates, all in accordance with GAAP, other
than with respect to interim Financial Statements, year end audit
adjustments and the absence of footnotes and since October 31, 2003 no event
or development has occurred that has had or could have a Material Adverse
Effect, except as disclosed in the Parent's public filings with the SEC
prior to the Interim Facility Effective Date.
(ii) On or before the Interim Facility Effective
Date, the Parent has heretofore furnished to each Agent and each Lender (A)
projected monthly balance sheets, income statements and statements of cash
flows of the Parent and its Subsidiaries for the period from October 2003
through October 2004, and (B) projected annual balance sheets, income
statements and statements of cash flows of the Parent and its Subsidiaries
for the Fiscal Years ending in 2004 through 2005, which projected financial
statements shall be updated from time to time pursuant Section 8.01(a)(vii).
Such projections, as so updated, shall be believed by the Parent at the time
furnished to be reasonable, shall have been prepared on a reasonable basis
and in good faith by the Parent, and shall have been based on assumptions
believed by the Parent to
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be reasonable at the time made and upon the best information then reasonably
available to the Parent, and the Parent shall not be aware of any facts or
information that would lead it to believe that such projections, as so
updated, are incorrect or misleading in any material respect.
(h) Compliance with Law, Etc. No Loan Party is in
violation of (i) its organizational documents, or (ii) any material law,
rule, regulation, judgment or order of any Governmental Authority applicable
to it or any of its property or assets, except to the extent, in the case of
clause (ii) (A) that the enforcement of any such violation is stayed by
virtue of the filing of the Chapter 11 cases, or (B) that it is subject to a
Good Faith Belief of Stay; and no Default or Event of Default has occurred
and is continuing.
(i) ERISA. Except as set forth on Schedule 7.01(i),
(i) each Employee Plan is in compliance in all material respects with ERISA
and the Internal Revenue Code, (ii) no Termination Event has occurred on or
prior to the Interim Facility Effective Date nor is reasonably expected to
result in a Material Adverse Effect after the Interim Facility Effective
Date with respect to any Employee Plan, (iii) the most recent annual report
(Form 5500 Series) with respect to each Employee Plan, including any
required Schedule B (Actuarial Information) thereto, copies of which have
been filed with the Internal Revenue Service and delivered to the Agents, is
complete and correct in all material respects and fairly presents the
funding status of such Employee Plan, and since the date of such report
there has been no material adverse change in such funding status, (iv)
copies of each agreement entered into with the PBGC, the U.S. Department of
Labor or the Internal Revenue Service with respect to any Employee Plan have
been delivered to the Agents, (v) no Employee Plan had an accumulated or
waived funding deficiency or permitted decrease which would create a
deficiency in its funding standard account or has applied for an extension
of any amortization period within the meaning of Section 412 of the Internal
Revenue Code at any time during the previous 60 months, and (vi) no Lien
imposed under the Internal Revenue Code or ERISA exists or is likely to
arise on account of any Employee Plan within the meaning of Section 412 of
the Internal Revenue Code or Section 4068 of ERISA. Except as set forth on
Schedule 7.01(i), no Loan Party or any of its ERISA Affiliates has incurred
any withdrawal liability in excess of $1,000,000 under ERISA with respect to
any Multiemployer Plan, or is aware of any facts indicating that it or any
of its ERISA Affiliates may in the future incur any such withdrawal
liability. No Loan Party or any of its ERISA Affiliates or any fiduciary of
any Employee Plan has (A) engaged in a nonexempt prohibited transaction
described in Sections 406 of ERISA or 4975 of the Internal Revenue Code, (B)
failed to pay any required installment or other payment required under
Section 412 of the Internal Revenue Code on or before the due date for such
required installment or payment, (C) engaged in a transaction within the
meaning of Section 4069 of ERISA or (D) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums, and there are
no premium payments which have become due which are unpaid. Except as set
forth on Schedule 7.01(i), there are no pending or, to the best knowledge of
any Loan Party, threatened claims, actions, proceedings or lawsuits (other
than claims for benefits in the normal course) asserted or instituted
against (x) any Employee Plan or its assets, (y) any fiduciary with respect
to any Employee Plan, or (z) any Loan Party or any of its ERISA Affiliates
with respect to any Employee Plan. Except as set forth on Schedule 7.01(i)
and except as required by Section 4980B of the Internal Revenue Code, no
Loan Party or any of its ERISA Affiliates maintains an employee welfare
benefit plan (as defined in Section 3(1) of ERISA) which provides health or
welfare benefits (through the purchase of insurance or otherwise) for any
retired or
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former employee of any Loan Party or any of its ERISA Affiliates or coverage
after a participant's termination of employment.
(j) Taxes, Etc. All Federal and foreign and all
material state and local tax returns and other material reports required by
applicable law to be filed by any Loan Party have been filed, or extensions
have been obtained, and all taxes, assessments and other governmental
charges imposed upon any Loan Party or any property of any Loan Party and
which have become due and payable on or prior to the date hereof have been
paid, except to the extent contested in good faith by proper proceedings
which stay the imposition of any penalty, fine or Lien resulting from the
non-payment thereof and with respect to which adequate reserves have been
set aside for the payment thereof in accordance with GAAP or to the extent
that such payment or any enforcement action is stayed as a result of the
Chapter 11 Cases.
(k) Regulations T, U and X. No Loan Party is or will
be engaged in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulation T, U or X), and
no proceeds of any Loan will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock.
(l) Nature of Business. No Loan Party is engaged in
any business other than as described in the Parent's Form 10-K filed on
March 6, 2003 with the SEC.
(m) Adverse Agreements, Etc. No Loan Party is a party
to any agreement or instrument, or subject to any charter, limited liability
company agreement, partnership agreement or other corporate, partnership or
limited liability company restriction or any judgment, order, regulation,
ruling or other requirement of a court or other Governmental Authority,
which has, or in the future could reasonably be expected to have, a Material
Adverse Effect.
(n) Permits, Etc. Each Loan Party has, and is in
compliance with, all permits, licenses, authorizations, approvals,
entitlements and accreditations required for such Person lawfully to own,
lease, manage or operate, or to acquire, each business currently owned,
leased, managed or operated, or to be acquired, by such Person, which if not
obtained, could reasonably be expected to have a Material Adverse Effect. No
condition exists or event has occurred which, results in, or with the giving
of notice or lapse of time or both, would result in, the suspension,
revocation, impairment, forfeiture or non-renewal of any such permit,
license, authorization, approval, entitlement or accreditation, and there is
no claim that any thereof is not in full force and effect, except, to the
extent any such condition, event or claim could not reasonably be expected
to have a Material Adverse Effect.
(o) Properties. (i) Each Loan Party has good and
marketable title to, valid leasehold interests in, or valid licenses to use,
all property and assets material to its business, free and clear of all
Liens, except Permitted Liens. All such properties and assets are in good
working order and condition, ordinary wear and tear excepted.
(ii) Schedule 7.01(o) sets forth a complete and
accurate list, as of the Interim Facility Effective Date, of the location,
by state and street address, of all real
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property of each Loan Party with (A) a Current Value in excess of $1,000,000
in the case of a fee interest, or (B) requiring the payment of annual rent
exceeding in the aggregate $100,000 in the case of leasehold interest. As of
the Interim Facility Effective Date, each Loan Party has valid leasehold
interests in the Leases described on Schedule 7.01(o) to which it is a
party. Schedule 7.01(o) sets forth with respect to each such Lease, the
commencement date, termination date, renewal options (if any) and annual
base rents. Each such Lease is valid and enforceable in accordance with its
terms in all material respects and is in full force and effect. No consent
or approval of any landlord or other third party in connection with any such
Lease is necessary for any Loan Party to enter into and execute the Loan
Documents to which it is a party, except as set forth on Schedule 7.01(o).
To the best knowledge of any Loan Party, no other party to any such Lease is
in default of its material obligations thereunder, and no Loan Party (or any
other party to any such Lease) has at any time delivered or received any
notice of default which remains uncured under any such Lease and, as of the
Interim Facility Effective Date, no event has occurred which, with the
giving of notice or the passage of time or both, would constitute a default
under any such Lease, except any such default the enforcement of which is
stayed by virtue of the filing of the Chapter 11 cases.
(p) Full Disclosure. Each Loan Party has disclosed to
the Agents all agreements, instruments and corporate or other restrictions
to which it is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in
a Material Adverse Effect. None of the other reports, financial statements,
certificates or other information furnished by or on behalf of any Loan
Party to the Agents in connection with the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which it was made, not misleading; provided that, with
respect to projected financial information, each Loan Party represents only
that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time. There is no contingent liability or
fact that could reasonably be expected to have a Material Adverse Effect
which has not been set forth in a footnote included in the Financial
Statements or a Schedule hereto.
(q) Operating Lease Obligations. On the Interim
Facility Effective Date, none of the Loan Parties has any Operating Lease
Obligations with annual payments in excess of $100,000 other than the
Operating Lease Obligations set forth on Schedule 7.01(q).
(r) Environmental Matters.
(i) Except as set forth on Part A of Schedule
7.01(r) and except to the extent that such compliance or any enforcement
action is stayed as a result of the Chapter 11 Cases or is subject to a Good
Faith Belief of Stay, each Loan Party's businesses, operations, properties
(including, without limitation, the Principal Properties) and assets are in
material compliance with all Environmental Laws applicable thereto;
(ii) except as set forth on Part A of Schedule
7.01(r) and except to the extent that such compliance or any enforcement
action is stayed as a result of the Chapter 11 Cases or is subject to a Good
Faith Belief of Stay, each Loan Party has obtained and is in compliance with
all material Environmental Permits necessary to operate, use or occupy all
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of such Loan Party's businesses, operations, properties (including, without
limitation, the Principal Properties) and assets;
(iii) each Loan Party has obtained and is in
compliance with all financial assurance requirements under RCRA and any
similar Environmental Law, as specifically set forth but not limited to 40
C.F.R. 264 and 265, necessary to operate, use or occupy all of such Loan
Party's businesses, operations, properties (including, without limitation,
the Principal Properties), and assets, except to the extent that such
compliance or any enforcement action is stayed as a result of the Chapter 11
Cases or is subject to a Good Faith Belief of Stay;
(iv) except as set forth on Part A of Schedule
7.01(r) and except to the extent that such compliance or any enforcement
action is stayed as a result of the Chapter 11 Cases or is subject to a Good
Faith Belief of Stay, each Loan Party is in material compliance with all
applicable writs, orders, consent decrees, judgments, and injunctions by any
Governmental Authority, and all decrees, informational requests or demands
issued pursuant to any Environmental Laws, and any Loan Party's failure to
comply has not resulted in any Governmental Authority seeking to enforce the
terms and conditions of said writ, order, consent decrees, judgments and
injunctions;
(v) there are no Environmental Liens associated
or, to the best knowledge of each Loan Party, threatened to be associated
with any Loan Parties' businesses, operations, properties (including,
without limitation, the Principal Properties) and assets;
(vi) all representations, including, without
limitation, applications, warranty statements and accompanying materials
provided in support of such representations, provided by any Loan Party to
obtain insurance, are truthful and complete in all respects, and the Loan
Parties have done nothing to prejudice their rights to obtain the benefits
of their insurance by failing to comply with any of the provisions,
conditions or requirements of their policies of insurance;
(vii) except as set forth on Part B of Schedule
7.01(r), there has been no Release at any of the properties currently or
previously owned or operated by any Loan Party or a corporate predecessor
that may result in any Environmental Liabilities and Costs in excess of
$100,000 related to any individual property;
(viii) except as set forth on Part B of Schedule
7.01(r), there have been no Releases at any disposal or treatment facility
which received Hazardous Materials Handled by any Loan Party or any
corporate predecessor that resulted in any Environmental Liabilities and
Costs in excess of $100,000 at any individual facility;
(ix) except as set forth on Schedule 7.01(f)
and Part B of Schedule 7.01(r), no Environmental Action has been asserted
against any Loan Party or any corporate predecessor nor does any Loan Party
have knowledge or notice of any threatened or pending Environmental Action
against any Loan Party or any corporate predecessor that may result in
Environmental Liabilities and Costs in excess of $100,000;
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(x) except as set forth on Schedule 7.01(f)
and Part B of Schedule 7.01(r), no Environmental Action has been asserted
against any facilities that may have received Hazardous Materials Handled by
any Loan Party or any corporate predecessor that resulted in Environmental
Liabilities and Costs in excess of $100,000;
(xi) except as set forth on Part B of Schedule
7.01(r), no property now or formerly owned or operated by a Loan Party has
been used as a treatment, storage or disposal site by a Loan Party for any
Hazardous Material that may result in Environmental Liabilities and Costs in
excess of $100,000;
(xii) no Loan Party has failed to report to the
proper Governmental Authority any Release which is required to be so
reported by any Environmental Laws;
(xiii) except as set forth on Part A of Schedule
7.01(r), no Loan Party has received any written notification pursuant to any
Environmental Laws that (A) any work, repairs, construction or Capital
Expenditures are required to be made in respect as a condition of continued
compliance with any Environmental Law or Environmental Permit or (B) any
Environmental Permit referred to above is about to be reviewed, made,
subject to limitations or conditions, revoked, withdrawn or terminated;
(xiv) except as set forth on Part A of Schedule
7.01(r), no Governmental Authority has asserted any monetary obligations,
losses, liabilities, damages or costs and expenses incurred as a result of
any Remedial Action performed or to be performed at any of the properties
(including, without limitation, the Principal Properties) currently operated
by the Loan Parties, that have not been reimbursed or otherwise paid;
(xv) the Environmental Liabilities and Costs set
forth on Part B of Schedule 7.01(r), have been calculated in accordance with
GAAP;
(xvi) based upon the best information available
to the Loan Parties on the Interim Facility Effective Date, the Loan Parties
have a good faith belief that they will not exceed by ten percent (10%) any
of the annual or aggregate Environmental Liabilities and Costs for each of
the "Operating Facilities" set forth on Part B of Schedule 7.01(r); and
(xvii) based upon the best information available
to the Loan Parties on the Interim Facility Effective Date, the Loan Parties
have a good faith belief that they will not exceed by ten percent (10%) any
of the annual or aggregate Environmental Liabilities and Costs for all of
"Non-Operating Facilities and Superfund Sites" as set forth on Part B of
Schedule 7.01(r).
(s) Insurance. Each Loan Party keeps its property
adequately insured and maintains (i) insurance to such extent and against
such risks, including fire, as is customary for companies in the same or
similar businesses, (ii) workmen's compensation insurance in the amount
required by applicable law, (iii) public liability insurance, which shall
include product liability insurance, in the amount customary with companies
in the same or similar business against claims for personal injury or death
on properties owned, occupied or controlled by it, and (iv) such other
insurance as may be required by law or as may be reasonably required by the
Collateral Agent
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(including, without limitation, against larceny, embezzlement or other
criminal misappropriation). Schedule 7.01(s) sets forth a list of all
insurance maintained by each Loan Party on the Interim Facility Effective
Date.
(t) Use of Proceeds. The proceeds of the Loans shall
be used (i) on the Final Facility Effective Date, such that the Pre-Petition
Obligations are Paid in Full (other than indemnification obligations for
which no claim has been asserted), (ii) to pay fees and expenses in
connection with the transactions contemplated hereby, (iii) in the case of
the Loans made on the Interim Facility Effective Date and the Final Facility
Effective Date, to fund working capital of the Borrowers and the Guarantors
(including, without limitation, prior to the Carve-Out Expenses Period,
payments of fees and expenses to professionals under Sections 328 and 331 of
the Bankruptcy Code and administrative expenses of the kind specified in
Section 503(b) of the Bankruptcy Code incurred in the ordinary course of
business of the Borrowers and the Guarantors or otherwise approved by the
Bankruptcy Court (and not otherwise prohibited under this Agreement),
subject to the priorities set forth in the definition of the term "Agreed
Administrative Expense Priorities" herein), and (iv) in the case of a
Carve-Out Term Loan B made during the Carve-Out Expenses Period, solely to
pay Carve-Out Expenses. The Letter of Credit Accommodations will be used to
support the Loan Parties' obligations under the Astaris Guaranty and for
other general corporate and working capital purposes.
(u) Location of Bank Accounts. On the Interim
Facility Effective Date, Schedule 7.01(u) sets forth a complete and accurate
list of all deposit, checking and other bank accounts, all securities and
other accounts maintained with any broker dealer and all other similar
accounts maintained by each Loan Party, together with a description thereof
(i.e., the bank or broker dealer at which such deposit or other account is
maintained and the account number and the purpose thereof).
(v) Intellectual Property. Except as set forth on
Schedule 7.01(v), each Loan Party owns or licenses or otherwise has the
right to use all licenses, service marks, tradenames, patents, patent
applications, trademarks, trademark applications, copyrights, copyright
applications and other intellectual property rights that are necessary for
the operation of its business, without infringement or conflict with the
rights of any other Person with respect thereto, except for such
infringements and conflicts which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect. Set forth on
Schedule 7.01(v) is a complete and accurate list as of the Interim Facility
Effective Date of all such licenses (other than such licenses having a value
of less than $1,000,000 or involving aggregate consideration payable by or
to any Loan Party which is less than $1,000,000), tradenames, patents,
patent applications, registered trademarks and service marks, trademark and
service mark applications, registered copyrights, copyright applications,
internet domain names and other intellectual property rights of each Loan
Party, in each case, to the extent such intellectual property rights or
other rights are necessary for the operation of its business. No slogan or
other advertising device, product, process, method, substance, part or other
material now employed by any Loan Party infringes upon or conflicts with any
rights owned by any other Person, and no claim or litigation regarding any
of the foregoing is pending or threatened, except for such infringements and
conflicts which could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
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(w) Material Contracts. Set forth on Schedule 7.01(w)
is a complete and accurate list as of the Interim Facility Effective Date of
all Material Contracts of each Loan Party, showing the parties and subject
matter thereof and amendments and modifications thereto. As of the Interim
Facility Effective Date, each such Material Contract (i) is in full force
and effect and is binding upon and enforceable against each Loan Party that
is a party thereto and, to the best knowledge of such Loan Party, all other
parties thereto in accordance with its terms, (ii) has not been otherwise
amended or modified, and (iii) is not in default due to the action of any
Loan Party or, to the best knowledge of any Loan Party, any other party
thereto, except any such default the enforcement of which is stayed by
virtue of the filing of the Chapter 11 Cases.
(x) Holding Company and Investment Company Acts. None
of the Loan Parties is (i) a "holding company" or a "subsidiary company" of
a "holding company" or an "affiliate" of a "holding company", as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended,
or (ii) an "investment company" or an "affiliated person" or "promoter" of,
or "principal underwriter" of or for, an "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended.
(y) Employee and Labor Matters. Except as set forth
on Schedule 7.01(y), there is (i) no unfair labor practice complaint pending
or, to the best knowledge of any Loan Party, threatened against any Loan
Party before any Governmental Authority and no grievance that would be
material to the business of any Loan Party or arbitration proceeding pending
or, to the best knowledge of any Loan Party, threatened against any Loan
Party which arises out of or under any collective bargaining agreement, (ii)
no strike, labor dispute, slowdown, stoppage or similar action or grievance
pending or, to the best knowledge of any Loan Party, threatened against any
Loan Party (that would be material to the business of any Loan Party) and
(iii) to the best knowledge of any Loan Party, no union representation
question existing with respect to the employees of any Loan Party and no
union organizing activity taking place with respect to any of the employees
of any Loan Party. Except as set forth on Schedule 7.01(y), no Loan Party or
any of its ERISA Affiliates has incurred any liability or obligation under
the Worker Adjustment and Retraining Notification Act ("WARN") or similar
state or foreign law, which remains unpaid or unsatisfied. Except as set
forth on Schedule 7.01(y), the hours worked and payments made to employees
of any Loan Party have not been in violation of the Fair Labor Standards Act
or any other applicable legal requirements other than violations of
immaterial obligations of any Loan Party resulting in immaterial liabilities
incurred by any Loan Party. All material payments due from any Loan Party on
account of wages and employee health and welfare insurance and other
benefits have been paid or accrued as a liability on the books of such Loan
Party.
(z) Customers and Suppliers. There exists no actual
or threatened termination, cancellation or limitation of, or modification to
or change in, the business relationship between (i) any Loan Party, on the
one hand, and any customer or any group thereof, on the other hand, whose
agreements with any Loan Party are individually or in the aggregate material
to the business or operations of such Loan Party, or (ii) any Loan Party, on
the one hand, and any material supplier thereof, on the other hand, which,
in case of either clause (i) or (ii), could reasonably be expected to have a
Material Adverse Effect.
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(aa) Name; Jurisdiction of Organization;
Organizational ID Number; Chief Place of Business; Chief Executive Office;
FEIN. Schedule 7.01(aa) sets forth a complete and accurate list as of the
date hereof of (i) the exact legal name of each Loan Party, (ii) the
jurisdiction of organization of each Loan Party, (iii) the organizational
identification number of each Loan Party (or indicates that such Loan Party
has no organizational identification number), (iv) each place of business of
each Loan Party, (v) the chief executive office of each Loan Party and (vi)
the federal employer identification number of each Loan Party.
(bb) Locations of Collateral. There is no location at
which any Loan Party has any Collateral (except for Inventory in transit)
with an aggregate Book Value in excess of $500,000 other than (i) those
locations listed on Schedule 7.01(bb) and (ii) any other locations approved
in writing by the Collateral Agent (and, with respect to Inventory, the
Administrative Agent) from time to time. Schedule 7.01(bb) hereto contains a
true, correct and complete list, as of the Interim Facility Effective Date,
of the legal names and addresses of each warehouse at which Collateral of
each Loan Party is stored. None of the receipts received by any Loan Party
from any warehouse states that the goods covered thereby are to be delivered
to bearer or to the order of a named Person or to a named Person and such
named Person's assigns.
(cc) Administrative Priority; Lien Priority.
(i) After the Interim Bankruptcy Court Order
Entry Date or the Final Bankruptcy Court Order Entry Date, as the case may
be, the Obligations of the Borrowers and the Guarantors will constitute
allowed administrative expenses in the Chapter 11 Cases, having priority in
payment over all other administrative expenses and unsecured claims against
the Borrowers and the Guarantors now existing or hereafter arising, of any
kind or nature whatsoever, including, without limitation, all administrative
expenses of the kind specified in, or arising or ordered under, Sections
105, 326, 328, 503(b), 506(c), 507(a), 507(b), 546(c) and 1114 of the
Bankruptcy Code, subject only to the prior payment of expenses to the extent
set forth in clause "first" of the definition of the term "Agreed
Administrative Expense Priorities".
(ii) Upon entry of the Interim Bankruptcy Court
Order or the Final Bankruptcy Court Order, as the case may be, the Lien and
security interest of the Collateral Agent on the Collateral shall be a valid
and perfected first priority Lien, subject only to Permitted Priority Liens.
(dd) On or after the Interim Bankruptcy Court Order
Entry Date and prior to the Final Bankruptcy Court Order Entry Date, the
Interim Bankruptcy Court Order is in full force and effect, and has not been
reversed, modified, amended, stayed or vacated absent the written consent of
the Agents, the Required Lenders and the Borrowers, which consent shall not
be unreasonably withheld in the case of ministerial amendments or
modifications, and after the Final Bankruptcy Court Order Entry Date, the
Final Bankruptcy Court Order is in full force and effect, and has not been
reversed, modified, amended, stayed or vacated absent the written consent of
the Agents, the Required Lenders and the Borrowers, which consent shall not
be unreasonably withheld in the case of ministerial amendments or
modifications.
(ee) Appointment of Trustee or Examiner; Liquidation.
No order has been entered in any Chapter 11 Case (i) for the appointment of
a Chapter 11 trustee, (ii) for the
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appointment of an examiner with enlarged powers (beyond those set forth in
Sections 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of
the Bankruptcy Code or (iii) to convert any Chapter 11 Case to a Chapter 7
case or to dismiss any Chapter 11 Case.
(ff) Schedules. All of the information which is
required to be scheduled to this Agreement is set forth on the Schedules
attached hereto, is correct and accurate and does not omit to state any
information material thereto.
ARTICLE VIII
COVENANTS OF THE LOAN PARTIES
Section 8.01 Affirmative Covenants. So long as any
principal of or interest on any Loan, Letter of Credit Obligation or any
other Obligation (whether or not due), other than indemnification
obligations for which no claim has been asserted, shall remain unpaid or any
Lender shall have any Revolving Credit Commitment or Term Loan Commitment
hereunder, each Loan Party will, unless the Required Lenders shall otherwise
consent in writing:
(a) Reporting Requirements. Furnish (which may be
effectuated via electronic mail in accordance with the electronic mail
address designated by each Agent and each Lender to the Administrative
Borrower in writing, provided that, (x) if any such Agent or any such Lender
requests that such reports or other information be delivered by mail,
telecopier or courier, then such reports or other information shall be
delivered by such manner in accordance with Section 13.01 and (y) with
respect to clauses (viii), (ix), (x), (xi), (xii), (xiii), (xvii), and
(xviii) below, delivery of such reports or other information may be
effectuated via electronic mail so long as such reports or other information
are promptly delivered by mail, telecopier or courier in accordance with
Section 13.01 after delivery by electronic mail) to each Agent and each
Lender:
(i) upon the earlier of (A) the public filing
with the SEC of the Parent's SEC Form 10-Q and (B) 45 days after the end of
each fiscal quarter of the Parent and its Subsidiaries, commencing with the
first fiscal quarter of the Parent and its Subsidiaries ending after the
Interim Facility Effective Date, consolidated and consolidating balance
sheets, consolidated and consolidating statements of operations and retained
earnings and consolidated and consolidating statements of cash flows of the
Parent and its Subsidiaries and of the Designated A Business Segment, the
Designated B Business Segment and the Designated C Business Segment
(provided that, solely with respect to the Designated A Business Segment,
the Designated B Business Segment and the Designated C Business Segment, the
Loan Parties may deliver a "statement of capital employed" in lieu of the
consolidated and consolidating balance sheets and retained earnings
statements), each as at the end of such quarter, and for the period
commencing at the end of the immediately preceding Fiscal Year and ending
with the end of such quarter, setting forth in each case in comparative form
the figures for the corresponding date or period of the immediately
preceding Fiscal Year, all in reasonable detail and certified by an
Authorized Officer of the Parent as fairly presenting, in all material
respects, the financial position of the Parent and its Subsidiaries and of
the Designated A Business Segment, the Designated B Business Segment and the
Designated C Business Segment, each as of the end of such quarter and the
results of operations and cash flows of the Parent and its Subsidiaries and
of the Designated A Business Segment, the Designated B Business Segment and
the Designated C
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Business Segment for such quarter, in accordance with GAAP applied in a
manner consistent with that of the most recent audited financial statements
of the Parent and its Subsidiaries furnished to the Agents and the Lenders,
subject to normal year-end audit adjustments and the absence of footnotes;
(ii) upon the earlier of (A) the public filing
with the SEC of the Parent's SEC Form 10-K and (B) 90 days after the end of
each Fiscal Year of the Parent and its Subsidiaries, consolidated and
consolidating balance sheets, consolidated and consolidating statements of
operations and retained earnings and consolidated and consolidating
statements of cash flows of the Parent and its Subsidiaries and of the
Designated A Business Segment, the Designated B Business Segment and the
Designated C Business Segment (provided that, solely with respect to the
Designated A Business Segment, the Designated B Business Segment and the
Designated C Business Segment, the Loan Parties may deliver a "statement of
capital employed" in lieu of the consolidated and consolidating balance
sheets and retained earnings statements), each as at the end of such Fiscal
Year, setting forth in each case in comparative form the corresponding
figures for the immediately preceding Fiscal Year, all in reasonable detail
and prepared in accordance with GAAP, and in the case of the Parent and its
Subsidiaries, accompanied by a report and an unqualified opinion, prepared
in accordance with generally accepted auditing standards, of independent
certified public accountants of recognized standing selected by the Parent
and satisfactory to the Administrative Agent and the Collateral Agent (which
opinion shall be without (A) any qualification or exception as to the scope
of such audit, or (B) any qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the provisions of Section 8.03),
together with a written statement of such accountants (1) to the effect
that, in making the examination necessary for their certification of such
financial statements, they have not obtained any knowledge of the existence
of an Event of Default or a Default and (2) if such accountants shall have
obtained any knowledge of the existence of an Event of Default or such
Default, describing the nature thereof;
(iii) as soon as available, and in any event
within 30 days after the end of each fiscal month of the Parent and its
Subsidiaries commencing with the first fiscal month of the Parent and its
Subsidiaries ending after the Interim Facility Effective Date, internally
prepared consolidated and consolidating balance sheets, consolidated and
consolidating statements of operations and retained earnings and
consolidated and consolidating statements of cash flows as at the end of
such fiscal month, and for the period commencing at the end of the
immediately preceding Fiscal Year and ending with the end of such fiscal
month, all in reasonable detail and certified by an Authorized Officer of
the Parent as fairly presenting, in all material respects, the financial
position of the Parent and its Subsidiaries and of the Designated A Business
Segment, the Designated B Business Segment and the Designated C Business
Segment (provided that, solely with respect to the Designated A Business
Segment, the Designated B Business Segment and the Designated C Business
Segment, the Loan Parties may deliver a "statement of capital employed" in
lieu of the consolidated and consolidating balance sheets and retained
earnings statements), each as at the end of such fiscal month and the
results of operations, retained earnings and cash flows of the Parent and
its Subsidiaries and of the Designated A Business Segment, the Designated B
Business Segment and the Designated C Business Segment, each for such fiscal
month, in accordance with GAAP applied in a manner
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consistent with that of the most recent audited financial statements
furnished to the Agents and the Lenders, subject to normal quarterly or
year-end adjustments, including audit adjustments (which include
restructuring actions, pension and other post-employment benefit true-ups,
asset impairment or manufacturing facility shut-down charges, environmental
remediation reserve true-ups, incentive compensation accruals, significant
litigation activity and gains and losses on significant asset dispositions
and divestitures) and the absence of footnotes;
(iv) simultaneously with the delivery of the
financial statements of the Parent and its Subsidiaries required by clauses
(i), (ii) and (iii) of this Section 8.01(a), a certificate of an Authorized
Officer of the Parent (I) stating that such Authorized Officer has reviewed
the provisions of this Agreement and the other Loan Documents and has made
or caused to be made under his or her supervision a review of the condition
and operations of the Parent and its Subsidiaries during the period covered
by such financial statements with a view to determining whether the Parent
and its Subsidiaries were in compliance with all of the provisions of this
Agreement and such Loan Documents at the times such compliance is required
hereby and thereby, and that such review has not disclosed, and such
Authorized Officer has no knowledge of, the existence during such period of
an Event of Default or Default or, if an Event of Default or Default
existed, describing the nature and period of existence thereof and the
action which the Parent and its Subsidiaries propose to take or have taken
with respect thereto, and (II) attaching a schedule showing the calculations
specified in Section 8.03;
(v) as soon as available and in any event
within 10 days after the end of each fiscal month of the Parent and its
Subsidiaries commencing with the first fiscal month of the Parent and its
Subsidiaries ending after the Interim Facility Effective Date, (A) reports
as required by Section 9.03(a)(ii), in form and detail satisfactory to the
Agents and certified by an Authorized Officer of the Administrative Borrower
as being accurate and complete, (B) a discussion of any reduction of the
federal net operating losses of the Parent and its Subsidiaries, as a result
of any dividends or other distributions from the Foreign Subsidiaries to the
Loan Parties or any Domestic Subsidiaries during such month, and (C) a
report on any United States taxes (including, without limitation, real
estate or excise taxes) due and payable during such period and evidence of
payment of any such taxes;
(vi) as soon as available and in any event
within 3 Business Days after the end of each week commencing with the first
week ending after the Interim Facility Effective Date, a Borrowing Base
Certificate, current as of the close of business on the Friday of the
immediately preceding week, supported by schedules showing the derivation
thereof and containing such detail and other information as any Agent may
request from time to time, provided that (A) the Borrowing Base set forth in
the Borrowing Base Certificate shall be effective from and including the
date such Borrowing Base Certificate is duly received by the Agents but not
including the date on which a subsequent Borrowing Base Certificate is
received by the Agents, unless the Administrative Agent disputes the
eligibility of any property included in the calculation of the Borrowing
Base or the valuation thereof by notice of such dispute to the
Administrative Borrower and (B) in the event of any dispute about the
eligibility of any property included in the calculation of the Borrowing
Base or the valuation thereof, the Administrative Agent's good faith
judgment shall control;
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(vii) as soon as available and in any event not
later than December 1 of each Fiscal Year, financial projections,
supplementing and superseding the financial projections referred to in
Section 7.01(g)(ii), prepared on a monthly basis and otherwise in form and
substance satisfactory to the Agents, for the immediately succeeding Fiscal
Year for the Parent and its Subsidiaries and for the Designated A Business
Segment, the Designated B Business Segment and the Designated C Business
Segment, such financial projections to be reasonable, to be prepared on a
reasonable basis and in good faith, and to be based on assumptions believed
by the Parent to be reasonable at the time made and from the best
information then available to the Parent;
(viii) promptly after submission to any
Governmental Authority, all documents and information furnished to such
Governmental Authority in connection with any investigation of any Loan
Party (unless, in the written opinion of counsel of such Loan Party, such
disclosure would be unlawful) other than routine or non-material inquiries
by such Governmental Authority;
(ix) as soon as possible, and in any event
within 3 Business Days after the occurrence of an Event of Default or
Default or the occurrence of any event or development that could reasonably
be expected to have a Material Adverse Effect, the written statement of an
Authorized Officer of the Administrative Borrower setting forth the details
of such Event of Default or Default or such other event or development and
the action which the affected Loan Party proposes to take with respect
thereto;
(x) (A) as soon as possible and in any event
within 15 days after any Loan Party or any ERISA Affiliate thereof knows or
has reason to know that (1) any Reportable Event with respect to any
Employee Plan has occurred, (2) any other Termination Event with respect to
any Employee Plan has occurred, or (3) an accumulated funding deficiency has
been incurred or an application has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standard
(including installment payments) or an extension of any amortization period
under Section 412 of the Internal Revenue Code with respect to an Employee
Plan, a statement of an Authorized Officer of the Administrative Borrower
setting forth the details of such occurrence and the action, if any, which
such Loan Party or such ERISA Affiliate proposes to take with respect
thereto, (B) promptly and in any event within three days after receipt
thereof by any Loan Party or any ERISA Affiliate thereof from the PBGC,
copies of each notice received by any Loan Party or any ERISA Affiliate
thereof of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan, (C) promptly and in any event within 10
days after the filing thereof with the Internal Revenue Service if requested
by any Agent, copies of each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) with respect to each Employee Plan and
Multiemployer Plan, (D) promptly and in any event within 10 days after any
Loan Party or any ERISA Affiliate thereof knows or has reason to know that a
required installment within the meaning of Section 412 of the Internal
Revenue Code has not been made when due with respect to an Employee Plan,
(E) promptly and in any event within 3 days after receipt thereof by any
Loan Party or any ERISA Affiliate thereof from a sponsor of a Multiemployer
Plan or from the PBGC, a copy of each notice received by any Loan Party or
any ERISA Affiliate thereof concerning the imposition or amount of
withdrawal liability under Section 4202 of ERISA or indicating that such
Multiemployer Plan may enter reorganization status under Section 4241 of
ERISA, and (F)
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promptly and in any event within 10 days after any Loan Party or any ERISA
Affiliate thereof sends notice of a plant closing or mass layoff (as defined
in WARN) to employees, copies of each such notice sent by such Loan Party or
such ERISA Affiliate thereof;
(xi) promptly after the commencement thereof
but in any event not later than 5 Business Days after service of process with
respect thereto on, or the obtaining of knowledge thereof by, any Loan
Party, notice of each action, suit or proceeding before any court or other
Governmental Authority or other regulatory body or any arbitrator which, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect;
(xii) as soon as possible and in any event
within 5 Business Days after execution, receipt or delivery thereof, copies
of any material notices that any Loan Party executes or receives in
connection with any Material Contract;
(xiii) as soon as possible and in any event
within 5 Business Days after execution, receipt or delivery thereof, copies
of any material notices that any Loan Party executes or receives in
connection with (A) any Disposition of the Capital Stock of, or all or
substantially all of the assets of, any Loan Party or of Solutia Europe or
any of its Subsidiaries (provided that, nothing in this clause (xiii) shall
be deemed to permit such Disposition) or (B) the Euro Restructuring;
(xiv) promptly, and in any event within 5
Business Days after the sending or filing thereof, copies of all statements,
reports and other information any Loan Party sends to any holders of its
Indebtedness (including, without limitation, any 2009 Note Holder, any
holder of the 1997 Debentures or the Euro Notes and any agent or trustee in
connection therewith) or its securities or files with the SEC or any
national (domestic or foreign) securities exchange, except filings on SEC
Form S-8;
(xv) promptly, and in any event within 5
Business Days upon receipt thereof, copies of all financial reports
(including, without limitation, management letters), if any, submitted to
any Loan Party by its auditors in connection with any annual or interim
audit of the books thereof;
(xvi) not later than Friday of every calendar
week, an updated 13 week cash flow projection, supplementing and superseding
the most recent cash flow projections delivered hereunder, with a comparison
of budget to actual and an explanation of any changes thereto, together with
appropriate supporting details and a statement of underlying assumptions,
such projections to be prepared on a reasonable basis and in good faith and
to be based on assumptions believed by the Parent to be reasonable at the
time made and from the best information then available to the Parent;
(xvii) promptly after the filing thereof, copies
of all pleadings, motions, applications, financial information and other
papers and documents filed by any Loan Party in the Chapter 11 Cases, which
papers and documents shall also be given or served on the Collateral Agent's
and the Administrative Agent's counsel;
(xviii) promptly after the sending thereof,
copies of all written reports given by any Loan Party to any official or
unofficial creditors' committee in the
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Chapter 11 Cases, other than any such reports subject to privilege, provided
that such Person may redact any confidential information contained in any
such report if it provides a summary of the nature of the information
redacted to the Collateral Agent and the Administrative Agent;
(xix) as soon as available at the end of each
week and in any event no later than Monday of the following week, a report
certified by the Chief Financial Officer of the Parent setting forth in
reasonable detail the accrued and unpaid expenses of the Loan Parties set
forth in the Cash Flow Schedules, the incurrence of any expenses not set
forth in the Cash Flow Schedules, including, without limitation, the amount
of each such expense and the Person to which such expense is owed, and such
other information as may be reasonably requested by any of the Agents, and
such initial weekly cash flow schedules of the Loan Parties are attached as
Schedule 8.01(a)(xix), and the Borrowers will, from time to time, at the
request of any of the Agents, deliver updated weekly cash flows schedules
setting forth the weekly cash flow forecasts of the Loan Parties for
additional weekly periods, in a form substantially similar to such initial
weekly cash flow schedules attached as Schedule 8.01(a)(xix) (the initial
cash flow schedules, together with the additional cash flow schedules to,
the "Cash Flow Schedules"), which schedules will be in form and substance
satisfactory to the Agents; and
(xx) promptly upon request, such other
information concerning the condition or operations, financial or otherwise,
of any Loan Party as any Agent may from time to time may reasonably request.
(b) Additional Guaranties and Collateral Security.
Cause:
(i) each Domestic Subsidiary of any Loan
Party not in existence on the Interim Facility Effective Date, to execute and
deliver to the Collateral Agent promptly and in any event within 10 Business
Days after the formation, acquisition or change in status thereof (A) a
Guaranty guaranteeing the Obligations, (B) a security agreement in form and
substance satisfactory to the Collateral Agent, if required by the
Collateral Agent, (C) if such Domestic Subsidiary has any Subsidiaries, a
Pledge Agreement, if required by the Collateral Agent, together with (x)
certificates evidencing all of the Capital Stock of any Person directly
owned by such Subsidiary (other than a Foreign Subsidiary) and, in the case
of a directly owned Foreign Subsidiary, all of the non-voting Capital Stock
and 65% of the voting Capital Stock of such Foreign Subsidiary, (y) undated
stock powers executed in blank with signature guaranteed, and (z) such
opinion of counsel and such approving certificate of such Subsidiary as the
Collateral Agent may reasonably request in respect of complying with any
legend on any such certificate or any other matter relating to such shares,
(D) one or more Mortgages creating on the real property of such Subsidiary a
perfected, first priority Lien (except, in respect of first priority, any
Permitted Priority Lien) on such real property, a Title Insurance Policy
covering such real property, a current ALTA survey thereof (or such other
survey thereof consistent with the requirements set forth on Schedule
8.01(q), and otherwise in form and substance acceptable to the Collateral
Agent in its sole discretion, exercised reasonably) and a surveyor's
certificate, each in form and substance satisfactory to the Collateral Agent
in its sole discretion, exercised reasonably, together with such other
agreements, instruments and documents as the Collateral Agent may require
whether comparable to the documents required under Section 8.01(m) or
otherwise, and (E) such other agreements, instruments, approvals, legal
opinions or other documents reasonably requested by the Collateral Agent in
order to create, perfect, establish the
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first priority of or otherwise protect any Lien purported to be covered by
any such security agreement, Pledge Agreement, or Mortgage or otherwise to
effect the intent that such Subsidiary shall become bound by all of the
terms, covenants and agreements contained in the Loan Documents and that all
property and assets of such Subsidiary shall become Collateral for the
Obligations; and
(ii) each owner of the Capital Stock of any
such Subsidiary to execute and deliver promptly and in any event within 10
Business Days after the formation or acquisition of such Subsidiary a Pledge
Agreement, if required by the Collateral Agent, together with (A)
certificates evidencing (x) in the case such Subsidiary is a directly owned
Domestic Subsidiary, all of the Capital Stock of such Subsidiary, (y) in the
case such Subsidiary is a directly owned Foreign Subsidiary, all of the
non-voting Capital Stock and 65% of the voting Capital Stock of such
Subsidiary, (B) undated stock powers or other appropriate instruments of
assignment executed in blank with signature guaranteed, (C) such opinion of
counsel and such approving certificate of such Subsidiary as the Collateral
Agent may reasonably request in respect of complying with any legend on any
such certificate or any other matter relating to such shares and (D) such
other agreements, instruments, approvals, legal opinions or other documents
requested by the Collateral Agent.
(c) Compliance with Laws, Etc. Comply, and cause each
of its Subsidiaries to comply, in all material respects with all applicable
material laws, rules, regulations and orders (including, without limitation,
all Environmental Laws), such compliance to include, without limitation, (i)
paying before the same become delinquent all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits
or upon any of its properties, and (ii) paying all lawful claims which if
unpaid might become a Lien or charge upon any of its properties, except to
the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for
the payment thereof in accordance with GAAP, other than, in the case of
clauses (i) and (ii) above, taxes, assessments and governmental charges and
levies and other claims the aggregate amount of which does not at any time
exceed $1,000,000, or to the extent that such compliance or payment or any
enforcement action is stayed as a result of the Chapter 11 Cases, and, in
the case of Environmental Laws, as such compliance may otherwise be subject
to a Good Faith Belief of Stay expressly set forth in clauses (ii), (ix) and
(xi) of Section 8.01(j).
(d) Preservation of Existence, Etc. Maintain and
preserve, and cause each of its Significant Subsidiaries to maintain and
preserve, its existence, rights and privileges, and become or remain, and
cause each of its Subsidiaries to become or remain, duly qualified and in
good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its material business
makes such qualification necessary.
(e) Keeping of Records and Books of Account. Keep,
and cause each of its Subsidiaries to keep, adequate records and books of
account, with complete entries made to permit the preparation of financial
statements in accordance with GAAP.
(f) Inspection Rights. Permit, and cause each of its
Subsidiaries to permit, the agents and representatives of any Agent at any
time and from time to time during
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normal business hours, at the expense of the Borrowers, to examine and make
copies of and abstracts from its records and books of account, to visit and
inspect its properties, to verify materials, leases, notes, accounts
receivable, deposit accounts and its other assets, to conduct audits,
physical counts, valuations, appraisals, Phase I Environmental Site
Assessments (and, after the occurrence and during the continuance of an
Event of Default, if requested by the Collateral Agent based upon the
results of any such Phase I Environmental Site Assessment, a Phase II
Environmental Site Assessment) or examinations and to discuss its affairs,
finances and accounts with any of its directors, officers, managerial
employees, independent accountants or any of its other representatives. In
furtherance of the foregoing, each Loan Party hereby authorizes its
independent accountants, and the independent accountants of each of its
Subsidiaries, to discuss the affairs, finances and accounts of such Person
(independently or together with representatives of such Person) with the
agents and representatives of any Agent in accordance with this Section
8.01(f).
(g) Maintenance of Properties, Etc. Maintain and
preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties which are necessary or used in the proper conduct of its
business in good working order and condition, ordinary wear and tear
excepted, and comply, and cause each of its Subsidiaries to comply, at all
times with the provisions of all material leases to which it is a party as
lessee or under which it occupies property, so as to prevent any loss or
forfeiture thereof or thereunder, except any non-compliance resulting in a
default the enforcement of which is stayed by the Chapter 11 Cases.
(h) Maintenance of Insurance. Maintain, and cause
each of its Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations (including, without
limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real
properties leased or owned by it) and business, in such amounts and covering
such risks as is required by any Governmental Authority having jurisdiction
with respect thereto or as is carried generally in accordance with sound
business practice by companies in similar businesses similarly situated and
in any event in amount, adequacy and scope reasonably satisfactory to the
Collateral Agent, and shall not be less than the amount, adequacy and scope
than the insurance maintained by the Parent and its Subsidiaries on the
Interim Facility Effective Date. All policies covering the Collateral are to
be made payable to the Collateral Agent for the benefit of the Agents and
the Lenders, as its interests may appear, in case of loss, under a standard
non-contributory "lender" or "secured party" clause. All certificates of
insurance are to be delivered to the Collateral Agent and the policies are
to be premium prepaid, with the loss payable and additional insured
endorsement in favor of the Collateral Agent and such other Persons as the
Collateral Agent may designate from time to time, and shall provide for not
less than 30 days' prior written notice to the Collateral Agent of the
exercise of any right of cancellation. If any Loan Party or any of its
Subsidiaries fails to maintain such insurance, the Collateral Agent may
arrange for such insurance, but at the Borrowers' expense and without any
responsibility on the Collateral Agent's part for obtaining the insurance,
the solvency of the insurance companies, the adequacy of the coverage, or
the collection of claims. Upon the occurrence and during the continuance of
an Event of Default, the Collateral Agent shall have the sole right, in the
name of the Lenders, any Loan Party and its Subsidiaries, to file claims
under any insurance policies, to receive, receipt and give acquittance for
any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments,
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reassignments or other documents that may be necessary to effect the
collection, compromise or settlement of any claims under any such insurance
policies.
(i) Obtaining of Permits, Etc. Obtain, maintain and
preserve, and cause each of its Subsidiaries to obtain, maintain and
preserve, and take all necessary action to timely renew, all permits,
licenses, authorizations, approvals, entitlements and accreditations which
are necessary in the proper conduct of its business, in each case, except to
the extent that such compliance or any enforcement action is stayed as a
result of the Chapter 11 Cases.
(j) Environmental. (i) Keep any property either owned
or operated by it or any of its Subsidiaries free of any Environmental
Liens; (ii) comply, and cause each of its Subsidiaries to comply, in all
material respects with Environmental Laws and provide to the Collateral
Agent any documentation of such compliance which the Collateral Agent may
reasonably request, except to the extent that such compliance is subject to
a Good Faith Belief of Stay; (iii) provide the Agents written notice within
ten (10) days of any Release of a Hazardous Material in excess of any
reportable quantity from or onto property owned or operated by it or any of
its Subsidiaries and take any Remedial Actions required under Environmental
Laws; (iv) promptly, and in any event before any Governmental Authority
exercises its statutory right to file an Environmental Lien, pay or
reimburse any monetary obligations, losses, liabilities, damages or costs
and expenses incurred by any Governmental Authority as a result of any
Remedial Action performed at the properties (including, without limitation,
the Principal Properties) operated by any Loan Party; (v) provide the
Collateral Agent prompt written notice if the Loan Parties will exceed by
ten percent (10%) any of the annual or aggregate Environmental Liabilities
and Costs for each of the "Operating Facilities" set forth on Part B of
Schedule 7.01(r); (vi) provide the Collateral Agent prompt written notice if
the Loan Parties will exceed by ten percent (10%) any of the annual or
aggregate Environmental Liabilities and Costs for all of "Non-Operating
Facilities and Superfund Sites" as set forth on Part B of Schedule 7.01(r);
(vii) provide the Agents with written notice within ten (10) days of the
receipt of any of the following: (A) notice that an Environmental Lien has
been filed against any property of any Loan Party or any of its
Subsidiaries; (B) commencement of any Environmental Action (other than
notices of violation or citations that are provided for in (C)) or notice
that an Environmental Action (other than notices of violation or citations
that are provided for in (C)) will be filed against any Loan Party or any of
its Subsidiaries; (C) notice of a violation, citation or other
administrative order which could cause any of the Loan Parties to incur more
than $500,000 individually or $3,000,000 in the aggregate; and (D) written
or oral notification that a Governmental Authority has incurred over
$100,000 in monetary obligations, losses, liabilities, damages or costs and
expenses as a result of any Remedial Action performed at any properties
(including, without limitation, the Principal Properties) operated by the
Loan Parties; (viii) defend, indemnify and hold harmless the Agents and the
Lenders and their transferees, and their respective employees, agents,
officers and directors, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs or expenses (including,
without limitation, attorney and consultant fees, investigation and
laboratory fees, court costs and litigation expenses) arising out of (A) the
Handling, presence, disposal, Release or threatened Release of any Hazardous
Materials on, under, in, originating or emanating from any property at any
time owned or operated by any Loan Party or any of its Subsidiaries (or its
predecessors in interest or title), (B) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or
related to the presence, Handling, or Release of such Hazardous Materials,
(C) any request for information, investigation, lawsuit brought or
threatened, settlement
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reached or order by a Governmental Authority relating to the presence,
Handling, or Release of such Hazardous Materials, (D) any violation of any
Environmental Law and/or (E) any Environmental Action filed against any
Agent or any Lender; (ix) maintain and preserve all Environmental Permits
necessary to operate, use or occupy each of the Loan Parties' material
businesses, operations, properties (including, without limitation, the
Principal Properties) and assets, except to the extent that such compliance
is subject to a Good Faith Belief of Stay; (x) maintain and comply with all
financial assurance requirements under RCRA and any similar Environmental
Law, as specifically set forth but not limited to 40 C.F.R. 264 and 265,
necessary to operate, use or occupy each of the Loan Parties' businesses,
Facilities, operations, properties and assets; (xi) comply with all
applicable writs, orders, consent decrees, judgments, injunctions, written
communications by any Governmental Authority, decrees, informational
requests or demands issued pursuant to, or arising under, any Environmental
Laws, except to the extent that such compliance or any enforcement action is
stayed as a result of the Chapter 11 Cases or is the subject of a Good Faith
Belief of Stay; (xii) provide the Collateral Agent with prompt written
notice in the event the Loan Parties is required to spend more than $500,000
individually or $3,000,000 in the aggregate to comply with any Environmental
Laws that have been promulgated and enacted by a Governmental Authority
throughout the term of this Agreement; and (xiii) file and submit truthful
and complete representations, including, without limitation, applications,
warranty statements and accompanying materials provided in support of such
representations, submitted by the Loan Parties to obtain insurance.
Without limiting the generality of the foregoing, whenever
the Agents reasonably determine that there is non-compliance, or any
condition which requires any action by or on behalf of any Loan Party in
order to avoid any material non-compliance, with any Environmental Law which
could result in the imposition of substantial fines or penalties or
otherwise materially and adversely affect the business, assets or prospects
of the Loan Parties on a consolidated basis, the Loan Parties shall, at the
Collateral Agent's request and Borrowers' expense: (i) cause an independent
environmental engineer acceptable to the Collateral Agent to conduct such
assessments, investigations or tests of the site where any Loan Party's
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to the Collateral
Agent a report as to such non-compliance setting forth the results of such
tests, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof and (ii) provide to
the Collateral Agent a supplemental report of such engineer whenever the
scope of such non-compliance, or the applicable Loan Party's response
thereto or the estimated costs thereof, shall change in any material
respect.
The Loan Parties acknowledge and agree that neither the
Loan Documents or the actions of any Agent or any Lender pursuant thereto
shall operate or be deemed (i) to place upon any Agent or any Lender any
responsibility for the operation, control, care, service, management,
maintenance or repair of property or facilities of the Loan Parties (except
in cases where an Agent or Lender has taken possession or control of any
property, either through foreclosure or alternative legal means) or (ii) to
make any Agent or any Lender the "owner" or "operator" of any property or
facilities of the Loan Parties or a "responsible party" within the meaning
of applicable Environmental Laws. The indemnification provisions of this
Section 8.01(j) shall survive the repayment of the Obligations and discharge
of any Liens granted under the Loan Documents.
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(k) Further Assurances. Subject to the terms of the
Bankruptcy Court Orders, take such action and execute, acknowledge and
deliver, and cause each of its Subsidiaries to take such action and execute,
acknowledge and deliver, at its sole cost and expense, such agreements,
instruments or other documents as the Administrative Agent or the Collateral
Agent may reasonably require from time to time in order (i) to carry out
more effectively the purposes of this Agreement and the other Loan
Documents, (ii) to subject to valid and perfected, first priority Liens any
of the Collateral or any other property of any Loan Party and its
Subsidiaries, provided that, Liens on the Capital Stock of a directly owned
Foreign Subsidiary shall be limited to all of the non-voting Capital Stock
and 65% of the voting Capital Stock of such Foreign Subsidiary and of
Solutia UK Holdings and Solutia UK Investments and Liens on the intercompany
note made by Solutia UK Investments in favor of Solutia UK Holdings in an
aggregate principal amount of approximately (pounds)87,000,000 shall be
limited to 65% of such note, (iii) to establish and maintain the validity
and effectiveness of any of the Loan Documents and the validity, perfection
and priority of the Liens intended to be created thereby, and (iv) to better
assure, convey, grant, assign, transfer and confirm unto each Agent, each
Lender and the L/C Issuer the rights now or hereafter intended to be granted
to it under this Agreement or any other Loan Document. In furtherance of the
foregoing, to the maximum extent permitted by applicable law and subject to
the Bankruptcy Court Orders, each Loan Party (i) authorizes the
Administrative Agent and the Collateral Agent to execute any such
agreements, instruments or other documents in such Loan Party's name and to
file such agreements, instruments or other documents in any appropriate
filing office, (ii) authorizes the Collateral Agent to file any financing
statement required hereunder or under any other Loan Document, and any
continuation statement or amendment with respect thereto, in any appropriate
filing office without the signature of such Loan Party (including, without
limitation, any such financing statements that indicate the Collateral as
"all assets" or words of similar import), and (iii) ratifies the filing of
any financing statement, and any continuation statement or amendment with
respect thereto, filed without the signature of such Loan Party prior to the
date hereof. The assurances contemplated by this Section 8.01(k) shall be
given under applicable non-bankruptcy law (to the extent not inconsistent
with the Bankruptcy Code and the Bankruptcy Court Orders) as well as the
Bankruptcy Code, it being the intention of the parties that the Collateral
Agent may request assurances under applicable non-bankruptcy law, and such
request shall be complied with (if otherwise made in good faith by the
Collateral Agent) whether or not any of the Bankruptcy Court Orders are in
force and whether or not dismissal of the Chapter 11 Cases or any other
action by the Bankruptcy Court is imminent, likely or threatened.
(l) Change in Collateral; Collateral Records. (i)
Give the Collateral Agent not less than 10 Business Days' prior written
notice of any change in the location of any Collateral with a book value in
excess of $2,000,000 (when aggregated with all other Collateral at the same
location), and, in the case of the relocation of Equipment for purposes of
repairs in the ordinary course of business, prompt (but in any event no more
than 5 Business Days') written notice after such relocation of Equipment
with a book value in excess of $5,000,000 (when aggregated with all other
Collateral at the same location), in each case, other than to locations set
forth on Schedule 7.01(bb) and with respect to which the Collateral Agent
has filed financing statements and otherwise fully perfected its Liens
thereon, (ii) advise the Collateral Agent promptly, in sufficient detail, of
any material adverse change relating to the type, quantity or quality of the
Collateral or the Lien granted thereon, and (iii) execute and deliver, and
cause each of its Domestic Subsidiaries to execute and deliver, to the
Administrative Agent or the Collateral Agent for the benefit of the Agents
and the Lenders from time to time, solely for convenience in
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maintaining a record of Collateral, such written statements and schedules as
the Administrative Agent or the Collateral Agent may reasonably require,
designating, identifying or describing the Collateral.
(m) After Acquired Real Property. Upon the
acquisition by it or any of its Domestic Subsidiaries after the date hereof
of any interest (whether fee or leasehold) in any real property (wherever
located) (each such interest being an "After Acquired Property") (x) with a
Current Value in excess of $5,000,000 in the case of a fee interest, or (y)
requiring the payment of annual rent exceeding in the aggregate $2,500,000
in the case of a leasehold interest, immediately so notify the Collateral
Agent, setting forth with specificity a description of the interest
acquired, the location of the real property, any structures or improvements
thereon and either an appraisal or such Loan Party's good-faith estimate of
the current value of such real property (the "Current Value"). The
Collateral Agent shall notify such Loan Party whether it intends to require
a Mortgage and the other documents referred to below or in the case of
leasehold, a leasehold Mortgage. Upon receipt of such notice requesting a
Mortgage, the Person which has acquired such After Acquired Property shall
promptly furnish to the Collateral Agent the following (unless otherwise
agreed to by the Collateral Agent in the exercise of its sole discretion),
each in form and substance satisfactory to the Collateral Agent: (i) a
Mortgage with respect to such real property and related assets located at
the After Acquired Property, each duly executed by such Person and in
recordable form, (ii) evidence of the recording of the Mortgage referred to
in clause (i) above in such office or offices as may be necessary or, in the
opinion of the Collateral Agent, desirable to create and perfect a valid and
enforceable first priority lien on the property purported to be covered
thereby or to otherwise protect the rights of the Agents and the Lenders
thereunder, (iii) a Title Insurance Policy, (iv) an ALTA survey (or such
other survey thereof consistent with the requirements set forth on Schedule
8.01(q), and otherwise in form and substance acceptable to the Collateral
Agent in its sole discretion, exercised reasonably) of such real property,
certified to the Collateral Agent and to the issuer of the Title Insurance
Policy by a licensed professional surveyor reasonably satisfactory to the
Collateral Agent, (v) Phase I Environmental Site Assessments with respect to
such real property, certified to the Collateral Agent by a company
reasonably satisfactory to the Collateral Agent, (vi) in the case of a
leasehold interest, a certified copy of the lease between the landlord and
such Person with respect to such real property in which such Person has a
leasehold interest, and the certificate of occupancy with respect thereto,
(vii) in the case of a leasehold interest, to the extent reasonably
available, an attornment and nondisturbance agreement between the landlord
(and any fee mortgagee) with respect to such real property and the
Collateral Agent, and (viii) such other documents or instruments (including
guarantees and opinions of counsel) as the Collateral Agent may reasonably
require. The Borrowers shall pay all fees and expenses, including reasonable
attorneys' fees and expenses, and all title insurance charges and premiums,
in connection with each Loan Party's obligations under this Section 8.01(m).
(n) Fiscal Year. Cause the Fiscal Year of the Parent
and its Subsidiaries to end on December 31 of each calendar year unless the
Administrative Agent and the Collateral Agent consent to a change in such
Fiscal Year (and appropriate related changes to this Agreement).
(o) Borrowing Base. Maintain all Revolving Loans and
Letter of Credit Obligations in compliance with the then current Borrowing
Base.
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(p) Use of Proceeds. Use the proceeds of the Loans
and the Letters of Credit Accommodations in accordance with Section 7.01(t).
(q) Post-Closing Delivery. Deliver within the period
specified on Schedule 8.01(q) (or such longer period as may be agreed upon
by the Collateral Agent in its sole discretion), a survey and surveyor's
certificate for each of the Principal Properties (other than the Principal
Property located at Fieldale, Virginia commonly referred to as the
"Martinsville Facility" and the Krummrich Property), in each case, complying
with the requirements set forth on Schedule 8.01(q) and otherwise in form
and substance acceptable to the Collateral Agent in its sole discretion,
exercised reasonably.
Section 8.02 Negative Covenants. So long as any principal
of or interest on any Loan, Letter of Credit Obligation or any other
Obligation (whether or not due), other than indemnification obligations for
which no claim has been asserted, shall remain unpaid or any Lender shall
have any Revolving Credit Commitment or Term Loan Commitment hereunder, each
Loan Party shall not, unless the Required Lenders shall otherwise consent in
writing:
(a) Liens, Etc. Create, incur, assume or suffer to
exist, or permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any Lien upon or with respect to any of its properties, whether
now owned or hereafter acquired; file or suffer to exist under the Uniform
Commercial Code or any similar law or statute of any jurisdiction, a
financing statement (or the equivalent thereof) that names it or any of its
Subsidiaries as debtor; sign or suffer to exist any security agreement
authorizing any secured party thereunder to file such financing statement
(or the equivalent thereof); sell any of its property or assets subject to
an understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of Accounts) with recourse to it or any
of its Subsidiaries or assign or otherwise transfer, or permit any of its
Subsidiaries to assign or otherwise transfer, any account or other right to
receive income; other than, as to all of the above, Permitted Liens;
provided, that, no Liens (other than a Permitted Priority Lien that is an
inchoate Lien securing obligations for the payment of money not overdue or
not otherwise due and payable) shall be permitted on any assets included in
the Borrowing Base other than the Liens of the Collateral Agent for the
benefit of the Agents and the Lenders and Liens in favor of the 2009 Note
Trustee, for benefit of the 2009 Note Holders.
(b) Indebtedness. Create, incur, assume, guarantee or
suffer to exist, or otherwise become or remain liable with respect to, or
permit any of its Subsidiaries to create, incur, assume, guarantee or suffer
to exist or otherwise become or remain liable with respect to, any
Indebtedness other than Permitted Indebtedness.
(c) Fundamental Changes; Dispositions. Wind-up,
liquidate or dissolve, or merge, consolidate or amalgamate with any Person,
or convey, sell, lease or sublease, assign, transfer or otherwise dispose
of, whether in one transaction or a series of related transactions, all or
any part of its business, property or assets, whether now owned or hereafter
acquired (or agree to do any of the foregoing), or purchase or otherwise
acquire, whether in one transaction or a series of related transactions, all
or substantially all of the assets of any Person (or any division thereof)
(or agree to do any of the foregoing), or permit any of its Subsidiaries to
do any of the foregoing; provided, however, that:
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(i) any Loan Party and its Subsidiaries may
(A) sell Inventory in the ordinary course of business, (B) sell or otherwise
dispose of obsolete or worn-out equipment or equipment no longer used in the
ordinary course of business, (C) sell or otherwise dispose of other property
or assets for cash in an aggregate amount not less than the fair market
value of such property or assets, (D) enter into licensing arrangements
entered into in the ordinary course of business, (E) sell or otherwise
dispose of its properties or assets to any Loan Party; (F) sell or otherwise
dispose of the assets described on Schedule 8.02(c)(i); provided that the
Net Cash Proceeds of such Dispositions (x) in the case of clauses (B) and
(C) above, do not exceed $5,000,000 in the aggregate in any 12-month period,
and (y) in all cases, are paid to the Administrative Agent for the benefit
of the Lenders pursuant to the terms of Section 2.05(c); provided, further,
that other than parcels of real property constituting an immaterial portion
of any Principal Property and set forth on Schedule 8.02(c)(i), no Loan
Party may sell or otherwise dispose of any Principal Property; and (I) enter
into leases and subleases of real property (other than with respect to any
Principal Property) in the ordinary course of business and subject to the
other provisions herein.
(ii) any wholly-owned Domestic Subsidiary of any
Guarantor may be merged into such Guarantor or another wholly-owned Domestic
Subsidiary of such Guarantor, or may be consolidated or amalgamated with
another wholly-owned Domestic Subsidiary of such Guarantor, so long as (A)
no other provision of this Agreement would be violated thereby, (B) such
Guarantor gives the Agents at least 60 days' prior written notice of such
merger, consolidation or amalgamation, (C) no Default or Event of Default
shall have occurred and be continuing either before or after giving effect
to such transaction, (D) the Agents' and the Lenders' rights in any
Collateral, including, without limitation, the existence, perfection and
priority of any Lien thereon, are not adversely affected by such merger,
consolidation or amalgamation, and (E) the surviving Domestic Subsidiary, if
any, to the extent such Domestic Subsidiary is a Significant Subsidiary, is
joined as a Loan Party hereunder and is a party to a Guaranty and a security
agreement in form and substance satisfactory to the Collateral Agent and the
Capital Stock of such Domestic Subsidiary is the subject of a Pledge
Agreement in form and substance satisfactory to the Collateral Agent, in
each case, which is in full force and effect on the date of and immediately
after giving effect to such merger, consolidation or amalgamation;
(iii) any Foreign Subsidiary (other than Solutia
Europe and its Subsidiaries, Solutia Dutch Newco and its Subsidiaries
organized in the United Kingdom and Solutia UK Holdings and its Subsidiaries
organized in the United Kingdom) (x) may be merged into any other Foreign
Subsidiary, or may be consolidated or amalgamated with another Foreign
Subsidiary, so long as (A) no other provision of this Agreement would be
violated thereby, (B) no Default or Event of Default shall have occurred and
be continuing either before or after giving effect to such transaction, and
(C) to the extent such Foreign Subsidiary is directly owned by a Loan Party,
all of the non-voting Capital Stock and 65% of the voting Capital Stock of
the surviving Foreign Subsidiary is the subject of a Pledge Agreement, which
is in full force and effect on the date of and immediately after giving
effect to such merger, consolidation or amalgamation, or (y) may sell or
otherwise dispose of, all or any part of its business, property or assets,
whether now owned or hereafter acquired, to any other Foreign Subsidiary so
long as (A) no other provision of this Agreement would be violated thereby,
and (B) no Default or Event
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of Default shall have occurred and be continuing either before or after
giving effect to such transaction;
(iv) any Subsidiary that is not a Significant
Subsidiary may wind-up its business and operations, liquidate or dissolve so
long as (A) no other provision of this Agreement would be violated thereby,
and (B) no Default or Event of Default shall have occurred and be continuing
either before or after giving effect to such transaction; and
(v) any Subsidiary of Solutia Dutch Newco or
Monchem International, Inc., in each case, organized in the United Kingdom
(x) may be merged into any other Foreign Subsidiary of Solutia Dutch Newco
or Monchem International, Inc., in each case, organized in the United
Kingdom and wholly owned, directly or indirectly, by Solutia Dutch Newco or
Monchem International, Inc., or may be consolidated or amalgamated with
another Foreign Subsidiary of Solutia Dutch Newco or Monchem International,
Inc., in each case, organized in the United Kingdom and wholly owned,
directly or indirectly, by Solutia Dutch Newco or Monchem International,
Inc., so long as (A) no other provision of this Agreement would be violated
thereby, (B) no Default or Event of Default shall have occurred and be
continuing either before or after giving effect to such transaction, and (C)
to the extent such Foreign Subsidiary is owned by a Loan Party (including,
without limitation, Monchem International, Inc.) or Solutia Dutch Newco, all
of the non-voting Capital Stock and 65% of the voting Capital Stock of the
surviving Foreign Subsidiary is the subject of a Pledge Agreement, which is
in full force and effect on the date of and immediately after giving effect
to such merger, consolidation or amalgamation, or (y) may sell or otherwise
dispose of, all or any part of its business, property or assets, whether now
owned or hereafter acquired, to any other Foreign Subsidiary of Solutia
Dutch Newco or Monchem International, Inc., in each case, organized in the
United Kingdom and wholly owned, directly or indirectly, by Solutia Dutch
Newco or Monchem International, Inc. so long as (A) no other provision of
this Agreement would be violated thereby, and (B) no Default or Event of
Default shall have occurred and be continuing either before or after giving
effect to such transaction, provided that, notwithstanding anything in this
clause (v) to the contrary, the Collateral Agent, for the benefit of the
Lenders, shall have a pledge of, and lien on, 65% of the voting and 100% of
the non-voting Capital Stock (including all legal and beneficial interest
thereof) of any first-tier Foreign Subsidiary organized in the United
Kingdom of Solutia Dutch Newco, Monchem International, Inc. and/or any other
Loan Party.
(d) Change in Nature of Business. Make, or permit any
of its Subsidiaries to make, any change in the nature of its business as
described in Section 7.01(l).
(e) Loans, Advances, Investments, Etc. Make or commit
or agree to make any loan, advance, guarantee of obligations, other
extension of credit or capital contributions to, or hold or invest in or
commit or agree to hold or invest in, or purchase or otherwise acquire or
commit or agree to purchase or otherwise acquire any shares of the Capital
Stock, bonds, notes, debentures or other securities of, or make or commit or
agree to make any other investment in, any other Person, or purchase or own
any futures contract or otherwise become liable for the purchase or sale of
currency or other commodities at a future date in the nature of a futures
contract, or permit any of its Subsidiaries to do any of the foregoing,
except for:
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(i) investments existing on the date hereof
as set forth on Schedule 8.02(e) hereto, but not any increase in the amount
thereof as set forth in such Schedule or any other modification of the terms
thereof,
(ii) loans and advances by such Subsidiaries to
any Loan Party,
(iii) Permitted Investments,
(iv) Hedging Agreements entered into in the
ordinary course of business and not for speculative purposes,
(v) loans and advances to employees of the
Loan Parties in the ordinary course of business and not exceeding in the
aggregate amount at any one time outstanding $500,000,
(vi) investments received in connection with
an Insolvency Proceeding of any supplier, customer or other Person having an
obligation in favor of any Loan Party as a result of a settlement of
delinquent obligations of, or other disputes with, such customer, supplier
or such other Person arising in the ordinary course of business,
(vii) investments not constituting loans or
advances by any Loan Party in any other Loan Party,
(viii) investments permitted under clause (f) of
the definition of "Permitted Indebtedness",
(ix) investments in deposit accounts in the
ordinary course of business,
(x) security deposits required by utility
companies or other Persons in a similar line of business made in the
ordinary course of business,
(xi) investments in respect of payments made
pursuant to the Astaris Guaranty in an aggregate amount equal to and made
with the proceeds of draws under, the Letter of Credit Accommodation issued
on the Interim Facility Effective Date to support the Astaris Guaranty,
(xii) the Solutia Therminol Investment,
provided, that (A) the aggregate amount of such investment does not exceed
$3,000,000, (B) both immediately before and after the making of such
investment, no Default or Event of Default has occurred or is continuing,
(C) immediately after the making of such investment Availability exceeds
$20,000,000 and (D) such investment shall be subject to approval of the
Bankruptcy Court; and
(xiii) loans, advances and other extensions of
credit (including, without limitation, the forgiveness or cancellation of
existing Indebtedness), capital contributions or investments by any Foreign
Subsidiary to or in any wholly-owned Foreign Subsidiary.
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(f) Lease Obligations. Create, incur or suffer to
exist, or permit any of its Subsidiaries to create, incur or suffer to
exist, any obligations as lessee (i) for the payment of rent for any real or
personal property in connection with any sale and leaseback transaction, or
(ii) for the payment of rent for any real or personal property under leases
or agreements to lease other than (A) Capitalized Lease Obligations which
would not cause the aggregate amount of all obligations under Capitalized
Leases entered into after the Interim Facility Effective Date owing by all
Loan Parties and their Subsidiaries in any Fiscal Year to exceed the amounts
set forth in subsection (g) of this Section 8.02, and (B) Operating Lease
Obligations which would not cause the aggregate amount of all Operating
Lease Obligations with respect to leases entered into after the Interim
Facility Effective Date owing by all Loan Parties and their Subsidiaries in
any Fiscal Year to exceed $5,000,000.
(g) Capital Expenditures. Make or commit or agree to
make, or permit any of its Subsidiaries to make or commit or agree to make,
any Capital Expenditure (by purchase made or Capitalized Lease entered into
after the Filing Date) that would cause the aggregate amount of all such
Capital Expenditures arising from purchases made or Capitalized Leases
entered into after the Filing Date by the Loan Parties and their
Subsidiaries to exceed $9,200,000 for the month of December 2003,
$65,800,000 in Fiscal Year 2004 and $88,200,000 in Fiscal Year 2005.
(h) Restricted Payments. (i) Declare or pay any
dividend or other distribution, direct or indirect, on account of any
Capital Stock of any Loan Party or any of its Subsidiaries, now or hereafter
outstanding, (ii) make any repurchase, redemption, retirement, defeasance,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any Capital Stock of any Loan Party or any direct or
indirect parent of any Loan Party, now or hereafter outstanding, (iii) make
any payment to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights for the purchase or acquisition of shares
of any class of Capital Stock of any Loan Party, now or hereafter
outstanding, (iv) return any Capital Stock to any shareholders or other
equity holders of any Loan Party or any of its Subsidiaries, or make any
other distribution of property, assets, shares of Capital Stock, warrants,
rights, options, obligations or securities thereto as such or (v) pay any
management fees or any other fees or expenses (including the reimbursement
thereof by any Loan Party or any of its Subsidiaries) pursuant to any
management, consulting or other services agreement to any of the
shareholders or other equityholders of any Loan Party or any of its
Subsidiaries or other Affiliates, or to any other Subsidiaries or Affiliates
of any Loan Party; provided, however, (A) dividends or other distribution
may be made by any Loan Party to the Parent and by any Subsidiary of a Loan
Party to any Loan Party, (B) the Parent may pay dividends in the form of
common Capital Stock, (C) any Loan Party may pay service fees to Foreign
Subsidiaries in connection with the sale of such Loan Party's Inventory to
Foreign Subsidiaries or unrelated third parties, provided that, such payment
would also be permitted under Section 8.02(j) and (D) any direct or indirect
Subsidiary of Solutia Europe may pay dividends to Solutia Europe or any
Subsidiary of Solutia Europe.
(i) Federal Reserve Regulations. Permit any Loan or
the proceeds of any Loan under this Agreement to be used for any purpose
that would cause such Loan to be a margin loan under the provisions of
Regulation T, U or X of the Board.
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(j) Transactions with Affiliates. Enter into, renew,
extend or be a party to, or permit any of its Subsidiaries to enter into,
renew, extend or be a party to, any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease,
transfer or exchange of property or assets of any kind or the rendering of
services of any kind) with any Affiliate, except (i) in the ordinary course
of business in a manner and to an extent consistent with past practice and
necessary or desirable for the prudent operation of its business, for fair
consideration and on terms no less favorable to it or its Subsidiaries than
would be obtainable in a comparable arm's length transaction with a Person
that is not an Affiliate thereof, (ii) transactions with another Loan Party,
and (iii) transactions permitted by Section 8.02(e).
(k) Limitations on Dividends and Other Payment
Restrictions Affecting Subsidiaries. Create or otherwise cause, incur,
assume, suffer or permit to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary of
any Loan Party (i) to pay dividends or to make any other distribution on any
shares of Capital Stock of such Subsidiary owned by any Loan Party or any of
its Subsidiaries, (ii) to pay or prepay or to subordinate any Indebtedness
owed to any Loan Party or any of its Subsidiaries, (iii) to make loans or
advances to any Loan Party or any of its Subsidiaries or (iv) to transfer
any of its property or assets to any Loan Party or any of its Subsidiaries,
or permit any of its Subsidiaries to do any of the foregoing; provided,
however, that nothing in any of clauses (i) through (iv) of this Section
8.02(k) shall prohibit or restrict compliance with:
(A) this Agreement and the other Loan
Documents;
(B) any agreements in effect on the date
of this Agreement and described on Schedule 8.02(k);
(C) any applicable law, rule or regulation
(including, without limitation, applicable currency control laws and
applicable state corporate statutes restricting the payment of dividends in
certain circumstances);
(D) in the case of clause (iv) any
agreement setting forth customary restrictions on the subletting, assignment
or transfer of any property or asset that is a lease, license, conveyance or
contract of similar property or assets;
(E) in the case of clause (iv) any
agreement, instrument or other document evidencing a Permitted Lien from
restricting on customary terms the transfer of any property or assets
subject thereto; or
(F) any agreement, instrument or other
document setting forth restrictions on the ability of Solutia Europe or any
of its Subsidiaries to comply with this paragraph (k).
(l) Limitation on Issuance of Capital Stock. Issue or
sell or enter into any agreement or arrangement for the issuance and sale
of, or permit any of its Subsidiaries to issue or sell or enter into any
agreement or arrangement for the issuance and sale of, any shares of its
Capital Stock, any securities convertible into or exchangeable for its
Capital Stock or any warrants, other than issuances of common Capital Stock
of the Parent or warrants or options to acquire any such common Capital
Stock (including such common Capital Stock of the Parent or
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issuances of warrants for common Capital Stock of the Parent to the Parent's
pension plans, issuances of options or other securities solely exercisable
or convertible into the Parent's common Capital Stock to the Loan Parties'
employees or directors in accordance with the existing benefit plans of the
Loan Parties or issuances of warrants for the Parent's common Capital Stock
to Pharmacia Corporation pursuant to the Settlement Agreement) to the extent
such issuances are not effected pursuant to a transaction prohibited by
Section 8.02(m)(ii).
(m) Modifications of Organizational Documents and
Certain Other Agreements; Etc. (i) Except as permitted by Section 8.02(c),
amend, modify or otherwise change its name, jurisdiction of organization,
organizational identification number or FEIN, (ii) amend, modify or
otherwise change its certificate of incorporation or bylaws (or other
similar organizational documents), including, without limitation, by the
filing or modification of any certificate of designation, or any agreement
or arrangement entered into by it, with respect to any of its Capital Stock
(including any shareholders' agreement), or enter into any new agreement
with respect to any of its Capital Stock, except any such amendments,
modifications or changes or any such new agreements or arrangements pursuant
to this clause (ii) that either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, (iii) amend,
modify or otherwise change the Euro Indenture or any Euro Note, except for
such amendments, modifications or other changes in connection with the Euro
Restructuring specifically set forth in Schedule 8.02(m) or as otherwise
acceptable to the Required Lenders in their sole discretion; provided, that
any such agreements, instruments and other documents related to the Euro
Restructuring shall be delivered to the Agents to provide them with a
reasonable opportunity to review any such documents prior to the execution,
entry or authorization thereof or consummation of the Euro Restructuring, or
(iv) make, or permit Solutia UK Holdings to make, any voluntary or optional
payment, prepayment or redemption in respect of the Solutia UK Holdings
Note.
(n) Investment Company Act of 1940. Engage in any
business, enter into any transaction, use any securities or take any other
action or permit any of its Subsidiaries to do any of the foregoing, that
would cause it or any of its Subsidiaries to become subject to the
registration requirements of the Investment Company Act of 1940, as amended,
by virtue of being an "investment company" or a company "controlled" by an
"investment company" not entitled to an exemption within the meaning of such
Act.
(o) Compromise of Accounts. Compromise or adjust any
Account (or extend the time of payment thereof) or grant any discounts,
allowances or credits or permit any of its Subsidiaries to do so other than
in the ordinary course of its business; provided during the existence of an
Event of Default, no such compromises, adjustments or grants may be given,
except as otherwise agreed to by the Administrative Agent, provided,
however, in no event shall all such discounts, allowances and credits exceed
$1,000,000 and no such extension of the time for payment extend beyond 30
days from the original due date thereof.
(p) ERISA. (i) Engage, or permit any ERISA Affiliate
to engage, in any transaction described in Section 4069 of ERISA; (ii)
engage, or permit any ERISA Affiliate to engage, in any prohibited
transaction described in Section 406 of ERISA or 4975 of the Internal
Revenue Code for which a statutory or class exemption is not available or a
private exemption has not previously been obtained from the U.S. Department
of Labor; (iii) adopt or permit any ERISA Affiliate to adopt any employee
welfare benefit plan within the meaning of Section 3(1) of ERISA
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which provides benefits to employees after termination of employment other
than as required by Section 601 of ERISA or applicable law; (iv) fail to
make any contribution or payment in excess of $1,000,000 to any
Multiemployer Plan which it or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or (v) fail, or permit any ERISA Affiliate to fail, to
pay any required installment or any other payment required under Section 412
of the Internal Revenue Code on or before the due date for such installment
or other payment.
(q) Environmental. Permit the Handling or Release of
Hazardous Materials at any property owned or leased by it or any of its
Subsidiaries, except (i) in compliance in all material respects with
Environmental Laws and so long as such Handling or Release disposal of
Hazardous Materials does not result in a Material Adverse Effect and (ii) to
the extent that such compliance or any enforcement action is stayed as a
result of the Chapter 11 Cases.
(r) Certain Agreements. Agree to any material
amendment or other material change to or material waiver of any of its
rights under any Material Contract, except if any such amendment, change or
waiver is not adverse to the Agents and the Lenders or the Loan Parties, as
determined by the Collateral Agent in its sole discretion, exercised
reasonably.
(s) Bankruptcy Court Orders; Administrative Priority;
Lien Priority; Payment of Claims.
(i) At any time, seek, consent to or suffer to
exist any reversal, modification, amendment, stay or vacation of any of the
Bankruptcy Court Orders, except for modifications and amendments agreed to
by the Agents and the Lenders;
(ii) at any time, suffer to exist a priority for
any administrative expense or unsecured claim against any of the Borrowers
or the Guarantors (now existing or hereafter arising of any kind or nature
whatsoever, including without limitation any administrative expenses of the
kind specified in, or arising or ordered under, Sections 105, 326, 328,
503(b), 506(c), 507(a), 507(b), 546(c) 726 and 1114 of the Bankruptcy Code
equal or superior to the priority of the Agent and the Lenders in respect of
the Obligations, except as provided in Section 4.05 and for the expenses
having priority of payment over the Obligations to the extent set forth in
clause "first" of the definition of the term "Agreed Administrative Expense
Priorities";
(iii) at any time, suffer to exist any Lien on
the Collateral having a priority equal or superior to the Lien in favor of
the Collateral Agent for the benefit of the Agents and the Lenders in
respect of the Collateral, except for Permitted Priority Liens; and
(iv) prior to the date on which the Obligations
have been Paid in Full, the Borrowers and the Guarantors shall not pay any
administrative expense claims except (A) Priority Professional Expenses and
other payments pursuant to sub-clause (i) of clause "first" of the
definition of the term "Agreed Administrative Expense Priorities", (B)
Obligations due and payable hereunder, and (C) other administrative expense
and professional claims incurred in the ordinary course of the business of
the Borrowers and the Guarantors or their respective
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Chapter 11 Cases, in each case to the extent and having the order of
priority set forth in the definition of the term "Agreed Administrative
Expense Priorities".
(t) Payments. Make any payment of principal or
interest or otherwise on account of any Indebtedness or trade payable
incurred prior to the Filing Date, provided that such payments may be made:
(i) in respect of wages, salaries, commissions, employee benefits and other
related compensation obligations (including expense reimbursements) to
employees and employee-equivalent independent contractors, and payroll
deductions and other costs (including processing costs), in each case,
incurred in the ordinary course of business and consistent with past
practice of the Loan Parties; (ii) in respect of the assumption of Leases
and executory contracts under Section 365 of the Bankruptcy Code; (iii) in
respect of workers' compensation obligations and liability and property
insurance policies of the Loan Parties (including premiums, processing
costs, fees and other costs and expenses incident to maintaining the Loan
Parties' workers' compensation programs and their liability and property
insurance policies) in an aggregate amount not to exceed $6,500,000; (iv) in
respect of payroll taxes, sales taxes, use taxes, excise taxes, garnishment
payments and any other trust fund taxes or withholding taxes in the ordinary
course of business and consistent with past practice of the Loan Parties;
(v) in respect of franchise taxes and related fees of the Loan Parties
(including business license fees) in an aggregate amount not to exceed
$100,000; (vi) in respect of Permitted Priority Liens, solely from the
proceeds of the assets subject to such Permitted Priority Liens in
connection with the sale of such assets, in each case, after prior written
notice of such payment has been given by the Borrowers to the Collateral
Agent and subject to approval of the Bankruptcy Court, provided that,
nothing contained in this clause (vi) shall permit any Loan Party or any of
its Subsidiaries to make a Disposition (including, without limitation, a
Disposition of assets of Solutia Europe or any of its Subsidiaries) of any
property other than in accordance with Section 8.02(c); (vii) in respect of
claims related to the Loan Parties' customer programs (including warranty
programs and other obligations related to resolving customer disputes and
promotional programs) in the ordinary course of business and consistent with
past practice of the Loan Parties; (viii) in respect of claims related to
(A) repair and maintenance of the Loan Parties' property or environmental
remediation on the Loan Parties' property (but limited to the extent that,
if not paid on a current basis the holder of such claims would be entitled
to assert a Lien against any of the Loan Parties' property), (B) shipping,
storing, processing and consigning the Loan Parties' property, and (C)
importing and exporting materials and good (including duties imposed by the
United States Customs Service, fees paid to customs brokers and related
charges of international shipping companies), in each case, as such claims
are disclosed in writing to the Collateral Agent and which payments in
respect of such claims are consented to by the Collateral Agent, which
consent shall not be unreasonably withheld; (ix) in respect of ministerial
services and other fees, costs, charges and expense of banks providing cash
management services to the Loan Parties under their contractual
arrangements; (x) in respect of intercompany trade payables for raw
materials, goods, services or finished products purchased by a Loan Party
from a foreign Affiliate of a Loan Party that is not a Loan Party, after
prior written notice of any such payments have been given by the Borrowers
to the Collateral Agent and which payments are consented to by the
Collateral Agent, which consent shall not be unreasonably withheld; (xi) in
respect of the Pre-Petition Obligations to the Existing Agents and the
Existing Lenders; and (xii) in respect of claims of the vendors identified
by the Loan Parties as being critical to the continued operation of the Loan
Parties' business in an aggregate amount not to exceed $5,000,000, subject
to approval of the Bankruptcy Court.
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Section 8.03 Financial Covenants. So long as any principal
of or interest on any Loan, Letter of Credit Obligation or any other
Obligation (whether or not due), other than indemnification obligations for
which no claim has been asserted, shall remain unpaid or any Lender shall
have any Revolving Credit Commitment or Term Loan Commitment hereunder, each
Loan Party shall not, unless the Required Lenders shall otherwise consent in
writing:
(a) Consolidated EBITDA. Permit Consolidated EBITDA
of the Parent and its Subsidiaries at the end of each twelve month period
ended on a date set forth below to be less than the amount corresponding to
such period set forth below:
Twelve-Month Period Ended Consolidated EBITDA
------------------------- -------------------
December 31, 2003 $ 95,300,000
January 31, 2004 $ 82,900,000
February 29, 2004 $ 86,400,000
March 31, 2004 $ 86,000,000
April 30, 2004 $100,800,000
May 31, 2004 $105,900,000
June 30, 2004 $103,300,000
July 31, 2004 $103,300,000
August 31, 2004 $104,500,000
September 30, 2004 $117,500,000
October 31, 2004 $117,400,000
November 30, 2004 $121,900,000
December 31, 2004 $132,100,000
January 31, 2005 $144,100,000
February 28, 2005 $145,000,000
March 31, 2005 $152,200,000
April 30, 2005 $154,300,000
May 31, 2005 $155,700,000
June 30, 2005 $158,000,000
July 31, 2005 $161,100,000
August 31, 2005 $163,500,000
September 30, 2005 $163,300,000
October 31, 2005 $164,800,000
November 30, 2005 $159,700,000
December 31, 2005 $160,200,000
(b) Designated C Business Segment. Permit
Consolidated EBITDA of the Designated C Business Segment at the end of each
twelve month period ended on a date set forth in Part C of Schedule 8.03 to
be less than the amount corresponding to such period set forth in Part C of
Schedule 8.03.
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(c) Fixed Charge Coverage Ratio. Permit the Fixed
Charge Coverage Ratio of the Parent and its Subsidiaries at the end of each
twelve-month period ended on the date set forth below to be less than the
ratio set forth opposite such date:
Twelve-Month Period Ended Fixed Charge Coverage Ratio
------------------------- ---------------------------
December 31, 2003 0.12 to 1.0
January 31, 2004 0.25 to 1.0
February 29, 2004 0.24 to 1.0
March 31, 2004 0.20 to 1.0
April 30, 2004 0.28 to 1.0
May 31, 2004 0.29 to 1.0
June 30, 2004 0.23 to 1.0
July 31, 2004 0.22 to 1.0
August 31, 2004 0.24 to 1.0
September 30, 2004 0.33 to 1.0
October 31, 2004 0.35 to 1.0
November 30, 2004 0.40 to 1.0
December 31, 2004 0.51 to 1.0
January 31, 2005 0.58 to 1.0
February 28, 2005 0.59 to 1.0
March 31, 2005 0.64 to 1.0
April 30, 2005 0.65 to 1.0
May 31, 2005 0.65 to 1.0
June 30, 2005 0.66 to 1.0
July 31, 2005 0.66 to 1.0
August 31, 2005 0.66 to 1.0
September 30, 2005 0.64 to 1.0
October 31, 2005 0.63 to 1.0
November 30, 2005 0.57 to 1.0
December 31, 2005 0.56 to 1.0
ARTICLE IX
MANAGEMENT, COLLECTION AND STATUS OF
ACCOUNTS AND OTHER COLLATERAL
Section 9.01 Collection of Accounts; Management of
Collateral. On or prior to the Final Facility Effective Date, the Loan
Parties shall (i) establish and maintain cash management services of a type
and on terms satisfactory to the Administrative Agent at one or more of the
banks set forth on Schedule 9.01 (each a "Cash Management Bank"), and shall
take such reasonable steps to enforce, collect and receive all amounts owing
on the Accounts of the Loan Parties or any of their Domestic Subsidiaries,
and (ii) deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all
proceeds in respect of any Collateral and all Collections and other amounts
received by any Loan Party (including payments made by the Account Debtors
directly to any Loan Party) into a
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Cash Management Account (other than an operating/check disbursement account)
or the Concentration Accounts. On or prior to the Final Facility Effective
Date, the Loan Parties shall deliver to the Administrative Agent (x) a Cash
Management Agreement with respect to each Cash Management Account and (y) a
Concentration Account Agreement with respect to each Concentration Account.
Each Cash Management Bank shall have irrevocable directions to send all
funds on deposit in the applicable Cash Management Accounts (other than
operating/check disbursement accounts) by electronic funds transfer
(including, but not limited to, ACH transfers) on each Business Day to the
applicable Concentration Account at such Cash Management Bank, or, in the
case of the accounts at Bank of America, N.A., directly to the Solutia
Business Concentration Account, it being understood that the operating/check
disbursement accounts of the Loan Parties identified on Schedule 9.01 shall
be subject to a Cash Management Agreement, but shall not be subject to such
irrevocable directions until the Administrative Agent shall have provided
notice to such Cash Management Bank as described in the Cash Management
Agreements. Notwithstanding the foregoing, promptly upon the request of
Administrative Agent, each Loan Party shall deliver a Cash Management
Agreement to the Administrative Agent with respect to any Cash Management
Account identified by the Administrative Agent.
(b) The Concentration Account Banks shall have
irrevocable directions to send all funds received in the applicable
Concentration Account into the Solutia Business Concentration Account by
electronic funds transfer (including, but not limited to, ACH transfers);
provided, that, in the case of the Concentration Account at Citibank, N.A.,
the Loan Parties shall direct such bank to transfer the funds in its
Concentration Accounts at the end of each Business Day to the Solutia
Business Concentration Account, and all funds received in the Solutia
Business Concentration Account shall be subject to irrevocable directions to
be sent by electronic funds transfer (including, but not limited to, ACH
transfers) to the Administrative Agent's Account to be credited to the
Administrative Agent's Account for application at the end of each Business
Day on which such funds are received in the Administrative Agent's Account
in accordance with Section 2.05(c)(ii) to reduce the then principal balance
of the Revolving Loans, conditional upon final payment to the Administrative
Agent. The Administrative Agent shall charge the Loan Account on the last
day of each month with 2 Business Days of "clearance" or "float" at the rate
applicable to the Revolving Loans set forth in Section 2.04(a)(i) for all
Collections that are received by the Administrative Agent (regardless of
whether forwarded by a Cash Management Bank to the Administrative Agent,
whether provisionally applied to reduce the Obligations under the Loan
Documents, or otherwise), for the account of the Agents and the Lenders, in
accordance with a written agreement among the Agents and the Lenders. This
across-the-board 2 Business Days clearance or float charge on all
Collections is acknowledged by the parties to constitute an integral aspect
of the pricing of the Lenders' financing of the Borrowers, and shall apply
irrespective of the characterization of whether receipts are owned by the
Borrowers or the Lenders, and whether or not there are any outstanding
Revolving Loans, the effect of such clearance or float charge being the
equivalent of charging interest on such funds in the Concentration Account
through the completion of a period ending 2 Business Days after the receipt
thereof. No checks, drafts or other instruments received by the
Administrative Agent shall constitute final payment to the Administrative
Agent unless and until such checks, drafts or instruments have actually been
collected.
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(c) So long as no Default or Event of Default has
occurred and is continuing, the Administrative Borrower may amend Schedule
9.01 to add or replace a Cash Management Account Bank or Cash Management
Account; provided, however, that (i) such prospective Cash Management Bank
shall be reasonably satisfactory to the Administrative Agent and the
Administrative Agent shall have consented in writing in advance to the
opening of such Cash Management Account with the prospective Cash Management
Bank, and (ii) prior to the time of the opening of such Cash Management
Account, each Loan Party and such prospective Cash Management Bank shall
have executed and delivered to the Administrative Agent a Cash Management
Agreement. Each Loan Party shall close any of its Cash Management Accounts
(and establish replacement cash management accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days of notice from
the Administrative Agent that the creditworthiness of any Cash Management
Bank is no longer acceptable in the Administrative Agent's reasonable
judgment, or as promptly as practicable and in any event within 60 days of
notice from the Administrative Agent that the operating performance, funds
transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash Management Accounts or the Administrative Agent's
liability under any Cash Management Agreement with such Cash Management Bank
is no longer acceptable in the Administrative Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash
collateral accounts, with all cash, checks and similar items of payment in
such accounts securing payment of the Obligations, and in which the Loan
Parties are hereby deemed to have granted a Lien to the Administrative Agent
for the benefit of the Agents and the Lenders. All checks, drafts, notes,
money orders, acceptances, cash and other evidences of Indebtedness received
directly by any Loan Party as proceeds of any Collateral shall be held by
such Loan Party in trust for the Agents and the Lenders and upon receipt be
deposited by such Loan Party in original form and no later than the next
Business Day after receipt thereof into the Concentration Accounts or the
Solutia Business Concentration Account, as applicable; provided, however,
all Net Cash Proceeds or cash received directly by such Loan Party pursuant
to an event described in Section 2.05(c)(iii) or Section 2.05(c)(iv)or
Section 2.05(c)(v), shall be held by such Loan Party in trust for the Agents
and the Lenders and upon receipt be deposited by the Loan Party in original
form and no later than the next Business Day after receipt thereof into the
Administrative Agent's Account. A Loan Party shall not commingle such
collections with such Loan Party's own funds or the funds of any Subsidiary
or Affiliate of such Loan Party or with the proceeds of any assets not
included in the Collateral.
(e) After the occurrence and during the continuance
of an Event of Default, the Collateral Agent may send a notice of assignment
and/or notice of the Lenders' security interest to any and all Account
Debtors or third parties holding or otherwise concerned with any of the
Collateral, and thereafter the Collateral Agent shall have the sole right to
collect the Accounts and/or take possession of the Collateral and the books
and records relating thereto. The Loan Parties shall not, without prior
written consent of the Collateral Agent, grant any extension of time of
payment of any Account, compromise or settle any Account for less than the
full amount thereof, release, in whole or in part, any Person or property
liable for the payment thereof, or allow any credit or discount whatsoever
thereon, except, in the absence of a continuing Event of Default, as
permitted by Section 8.02(o).
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(f) Each Loan Party hereby appoints each Agent or its
designee on behalf of such Agent as the Loan Parties' attorney-in-fact with
power exercisable during the continuance of an Event of Default to endorse
any Loan Party's name upon any notes, acceptances, checks, drafts, money
orders or other evidences of payment relating to the Accounts, to sign any
Loan Party's name on any invoice or bill of lading relating to any of the
Accounts, drafts against Account Debtors with respect to Accounts,
assignments and verifications of Accounts and notices to Account Debtors
with respect to Accounts, to send verification of Accounts, and to notify
the Postal Service authorities to change the address for delivery of mail
addressed to any Loan Party to such address as such Agent may designate and
to do all other acts and things necessary to carry out this Agreement. All
acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of omission or
commission (other than acts of omission or commission constituting gross
negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction), or for any error of judgment or mistake of
fact or law; this power being coupled with an interest is irrevocable until
all of the Loans, Letter of Credit Obligations and other Obligations under
the Loan Documents are Paid in Full and all of the Loan Documents are
terminated.
(g) Nothing herein contained shall be construed to
constitute any Agent as agent of any Loan Party for any purpose whatsoever,
and the Agents shall not be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof (other
than from acts of omission or commission constituting gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction). The Agents shall not, under any circumstance or in any event
whatsoever, have any liability for any error or omission or delay of any
kind occurring in the settlement, collection or payment of any of the
Accounts or any instrument received in payment thereof or for any damage
resulting therefrom (other than acts of omission or commission constituting
gross negligence or willful misconduct as determined by a final judgment of
a court of competent jurisdiction). The Agents, by anything herein or in any
assignment or otherwise, do not assume any of the obligations under any
contract or agreement assigned to any Agent and shall not be responsible in
any way for the performance by any Loan Party of any of the terms and
conditions thereof.
(h) If any Account includes a charge for any tax
payable to any Governmental Authority, each Agent is hereby authorized (but
in no event obligated) in its discretion to pay the amount thereof to the
proper taxing authority for the Loan Parties' account and to charge the Loan
Parties therefor. The Borrowers shall notify the Administrative Agent if any
Account includes any taxes due to any such Governmental Authority and, in
the absence of such notice, the Administrative Agent shall have the right to
retain the full proceeds of such Account and shall not be liable for any
taxes that may be due by reason of the sale and delivery creating such
Account.
(i) Notwithstanding any other terms set forth in the
Loan Documents, the rights and remedies of the Agents and the Lenders herein
provided, and the obligations of the Loan Parties set forth herein, are
cumulative of, may be exercised singly or concurrently with, and are not
exclusive of, any other rights, remedies or obligations set forth in any
other Loan Document or as provided by law.
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Section 9.02 Collateral Custodian. Upon the occurrence and
during the continuance of any Default or Event of Default, the Collateral
Agent may at any time and from time to time employ and maintain on the
premises of any Loan Party a custodian selected by the Collateral Agent who
shall have full authority to do all acts necessary to protect the Agents'
and the Lenders' interests. Each Loan Party hereby agrees to, and to cause
its Subsidiaries to, cooperate with any such custodian and to do whatever
the Collateral Agent may reasonably request to preserve the Collateral. All
costs and expenses incurred by the Collateral Agent by reason of the
employment of the custodian shall be the responsibility of the Borrowers and
charged to the Loan Account.
Section 9.03 Collateral Reporting.
(a) The Borrowers shall provide the Administrative
Agent and the Documentation Agent with the following documents in a form
satisfactory to the Administrative Agent and the Documentation Agent:
(i) on a regular basis as required by the
Administrative Agent or the Documentation Agent, schedules of sales made,
credits issued and cash received;
(ii) as soon as possible after the end of each
fiscal month (but in any event within ten (10) days after the end thereof),
on a monthly basis or more frequently as the Administrative Agent or the
Documentation Agent may request: (A) perpetual inventory reports, (B)
inventory reports by location and category (and including the amounts of
Inventory and the value thereof at any leased locations and at premises of
warehouses, processors or other third parties), (C) agings of Accounts
(together with a reconciliation to the previous month's aging and general
ledger), (D) agings of accounts payable (and including information
indicating the amounts owing to owners and lessors of leased premises,
warehouses, processors and other third parties from time to time in
possession of any Collateral) and (E) a report setting forth all issued and
outstanding letters of credit;
(iii) upon the Administrative Agent's or the
Documentation Agent's request, (A) copies of customer statements, purchase
orders, sales invoices, credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (B) copies of shipping and
delivery documents, and (C) copies of purchase orders, invoices and delivery
documents for Inventory and Equipment acquired by any Borrower or Guarantor;
and
(iv) such other reports as to the portion of
the Collateral comprised of Inventory, Accounts and Receivables as the
Administrative Agent or the Documentation Agent shall reasonably request
from time to time.
(b) If any Loan Party's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, such Loan Party hereby irrevocably authorizes such
service, contractor, shipper or agent to deliver such records, reports, and
related documents to the Administrative Agent and the Documentation Agent
and to follow the Administrative Agent's or the Documentation Agent's
instructions with respect to further services at any time that an Event of
Default has occurred and is continuing.
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Section 9.04 Accounts Covenants.
(a) The Borrowers shall notify the Administrative
Agent and the Documentation Agent promptly of: (i) any material delay in any
Loan Party's performance of any of its material obligations to any Account
Debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any Account Debtor, or any material disputes with Account
Debtors, or any settlement, adjustment or compromise thereof, (ii) all
material adverse information known to any Borrower or Guarantor relating to
the financial condition of any Account Debtor to the extent the aggregate
outstanding amount of Accounts of such Account Debtor exceeds $1,000,000 and
(iii) any event or circumstance which, to the best of any Loan Party's
knowledge, would cause the Administrative Agent to consider any then
existing Accounts as no longer constituting Eligible Accounts. No credit,
discount, allowance or extension or agreement for any of the foregoing shall
be granted to any Account Debtor without the Administrative Agent's consent,
except in the ordinary course of a Loan Party's business in accordance with
practices and policies previously disclosed in writing to the Administrative
Agent and the Documentation Agent. Subject to Section 8.02(o), as long as no
Event of Default has occurred and is continuing, Loan Parties may settle,
adjust or compromise any claim, offset, counterclaim or dispute with any
Account Debtor. At any time that an Event of Default has occurred and is
continuing, the Administrative Agent shall, at its option, have the
exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with Account Debtors or grant any credits, discounts
or allowances.
(b) With respect to each Account: (i) the amounts
shown on any invoice delivered to the Administrative Agent or the
Documentation Agent or schedule thereof delivered to the Administrative
Agent or the Documentation Agent shall be true and complete, (ii) no
payments shall be made thereon except payments immediately delivered to the
Administrative Agent pursuant to the terms of this Agreement, (iii) no
credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any Account Debtor except as reported to the
Administrative Agent and the Documentation Agent in accordance with this
Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of each Loan Party's business in accordance
with practices and policies previously disclosed to the Administrative Agent
and the Documentation Agent, (iv) there shall be no setoffs, deductions,
contras, defenses, counterclaims or disputes existing or asserted with
respect thereto except as reported to the Administrative Agent and the
Documentation Agent in accordance with the terms of this Agreement, (v) none
of the transactions giving rise thereto will violate any applicable foreign,
Federal, state or local laws or regulations, all documentation relating
thereto will be legally sufficient under such laws and regulations and all
such documentation will be legally enforceable in accordance with its terms.
(c) The Administrative Agent shall have the right at
any time or times, in the Administrative Agent's name or in the name of a
nominee of the Administrative Agent, to verify the validity, amount or any
other matter relating to any Receivables, Inventory or Accounts, by mail,
telephone, facsimile transmission or otherwise.
Section 9.05 Inventory Covenants. With respect to the
Inventory: (a) each Loan Party shall at all times maintain inventory records
reasonably satisfactory to the Administrative Agent and the Documentation
Agent, keeping correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, such Loan Party's cost
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therefor and daily withdrawals therefrom and additions thereto; (b) Loan
Parties shall conduct a physical count of the Inventory at any time the
Administrative Agent or the Documentation Agent may request on or after an
Event of Default, and promptly following such physical inventory shall
supply the Administrative Agent and the Documentation Agent with a report in
the form and with such specificity as may be satisfactory to the
Administrative Agent or the Documentation Agent concerning such physical
count; (c) the Loan Parties shall not remove any Inventory from the
locations set forth or permitted herein, without the prior written consent
of the Administrative Agent and the Collateral Agent, except (i) for sales
of Inventory in the ordinary course of its business, (ii) to move Inventory
directly from one location set forth or permitted herein to another such
location, (iii) for consignments of Inventory to a third party (or similar
arrangements with respect to Inventory) with an aggregate Book Value of all
such Inventory not at any time exceeding $2,000,000, (iv) to move Inventory
to such other locations outside of the continental United States as the Loan
Parties may elect, provided that, in the case of this clause (iv) (A) the
book value of such Inventory (together with any other Inventory located
outside of the continental United States, whether pursuant to consignment
arrangements or otherwise) shall not exceed an aggregate amount equal to
$15,000,000 at any time outstanding, and (B) such Inventory shall be moved
to such other location in the ordinary course of business of such Loan
Party, and (v) for Inventory shipped from the manufacturer thereof to such
Loan Party which is in transit to the locations set forth or permitted
herein; (d) upon the Administrative Agent's or the Documentation Agent's
request, the Borrowers shall, at their expense, but at any time or times as
the Administrative Agent or the Documentation Agent may request on or after
an Event of Default, deliver or cause to be delivered to the Administrative
Agent and the Documentation Agent written appraisals as to the Inventory in
form, scope and methodology acceptable to the Administrative Agent and the
Documentation Agent and by an appraiser acceptable to the Administrative
Agent and the Documentation Agent, addressed to Agents and Lenders and upon
which Agents and Lenders are expressly permitted to rely; (e) the Loan
Parties shall produce, use, store and maintain the Inventory with all
reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with applicable laws (including the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and
all rules, regulations and orders related thereto); (f) none of the
Inventory or other Collateral constitutes farm products or the proceeds
thereof; (g) each Loan Party assumes all responsibility and liability
arising from or relating to the production, use, sale or other disposition
of the Inventory; (h) except as otherwise expressly permitted under clauses
(c)(iii) and (c)(iv) above, the Loan Parties shall not sell Inventory to any
customer on approval, or any other basis which entitles the customer to
return or may obligate any Loan Party to repurchase such Inventory; (i) the
Loan Parties shall keep the Inventory in good and marketable condition; and
(j) the Loan Parties shall not, without prior written notice to the
Administrative Agent and the Documentation Agent or the specific
identification of such Inventory in a report with respect thereto provided
by the Administrative Borrower to the Administrative Agent and the
Documentation Agent pursuant to Section 9.03(a) hereof, acquire or accept
any Inventory on consignment or approval.
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ARTICLE X
EVENTS OF DEFAULT
Section 10.01 Events of Default. If any of the following
Events of Default shall occur and be continuing:
(a) any Borrower shall fail to pay any principal of
or interest on any Loan, any Reimbursement Obligation, any Agent Advance or
any fee, indemnity or other amount payable under this Agreement or any other
Loan Document when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise);
(b) any representation or warranty made or deemed
made by or on behalf of any Loan Party or by any officer of the foregoing
under or in connection with any Loan Document or under or in connection with
any report, certificate, or other document delivered to any Agent, any
Lender or the L/C Issuer pursuant to any Loan Document shall have been
incorrect in any material respect when made or deemed made;
(c) any Loan Party shall fail to perform or comply
with any covenant or agreement contained in (i) clauses (b), (c), (d), (f),
(h), (j), (k), (l), (m), (n), (o), (p) or (q) of Section 8.01, Section 8.02
or Section 8.03 or ARTICLE IX, or any Loan Party shall fail to perform or
comply with any covenant or agreement contained in any security agreement
related to this Agreement to which it is a party, any Pledge Agreement
related to this Agreement to which it is a party or any Mortgage to which it
is a party, (ii) clauses (e), (g), and (i) of Section 8.01 and such failure,
if capable of being remedied, shall remain unremedied for 5 days, after the
earlier of the date a senior officer of any Loan Party shall become aware of
such failure and the date written notice of such default shall have been
given by any Agent to such Loan Party, (iii) clauses (a)(i), (a)(ii),
(a)(iii), (a)(iv) or (a)(vii) of Section 8.01 and such failure shall remain
unremedied for 5 days, (iv) clauses (a)(v), (a)(x), and (a)(xvii) of Section
8.01 and such failure shall remain unremedied for 3 days, and (v) clauses
(a)(vi), (a)(viii), (a)(ix), (a)(xi), (a)(xii), (a)(xiii), (a)(xiv),
(a)(xv), (a)(xvi), (a)(xvii) and (a)(xviii) of Section 8.01 and such failure
shall remain unremedied for 1 day;
(d) any Loan Party shall fail to perform or comply
with any other term, covenant or agreement contained in any Loan Document to
be performed or observed by it and, except as set forth in subsections (a),
(b) and (c) of this Section 10.01, such failure, if capable of being
remedied, shall remain unremedied for 15 days after the earlier of the date
a senior officer of any Loan Party becomes aware of such failure and the
date written notice of such default shall have been given by any Agent to
such Loan Party;
(e) an order with respect to any of the Chapter 11
Cases shall be entered by the Bankruptcy Court appointing, or any Loan Party
shall file an application for an order with respect to any Chapter 11 Case
seeking the appointment of, (i) a trustee under Section 1104, or (ii) an
examiner with enlarged powers relating to the operation of the business
(powers beyond those set forth in Section 1106(a)(3) and (4) of the
Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code;
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(f) an order with respect to any of the Chapter 11
Cases shall be entered by the Bankruptcy Court converting such Chapter 11
Case to a Chapter 7 case;
(g) an order shall be entered by the Bankruptcy Court
confirming a plan of reorganization in any of the Chapter 11 Cases which
does not (i) contain a provision for termination of the Total Commitment and
payment in full in cash of all Obligations of the Borrowers hereunder and
under the other Loan Documents and the termination or cash collateralization
of the outstanding Letter of Credit Accommodations in an amount equal to
105% of the aggregate undrawn amount of all outstanding Letter of Credit
Accommodations on or before the effective date of such plan or plans upon
entry thereof and (ii) provide for the continuation of the Liens and
security interests granted to the Collateral Agent for the benefit of the
Agents and the Lenders and priorities until such plan effective date;
(h) an order shall be entered by the Bankruptcy Court
dismissing any of the Chapter 11 Cases which does not contain a provision
for termination of the Total Commitment, and payment in full in cash of all
Obligations of the Borrowers hereunder and under the other Loan Documents
upon entry thereof and the termination or cash collateralization of the
outstanding Letter of Credit Accommodations in an amount equal to 105% of
the aggregate undrawn amount of all outstanding Letter of Credit
Accommodations;
(i) an order with respect to any of the Chapter 11
Cases shall be entered by the Bankruptcy Court without the express prior
written consent of the Agents and the Required Lenders (i) to revoke,
reverse, stay, modify, supplement or amend any of the Bankruptcy Court
Orders, which consent shall not be unreasonably withheld in the case of
ministerial amendments or modifications, (ii) to permit any administrative
expense or any claim (now existing or hereafter arising, of any kind or
nature whatsoever) to have administrative priority as to any Borrower or any
Guarantor equal or superior to the priority of the Agents and the Lenders in
respect of the Obligations, except for allowed administrative expenses to
the extent set forth in clause "first" of the definition of the term "Agreed
Administrative Expense Priorities", or (iii) to grant or permit the grant of
a Lien on the Collateral other than a Permitted Lien;
(j) an application for any of the orders described in
clauses (e) through (i) above shall be made by a Person other than the
Borrowers and such application is not contested by the Borrowers in good
faith and the relief requested is granted in an order that is not stayed
pending appeal;
(k) an order shall be entered by the Bankruptcy Court
that is not stayed pending appeal granting relief from the automatic stay to
any creditor of any Loan Party with respect to any claim in an amount equal
to or exceeding $5,000,000 in the aggregate;
(l) (i) any Loan Party shall attempt to invalidate,
reduce or otherwise impair the Liens or security interests of any Agent
and/or the Lenders, claims or rights against such Person or to subject any
Collateral to assessment pursuant to Section 506(c) of the Bankruptcy Code,
(ii) any Lien or security interest created by this Agreement or the
Bankruptcy Court Orders securing all or any part of the Collateral with a
value in excess of $1,000,000 in the aggregate shall, for any reason, cease
to be valid or (iii) any action is commenced by any Loan Party which
contests the validity, perfection or enforceability of any of the Liens and
security interests of any
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Agent and/or the Lenders created by any of the Bankruptcy Court Orders or
this Agreement, any Mortgage, any security agreement related to this
Agreement, any Pledge Agreement related to this Agreement, any other
security document related to this Agreement or the Bankruptcy Court Orders;
(m) the determination of any Loan Party or any other
Significant Subsidiary, whether by vote of such Person's board of directors
or otherwise, to suspend the operation of such Person's business in the
ordinary course, liquidate all or substantially all of such Person's assets,
or employ an agent or other third party to conduct any sales of all or
substantially all of such Person's assets, or in the case of the Loan
Parties, the filing of a motion or other application in the Chapter 11
Cases, seeking authority to do any of the foregoing;
(n) any provision of any Loan Document shall at any
time for any reason (other than pursuant to the express terms thereof) cease
to be valid and binding on or enforceable against any Loan Party intended to
be a party thereto, or the validity or enforceability thereof shall be
contested by any party thereto, or a proceeding shall be commenced by any
Loan Party or any Governmental Authority having jurisdiction over any of
them, other than the US Trustee for the Chapter 11 Cases, seeking to
establish the invalidity or unenforceability thereof, or any Loan Party
shall deny in writing that it has any liability or obligation purported to
be created under any Loan Document;
(o) any Mortgage, security agreement related to this
Agreement, Pledge Agreement related to this Agreement or any other security
document related to this Agreement or the Bankruptcy Court Orders after
delivery thereof pursuant hereto, shall for any reason fail or cease to
create a valid and perfected and, except to the extent permitted by the
terms hereof or thereof, first priority Lien in favor of the Collateral
Agent for the benefit of the Lenders on any Collateral purported to be
covered thereby;
(p) one or more judgments or orders for the payment
of money exceeding $5,000,000 in the aggregate shall be rendered against the
Parent or any of its Significant Subsidiaries and remain unsatisfied and
either (i) enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order, or (ii) there shall be a period of 15
consecutive days after entry thereof during which a stay of enforcement of
any such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; provided, however, that any such judgment or order
shall not give rise to an Event of Default under this subsection (p) (A) if
and for so long as (I) the amount of such judgment or order is covered by a
valid and binding policy of insurance between the defendant and the insurer
covering full payment thereof (less any retention) and (II) such insurer has
been notified, and has not disputed the claim made for payment, of the
amount of such judgment or order or (B) if such judgment or order shall be
rendered against Solutia Europe or any of its Subsidiaries unless the
enforcement of such judgment results in the liquidation, winding up or
dissolution of Solutia Europe or any of its Subsidiaries, or the attachment,
seizure or levy of any material portion of the assets of Solutia Europe or
any of its Subsidiaries;
(q) any material portion of Solutia Europe's or any
of its Subsidiaries' assets is attached, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
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(r) the Parent or any of its Significant Subsidiaries
is enjoined, restrained or in any way prevented by the order of any court or
any Governmental Authority from conducting all or any material part of its
business for more than fifteen (15) consecutive days which could reasonably
be expected to have a Material Adverse Effect;
(s) any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty which causes, for more than fifteen (15) consecutive days,
the cessation or substantial curtailment of revenue producing activities at
any facility of any Loan Party, if any such event or circumstance could
reasonably be expected to have a Material Adverse Effect;
(t) any cessation of a substantial part of the
business of the Parent or any of its Significant Subsidiaries for a period
which materially and adversely affects the ability of such Person to
continue its business on a profitable basis which could reasonably be
expected to have a Material Adverse Effect;
(u) the loss, suspension or revocation of, or failure
to renew, any license or permit now held or hereafter acquired by the Parent
or any of its Significant Subsidiaries, if such loss, suspension, revocation
or failure to renew could reasonably be expected to have a Material Adverse
Effect;
(v) the indictment, or the written threatened
indictment of the Parent or any of its Significant Subsidiaries under any
criminal statute, or commencement or written threatened commencement of
criminal or civil proceedings against any Loan Party, pursuant to which
statute or proceedings the penalties or remedies sought or available include
forfeiture to any Governmental Authority of any material portion of the
property of such Person;
(w) any Loan Party or any of its ERISA Affiliates
shall have made a complete or partial withdrawal from a Multiemployer Plan,
and, as a result of such complete or partial withdrawal, any Loan Party or
any of its ERISA Affiliates incurs a withdrawal liability, currently due and
payable, after exhausting all appeals, if applicable, in an annual amount
exceeding $5,000,000; or a Multiemployer Plan enters reorganization status
under Section 4241 of ERISA, and, as a result thereof any Loan Party's or
any of its ERISA Affiliates' annual contribution requirements with respect
to such Multiemployer Plan increases, currently due and payable, after
exhausting all appeals, if applicable, in an annual amount exceeding
$5,000,000;
(x) (i) any Termination Event with respect to any
Employee Plan shall have occurred which results in uninsured or unreimbursed
liability, currently due and payable, after exhausting all appeals (but not
including payment of benefits by the PBGC) exceeding $5,000,000 or (ii) any
of the events under (iii), (iv) or (v) of the definition of "Termination
Event" which could reasonably be expected to result in a Material Adverse
Effect; provided that, with respect to both clause (i) and (ii), such
Termination Event (if correctable) shall not have been corrected;
(y) the Parent or any of its Significant Subsidiaries
shall be liable for any Environmental Liabilities and Costs the payment of
which has a Material Adverse Effect;
(z) a Change of Control shall have occurred;
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(aa) any Significant Subsidiary of Parent (other than
a Loan Party and prior to the consummation of the Euro Restructuring,
Solutia Europe or any Subsidiary of Solutia Europe) (i) shall institute any
proceeding or voluntary case seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
any such Person or for any substantial part of its property, (ii) shall be
generally not paying its debts as such debts become due or shall admit in
writing its inability to pay its debts generally, (iii) shall make a general
assignment for the benefit of creditors, or (iv) shall take any action to
authorize or effect any of the actions set forth above in this subsection
(aa);
(bb) any proceeding shall be instituted against any
Significant Subsidiary of Parent (other than a Loan Party and prior to the
consummation of the Euro Restructuring, Solutia Europe or any Subsidiary of
Solutia Europe) seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, custodian or other
similar official for any such Person or for any substantial part of its
property, and either such proceeding shall remain undismissed or unstayed
for a period of 30 days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against any
such Person or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property) shall
occur;
(cc) a default shall have occurred under the Euro
Indenture, the Euro Notes or any other agreement, instrument or other
document related thereto; or
(dd) an event or development occurs which could
reasonably be expected to have a Material Adverse Effect;
then, and in any such event, the Collateral Agent may, and
shall at the request of the Required Lenders, by notice to the
Administrative Borrower, (i) terminate or reduce all Revolving Credit
Commitments and Term Loan Commitments, whereupon all Revolving Credit
Commitments and Term Loan Commitments shall immediately be so terminated or
reduced, (ii) declare all or any portion of the Loans then outstanding to be
due and payable, whereupon all or such portion of the aggregate principal of
all Loans and Reimbursement Obligations, all accrued and unpaid interest
thereon, all fees and all other amounts payable under this Agreement and the
other Loan Documents shall become due and payable immediately, without
further order of, or application to, the Bankruptcy Court, presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by each Loan Party and (iii) exercise any and all of its
other rights and remedies under applicable law, (including, but not limited
to, the Bankruptcy Code and the Uniform Commercial Code), hereunder and
under the other Loan Documents.
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ARTICLE XI
AGENTS
Section 11.01 Appointment. Each Lender (and each
subsequent maker of any Loan by its making thereof) hereby irrevocably
appoints and authorizes the Administrative Agent, the Documentation Agent
and the Collateral Agent to perform the duties of each such Agent as set
forth in this Agreement including: (i) in the case of the Administrative
Agent, to receive on behalf of each Lender any payment of principal of or
interest on the Loans outstanding hereunder and all other amounts accrued
hereunder for the account of the Lenders and paid to such Agent, and,
subject to Section 2.02(c), to distribute promptly to each Lender its Pro
Rata Share of all payments so received; (ii) to distribute to each Lender
copies of all material notices and agreements received by such Agent and not
required to be delivered to each Lender pursuant to the terms of this
Agreement, provided that the Agents shall not have any liability to the
Lenders for any Agent's inadvertent failure to distribute any such notices
or agreements to the Lenders; (iii) in the case of the Administrative Agent
and the Collateral Agent, to maintain, in accordance with its customary
business practices, ledgers and records reflecting the status of the
Obligations, the Loans, and related matters and to maintain, in accordance
with its customary business practices, ledgers and records reflecting the
status of the Collateral and related matters; (iv) in the case of the
Administrative Agent and the Collateral Agent, to execute or file any and
all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other
written agreements with respect to this Agreement or any other Loan
Document; (v) to make the Loans and Agent Advances, for such Agent or on
behalf of the applicable Lenders as provided in this Agreement or any other
Loan Document; (vi) to perform, exercise, and enforce any and all other
rights and remedies of the Lenders with respect to the Loan Parties, the
Obligations, or otherwise related to any of same to the extent reasonably
incidental to the exercise by such Agent of the rights and remedies
specifically authorized to be exercised by such Agent by the terms of this
Agreement or any other Loan Document; (vii) to incur and pay such fees
necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to this Agreement or any other Loan Document;
and (viii) in the case of the Administrative Agent and the Collateral Agent,
subject to Section 11.03 of this Agreement, to take such action as such
Agent deems appropriate on its behalf to administer the Loans and the Loan
Documents and to exercise such other powers delegated to such Agent by the
terms hereof or the other Loan Documents (including, without limitation, the
power to give or to refuse to give notices, waivers, consents, approvals and
instructions and the power to make or to refuse to make determinations and
calculations) together with such powers as are reasonably incidental thereto
to carry out the purposes hereof and thereof. As to any matters not
expressly provided for by this Agreement and the other Loan Documents
(including, without limitation, enforcement or collection of the Loans), the
Agents shall not be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all
Lenders and all makers of Loans; provided, however, that the L/C Issuer
shall not be required to refuse to honor a drawing under any Letter of
Credit Accommodation and the Agents shall not be required to take any action
which, in the reasonable opinion of any Agent, exposes such Agent to
liability or which is contrary to this Agreement or any other Loan Document
or applicable law.
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Section 11.02 Nature of Duties. The Agents shall have no
duties or responsibilities except those expressly set forth in this
Agreement or in the other Loan Documents. The duties of the Agents shall be
mechanical and administrative in nature. The Agents shall not have by reason
of this Agreement or any other Loan Document a fiduciary relationship in
respect of any Lender. Nothing in this Agreement or any other Loan Document,
express or implied, is intended to or shall be construed to impose upon the
Agents any obligations in respect of this Agreement or any other Loan
Document except as expressly set forth herein or therein. Each Lender shall
make its own independent investigation of the financial condition and
affairs of the Loan Parties in connection with the making and the
continuance of the Loans hereunder and shall make its own appraisal of the
creditworthiness of the Loan Parties and the value of the Collateral, and
the Agents shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into their possession before the
initial Loan hereunder or at any time or times thereafter, provided that,
upon the reasonable request of a Lender, each Agent shall provide to such
Lender any documents or reports delivered to such Agent by the Loan Parties
pursuant to the terms of this Agreement or any other Loan Document. If any
Agent seeks the consent or approval of the Required Lenders to the taking or
refraining from taking any action hereunder, such Agent shall send notice
thereof to each Lender. Each Agent shall promptly notify each Lender any
time that the Required Lenders have instructed such Agent to act or refrain
from acting pursuant hereto.
Section 11.03 Rights, Exculpation, Etc. The Agents and
their directors, officers, agents or employees shall not be liable for any
action taken or omitted to be taken by them under or in connection with this
Agreement or the other Loan Documents, except for their own gross negligence
or willful misconduct as determined by a final judgment of a court of
competent jurisdiction. Without limiting the generality of the foregoing,
the Agents (i) may treat the payee of any Loan as the owner thereof until
the Collateral Agent receives written notice of the assignment or transfer
thereof, pursuant to Section 13.07 hereof, signed by such payee and in form
satisfactory to the Collateral Agent; (ii) may consult with legal counsel
(including, without limitation, counsel to any Agent or counsel to the Loan
Parties), independent public accountants, and other experts selected by any
of them and shall not be liable for any action taken or omitted to be taken
in good faith by any of them in accordance with the advice of such counsel
or experts; (iii) make no warranty or representation to any Lender and shall
not be responsible to any Lender for any statements, certificates,
warranties or representations made in or in connection with this Agreement
or the other Loan Documents; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of
any Person, the existence or possible existence of any Default or Event of
Default, or to inspect the Collateral or other property (including, without
limitation, the books and records) of any Person; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the
other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall not be deemed to have made any
representation or warranty regarding the existence, value or collectibility
of the Collateral, the existence, priority or perfection of the Collateral
Agent's Lien thereon, or any certificate prepared by any Loan Party in
connection therewith, nor shall the Agents be responsible or liable to the
Lenders for any failure to monitor or maintain any portion of the
Collateral. The Agents shall not be liable for any apportionment or
distribution of payments
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made in good faith pursuant to Section 5.04, and if any such apportionment
or distribution is subsequently determined to have been made in error the
sole recourse of any Lender to whom payment was due but not made, shall be
to recover from other Lenders any payment in excess of the amount which they
are determined to be entitled. The Agents may at any time request
instructions from the Lenders with respect to any actions or approvals which
by the terms of this Agreement or of any of the other Loan Documents the
Agents are permitted or required to take or to grant, and if such
instructions are promptly requested, the Agents shall be absolutely entitled
to refrain from taking any action or to withhold any approval under any of
the Loan Documents until they shall have received such instructions from the
Required Lenders. Without limiting the foregoing, no Lender shall have any
right of action whatsoever against any Agent as a result of such Agent
acting or refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of the Required Lenders.
Section 11.04 Reliance. Each Agent shall be entitled to
rely upon any written notices, statements, certificates, orders or other
documents or any telephone message believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper
Person, and with respect to all matters pertaining to this Agreement or any
of the other Loan Documents and its duties hereunder or thereunder, upon
advice of counsel selected by it.
Section 11.05 Indemnification. To the extent that any
Agent or the L/C Issuer is not reimbursed and indemnified by any Loan Party,
the Lenders will reimburse and indemnify such Agent and the L/C Issuer from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against such Agent or the L/C Issuer in any way
relating to or arising out of this Agreement or any of the other Loan
Documents or any action taken or omitted by such Agent or the L/C Issuer
under this Agreement or any of the other Loan Documents, in proportion to
each Lender's Pro Rata Share, including, without limitation, advances and
disbursements made pursuant to Section 11.08; provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses,
advances or disbursements for which there has been a final judicial
determination that such liability resulted from such Agent's or the L/C
Issuer's gross negligence or willful misconduct. The obligations of the
Lenders under this Section 11.05 shall survive the payment in full of the
Loans and the termination of this Agreement.
Section 11.06 Agents Individually. With respect to its Pro
Rata Share of each Revolving Credit Commitment, Term Loan A Commitment
and/or Term Loan B Commitment and the Total Revolving Credit Commitment and
the Total Term Loan Commitment hereunder and the Loans made by it, each
Agent shall have and may exercise the same rights and powers hereunder and
is subject to the same obligations and liabilities as and to the extent set
forth herein for any other Lender or maker of a Loan. The terms "Lenders",
"Required Revolving Loan Lenders", "Required Term A/B Lenders", "Required
Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include each Agent in its individual capacity as a Lender or one
of the Required Revolving Loan Lenders, the Required Term A/B Lenders or the
Required Lenders. Each Agent and its Affiliates may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with any Borrower as if it were not acting as an Agent pursuant
hereto without any duty to account to the other Lenders.
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Section 11.07 Successor Agent. (a) Each Agent may resign
from the performance of all its functions and duties hereunder and under the
other Loan Documents at any time by giving at least thirty (30) Business
Days' prior written notice to the Administrative Borrower and each Lender.
Such resignation shall take effect upon the acceptance by a successor Agent
of appointment pursuant to clauses (b) and (c) below or as otherwise
provided below.
(b) Upon any such notice of resignation, the Required
Lenders shall appoint a successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement and the
other Loan Documents. After any Agent's resignation hereunder as an Agent,
the provisions of this ARTICLE XI shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under this
Agreement and the other Loan Documents.
(c) If a successor Agent shall not have been so
appointed within said thirty (30) Business Day period, the retiring Agent,
with the consent of the other Agents, shall then appoint a successor Agent
who shall serve as an Agent until such time, if any, as the Required
Lenders, with the consent of the other Agents, appoint a successor Agent as
provided above.
Section 11.08 Collateral Matters.
(a) Subject to the terms of a separate written
agreement among the Agents and the Lenders, the Administrative Agent, the
Collateral Agent and the Documentation Agent may from time to time make such
disbursements and advances ("Agent Advances") which such Agent, in its sole
discretion, deems necessary or desirable to preserve, protect, prepare for
sale or lease or dispose of the Collateral or any portion thereof, to
enhance the likelihood or maximize the amount of repayment by the Borrowers
of the Loans, Letter of Credit Obligations and other Obligations or to pay
any other amount chargeable to the Borrowers pursuant to the terms of this
Agreement, including, without limitation, costs, fees and expenses as
described in Section 13.04. The Agent Advances shall bear interest at the
maximum rate set forth in this Agreement and shall be repayable on demand
and be secured by the Collateral. The Agent Advances shall constitute
Obligations hereunder which may be charged to the Loan Account in accordance
with Section 5.02. Any Agent making an Agent Advance shall notify each
Lender and the Administrative Borrower in writing of each such Agent
Advance, which notice shall include a description of the purpose of such
Agent Advance. Without limitation to its obligations pursuant to Section
11.05, each Lender agrees that it shall make available to the Agent, making
the Agent Advance upon such Agent's demand, in Dollars in immediately
available funds, the amount equal to such Lender's Pro Rata Share of each
such Agent Advance. If such funds are not made available to the Agent making
an Agent Advance by such Lender, such Agent shall be entitled to recover
such funds on demand from such Lender, together with interest thereon for
each day from the date such payment was due until the date such amount is
paid to such Agent, at the Federal Funds Rate for three Business Days and
thereafter at the Reference Rate.
(b) The Lenders hereby irrevocably authorize the
Collateral Agent, at its option and in its discretion, to release any Lien
granted to or held by the Collateral Agent upon any
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Collateral upon termination of the Total Commitment and payment and
satisfaction of all Loans, Letter of Credit Obligations, and all other
Obligations which have matured and which the Collateral Agent has been
notified in writing are then due and payable; or constituting property being
sold or disposed of in compliance with the terms of this Agreement and the
other Loan Documents; or constituting property in which the Loan Parties
owned no interest at the time the Lien was granted or at any time
thereafter; or if approved, authorized or ratified in writing by the
requisite Lenders. Upon request by the Collateral Agent at any time, the
Lenders will confirm in writing the Collateral Agent's authority to release
particular types or items of Collateral pursuant to this Section 11.08(b).
(c) Without in any manner limiting the Collateral
Agent's authority to act without any specific or further authorization or
consent by the Lenders (as set forth in Section 11.08(b)), each Lender
agrees to confirm in writing, upon request by the Collateral Agent, the
authority to release Collateral conferred upon the Collateral Agent under
Section 11.08(b). Upon receipt by the Collateral Agent of confirmation from
the Lenders of its authority to release any particular item or types of
Collateral, and upon prior written request by any Loan Party, the Collateral
Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Liens
granted to the Collateral Agent for the benefit of the Agents and the
Lenders upon such Collateral; provided, however, that (i) the Collateral
Agent shall not be required to execute any such document on terms which, in
the Collateral Agent's opinion, would expose the Collateral Agent to
liability or create any obligations or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
Lien upon (or obligations of any Loan Party in respect of) all interests in
the Collateral retained by any Loan Party.
(d) The Collateral Agent shall have no obligation
whatsoever to any Lender to assure that the Collateral exists or is owned by
the Loan Parties or is cared for, protected or insured or has been
encumbered or that the Lien granted to the Collateral Agent pursuant to this
Agreement or any other Loan Document has been properly or sufficiently or
lawfully created, perfected, protected or enforced or is entitled to any
particular priority, or to exercise at all or in any particular manner or
under any duty of care, disclosure or fidelity, or to continue exercising,
any of the rights, authorities and powers granted or available to the
Collateral Agent in this Section 11.08 or in any other Loan Document, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Collateral Agent may act in any
manner it may deem appropriate, in its sole discretion, given the Collateral
Agent's own interest in the Collateral as one of the Lenders and that the
Collateral Agent shall have no duty or liability whatsoever to any other
Lender, except as otherwise provided herein.
Section 11.09 Agency for Perfection. Each Agent and each
Lender hereby appoints each other Agent and each other Lender as agent and
bailee for the purpose of perfecting the security interests in and liens
upon the Collateral in assets which, in accordance with Article 9 of the
Uniform Commercial Code, can be perfected only by possession or control (or
where the security interest of a secured party with possession or control
has priority over the security interest of another secured party) and each
Agent and each Lender hereby acknowledges that it holds possession of or
otherwise controls any such Collateral for the benefit of the Agents and the
Lenders as secured party. Should the Administrative Agent or the
Documentation Agent
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or any Lender obtain possession or control of any such Collateral, such
Agent or such Lender shall notify the Collateral Agent thereof, and,
promptly upon the Collateral Agent's request therefor shall deliver such
Collateral to the Collateral Agent or in accordance with the Collateral
Agent's instructions. In addition, the Collateral Agent shall also have the
power and authority hereunder to appoint such other sub-agents as may be
necessary or required under applicable state law or otherwise to perform its
duties and enforce its rights with respect to the collateral and under the
Loan Documents. Each Loan Party by its execution and delivery of this
Agreement hereby consents to the foregoing.
ARTICLE XII
GUARANTY
Section 12.01 Guaranty. Each Guarantor hereby jointly and
severally and unconditionally and irrevocably guarantees the punctual
payment when due, whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise, of all Obligations of the Borrowers now
or hereafter existing under any Loan Document, whether for principal,
interest, Letter of Credit Obligations, fees, commissions, expense
reimbursements, indemnifications or otherwise (such obligations, to the
extent not paid by the Borrowers, being the "Guaranteed Obligations"), and
agrees to pay any and all expenses (including reasonable counsel fees and
expenses) incurred by the Agents, the Lenders and the L/C Issuer in
enforcing any rights under the guaranty set forth in this ARTICLE XII.
Without limiting the generality of the foregoing, each Guarantor's liability
shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by the Borrowers to the Agents, the Lenders
and the L/C Issuer under any Loan Document but for the fact that they may
not be enforceable or allowable due to the existence of the Chapter 11
Cases.
Section 12.02 Guaranty Absolute. Each Guarantor, jointly
and severally, guarantees that the Guaranteed Obligations will be paid
strictly in accordance with the terms of the Loan Documents, regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agents, the Lenders or the
L/C Issuer with respect thereto. Each Guarantor agrees that this ARTICLE XII
constitutes a guaranty of payment when due and not of collection and waives
any right to require that any resort be made by any Agent or any Lender to
any Collateral. The obligations of each Guarantor under this ARTICLE XII are
independent of the Guaranteed Obligations, and a separate action or actions
may be brought and prosecuted against each Guarantor to enforce such
obligations, irrespective of whether any action is brought against any other
Loan Party or whether any other Loan Party is joined in any such action or
actions. The liability of each Guarantor under this ARTICLE XII shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any
way relating to, any or all of the following:
(a) any lack of validity or enforceability of any
Loan Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or
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any consent to departure from any Loan Document, including, without
limitation, any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Loan Party or otherwise;
(c) any taking, exchange, release or non-perfection
of any Collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;
(d) the existence of any claim, set-off, defense or
other right that the Guarantors may have at any time against any Person,
including, without limitation, any Agent, any Lender or the L/C Issuer.
(e) any change, restructuring or termination of the
corporate, limited liability company or partnership structure or existence
of any Loan Party; or
(f) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on
any representation by the Agents, the Lenders or the L/C Issuer that might
otherwise constitute a defense available to, or a discharge of, any Loan
Party or any other guarantor or surety.
This ARTICLE XII shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by the Agents, the Lenders, the
L/C Issuer or any other Person, all as though such payment had not been
made.
Section 12.03 Waiver. Each Guarantor hereby waives (i)
promptness, diligence, (ii) notice of acceptance and any other notice with
respect to any of the Guaranteed Obligations and this ARTICLE XII and any
requirement that the Agents, the Lenders or the L/C Issuer exhaust any right
or take any action against any Loan Party or any other Person or any
Collateral, (iii) any right to compel or direct any Agent, any Lender or the
L/C Issuer to seek payment or recovery of any amounts owed under this
ARTICLE XII from any one particular fund or source or to exhaust any right
or take any action against any other Loan Party or any other Person or any
Collateral, (iv) any requirement that any Agent, any Lender or the L/C
Issuer protect, secure, perfect or insure any security interest or Lien or
any property subject thereto or exhaust any right or take any action against
any Loan Party or any other Person or any Collateral, and (v) any other
defense available to the Guarantors. The Guarantors agree that the Agents,
the Lenders and the L/C Issuer shall have no obligation to marshall any
assets in favor of the Guarantors or against, or in payment of, any or all
of the Obligations. Each Guarantor acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated herein
and that the waiver set forth in this Section 12.03 is knowingly made in
contemplation of such benefits. Each Guarantor hereby waives any right to
revoke this ARTICLE XII, and acknowledges that this ARTICLE XII is
continuing in nature and applies to all Guaranteed Obligations, whether
existing now or in the future.
Section 12.04 Continuing Guaranty; Assignments. This
ARTICLE XII is a continuing guaranty and shall (a) remain in full force and
effect until the later of the date on which all of the Guaranteed
Obligations and all other amounts payable under this ARTICLE XII
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shall have been Paid in Full and the Final Maturity Date, (b) be binding
upon each Guarantor, its successors and assigns and (c) inure to the benefit
of, and be enforceable by, the Agents, the Lenders and the L/C Issuer and
their successors, pledgees, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Lender may pledge, assign or
otherwise transfer all or any portion of its rights and obligations under
this Agreement (including, without limitation, all or any portion of its
Revolving Credit Commitments, Term Loan A Commitments, Term Loan B
Commitments, its Loans and the Letter of Credit Obligations owing to 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 13.07.
Section 12.05 Subrogation. No Guarantor will exercise any
rights that it may now or hereafter acquire against any Loan Party or any
other guarantor that arise from the existence, payment, performance or
enforcement of such Guarantor's obligations under this ARTICLE XII,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in
any claim or remedy of the Agents, the Lenders and the L/C Issuer against
any Loan Party or any other guarantor or any Collateral, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from any
Loan Party or any other guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security solely on
account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and all other amounts payable under this ARTICLE XII
shall have been Paid in Full and the Final Maturity Date shall have
occurred. If any amount shall be paid to any Guarantor in violation of the
immediately preceding sentence at any time prior to the later of the date on
which all of the Guaranteed Obligations and all other amounts payable under
this ARTICLE XII shall have been Paid in Full and the Final Maturity Date,
such amount shall be held in trust for the benefit of the Agents, the
Lenders and the L/C Issuer and shall forthwith be paid to the Agents, the
Lenders and the L/C Issuer to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this ARTICLE XII, whether
matured or unmatured, in accordance with the terms of this Agreement, or to
be held as Collateral for any Guaranteed Obligations or other amounts
payable under this ARTICLE XII thereafter arising. If (i) any Guarantor
shall make payment to the Agents, the Lenders and the L/C Issuer of all or
any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this ARTICLE XII shall be
Paid in Full and (iii) the Final Maturity Date shall have occurred, the
Agents, the Lenders and the L/C Issuer will, at such Guarantor's request and
expense, execute and deliver to such Guarantor appropriate documents,
without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Obligations resulting from such payment by such Guarantor.
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ARTICLE XIII
MISCELLANEOUS
Section 13.01 Notices, Etc. All notices and other
communications provided for hereunder shall be in writing and shall be
mailed, telecopied or delivered, if to any Loan Party, at the following
address:
Solutia Inc.
575 Maryville Centre Drive
P.O. Box 66760
St. Louis, Missouri 63166-6760
(courier delivers to: 575 Maryville Centre Drive,
St. Louis, Missouri 63141)
Attention: Jeffry N. Quinn
Telephone: 314-674-1000
Telecopier: 314-674-2721
with a copy to:
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Kathy Swien
Telephone: 312-558-5148
Telecopier: 312-558-5700
and
Gibson, Dunn & Crutcher LLP
Post Montgomery Center, 26th Floor
San Francisco, California 94104
Attention: Kathryn A. Coleman
Telephone: 415-393-8265
Telecopier: 415-374-8417
if to the Administrative Agent, to it at the following
address:
Wells Fargo Foothill, Inc.
400 North Park Town Center
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Business Finance Division Manager
Telephone: 770-508-1300
Telecopier: 770-508-1375
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and
Wells Fargo Foothill, Inc.
2450 Colorado Avenue
Santa Monica, California 90404
Attention: Business Finance Division Manager
Telephone: 310-453-7300
Telecopier: 310-453-7442
if to the Documentation Agent, to it at the following address:
Congress Financial Corporation (Central)
150 South Wacker Drive
Chicago, Illinois 60606
Attention: Portfolio Manager
Telephone: 312-332-0420
Telecopier: 312-332-0424
if to the Collateral Agent, to it at the following address:
Ableco Finance LLC
299 Park Avenue, 23rd Floor
New York, New York 10171
Attention: Kevin P. Genda
Telephone: 212-891-2117
Telecopier: 212-891-1541
in each case, with a copy to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention: Frederic L. Ragucci, Esq.
Telephone: 212-756-2000
Telecopier: 212-593-5955
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other parties complying as to delivery with
the terms of this Section 13.01. All such notices and other communications
shall be effective, (i) if mailed, when received or three Business Days
after deposited in the mails, whichever occurs first, (ii) if telecopied,
when transmitted and confirmation received, or (iii) if delivered, upon
delivery, except that notices to any Agent or the L/C Issuer pursuant to
ARTICLE II and ARTICLE III shall not be effective until received by such
Agent or the L/C Issuer, as the case may be.
Nothing in this Agreement or in any other Loan Document shall be construed
to limit or affect the obligation of the Borrowers or any other Person to
serve upon the Agents and the Lenders in the manner prescribed by the
Bankruptcy Code any pleading or notice required to be given to the Agents
and the Lenders pursuant to the Bankruptcy Code.
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Section 13.02 Amendments, Etc. No amendment or waiver of
any provision of this Agreement, and no consent to any departure by any Loan
Party therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders or by the Collateral Agent with
the consent of the Required Lenders, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given, provided, however, that no amendment, waiver or consent shall
(i) increase the Revolving Credit Commitment, the Term Loan A Commitment or
the Term Loan B Commitment of any Lender, reduce the principal of, or
interest on, the Loans or the Letter of Credit Obligations payable to any
Lender, reduce the amount of any fee payable for the account of any Lender,
or postpone or extend any date fixed for any payment of principal of, or
interest or fees on, the Loans or Letter of Credit Obligations payable to
any Lender, in each case without the written consent of any Lender affected
thereby, (ii) increase the Total Revolving Credit Commitment, the Total Term
Loan A Commitment or the Total Term Loan B Commitment without the written
consent of each Lender affected thereby, (iii) change the percentage of the
Revolving Credit Commitments, any of the Term Loan Commitments or of the
aggregate unpaid principal amount of the Loans that is required for the
Lenders or any of them to take any action hereunder without the written
consent of each Lender, (iv) amend the definition of "Required Revolving
Loan Lenders", "Required Term A/B Lenders", "Required Lenders" or "Pro Rata
Share" without the written consent of each Lender, (v) release all or a
substantial portion of the Collateral (except as otherwise provided in this
Agreement and the other Loan Documents), subordinate any Lien granted in
favor of the Collateral Agent for the benefit of the Agents and the Lenders,
or release any Borrower or any Guarantor, in each case, without the written
consent of each Lender, (vi) amend, modify or waive Section 5.04 or this
Section 13.02 of this Agreement without the written consent of each Lender,
(vii) modify, waive, release or subordinate the superpriority claim status
of the Obligations (except as permitted in this Agreement and the Loan
Documents), or (vii) amend the definition of "Book Value", "Borrowing Base",
"Eligible Accounts", "Eligible Inventory", "Net Amount of Eligible Accounts"
or "Total Revolving Credit Commitment" or "Total Term Loan Commitment",
without the written consent of each Lender. Notwithstanding the foregoing,
no amendment, waiver or consent shall, unless in writing and signed by an
Agent, affect the rights or duties of such Agent (but not in its capacity as
a Lender) under this Agreement or the other Loan Documents.
Section 13.03 No Waiver; Remedies, Etc. No failure on the
part of any Agent or any Lender to exercise, and no delay in exercising, any
right hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any right under any
Loan Document preclude any other or further exercise thereof or the exercise
of any other right. The rights and remedies of the Agents and the Lenders
provided herein and in the other Loan Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law.
The rights of the Agents and the Lenders under any Loan Document against any
party thereto are not conditional or contingent on any attempt by the Agents
and the Lenders to exercise any of their rights under any other Loan
Document against such party or against any other Person.
Section 13.04 Expenses; Taxes; Attorneys' Fees. The
Borrowers will pay on demand, all costs and expenses incurred by or on
behalf of each Agent (and, in the case of clauses (b) through (m) below,
each Lender), regardless of whether the transactions contemplated hereby are
consummated, including, without limitation, reasonable fees, costs,
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client charges and expenses of counsel for each Agent (and, in the case of
clauses (b) through (m) below, each Lender), accounting, due diligence,
periodic field audits, physical counts, valuations, investigations, searches
and filings, monitoring of assets, appraisals of Collateral, title searches
and reviewing environmental assessments, miscellaneous disbursements,
examination, travel, lodging and meals (subject, in the case of costs and
expenses in connection with visits, audits, inspections, valuations and
field examinations, to the limitations set forth in Section 5.01), arising
from or relating to: (a) the negotiation, preparation, execution, delivery,
performance and administration of this Agreement and the other Loan
Documents (including, without limitation, the preparation of any additional
Loan Documents pursuant to Section 8.01(b) or the review of any of the
agreements, instruments and documents referred to in Section 8.01(f)), (b)
any requested amendments, waivers or consents to this Agreement or the other
Loan Documents whether or not such documents become effective or are given,
(c) the preservation and protection of any of the Agents' or the Lenders'
rights under this Agreement or the other Loan Documents, (d) the defense of
any claim or action asserted or brought against any Agent or any Lender by
any Person that arises from or relates to this Agreement, any other Loan
Document, the Agents' or the Lenders' claims against any Loan Party, or any
and all matters in connection therewith, (e) the commencement or defense of,
or intervention or participation in, any court or judicial proceeding
arising from or related to this Agreement or any other Loan Document,
including, without limitation, in connection with any Insolvency Proceeding
related to any Loan Party or the Collateral, including in any adversary
proceeding or contested matter commenced or continued by, on behalf of, or
against any Loan Party or its estate, and any appeal or review thereof, (f)
the filing of any petition, complaint, answer, motion or other pleading by
any Agent or any Lender, or the taking of any action in respect of the
Collateral or other security, in connection with this Agreement or any other
Loan Document, (g) the protection, collection, lease, sale, taking
possession of or liquidation of, any Collateral or other security in
connection with this Agreement or any other Loan Document, (h) any attempt
to enforce any Lien or security interest in any Collateral or other security
in connection with this Agreement or any other Loan Document, (i) any
attempt to collect from any Loan Party, (j) all liabilities and costs
arising from or in connection with the past, present or future operations of
any Loan Party involving any damage to real or personal property or natural
resources or harm or injury alleged to have resulted from any Release of
Hazardous Materials on, upon or into such property, (k) any Environmental
Liabilities and Costs incurred in connection with the investigation,
removal, cleanup and/or remediation of any Hazardous Materials present or
arising out of the operations of any facility of any Loan Party, (l) any
Environmental Liabilities and Costs incurred in connection with any
Environmental Lien, or (m) the receipt by any Agent or any Lender of any
advice from professionals with respect to any of the foregoing. Without
limitation of the foregoing or any other provision of any Loan Document: (x)
the Borrowers agree to pay all stamp, document, transfer, recording or
filing taxes or fees and similar impositions now or hereafter determined by
any Agent or any Lender to be payable in connection with this Agreement or
any other Loan Document, and the Borrowers agree to save each Agent and each
Lender harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission to pay
or delay in paying any such taxes, fees or impositions, (y) the Borrowers
agree to pay all broker fees that may become due in connection with the
transactions contemplated by this Agreement and the other Loan Documents,
and (z) if the Borrowers fail to perform any covenant or agreement contained
herein or in any other Loan Document, any Agent may itself perform or cause
performance of such covenant or agreement,
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and the expenses of such Agent incurred in connection therewith shall be
reimbursed on demand by the Borrowers.
Section 13.05 Right of Set-off. Upon the occurrence and
during the continuance of any Event of Default, any Agent or any Lender may,
and is hereby authorized to, at any time and from time to time, without
notice to any Loan Party (any such notice being expressly waived by the Loan
Parties) and to the fullest extent permitted by law, set off and apply any
and all deposits (general or special, time or demand, provisional or final)
at any time held and other Indebtedness at any time owing by such Agent or
such Lender to or for the credit or the account of any Loan Party against
any and all obligations of the Loan Parties either now or hereafter existing
under any Loan Document, irrespective of whether or not such Agent or such
Lender shall have made any demand hereunder or thereunder and although such
obligations may be contingent or unmatured. Each Agent and each Lender
agrees to notify such Loan Party promptly after any such set-off and
application made by such Agent or such Lender, provided that the failure to
give such notice shall not affect the validity of such set-off and
application. The rights of the Agents and the Lenders under this Section
13.05 are in addition to the other rights and remedies (including, without
limitation, other rights of set-off) which the Agents and the Lenders may
have under this Agreement or any other Loan Documents, in law or otherwise.
Section 13.06 Severability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 13.07 Assignments and Participations. (a) This
Agreement and the other Loan Documents shall be binding upon and inure to
the benefit of each Loan Party and each Agent and each Lender and their
respective successors and assigns (including, except for the right to
request Loans, any trustee succeeding to the rights of the Borrowers and the
Guarantors pursuant to Chapter 11 of the Bankruptcy Code or pursuant to any
conversion to a case under Chapter 7 of the Bankruptcy Code); provided,
however, that none of the Loan Parties may assign or transfer any of its
rights hereunder without the prior written consent of each Lender and any
such assignment without the Lenders' prior written consent shall be null and
void.
(b) Each Lender may, (x) with the written consent of
the Collateral Agent, assign to one or more other lenders or other entities
all or a portion of its rights and obligations under this Agreement with
respect to all or a portion of its Term Loan A Commitment and the Term Loan
A made by it or its Term Loan B Commitment and the Term Loan B made by it
and (y) with the written consent of the Collateral Agent and the
Administrative Agent, assign to one or more other lenders or other entities
all or a portion of its rights and obligations under this Agreement with
respect to all or a portion of its Revolving Credit Commitment, the
Revolving Loans made by it and its Pro Rata Share of Letter of Credit
Obligations, assign to one or more other lenders or other entities all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Revolving Credit Commitments,
the Loans made by it and its Pro Rata Share of Letter of Credit
Obligations); provided, however, that (i) such assignment is in an amount
which is at least $10,000,000 or a multiple of $500,000 in excess thereof
(or the remainder of such Lender's Revolving Credit Commitment) (except such
minimum
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amount shall not apply to an assignment by a Lender (A) to an Affiliate of
such Lender or a fund or account managed by such Lender or an Affiliate of
such Lender or (B) with the consent of the Collateral Agent, to a Person and
its Affiliates or a fund or account managed by such Person or an Affiliate
of such Person to the extent the aggregate amount assigned to all such
Persons is at least $10,000,000 or a multiple of $500,000 in excess
thereof), (ii) the parties to each such assignment shall execute and deliver
to the Collateral Agent, for its acceptance, an Assignment and Acceptance
and an acknowledgement to a separate written agreement among the Agents and
the Lenders, together with any promissory note subject to such assignment
and such parties shall deliver to the Collateral Agent a processing and
recordation fee of $5,000 (except the payment of such fee shall not be
required in connection with an assignment by a Lender to an Affiliate of
such Lender or a fund or account managed by such Lender or an Affiliate of
such Lender), (iii) no written consent of the Collateral Agent shall be
required in connection with any assignment by a Lender to an Affiliate of
such Lender or a fund or account managed by such Lender or an Affiliate of
such Lender, and (iv) on and after the Final Facility Effective Date, any
assignment with respect to the Term Loan A Commitments or the Term Loan B
Commitments (including, the Term Loan A or the Term Loan B), shall be pro
rata in respect of such Lender's Term Loan A Commitment and Term Loan B
Commitment (or if such Term Loan A Commitment and Term Loan B Commitment
have terminated, pro rata in respect of such Lender's Term Loan A or Term
Loan B) (except in the case of any assignment by a Lender to an Affiliate of
such Lender or a fund or account managed by such Lender or an Affiliate of
such Lender). The Borrowers and the Agents may continue to deal solely and
directly with an assigning Lender in connection with the interest so
assigned until such Lender and its assignee shall have executed and
delivered to the Administrative Borrower and the Collateral Agent, and the
Collateral Agent shall have accepted, an Assignment and Acceptance. Upon
such execution, delivery and acceptance, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be
at least three Business Days after the delivery thereof to the Collateral
Agent (or such shorter period as shall be agreed to by the Collateral Agent
and the parties to such assignment), (A) the assignee thereunder shall
become a "Lender" hereunder and, in addition to the rights and obligations
hereunder held by it immediately prior to such effective date, have the
rights and obligations hereunder that have been assigned to it pursuant to
such Assignment and Acceptance and (B) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(i) By executing and delivering an Assignment
and Acceptance, the assigning Lender and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (A) other
than as provided in such Assignment and Acceptance, the assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any other Loan Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other Loan Document furnished pursuant hereto; (B) the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or
any of its Subsidiaries or the performance or observance by any Loan Party
of any of its obligations under this Agreement or any other Loan Document
furnished pursuant hereto; (C) such assignee
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confirms that it has received a copy of this Agreement and the other Loan
Documents, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (D) such assignee will, independently and without
reliance upon the assigning Lender, any Agent or any Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents; (E) such assignee
appoints and authorizes the Agents to take such action as agents on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agents by the terms hereof and thereof,
together with such powers as are reasonably incidental hereto and thereto;
and (F) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement and the
other Loan Documents are required to be performed by it as a Lender.
(ii) The Collateral Agent shall, on behalf of
the Borrowers, maintain, or cause to be maintained at the Payment Office, a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register (the "Register") for the recordation of the names and addresses of
the Lenders and the Revolving Credit Commitments of, Term Loan A Commitments
of, and Term Loan B Commitments of, and principal amount of the Loans (the
"Registered Loans") and Letter of Credit Obligations owing to each Lender
from time to time. Other than in connection with an assignment by a Lender
to an Affiliate of such Lender or a fund or account managed by such Lender
or an Affiliate of such Lender, the entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agents and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the
Administrative Borrower and any Lender at any reasonable time and from time
to time upon reasonable prior notice. In the case of any assignment by a
Lender to an Affiliate of such Lender or a fund or account managed by such
Lender or an Affiliate of such Lender, and which assignment is not recorded
in the Register, the assigning Lender shall maintain a comparable register
to the Register.
(iii) Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee, together with
any promissory notes subject to such assignment, the Collateral Agent shall,
if the Collateral Agent consents to such assignment and if such Assignment
and Acceptance has been completed (i) accept such Assignment and Acceptance
and (ii) record the information contained therein in the Register.
(iv) A Registered Loan (and the registered note,
if any, evidencing the same) may be assigned or sold in whole or in part
only by registration of such assignment or sale on the Register (and each
registered note shall expressly so provide). Any assignment or sale of all
or part of such Registered Loan (and the registered note, if any, evidencing
the same) may be effected only by registration of such assignment or sale on
the Register, together with the surrender of the registered note, if any,
evidencing the same duly endorsed by (or accompanied by a written instrument
of assignment or sale duly executed by) the holder of such registered note,
whereupon, at the request of the designated assignee(s) or transferee(s),
one or more new registered notes in the same aggregate principal amount
shall be issued to the designated assignee(s) or transferee(s). Prior to the
registration of assignment or sale of any Registered Loan (and the
registered note, if any, evidencing the same), the Agents
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shall treat the Person in whose name such Registered Loan (and the
registered note, if any, evidencing the same) is registered as the owner
thereof for the purpose of receiving all payments thereon and for all other
purposes, notwithstanding notice to the contrary.
(v) In the event that any Lender sells
participations in a Registered Loan, such Lender shall maintain a register
on which it enters the name of all participants in the Registered Loans held
by it (the "Participant Register"). A Registered Loan (and the registered
note, if any, evidencing the same) may be participated in whole or in part
only by registration of such participation on the Participant Register (and
each registered note shall expressly so provide). Any participation of such
Registered Loan (and the registered note, if any, evidencing the same) may
be effected only by the registration of such participation on the
Participant Register.
(vi) Any foreign Person who purchases or is
assigned or participates in any portion of such Registered Loan shall
provide the Agents and the Lender with a completed Internal Revenue Service
Form W-8BEN (Certificate of Foreign Status) or a substantially similar form
for such purchaser, participant or any other affiliate who is a holder of
beneficial interests in the Registered Loan.
(c) Each Lender may sell participations to one or
more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Revolving Credit Commitments,
the Loans made by it and its Pro Rata Share of the Letter of Credit
Obligations); provided, that (i) such Lender's obligations under this
Agreement (including without limitation, its Revolving Credit Commitments
hereunder) and the other Loan Documents shall remain unchanged; (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, and the Borrowers, the Agents and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement
and the other Loan Documents; and (iii) a participant shall not be entitled
to require such Lender to take or omit to take any action hereunder except
(A) action directly effecting an extension of the maturity dates or decrease
in the principal amount of the Loans or Letter of Credit Obligations, (B)
action directly effecting an extension of the due dates or a decrease in the
rate of interest payable on the Loans or the fees payable under this
Agreement, or (C) actions directly effecting a release of all or a
substantial portion of the Collateral or any Loan Party (except as set forth
in Section 11.08 of this Agreement or any other Loan Document). The Loan
Parties agree that each participant shall be entitled to the benefits of
Section 2.07 and Section 5.05 of this Agreement with respect to its
participation in any portion of the Revolving Credit Commitments, Term Loan
A Commitments or Term Loan B Commitments and the Loans as if it were a
Lender; provided, however, that the amount of any such benefit shall be
limited to the amount that would otherwise be payable to the Lender selling
the participation with respect to the portion of the Loan in which the
participation was so sold.
Section 13.08 Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same agreement. Delivery
of an executed counterpart of this Agreement by telecopier shall be equally
as effective as delivery of an original executed counterpart of this
Agreement. Any party
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delivering an executed counterpart of this Agreement by telecopier also
shall deliver an original executed counterpart of this Agreement but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. The
foregoing shall apply to each other Loan Document mutatis mutandis.
Section 13.09 GOVERNING LAW. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED IN THE STATE OF NEW YORK EXCEPT AS GOVERNED BY THE BANKRUPTCY CODE
AND EXCEPT AS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT.
Section 13.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS
AND VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE BANKRUPTCY COURT OR IN THE
COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY
ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH LOAN PARTY HEREBY IRREVOCABLY
APPOINTS CT CORPORATION AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE ADMINISTRATIVE BORROWER AT ITS
ADDRESS FOR NOTICES AS SET FORTH IN SECTION 13.01 AND TO CT CORPORATION AT
111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, SUCH SERVICE TO BECOME
EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENTS AND THE LENDERS TO SERVICE OF PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT
OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
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Section 13.11 WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY,
EACH AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT,
INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY
BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY. EACH LOAN PARTY CERTIFIES THAT NO OFFICER,
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT OR ANY LENDER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY AGENT OR ANY LENDER WOULD NOT,
IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE
FOREGOING WAIVERS. EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS
AGREEMENT.
Section 13.12 Consent by the Agents and Lenders. Except as
otherwise expressly set forth herein to the contrary, if the consent,
approval, satisfaction, determination, judgment, acceptance or similar
action (an "Action") of any Agent or any Lender shall be permitted or
required pursuant to any provision hereof or any provision of any other
agreement to which any Loan Party is a party and to which any Agent or any
Lender has succeeded thereto, such Action shall be required to be in writing
and may be withheld or denied by such Agent or such Lender, in its sole
discretion, with or without any reason, and without being subject to
question or challenge on the grounds that such Action was not taken in good
faith.
Section 13.13 No Party Deemed Drafter. Each of the parties
hereto agrees that no party hereto shall be deemed to be the drafter of this
Agreement.
Section 13.14 Reinstatement; Certain Payments. If any
claim is ever made upon any Agent, any Lender or the L/C Issuer for
repayment or recovery of any amount or amounts received by such Agent, such
Lender or the L/C Issuer in payment or on account of any of the Obligations,
such Agent, such Lender or the L/C Issuer shall give prompt notice of such
claim to each other Agent and Lender and the Administrative Borrower, and if
such Agent, such Lender or the L/C Issuer repays all or part of such amount
by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such Agent, such Lender or the
L/C Issuer or any of its property, or (ii) any good faith settlement or
compromise of any such claim effected by such Agent, such Lender or the L/C
Issuer with any such claimant, then and in such event each Loan Party agrees
that (A) any such judgment, decree, order, settlement or compromise shall be
binding upon it notwithstanding the cancellation of any Indebtedness
hereunder or under the other Loan Documents or the termination of this
Agreement or the other Loan Documents, and (B) it shall be and remain liable
to such Agent, such Lender or the L/C Issuer hereunder for the amount so
repaid or recovered to the same extent as if such amount had never
originally been received by such Agent, such Lender or the L/C Issuer.
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Section 13.15 Indemnification.
(a) General Indemnity. In addition to each Loan
Party's other Obligations under this Agreement, each Loan Party agrees to,
jointly and severally, defend, protect, indemnify and hold harmless each
Agent, each Lender and the L/C Issuer and all of their respective officers,
directors, members, partners, employees, attorneys, consultants and agents
(collectively called the "Indemnitees") from and against any and all losses,
damages, liabilities, obligations, penalties, fees, reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees, costs
and expenses) incurred by such Indemnitees, whether prior to or from and
after the Interim Facility Effective Date, whether direct, indirect or
consequential, as a result of or arising from or relating to or in
connection with any of the following: (i) the negotiation, preparation,
execution or performance or enforcement of this Agreement, any other Loan
Document or of any other document executed in connection with the
transactions contemplated by this Agreement, (ii) any Agent's or any
Lender's furnishing of funds to the Borrowers or the L/C Issuer's issuing of
Letter of Credit Accommodations for the account of the Borrowers under this
Agreement or the other Loan Documents, including, without limitation, the
management of any such Loans or the Letter of Credit Obligations, (iii) any
matter relating to the financing transactions contemplated by this Agreement
or the other Loan Documents or by any document executed in connection with
the transactions contemplated by this Agreement or the other Loan Documents,
or (iv) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto
(collectively, the "Indemnified Matters"); provided, however, that the Loan
Parties shall not have any obligation under this subsection (a) for any
Indemnified Matter (x) to any Indemnitee caused by the gross negligence or
willful misconduct of such Indemnitee, as determined by a final judgment of
a court of competent jurisdiction or (y) to any Lender or its Indemnitees
arising directly from any action solely between or among the Lenders.
(b) Environmental Indemnity. Without limiting Section
13.15(a) hereof, each Loan Party agrees to, jointly and severally, defend,
indemnify, and hold harmless the Indemnitees against any and all
Environmental Liabilities and Costs and all other claims, demands,
penalties, fines, liability (including strict liability), losses, damages,
costs and expenses (including without limitation, reasonable legal fees and
expenses, consultant fees and laboratory fees), arising out of (i) any
Releases or threatened Releases (x) at any property presently or formerly
owned or operated by any Loan Party or any Subsidiary of any Loan Party, or
any corporate predecessor, or (y) of any Hazardous Materials Handled by any
Loan Party or any Subsidiary of any Loan Party, or any corporate
predecessor; (ii) any violations of Environmental Laws; (iii) any
Environmental Action relating to any Loan Party or any Subsidiary of any
Loan Party, or any corporate predecessor; (iv) any personal injury
(including wrongful death) or property damage (real or personal) arising out
of exposure to Hazardous Materials Handled by any Loan Party or any
Subsidiary of any Loan Party, or any corporate predecessor; and (v) any
breach of any warranty or representation regarding environmental matters
made by the Loan Parties in Section 7.01(r) or the breach of any covenant
made by the Loan Parties in Section 8.01(j). Notwithstanding the foregoing,
the Loan Parties shall not have any obligation to any Indemnitee under this
subsection (b) regarding any and all Environmental Liabilities and Costs and
all other claims, demands, penalties, fines, liabilities, losses, damages,
costs and expenses (including, without limitation, reasonable legal fees and
expenses, consultant fees and laboratory fees) covered hereunder which
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is caused by the gross negligence or willful misconduct of such Indemnitee,
as determined by a final judgment of a court of competent jurisdiction.
(c) The indemnification for all of the foregoing
losses, damages, fees, costs and expenses of the Indemnitees are chargeable
against the Loan Account. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section 13.15 may be unenforceable
because it is violative of any law or public policy, each Loan Party shall,
jointly and severally, contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and satisfaction of
all Indemnified Matters incurred by the Indemnitees. The indemnities set
forth in this Section 13.15 shall survive the repayment of the Obligations
and discharge of any Liens granted under the Loan Documents.
Section 13.16 Parent as Agent for Borrowers. Each Borrower
hereby irrevocably appoints the Parent as the borrowing agent and
attorney-in-fact for the Borrowers (the "Administrative Borrower") which
appointment shall remain in full force and effect unless and until the
Agents shall have received prior written notice signed by all of the
Borrowers that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide to the
Agents and receive from the Agents all notices with respect to Loans
obtained for the benefit of any Borrower and all other notices and
instructions under the Loan Documents and (ii) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Loans and
to exercise such other powers as are reasonably incidental thereto to carry
out the purposes of this Agreement. It is understood that the handling of
the Loan Account and Collateral of the Borrowers in a combined fashion, as
more fully set forth herein, is done solely as an accommodation to the
Borrowers in order to utilize the collective borrowing powers of the
Borrowers in the most efficient and economical manner and at their request,
and that neither the Agents nor the Lenders shall incur liability to the
Borrowers as a result hereof. Each of the Borrowers expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and
the Collateral in a combined fashion since the successful operation of each
Borrower is dependent on the continued successful performance of the
integrated group. To induce the Agents and the Lenders to do so, and in
consideration thereof, each of the Borrowers hereby jointly and severally
agrees to indemnify the Indemnitees and hold the Indemnitees harmless
against any and all liability, expense, loss or claim of damage or injury,
made against such Indemnitee by any of the Borrowers or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the
Loan Account and Collateral of the Borrowers as herein provided, (b) the
Agents and the Lenders relying on any instructions of the Administrative
Borrower, or (c) any other action taken by any Agent or any Lender hereunder
or under the other Loan Documents.
Section 13.17 Records. The unpaid principal of and
interest on the Loans, the interest rate or rates applicable to such unpaid
principal and interest, the duration of such applicability, the Revolving
Credit Commitments, the Term Loan A Commitments, the Term Loan B Commitments
and the accrued and unpaid fees (including, without limitation, the Loan
Servicing Fee, the Unused Line Fee and Letter of Credit Fee) payable
pursuant to the terms hereof and the Fee Letter, shall at all times be
ascertained from the records of the Agents, which shall be conclusive and
binding absent manifest error.
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Section 13.18 Binding Effect. This Agreement shall become
effective when it shall have been executed by each Loan Party, each Agent
and each Lender and when the conditions precedent set forth in Section 6.01
hereof have been satisfied or waived in writing by the Agents, and
thereafter shall be binding upon and inure to the benefit of each Loan
Party, each Agent and each Lender, and their respective successors and
assigns (including, except for the right to request Loans, any trustee
succeeding to the rights of each Borrower and each Guarantor pursuant to
Chapter 11 of the Bankruptcy Code or pursuant to any conversion to a case
under Chapter 7 of the Bankruptcy Code), except that the Loan Parties shall
not have the right to assign their rights hereunder or any interest herein
without the prior written consent of each Lender, and any assignment by any
Lender shall be governed by Section 13.07 hereof.
Section 13.19 Interest. It is the intention of the parties
hereto that each Agent and each Lender shall conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby or by
any other Loan Document would be usurious as to any Agent or any Lender
under laws applicable to it (including the laws of the United States of
America and the State of New York or any other jurisdiction whose laws may
be mandatorily applicable to such Agent or such Lender notwithstanding the
other provisions of this Agreement), then, in that event, notwithstanding
anything to the contrary in this Agreement or any other Loan Document or any
agreement entered into in connection with or as security for the
Obligations, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under law applicable to any Agent or any Lender
that is contracted for, taken, reserved, charged or received by such Agent
or such Lender under this Agreement or any other Loan Document or agreements
or otherwise in connection with the Obligations shall under no circumstances
exceed the maximum amount allowed by such applicable law, any excess shall
be canceled automatically and if theretofore paid shall be credited by such
Agent or such Lender on the principal amount of the Obligations (or, to the
extent that the principal amount of the Obligations shall have been or would
thereby be Paid in Full, refunded by such Agent or such Lender, as
applicable, to the Borrowers); and (ii) in the event that the maturity of
the Obligations is accelerated by reason of any Event of Default under this
Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to any Agent or any Lender may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically
by such Agent or such Lender, as applicable, as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by
such Agent or such Lender, as applicable, on the principal amount of the
Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be Paid in Full, refunded by such Agent or
such Lender to the Borrowers). All sums paid or agreed to be paid to any
Agent or any Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by law applicable to such Agent or
such Lender, be amortized, prorated, allocated and spread throughout the
full term of the Loans until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum
amount allowed by such applicable law. If at any time and from time to time
(x) the amount of interest payable to any Agent or any Lender on any date
shall be computed at the Highest Lawful Rate applicable to such Agent or
such Lender pursuant to this Section 13.19 and (y) in respect of any
subsequent interest computation period the amount of interest otherwise
payable to such Agent or such Lender would be less than the amount of
interest payable to such Agent or such Lender computed at the Highest Lawful
Rate applicable to such Agent or such Lender, then the amount of interest
payable to such Agent or such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Agent or such Lender until the total amount of interest
payable to such Agent or such
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Lender shall equal the total amount of interest which would have been
payable to such Agent or such Lender if the total amount of interest had
been computed without giving effect to this Section 13.19.
For purposes of this Section 13.19, the term "applicable
law" shall mean that law in effect from time to time and applicable to the
loan transaction between the Borrowers, on the one hand, and the Agents and
the Lenders, on the other, that lawfully permits the charging and collection
of the highest permissible, lawful non-usurious rate of interest on such
loan transaction and this Agreement, including laws of the State of New York
and, to the extent controlling, laws of the United States of America.
The right to accelerate the maturity of the Obligations
does not include the right to accelerate any interest that has not accrued
as of the date of acceleration.
Section 13.20 Confidentiality. Each Agent and each Lender
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with its customary procedures for handling
confidential information of this nature and in accordance with safe and
sound practices of comparable commercial finance companies, any non-public
information supplied to it by the Loan Parties on and after the Interim
Facility Effective Date pursuant to this Agreement or the other Loan
Documents which is identified in writing by the Loan Parties as being
confidential at the time the same is delivered to such Person (and which at
the time is not, and does not thereafter become, publicly available or
available to such Person from another source not known to be subject to a
confidentiality obligation to such Person not to disclose such information),
provided that nothing herein shall limit the disclosure of any such
information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any Agent or any Lender, (iii) to
examiners, auditors, accountants or Securitization Parties, (iv) in
connection with any litigation to which any Agent or any Lender is a party
or (v) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective
assignee or participant) first agrees, in writing, to be bound by
confidentiality provisions similar in substance to this Section 13.20. Each
Agent and each Lender agrees that, upon receipt of a request or
identification of the requirement for disclosure pursuant to clause (iv)
hereof, it will make reasonable efforts to keep the Loan Parties informed of
such request or identification; provided that each Loan Party acknowledges
that (x) each Agent and each Lender may make disclosure as required or
requested by any Governmental Authority or representative thereof and that
each Agent and each Lender may be subject to review by Securitization
Parties or other regulatory agencies and may be required to provide to, or
otherwise make available for review by, the representatives of such parties
or agencies any such non-public information, and (y) the provisions of this
Section 13.20 shall not apply to the federal tax structure or federal tax
treatment of such transactions, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
Persons, without limitation, the federal tax structure and federal tax
treatment of such transactions (including all written materials related to
such tax structure and tax treatment), the intent of which is to cause the
transactions contemplated hereby not to be treated as having been offered
under conditions of confidentiality
-135-
for purposes of Section 1.6011-4(b)(3) (or any successor provision) of the
Treasury Regulations promulgated under Section 6011 of the Internal Revenue
Code, and shall be construed in a manner consistent with such purpose.
Section 13.21 Integration. This Agreement, together with
the other Loan Documents, reflects the entire understanding of the parties
with respect to the transactions contemplated hereby and shall not be
contradicted or qualified by any other agreement, oral or written, before
the date hereof.
Section 13.22 Collateral Agent, Administrative Agent and
Documentation Agent as Party-in-Interest. The Borrowers and Guarantors
hereby stipulate and agree that each of the Collateral Agent, Administrative
Agent and Documentation Agent is and shall remain a party in interest in the
Chapter 11 Cases and shall have the right to participate, object and be
heard in any motion or proceeding in connection therewith. Nothing in this
Agreement or any other Loan Document shall be deemed to be a waiver of any
of such Agent's rights or remedies under applicable law or documentation.
Without limitation of the foregoing, each Agent shall have the right to make
any motion or raise any objection it deems to be in its interest
(specifically including but not limited to objections to use of proceeds of
the Loans, to payment of professional fees and expenses or the amount
thereof, to sales or other transactions outside the ordinary course of
business or to assumption or rejection of any executory contract or lease),
provided that no Agent will exercise such right if the action or inaction by
the Borrowers or the Guarantors which is the subject of such motion or
objection is expressly permitted by any covenant or provision of this
Agreement.
Section 13.23 Dutch Security Agreement. Notwithstanding
anything contained in this Agreement and the other Loan Documents and solely
for the purpose of ensuring and preserving the validity and continuity of
the security rights granted and to be granted under or pursuant to the
security agreements (including, without limitation, the Pledge Agreements)
governed by the laws of The Netherlands (the "Dutch Security Agreements"),
(i) each of the Loan Parties hereby irrevocably and unconditionally
undertakes to pay to the Collateral Agent an amount equal to the aggregate
amount of the Obligations as they may exist from time to time (the payment
undertaking of the Loan Parties to the Collateral Agent under this Section
13.23(a) is referred to as the "Parallel Debt"), and (ii) each of the
Lenders and the other parties hereto hereby acknowledges and consents to (x)
the undertaking by the relevant Loan Party to the Collateral Agent, in its
individual capacity and not as agent, representative or trustee, amounts
which are equal to and in the currency of the Obligations from time to time
due in accordance with the terms of the Obligations, and (y) the granting of
the security rights contemplated by the Dutch Security Agreements in favor
of the Collateral Agent in its individual capacity as security for its
claims under the Parallel Debt.
(b) The Lenders and the other parties hereto agree
that the Parallel Debt is a claim of the Collateral Agent which is separate
and independent from, and without prejudice to, the claims of the Lenders in
respect of the Obligations, and neither such claim nor the security rights
as contemplated by the Dutch Security Agreements are held jointly with the
Lenders, provided that to the extent any amount is paid to and received by
the Collateral Agent in payment of the Parallel Debt, the total amount due
and payable in respect of the Obligations shall be decreased as if such
amount were received by the Lenders or any of them in payment of the
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corresponding Obligations. The Collateral Agent, acting in its individual
capacity, hereby agrees to apply all proceeds that it receives in connection
with any enforcement action taken under or pursuant to the Dutch Security
Agreements or otherwise in satisfaction in whole or in part of the Parallel
Debt, mutatis mutandis, in accordance with the provisions of this Agreement
and the other Loan Documents.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
BORROWERS:
SOLUTIA INC., as a debtor and a debtor-in-
possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: Vice President
SOLUTIA BUSINESS ENTERPRISES, INC., as
a debtor and a debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: President
GUARANTORS:
AXIO RESEARCH CORPORATION, as a debtor and a
debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: Treasurer
BEAMER ROAD MANAGEMENT COMPANY, as a debtor
and a debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: Vice President
CPFILMS INC., as a debtor and a debtor-in-
possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: Vice President
MONCHEM, INC., as a debtor and a
debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: President
MONCHEM INTERNATIONAL, INC., as a debtor and a
debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: President
SOLUTIA GREATER CHINA, INC., as a debtor and a
debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: Vice President
SOLUTIA INTER-AMERICA, INC., as a debtor and a
debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: Vice President
SOLUTIA INTERNATIONAL HOLDING, LLC, as a debto
and a debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: President
SOLUTIA INVESTMENTS, LLC, as a debtor and a
debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: President
SOLUTIA MANAGEMENT COMPANY, INC., as a debtor
and a debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: Treasurer
SOLUTIA OVERSEAS, INC., as a debtor and a
debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: President
SOLUTIA SYSTEMS, INC., as a debtor and a
debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: President
SOLUTIA TAIWAN, INC., as a debtor and a
debtor-in-possession
By: /s/ C. Kevin Wilson
------------------------------------------
Name: C. Kevin Wilson
Title: Vice President
COLLATERAL AGENT AND LENDER:
ABLECO FINANCE LLC, for itself as the
Collateral Agent and a Lender and on behalf
of its affiliate assignees as Lenders
By:
------------------------------------------
Name:
Title:
DOCUMENTATION AGENT AND LENDER:
CONGRESS FINANCIAL CORPORATION (CENTRAL)
By:
------------------------------------------
Name:
Title:
ADMINISTRATIVE AGENT AND LENDER:
WELLS FARGO FOOTHILL, INC.
By: /s/ Robert Bernier
------------------------------------------
Name: Robert Bernier
Title: Vice President
LENDERS:
CANPARTNERS INVESTMENTS IV, LLC
By:
------------------------------------------
Name:
Title:
LENDERS:
FORTRESS CREDIT OPPORTUNITIES I LP
By: FORTRESS CREDIT OPPORTUNITIES I GP LLC,
its general partner
By: /s/ Kevin J. Treacy
------------------------------------------
Name: Kevin J. Treacy
Title: Chief Financial Officer
LENDERS:
GOLDENTREE HIGH YIELD MASTER
FUND, LTD.
By: GoldenTree Asset Management, LP
By: /s/ Thomas O'Shea
------------------------------------------
Name: Thomas O'Shea
Title: Portfolio Manager
GOLDENTREE HIGH YIELD MASTER
FUND II, LTD.
By: GoldenTree Asset Management, LP
By: /s/ Thomas O'Shea
------------------------------------------
Name: Thomas O'Shea
Title: Portfolio Manager
LENDERS:
HIGHBRIDGE/ZWIRN SPECIAL OPPORTUNITIES
FUND, L.P.
By: Highbridge/Zwirn Capital Management, LLC
By: /s/ Daniel B. Zwirn
------------------------------------------
Name: Daniel B. Zwirn
Title: Managing Principal
LENDERS:
BERNARD NATIONAL LOAN INVESTORS, LTD.
By: /s/ Daniel B. Zwirn
------------------------------------------
Name: Daniel B. Zwirn
Title: Director
LENDERS:
H/Z ACQUISITION PARTNERS LLC
By: /s/ Daniel B. Zwirn
------------------------------------------
Name: Daniel B. Zwirn
Title: Managing Member
LENDERS:
NYLON & FILMS, L.L.C.
By: Farallon Capital Management, L.L.C.,
Its Managing Member
By: /s/ Ding Chun
------------------------------------------
Name: Ding Chun
Title: Managing Member
LENDERS:
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: /s/ Scott D. Krase
------------------------------------------
Name: Scott D. Krase
Title: Authorized Signatory
OAK HILL SECURITIES FUND II, L.P.
By: Oak Hill Securities GenPar II, L.P.
its General Partner
By: Oak Hill Securities MGP II, Inc.,
its General Partner
By: /s/ Scott D. Krase
------------------------------------------
Name: Scott D. Krase
Title: Authorized Signatory
LERNER ENTERPRISES, L.P.
By: Oak Hill Asset Management, Inc.,
as Advisor and Attorney-in-Fact to Lerner
Enterprises, L.P.
By: /s/ Scott D. Krase
------------------------------------------
Name: Scott D. Krase
Title: Authorized Signatory
LENDERS:
PP&K FAMILY LTD. PARTNERSHIP
By: Oak Hill Asset Management, Inc.,
as Advisor and Attorney-in-Fact to P&PK
Family Ltd. Partnership
By: /s/ Scott D. Krase
------------------------------------------
Name: Scott D. Krase
Title: Authorized Signatory
CARDINAL INVESTMENT PARTNERS I, L.P.
By: Oak Hill Asset Management, Inc.,
as Advisor and Attorney-in-Fact to
Cardinal Investment Partners I, L.P.
By: /s/ Scott D. Krase
------------------------------------------
Name: Scott D. Krase
Title: Authorized Signatory
OAK HILL CREDIT PARTNERS I, LIMITED
By: Oak Hill CLO Management I, LLC,
as Investment Manager
By: /s/ Scott D. Krase
------------------------------------------
Name: Scott D. Krase
Title: Authorized Signatory
OAK HILL CREDIT PARTNERS II, LIMITED
By: Oak Hill CLO Management II, LLC,
as Investment Manager
By: /s/ Scott D. Krase
------------------------------------------
Name: Scott D. Krase
Title: Authorized Signatory
LENDERS:
TRS THEBE LLC
By: /s/ Deborah O'Keefe
------------------------------------------
Name: Deborah O'Keefe
Title: Vice President
LENDERS:
UPPER COLUMBIA CAPITAL COMPANY, LLC
By: /s/ Adrian Duffy
------------------------------------------
Name: Adrian Duffy
Title: Manager