Exhibit 99.2
FINANCING AGREEMENT
DATED AS OF JANUARY 16, 2004
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,
CITICORP USA, INC.,
AS COLLATERAL AGENT, ADMINISTRATIVE AGENT AND DOCUMENTATION AGENT
CITIGROUP GLOBAL MARKETS INC.,
AS ARRANGER
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; CERTAIN TERMS.........................................................1
Section 1.01 Definitions.....................................................1
Section 1.02 Terms Generally................................................36
Section 1.03 Accounting and Other Terms.....................................37
Section 1.04 Time References................................................37
ARTICLE II THE LOANS........................................................................37
Section 2.01 Commitments....................................................37
Section 2.02 Making the Loans...............................................38
Section 2.03 Repayment of Loans; Evidence of Debt...........................42
Section 2.04 Interest.......................................................43
Section 2.05 Reduction of Commitment; Prepayment of Loans...................43
Section 2.06 Fees...........................................................49
Section 2.07 Securitization.................................................49
Section 2.08 Taxes..........................................................50
Section 2.09 Conversion and Continuation Options............................52
Section 2.10 Special Provisions Governing Eurodollar Rate Loans.............53
ARTICLE III LETTERS OF CREDIT...............................................................55
Section 3.01 Letters of Credit..............................................55
Section 3.02 Letter of Credit Fees..........................................60
ARTICLE IV SECURITY AND ADMINISTRATIVE PRIORITY.............................................61
Section 4.01 Collateral; Grant of Lien and Security Interest................61
Section 4.02 Administrative Priority........................................62
Section 4.03 Grants, Rights and Remedies....................................62
Section 4.04 No Filings Required............................................62
Section 4.05 Survival.......................................................62
ARTICLE V FEES, PAYMENTS AND OTHER COMPENSATION.............................................63
Section 5.01 Audit and Collateral Monitoring Fees...........................63
Section 5.02 Payments; Computations and Statements..........................64
Section 5.03 Sharing of Payments, Etc.......................................65
Section 5.04 Apportionment of Payments......................................65
Section 5.05 Increased Costs and Reduced Return.............................66
Section 5.06 Joint and Several Liability of the Borrowers...................68
ARTICLE VI CONDITIONS TO LOANS..............................................................69
Section 6.01 Conditions Precedent to Facility Effectiveness.................69
Section 6.02 Conditions Precedent to All Loans and Letters of Credit........72
Section 6.03 Proceedings; Receipt of Documents..............................72
ARTICLE VII REPRESENTATIONS AND WARRANTIES..................................................73
Section 7.01 Representations and Warranties.................................73
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ARTICLE VIII COVENANTS OF THE LOAN PARTIES..................................................83
Section 8.01 Affirmative Covenants..........................................83
Section 8.02 Negative Covenants.............................................95
Section 8.03 Financial Covenants...........................................104
ARTICLE IX MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS AND OTHER COLLATERAL..............105
Section 9.01 Collection of Accounts; Management of Collateral..............105
Section 9.02 Collateral Custodian..........................................108
Section 9.03 Collateral Reporting..........................................108
Section 9.04 Accounts Covenants............................................109
Section 9.05 Inventory Covenants...........................................110
ARTICLE X EVENTS OF DEFAULT................................................................111
Section 10.01 Events of Default.............................................111
ARTICLE XI AGENTS..........................................................................116
Section 11.01 Appointment...................................................116
Section 11.02 Nature of Duties..............................................117
Section 11.03 Rights, Exculpation, Etc......................................117
Section 11.04 Reliance......................................................118
Section 11.05 Indemnification...............................................118
Section 11.06 Agents Individually...........................................118
Section 11.07 Successor Agent...............................................119
Section 11.08 Collateral Matters............................................119
Section 11.09 Agency for Perfection.........................................121
ARTICLE XII GUARANTY.......................................................................121
Section 12.01 Guaranty......................................................121
Section 12.02 Guaranty Absolute.............................................121
Section 12.03 Waiver........................................................122
Section 12.04 Continuing Guaranty; Assignments..............................123
Section 12.05 Subrogation...................................................123
ARTICLE XIII MISCELLANEOUS.................................................................124
Section 13.01 Notices, Etc..................................................124
Section 13.02 Amendments, Etc...............................................125
Section 13.03 No Waiver; Remedies, Etc......................................126
Section 13.04 Expenses; Taxes; Attorneys' Fees..............................126
Section 13.05 Right of Set-off..............................................127
Section 13.06 Severability..................................................127
Section 13.07 Assignments and Participations................................127
Section 13.08 Counterparts..................................................130
Section 13.09 GOVERNING LAW.................................................131
Section 13.10 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE.........131
Section 13.11 WAIVER OF JURY TRIAL, ETC.....................................131
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Section 13.12 Consent by the Agents and Lenders.............................132
Section 13.13 No Party Deemed Drafter.......................................132
Section 13.14 Reinstatement; Certain Payments...............................132
Section 13.15 Indemnification...............................................133
Section 13.16 Parent as Agent for Borrowers.................................134
Section 13.17 Records.......................................................134
Section 13.18 Binding Effect................................................134
Section 13.19 Interest......................................................135
Section 13.20 Confidentiality...............................................136
Section 13.21 Integration...................................................137
Section 13.22 Collateral Agent, Administrative Agent and Documentation
Agent as Party-in-Interest....................................137
Section 13.23 Dutch Security Agreement......................................137
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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(l) Certain 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 8.02(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 Assignment and Acceptance
Exhibit E Form of Intercompany Subordination Agreement
Exhibit F Form of Letter of Credit Request
Exhibit G Form of Notice of Conversion or Continuation
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FINANCING AGREEMENT
Financing Agreement, dated as of January 16, 2004, by and
among Solutia Inc., as a debtor and debtor-in-possession, a Delaware
corporation (the "Parent"), and Solutia Business Enterprises, Inc., as a
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debtor and debtor-in-possession, a New York corporation, ("Solutia Business"
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and together with the Parent, each a "Borrower" and collectively, the
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"Borrowers"), each subsidiary of the Parent listed as a "Guarantor" on the
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signature pages hereto, each as a debtor and debtor-in-possession (each a
"Guarantor" and collectively, the "Guarantors"), the lenders from time to
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time party hereto (each a "Lender" and collectively, the "Lenders"),
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Citicorp USA, Inc. ("CUSA"), as collateral agent for the Lenders (in such
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capacity, the "Collateral Agent"), CUSA, as administrative agent for the
----------------
Lenders (in such capacity, the "Administrative Agent"), and CUSA, as
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documentation agent for the Lenders (in such capacity, the "Documentation
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Agent" and together with the Collateral Agent and the Administrative Agent,
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each an "Agent" and collectively, the "Agents").
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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 (such Court and any other court having jurisdiction
over the Chapter 11 Cases from time to time, 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, (i) the Borrowers and the Guarantors have asked
the Lenders to make post-petition loans and advances to the Borrowers
consisting of (a) a multiple draw term loan A in the aggregate principal
amount of $50,000,000 which loan may be drawn from time to time from the
Facility Effective Date (as defined below) until the Final Maturity Date (as
defined below), (b) a single draw term loan B in the aggregate principal
amount of $300,000,000 which loan shall be drawn in full on the Facility
Effective Date, and (c) a revolving credit facility in an aggregate
principal amount not to exceed $175,000,000 at any time outstanding, which
revolving credit facility will include a letter of credit subfacility for
the issuance of letters of credit and (ii) 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
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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" means Ableco Finance LLC, a Delaware limited
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liability company.
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"Account Debtor" means each debtor, customer or obligor in
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any way obligated on or in connection with any Account.
"Accounts" means, as to each Loan Party, all present and
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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
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13.12.
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"Additional Principal Properties" means the following
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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).
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"Administrative Agent" has the meaning specified therefor
--------------------
in the preamble hereto.
"Administrative Agent's Account" means an account at a
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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
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therefor in Section 13.16.
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"Affiliate" means, with respect to any Person, any other
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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
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therefor in Section 8.01(m).
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"Agent" and "Agents" have the respective meanings
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specified therefor in the preamble hereto.
"Agent Advances" has the meaning specified therefor in
--------------
Section 11.08(a).
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"Agreed Administrative Expense Priorities" means the
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following priority with respect to administrative expenses of the Borrowers
and the Guarantors (and, with respect to sub-clause (ii) of clause "first",
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any official committee appointed by the Bankruptcy Court):
first, (i) amounts payable pursuant to 28 U.S.C.
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Section 1930(a)(6) and any fees payable to the Clerk of
the Bankruptcy Court and (ii) the Carve-Out Expenses,
provided, that the Carve-Out Expenses shall not exceed $15
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million in the aggregate (inclusive of (a) any holdbacks
required by the Bankruptcy Court, (b) actual, documented
reasonable fees and expenses of a trustee payable under
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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
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Section 4.02; and
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third, all other allowed administrative expenses.
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"Agreement" means this Financing Agreement, including all
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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
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acceptance entered into by an assigning Lender and an assignee, and accepted
by the Administrative Agent, in accordance with Section 13.07 and
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substantially in the form of Exhibit D or such other form acceptable to the
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Collateral Agent.
"Astaris" means Astaris LLC, a Delaware limited liability
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company.
"Astaris Agent" means Bank of America, N.A., in its
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capacity as administrative agent for the Astaris Lenders.
"Astaris Credit Agreement" means the Five Year Credit
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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 Order.
"Astaris Lenders" means the lenders from time to time
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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
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sum of (i) the 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 (provided that in no event shall any
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Specified Environmental Receipts be included within this clause (ii)).
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"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.
"Banking Services" means the provision to any Loan Party
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by a Lender or any of its Affiliates (in each case with the consent of the
Administrative Agent) of treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions,
return items, overdrafts and interstate depository network services).
"Banking Services Obligations" of the Loan Parties means
----------------------------
any and all obligations of the Loan Parties, whether absolute or contingent
and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Banking Services.
"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 Order" means the order of the Bankruptcy
----------------------
Court with respect to the Borrowers and the Guarantors approving (i) the
financing contemplated by the Loan Documents, including, without limitation,
superpriority administrative expense and lien status in form and substance
satisfactory to the Administrative Agent, (ii) the repayment in full of all
outstanding obligations under the Existing Post-Petition Credit Agreement
and related documents, (iii) the repayment in full of all outstanding
obligations under the Existing Pre-Petition Credit Agreement and related
documents, (iv) the release of all Liens relating to the Existing
Post-Petition Credit Agreement and related documents and (v) the release of
all Liens relating to the Existing Pre-Petition Credit Agreement and related
documents, such order to be in form and substance satisfactory to the
Administrative Agent in its sole discretion, 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.
"Bankruptcy Court Order Entry Date" means the date on
---------------------------------
which the Bankruptcy Court Order shall have been entered by the Bankruptcy
Court.
"Board" means the Board of Governors of the Federal
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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
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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.
- 4 -
"Borrower" and "Borrowers" have the respective meanings
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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) 70% of the Book Value of the Eligible
----
Inventory constituting finished goods at such time plus (y) 50% of the Book
Value of the Eligible Inventory constituting raw materials at such time plus
(z) the lesser of (1) 50% of the Book Value of the Eligible Inventory
constituting the Designated Chemicals at such time and (2) $25,000,000 and
(ii) such reserves as the Administrative Agent may deem appropriate in the
exercise of its business judgment made in good faith and exercised
reasonably based upon the lending practices of the Administrative Agent
consistent with the general practices in the commercial finance industry (it
being understood that such reserves shall include, but not be limited to,
(x) reserves for the administrative expenses referred to in clause "first"
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of the definition of "Agreed Administrative Expense Priority", (y) reserves
with respect to Banking Services Obligations and (z) reserves with respect
to Hedging Obligations). The advance rates with respect to Eligible Accounts
and Eligible Inventory shall be as determined by the Administrative Agent
from time to time. The Administrative Agent will advise the Administrative
Borrower of the initial advance rates on the Facility Effective Date.
"Borrowing Base Certificate" means a certificate signed by
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an Authorized Officer of the Administrative Borrower and setting forth the
calculation of the Borrowing Base in compliance with Section 8.01(a)(vi),
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substantially in the form of Exhibit C.
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"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 and, if the applicable Business Day relates to notices,
determinations, fundings and payments in connection with the Eurodollar Rate
or any Eurodollar Rate Loans, a day on which dealings in Dollar deposits are
also carried on in the London interbank market.
"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 (including financing in the form of Capital Lease Obligations);
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, (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 and (c) Capitalized Lease Obligations outstanding as of the Filing
Date and paid or payable during such period.
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"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
any Issuer or the manner in which any Lender, any Person controlling any
Lender, or any 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
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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
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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 on a loan for Federal income
tax purposes); provided that, the term Capitalized Lease shall not include
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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 the Bankruptcy Court Order.
"Cash Management Accounts" means those bank accounts of
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each Loan Party listed on Schedule 9.01 that are maintained at one or more
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Cash Management Banks listed on Schedule 9.01.
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"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).
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"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
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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).
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"Chapter 11 Cases" has the meaning specified therefor in
----------------
the recitals hereto.
"Collateral" has the meaning specified therefor in Section
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4.01(a).
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"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.
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"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
Administrative Agent, applicable to the Concentration Account.
"Concentration Account Banks" means each of the banks
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identified on Schedule 9.01 as a "Concentration Account Bank", or such other
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Person or Persons as the Administrative
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Borrower (with the prior written consent of the Administrative Agent) may
designate from time to time.
"Congress" means Congress Financial Corporation (Central),
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an Illinois corporation.
"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.
"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 described on Schedule 1.01(B) to the extent
----------------
that (i) the aggregate amount of such cash charges do not exceed
$125,000,000 and (ii) the aggregate amount of such cash charges do not
exceed $20,000,000 in 2003, $82,000,000 in 2004, and $49,000,000 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, and (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
- 8 -
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, 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.
"Current Value" has the meaning specified therefor in
-------------
Section 8.01(m).
- ---------------
"CUSA" has the meaning specified therefor in the preamble
----
hereto.
"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%.
- 9 -
"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.
"Documentary Letter of Credit" means any letter of credit
----------------------------
issued by an Issuer pursuant to clause (a) of Section 3.01 for the account
------------
of any Borrower or Guarantor which is drawable upon presentation of
documents evidencing the sale or shipment of goods purchased by any Borrower
or Guarantor in the ordinary course of its business.
"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.
"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
and any Inventory sold or transferred in connection with the creation of
such Account is not subject to a repurchase or similar agreement; (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
- 10 -
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 50% 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 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
- 11 -
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 (including
------------------
those finished goods with respect to which a Loan Party has an obligation to
repurchase such finished goods), raw materials (including work-in-process
constituting the Designated Chemicals Inventory and "uninstalled catalysts")
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 Administrative Agent may
approve in writing from time to time; (vii) such Inventory does not consist
of goods returned or 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.
- 12 -
"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 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.
- 13 -
"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.
"Eurocurrency Liabilities" has the meaning assigned to
------------------------
that term in Regulation D of the Board.
"Eurodollar Base Rate" means the rate of interest
--------------------
determined by the Administrative Agent to be the average (rounded upward to
the nearest whole multiple of one sixteenth of one percent (0.0625%) per
annum, if such average is not such a multiple) of the rates per annum at
which deposits in Dollars are offered by the principal office of Citibank,
N.A. in London, to major banks in the London interbank market at 11:00 A.M.
(London time) two (2) Business Days before the first day of such Interest
Period in an amount substantially equal to the Eurodollar Rate Loan for a
period equal to such Interest Period.
"Eurodollar Lending Office" means, with respect to any
-------------------------
Revolving Loan Lender, the office of such Revolving Loan Lender specified as
its "Eurodollar Lending Office" opposite its name on Part II of Schedule
--------
1.01(a) or on the Assignment and Acceptance by which it became a Lender or
- -------
such other office of such Lender as such Lender may from time to time
specify to the Administrative Borrower and the Administrative Agent.
"Eurodollar Rate" means, with respect to any Interest
---------------
Period for any Eurodollar Rate Loan, an interest rate per annum equal to the
rate per annum obtained by dividing (a) the Eurodollar Base Rate by (b)(i) a
percentage equal to one hundred percent (100%) minus (ii) the reserve
-----
percentage applicable two (2) Business Days before the first day of such
Interest Period under regulations issued from time to time by the Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) for a member bank of the
United States Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities
(or with respect to any other category of liabilities that includes deposits
by reference to which the Eurodollar Rate is determined) having a term equal
to such Interest Period.
"Eurodollar Rate Loan" means any Revolving Loan that, for
--------------------
an Interest Period, bears interest based on the Eurodollar Rate.
"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.
- 14 -
"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.
"Excluded Assets" shall mean all right, title and interest
---------------
of any Loan Party in any (i) Avoidance Actions and (ii) Specified
Environmental Receipts and the segregated account in which such payments are
held in compliance with Section 8.02(q).
---------------
"Existing Post-Petition Agents" means the Existing
-----------------------------
Post-Petition Collateral Agent, Foothill, in its capacity as the
administrative agent to the Existing Post-Petition Lenders, and Congress, in
its capacity as the documentation agent to the Existing Post-Petition
Lenders.
"Existing Post-Petition Collateral Agent" means Ableco, in
---------------------------------------
its capacity as the collateral agent to the Existing Post-Petition Agents
and the Existing Post-Petition Lenders.
"Existing Post-Petition Credit Agreement" means the
---------------------------------------
Financing Agreement, dated as of December 19, 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 Post-Petition
Lenders and the Existing Post-Petition Agents.
"Existing Post-Petition Lenders" means the lenders party
------------------------------
to the Existing Post-Petition Credit Agreement.
"Existing Pre-Petition Agents" means the Existing
----------------------------
Pre-Petition Collateral Agent, Foothill, in its capacity as the
administrative agent to the Existing Pre-Petition Lenders, and Congress, in
its capacity as the documentation agent to the Existing Pre-Petition
Lenders.
"Existing Pre-Petition Collateral Agent" means Ableco, in
--------------------------------------
its capacity as the collateral agent to the Existing Pre-Petition Agents and
the Existing Pre-Petition Lenders.
"Existing Pre-Petition 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 Pre-Petition
Lenders and the Existing Pre-Petition Agents.
"Existing Pre-Petition Lenders" means the lenders party to
-----------------------------
the Existing Pre-Petition Credit Agreement.
"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 clause (iii) of Section
-------
2.05(c), including, without limitation, (i) foreign, United States, state or
- -------
local tax refunds, (ii) pension plan reversions, (iii) proceeds of
insurance, (iv) judgments,
- 15 -
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; provided that
--------
"Extraordinary Receipts" shall not include cash received by the Parent or
any of its Subsidiaries amounting to less than $50,000 per receipt up to an
aggregate exclusion under this proviso of $1,000,000 for all such receipts
per Fiscal Year.
"Facility Effective Date" has the meaning specified
-----------------------
therefor in Section 6.01.
------------
"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 January 15,
----------
2004, among the Borrowers, CUSA and Citigroup Global Markets Inc.
"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 Administrative Agent, at the
sole cost and expense of the Borrowers.
"Filing Date" means December 17, 2003.
-----------
"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, and (iii)
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.
"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 eleven months ended November 30, 2003, and the related consolidated
statement of operations, shareholder's equity and cash flows for the eleven
months then ended.
"Fiscal Year" means the fiscal year of the Parent and its
-----------
Subsidiaries ending on December 31 of each year.
"Foothill" means Wells Fargo Foothill, Inc., a California
--------
corporation.
"Foreign Subsidiary" means any Subsidiary of a Loan Party
------------------
that is not a Domestic Subsidiary.
- 16 -
"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 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, 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 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.
-------------
"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, 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.
- 17 -
"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.
"Hedging Obligations" means obligations owed by any
-------------------
Borrower or any Guarantor to any Lender or any Affiliate of any Lender (in
each case with the consent of the Administrative Agent) with respect to any
Hedging Agreement.
"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 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
- 18 -
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 E.
---------
"Interest Period" means, in the case of any Eurodollar
---------------
Rate Loan but in any event subject to Section 2.10, (x) initially, the
------------
period commencing on the date such Eurodollar Rate Loan is made or on the
date of conversion of a Reference Rate Loan to such Eurodollar Rate Loan and
ending one (1), two (2) or three (3) months thereafter, as selected by the
Administrative Borrower in its Notice of Borrowing or Notice of Conversion
or Continuation given to the Administrative Agent pursuant to Section 2.02
------------
or 2.09 and (y) thereafter, if such Eurodollar Rate Loan is continued, in
----
whole or in part, as a Eurodollar Rate Loan pursuant to Section 2.09, a
------------
period commencing on the last day of the immediately preceding Interest
Period therefor and ending one (1), two (2) or three (3) months thereafter,
as selected by the Administrative Borrower in its Notice of Conversion or
Continuation given to the Administrative Agent pursuant to Section 2.09;
------------
provided, however, that all of the foregoing provisions relating to Interest
- -------- -------
Periods in respect of Eurodollar Rate Loans are subject to the following:
(a) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day, unless, the result of such
extension would be to extend such Interest Period into another
calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day;
(b) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar
- 19 -
month at the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(c) the Borrower may not select any Interest Period that
ends after the scheduled Final Maturity Date;
(d) the Borrower may not select any Interest Period in
respect of Revolving Loans having an aggregate principal amount of
less than $15 million or an integral multiples of $1 million in
excess thereof; and
(e) there shall be outstanding at any one time no more
than three (3) Interest Periods in the aggregate.
"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.
"Issue" means, with respect to any Letter of Credit, to
-----
issue, extend the expiry of, renew or increase the maximum stated amount
(including by deleting or reducing any scheduled decrease in such maximum
stated amount) of, such Letter of Credit, and terms "Issued" and "Issuance"
------ --------
shall have a corresponding meaning.
"Issuer" means each Lender or Affiliate of a Lender that
------
(a) is listed on the signature pages hereof as an "Issuer" or (b) hereafter
becomes an Issuer with the approval of the Administrative Agent and the
Borrowers by agreeing pursuant to an agreement with and in form and
substance satisfactory to the Administrative Agent and the Borrowers to be
bound by the terms hereof applicable to Issuers.
"Krummrich Property" means the Principal Property located
------------------
in Sauget, Illinois.
"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.
"Legal Proceeding" means any judicial, administrative,
----------------
investigative, informal or arbitral action, arbitration, suit, claim,
demand, audit, investigation, litigation, hearing (public or private),
including proceedings of a Governmental Authority.
"Lender" and "Lenders" have the respective meanings
------ -------
specified therefor in the preamble hereto.
- 20 -
"Letter of Credit" means any letter of credit issued or
----------------
deemed issued pursuant to Section 3.01.
------------
"Letter of Credit Fees" has the meaning specified in
---------------------
Section 3.02.
- ------------
"Letter of Credit Obligations" means, at any time, the
----------------------------
aggregate of all liabilities at such time of the Borrower to all Issuers
with respect to Letters of Credit, whether or not any such liability is
contingent, including the sum of (a) the Reimbursement Obligations at such
time and (b) the Letter of Credit Undrawn Amounts at such time.
"Letter of Credit Reimbursement Agreement" has the meaning
----------------------------------------
specified in clause (f) of Section 3.01.
------------
"Letter of Credit Request" has the meaning specified in
------------------------
clause (c) of Section 3.01.
------------
"Letter of Credit Undrawn Amounts" means, at any time, the
--------------------------------
aggregate undrawn face amount of all Letters of Credit outstanding at such
time.
"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, 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 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.
----------
"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
- 21 -
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 $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
- 22 -
in connection therewith, (C) transfer taxes paid to any taxing authorities
by such Person or such Subsidiary inconnection 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 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).
- ---------------
"Note" and "Notes" have the meaning specified therefor in
---- -----
Section 2.03(e).
- ---------------
"Notice of Borrowing" has the meaning specified therefor
-------------------
in Section 2.02(a).
---------------
"Notice of Conversion or Continuation" has the meaning
------------------------------------
specified therefor in Section 2.09.
------------
"Obligations" means all present and future (i) Banking
-----------
Services Obligations, (ii) Hedging Obligations and (iii) 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, any Letter of
Credit, any pay-off, termination, release or similar agreement or
arrangement entered into among any Agent and any Existing Pre-Petition
Agent, Existing Pre-Petition Lender, Existing Post-Petition Agent or
Existing Post-Petition Lender in connection with the pay off of the Existing
Pre-Petition Credit Agreement or the Existing Post-Petition Credit
Agreement, or any other document made,
- 23 -
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.
"Order" means any order, award, injunction, judgment,
-----
decree, settlement, process, ruling, subpoena, writ, assessment, arbitration
award, verdict (whether temporary, preliminary or permanent) or any
determination or pronouncement (whether or not such determination or
pronouncement can be appealed or otherwise modified) of any Governmental
Authority reached as a result of a Legal Proceeding.
"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 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 Letters of Credit shall be cash
collateralized (or supported by a letter of credit as described in the
preceding sentence) by an amount equal to 105% of the amount of each Standby
Letter of Credit then existing, plus 107% of the amount of each Documentary
Letter of Credit 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.
"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 388 Greenwich Street, New York, New York 10013, or at such other
office or offices of the
- 24 -
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.
"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
other than the Pre-Petition Obligations;
(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
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 $5,000,000 and no such amount is outstanding for
more than three (3) consecutive Business Days;
(i) other than the Letters of Credit, (x) letters
of credit that are set forth on Parts I and II of Schedule 3.01(l) and which
----------------
were outstanding on the Filing Date and (y) letters of
- 25 -
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;
(k) guaranties by the Subsidiaries of Solutia
Europe of the obligations evidenced by the Euro Notes pursuant to the Euro
Restructuring; and
(l) secured Indebtedness under any Hedging
Agreement of any Loan Party entered into with any Lender or any Affiliate of
any Lender, in the ordinary course of business and not for speculative
purposes.
"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 (6) 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;
(b) Liens for taxes, assessments and governmental
charges the payment of which is not required under Section 8.01(c);
---------------
(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 clause (i)
----------------
below and other than Liens with respect to the Pre-Petition Obligations),
but not the extension of coverage thereof to other property or the extension
- 26 -
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 Part II of
Schedule 3.01(l) 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;
(h) Liens securing Indebtedness permitted by
clause (c) of the definition of Permitted Indebtedness;
(i) the 2009 Pre-Petition Liens;
(j) the 2009 Post-Petition Liens; and
(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.
"Permitted Priority Liens" means all Permitted Liens other
------------------------
than the Liens permitted under clauses (b), (c), (i) and (j) of the
definition of the term "Permitted Lien" and all
- 27 -
Liens of the type described in clause (c)(i) of the definition of "Permitted
Lien" that constitute valid and perfected Liens on the Filing Date or which
were in existence on the Filing Date that are perfected subsequent to the
Filing Date as permitted by Section 546(b) of the Bankruptcy Code.
"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 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 2.0%, or, if a rate of interest is not
otherwise in effect, the greater of (i) the Reference Rate plus 6.00% and
(ii) 10.00%.
"Post-Petition Obligations" means all indebtedness,
-------------------------
obligations and liabilities of the Borrowers and the Guarantors to the
Existing Post-Petition Agents and the Existing Post-Petition Lenders arising
from or related to the Existing Post-Petition Credit Agreement and the other
agreements, instruments and other documents related thereto.
"Pre-Petition Letters of Credit" has the meaning specified
------------------------------
therefor in Section 3.01(l).
---------------
"Pre-Petition Loan Parties" means each of the Loan Parties
-------------------------
that are party to the Existing Pre-Petition 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 Pre-Petition
Agents and the Existing Pre-Petition Lenders arising from or related to the
Existing Pre-Petition Credit Agreement and the other agreements, instruments
and other documents related thereto.
"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).
----------------
- 28 -
"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) the sum of (X) such
Lender's Term Loan A Commitment plus (Y) the aggregate unpaid principal
----
amount of such Lender's Term A Loans, by (ii) the sum of (A) the Total Term
Loan A Commitment plus (B) the aggregate unpaid principal amount of all Term
----
A Loans,
(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, the aggregate unpaid
principal amount of Term Loan A and Term 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
- 29 -
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 Citibank, N.A., 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 Rate shall be
effective from and including the date such change is publicly announced as
being effective.
"Reference Rate Loan" means Revolving Loans the rate of
-------------------
interest applicable to which is based upon the Reference Rate.
"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 Date" has the meaning specified in clause
------------------
(i) of Section 3.01.
------------
"Reimbursement Obligations" means all unpaid matured
-------------------------
reimbursement or repayment obligations of the Borrower to any Issuer with
respect to amounts drawn under Letters of Credit.
"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,
- 30 -
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%.
"Requirement of Law" means with respect to any Person, the
------------------
common law and all federal, state, local and foreign or international laws,
treaty, constitution, equity principles, rules and regulations, Orders
(including the Bankruptcy Court Order), judgments, decrees and other
determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"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), 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.
- 31 -
"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.
"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.
- 32 -
"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 Commercial Tort Claims" means (i) any and all
--------------------------------
commercial tort claims arising out of or otherwise related to any Loan
Party's dealings with Liberty Mutual Insurance Company, including without
limitation, any such claims relating to Fluor Enterprises and Solutia Inc.
v. Liberty Mutual Insurance Company, filed on August 1, 2003, in the Circuit
Court of the Mobile Judicial Circuit, Mobile Alabama (removed to Morgan
County Judicial Circuit), relating to such Loan Party's claim of bad faith
refusal to insure, and (ii) any and all commercial tort claims arising out
of or otherwise related to any Loan Party's dealings with FMC Corporation,
including, without limitation, any such claims relating to Solutia Inc. v.
FMC Corporation, filed in the Circuit Court in St. Louis Missouri, relating
to such Loan Party's claims of breach of contract and misrepresentation
relating to the Astaris phosphorus joint venture with FMC Corporation.
"Specified Environmental Receipts" means any cash payments
--------------------------------
made to any Loan Party by third parties (other than Pharmacia Corporation,
Monsanto Company and their respective Affiliates) as a result of settlements
made by Solutia on behalf of Pharmacia Corporation, Monsanto Company or
their respective Affiliates with respect to environmental remediation
obligations, provided that any such cash amounts are promptly deposited in a
--------
segregated account to which only Specified Environmental Receipts are
deposited.
"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 as of December 19, 2003 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.
"Standby Letter of Credit" means any letter of credit
------------------------
issued pursuant to Section 3.01 that is not a Documentary Letter of Credit.
"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
- 33 -
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.
"Supermajority Consent" means the consent of each of (i)
---------------------
the Revolving Loan Lenders whose Pro Rata Shares (as defined under clause
(a) of such definition) of the Revolving Credit Commitments aggregate at
least 66.667%, (ii) 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 66.667% and (iii) 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 66.667%.
"Term Loan A" means, collectively, the loans made by the
-----------
Term Loan A Lenders to the Borrowers 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), as such amount may be terminated or reduced from time to time in
- -------
accordance with the terms of this Agreement.
"Term Loan A Commitment Fee" has the meaning specified
--------------------------
therefor in Section 2.06(b).
---------------
"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 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), 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.
- 34 -
"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 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 the sum of the Total Revolving
----------------
Credit Commitment and the Total Term Loan Commitment.
"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.
- 35 -
"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 Facility 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 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.
"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,
- 36 -
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). Upon the appointment of
any successor Administrative Agent pursuant to Section 11.07, the reference
-------------
to Citibank, N.A. in the definition of Eurodollar Rate shall be deemed to
refer to the financial institution then acting as the Administrative Agent
or one of its Affiliates if it so designates.
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
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 any 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 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 one or more advances to the Borrowers constituting Term Loan
A at any time and from time to time from the Facility Effective Date to the
Final Maturity Date, or until the earlier reduction of its Term Loan A
Commitment to zero in accordance with the terms hereof, in an aggregate
principal
- 37 -
amount of Term Loan A at any time outstanding not to exceed the amount of
such Lender's Term Loan A Commitment; and
(iii) each Term Loan B Lender severally
agrees to make a Term Loan B to the Borrowers on the Facility Effective Date
in an aggregate principal amount not to exceed the amount of such Lender's
Term Loan B Commitment.
(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;
(ii) the aggregate principal amount of
any Term Loan A advance shall not exceed the remaining Total Term Loan A
Commitment at the time of such advance, and each Term Loan A advance shall
be in an amount not less than $5,000,000 and integral multiples of
$5,000,000 in excess thereof;
(iii) the aggregate principal amount of
the Term Loan B made on the Facility Effective Date shall not exceed the
Total Term Loan B Commitment;
(iv) the Revolving Credit Commitment
shall automatically and permanently be reduced to zero on the Final Maturity
Date;
(v) the Term Loan A Commitment of each
Term Loan A Lender shall automatically and permanently be reduced on a
Dollar for Dollar basis upon funding of any Term Loan A advance, such
permanent reduction to be in the amount of such Term Loan A advance;
(vi) within the foregoing limits, the
Borrowers may borrow, repay and reborrow Revolving Loans, on or after the
Facility Effective Date and prior to the Final Maturity Date, subject to the
terms, provisions and limitations set forth herein; and
(vii) any principal amount of the Term
Loans which is repaid or prepaid may not be reborrowed.
Section 2.02 Making the Loans. (a) The Administrative Borrower
----------------
shall give the Administrative Agent prior telephonic notice (immediately
confirmed in writing, in substantially the form of Exhibit B (a "Notice of
--------- ---------
Borrowing")), not later than 12:00 noon (New York City time) on the date
- ---------
which is three (3) Business Days (or such shorter period as may be
acceptable to the Administrative Agent) prior to the date of the proposed
Loan with respect to Term Loan B 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 CUSA acts as the Administrative Agent, if the amount of any
proposed Revolving Loan does not exceed the lesser of (i) amount available
on the Revolving Loan at such time and (ii)
- 38 -
$20,000,000, CUSA, acting as the Administrative Agent, may make such
proposed Loan on the Business Day of the borrowing request. Notwithstanding
the foregoing, the Administrative Borrower shall give the Administrative
Agent (x) five (5) Business Days notice prior to the date of any proposed
Term Loan A advance and (y) three (3) Business Days notice prior to the date
of any proposed Revolving Loan which is a Eurodollar Rate Loan. Each 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 B, shall
fully utilize the Total Term Loan B Commitment on the 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 and the Term A Loan advances, must be on or after the
Facility Effective Date, and in the case of the Term Loan B, must be the
Facility Effective Date, (iv) whether the Loan is a Revolving Loan, Term
Loan A or Term Loan B or a combination thereof, (v) whether any portion of
the proposed borrowing of any Revolving Loan will be Reference Rate Loans or
Eurodollar Rate Loans and (vi) the initial Interest Period or Periods for
any portion of any Revolving Loans which are Eurodollar Rate Loans.
Revolving Loans shall be made as Reference Rate Loans unless, subject to
Section 2.10, the Notice of Borrowing specifies that all or a portion
- ------------
thereof shall be Eurodollar Rate Loans. Each borrowing of Eurodollar Rate
Loans shall be in an aggregate amount of $15 million or an integral
multiples of $1 million in excess thereof; provided, however, that the
-------- -------
aggregate amount of the Eurodollar Rate Loans for each Interest Period must
be in an amount of $15 million or an integral multiple of $1 million in
excess 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 which is a Reference
Rate Loan shall be made in a minimum amount of $100,000 and shall be in an
integral multiple of $100,000. Each Revolving Loan which is a Eurodollar
Rate Loan shall be made in a minimum amount of $15,000,000 and shall be in
an integral multiple of $1,000,000.
(c) (i) Except as otherwise provided in this
Section 2.02(c), all Loans under this Agreement 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.
- 39 -
(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 Section 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 6.02 will not be satisfied at the time of the proposed
------------
Revolving Loan, and (b) the Administrative Agent shall not otherwise be
required to determine that, or take notice whether, the conditions precedent
in Section 6.02 have been satisfied. All Revolving Loans funded by the
------------
Administrative Agent pursuant to this Section 2.02(c) shall be Reference
---------------
Rate Loans. 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, if Eurodollar Rate Loans are
properly requested in such Notice of Borrowing, the applicable interest
rate) 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 Section 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 one (1) Business Day 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
- 40 -
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 Section 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 Revolving Loans or Term Loans hereunder on behalf of any Revolving Loan
Lender or Term Loan Lender unless it has received immediately available
funds from such Lender in the amount of such Lender's Pro Rata Share of such
Loan.
(d) (i) With respect to all periods for which the
Administrative Agent has funded Revolving Loans pursuant to Section 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 Section 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
Section 2.02(d)(i), the Administrative Agent
- ------------------
- 41 -
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 one (1) Business Day 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 Section
-------
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 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 on the
Final Maturity Date.
(ii) The outstanding principal of the Term Loan B
shall be due and payable on the Final Maturity Date.
(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, and if a Loan is a Eurodollar Rate Loan,
the Interest Period and interest rate with respect thereto.
(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 and (iv) if a
Loan is a Eurodollar Rate Loan, the Interest Period and interest rate with
respect thereto.
(d) The entries made in the accounts maintained
pursuant to subsection (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 (each a "Note" and, collectively, the
----
"Notes"). In such event, the Borrowers shall execute and deliver to such
-----
Lender a promissory note payable to the order of such Lender (or, if
- 42 -
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 which is a
Reference Rate Loan shall bear interest on the principal amount thereof from
time to time outstanding, from the date of such Loan until such principal
amount becomes due, at a rate per annum equal to the Reference Rate. Each
Revolving Loan which is a Eurodollar Rate Loan shall bear interest on the
principal amount thereof from time to time outstanding, from the date of
such Loan until such principal amount becomes due, at a rate per annum equal
to the sum of (x) the Eurodollar Rate plus (y) 2.25% per annum.
----
(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 4.0% and (ii) 8.00%.
(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) Each of the Total Revolving Credit
Commitment and the Total Term Loan A Commitment shall terminate on the Final
Maturity Date. The Borrowers may, without premium or penalty, reduce the
Total Term Loan A Commitment, including to an
- 43 -
amount which may be zero. 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 Letters
of Credit not yet issued as to which a request has been made and not
withdrawn.
(B) The Total Term Loan B
Commitment shall terminate on the Facility Effective Date.
(ii) Each such voluntary reduction of the
Total Revolving Credit Commitment or the Total Term Loan A Commitment
pursuant to clause (i)(A) of this Section 2.05(a) shall be in an amount
---------------
which is an integral multiple of $15,000,000 (unless the Total Revolving
Credit Commitment or Total Term Loan A Commitment in effect immediately
prior to such reduction is less than $15,000,000), shall be made by
providing not less than five (5) Business Days' prior written notice to the
Administrative Agent and shall be irrevocable. Once reduced, neither the
Total Revolving Credit Commitment nor the Total Term Loan A Commitment may
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. Each such reduction of the Total Term Loan A Commitment shall
reduce the applicable Term Loan A 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
clause (vii) of Section 2.05(c), 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.
(iv) In addition, if the Loan Parties are
obligated to prepay the Term Loan A pursuant to any mandatory prepayment
described in clauses (ii) through (vii) of Section 2.05(c) and amounts are
---------------
payable in respect of the Term Loan A in excess of the outstanding amount of
the Term Loan A, the Total Term Loan A Commitment shall be permanently
reduced in an amount corresponding to the amount of such excess (in addition
to any reduction in the Total Term Loan A Commitment as provided in clause
(v) of Section 2.01(b)).
---------------
(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; provided, however, that if any
-------- -------
prepayment of any Eurodollar Rate Loan is made by the Borrowers other than
on the last day of an Interest Period for such Revolving Loan, the Borrowers
shall also pay any amounts owing pursuant to Section 2.10.
------------
- 44 -
(ii) Term Loans. After the 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 $15,000,000 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 two (2) 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 the sum of (i) 105% of the aggregate undrawn amount of
all outstanding Letters of Credit which are Standby Letters of Credit and
(ii) 107% of the aggregate undrawn amount of all outstanding Letters of
Credit which are Documentary Letters of Credit or (B) causing the original
Letters of Credit to be returned to the Administrative Agent), in full and
canceled; provided, however, that if any prepayment of any Eurodollar Rate
-------- -------
Loan is made by the Borrowers other than on the last day of an Interest
Period for such Revolving Loan, the Borrowers shall also pay any amounts
owing pursuant to Section 2.10. 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
the sum of (i) 105% of the aggregate undrawn amount of all outstanding
Standby Letters of Credit and (ii) 107% of the aggregate undrawn amount of
all outstanding Documentary Letters of Credit or (B) causing the original
Letters of Credit to be returned to the Administrative Agent, in full and
canceled) 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; provided, however, that if any prepayment of any Eurodollar Rate
-------- -------
Loan is made by the Borrowers other than on the last day of an Interest
Period for such Revolving Loan, the Borrowers shall also pay any amounts
owing pursuant to Section 2.10. 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 clause (i)(A) of this
Section 2.05(c), 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 with
respect to
- 45 -
undrawn Standby Letters of Credit and 107% of such excess with respect to
Documentary Letters of Credit and, provided that no Event of Default shall
--------
have occurred and be continuing, such cash collateral amount shall be
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;
provided, however, that if any prepayment of any Eurodollar Rate Loan is
- -------- -------
made by the Borrowers other than on the last day of an Interest Period for
such Revolving Loan, the Borrowers shall also pay any amounts owing pursuant
to Section 2.10.
------------
(ii) 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 one (1) Business Day, be
returned by the Administrative Agent to the Borrowers; provided, further,
-------- -------
that if any prepayment of any Eurodollar Rate Loan is made by the Borrowers
other than on the last day of an Interest Period for such Revolving Loan,
the Borrowers shall also pay any amounts owing pursuant to Section 2.10.
------------
(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 100% of the
Net Cash Proceeds received by such Person in connection with such
Disposition. Nothing contained in this clause (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 clause (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 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 clause (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
- 46 -
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), 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 clause
(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 (other than with respect to the letters of credit
described on Part III of Schedule 3.01(l)), 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 clause (vi) shall be
applied as set forth in Section 2.05(d).
---------------
(vii) Notwithstanding the foregoing, (A)
in connection with a Disposition under clause (iii) of this Section 2.05(c)
---------------
or receipt of insurance proceeds or condemnation awards pursuant to clause
(iv) of this Section 2.05(c), 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 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 five
(5) days after such Disposition or ten (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 clause (iii) or (iv) of this
Section 2.05(c), 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 clause (iii) or
(iv) of this Section 2.05(c) (other than with respect to any event described
---------------
in clause (iii) or (iv) of this Section 2.05(c) 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.
- 47 -
(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 clause (vi) of Section 2.05(c) 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
Accounts and Inventory, or, if greater, the amount of Revolving Loans or
Letters of Credit 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, pro rata to the
Term Loan A and Term Loan B until paid in full (and if the Term Loan A
Commitment has not been fully utilized, the pro rata share allocable to the
Term Loan A shall be determined as if the Term Loan A Commitment has been
fully utilized and any amount to be applied to the Term Loan A in excess of
the outstanding amount of the Term Loan A shall be applied to reduce the
Term Loan A Commitment in accordance with Section 2.05(a)(iv)), and second,
-------------------
to the Revolving Loans until paid in full;
(iii) the proceeds from any prepayment
event set forth in clause (iii) of Section 2.05(c) (other than with respect
---------------
to Dispositions described in clauses (i) or (ii) of this Section 2.05(d)),
---------------
clause (iv) of Section 2.05(c) (other than proceeds from any insurance
---------------
policy or condemnation award with respect to Inventory) or clause (v) of
Section 2.05(c) shall be applied first, pro rata to the Term Loan A and Term
- ---------------
Loan B until paid in full (and if the Term Loan A Commitment has not been
fully utilized, the pro rata share allocable to the Term Loan A shall be
determined as if the Term Loan A Commitment has been fully utilized and any
amount to be applied to the Term Loan A in excess of the outstanding amount
of the Term Loan A shall be applied to reduce the Term Loan A Commitment in
accordance with Section 2.05(a)(iv)), and, second, to the Revolving Loans
-------------------
until paid in full; and
(iv) the proceeds from any prepayment
event set forth in clause (vii) of Section 2.05(c) shall be applied first,
---------------
to the Revolving Loans until paid in full, and second, pro rata to the Term
Loan A and Term Loan B until paid in full (and if the Term Loan A Commitment
has not been fully utilized, the pro rata share allocable to the Term Loan A
shall be determined as if the Term Loan A Commitment has been fully utilized
and any amount to be applied to the Term Loan A in excess of the outstanding
amount of the Term Loan A shall be applied to reduce the Term Loan A
Commitment in accordance with Section 2.05(a)(iv)).
-------------------
(e) Availability Requirements. Notwithstanding
-------------------------
anything to the contrary contained herein, if Availability would be less
than $15,000,000 immediately after giving effect to any prepayment of the
Term Loan A or the Term Loan B pursuant to clause (ii) or (iii) of Section
-------
2.05(c), no such prepayment of the Term Loan A or the Term Loan B shall be
- -------
made and such
- 48 -
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 one (1) Business Day.
(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) Unused Line Fee. From and after the Facility
---------------
Effective Date and until the Final Maturity Date, the Borrowers shall pay to
the Administrative Agent for the account of the Revolving Loan Lenders, an
unused line fee (the "Unused Line Fee"), which shall accrue at the rate per
---------------
annum of 0.625% on 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 Facility
Effective Date.
(b) Term Loan A Commitment Fee. From and after
--------------------------
the Facility Effective Date and until the Final Maturity Date, the Borrowers
shall pay to the Administrative Agent for the account of the Term Loan A
Lenders, a Term Loan A commitment fee (the "Term A Loan Commitment Fee"),
--------------------------
which shall accrue at the rate per annum of 1.50% on the Total Term Loan A
Commitment then in effect 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 Facility Effective Date.
(c) Fee Letter. From and after the 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
- 49 -
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 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 any 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 any Issuer is organized, has its principal lending office or is
doing business other than solely by reason of the Loan Documents 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 Taxes shall be
-----
required to be deducted from or in respect of any sum payable hereunder to
any Lender, any Agent or any Issuer (or any Transferee), (A) the Loan
Parties shall increase the sum payable by the amount (an "additional
----------
amount") necessary so that after all required deductions (including
- ------
deductions applicable to additional sums payable under this Section 2.08)
------------
such Lender, such Agent or any Issuer (or such Transferee) shall receive and
retain an amount equal to the sum it would have received and retained had no
such deductions been made, (B) the appropriate party shall make such
deductions and (C) such 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 Letters of Credit or any other Loan Document
("Other Taxes"). Each Loan Party shall deliver to each Lender, each Agent
-----------
and any 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 any
Issuer harmless from and against Taxes and Other Taxes (including, without
limitation, Taxes and Other Taxes (plus taxes imposed on Taxes and Other
Taxes) imposed on any amounts payable under this Section 2.08) paid by such
------------
Lender, such Agent
- 50 -
or any Issuer (or such Transferee), whether or not such Taxes or Other Taxes
were correctly or legally asserted. Such indemnification shall be paid
within ten (10) days from the date on which any such Lender, any such Agent
or any 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
---
Lending Office"). In addition, each Non-U.S. Lender shall deliver such forms
- --------------
within twenty (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.
- 51 -
(f) Any Lender, any Agent or any 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 such Issuer (or Transferee) to disclose any
information such Lender, such Agent or such Issuer (or Transferee) deems
confidential and would not, in the sole determination of such Lender, such
Agent or such Issuer (or Transferee), be otherwise disadvantageous to such
Lender, such Agent or such Issuer (or Transferee).
(g) If any Lender, any Agent or any 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 any Issuer (or Transferee) determines in its good faith discretion
that it has received 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 Borrower, net of all out-of-pocket
expenses of such Lender, such Agent or such 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.
Section 2.09 Conversion and Continuation Options. (a)
-----------------------------------
Delivery of Notice of Conversion or Continuation. The Administrative
- ------------------------------------------------
Borrower may elect (i) at any time, to convert Revolving Loans which are
Reference Rate Loans (other than Revolving Loans made by the Administrative
Agent pursuant to Section 2.02) or any portion thereof to Eurodollar Rate
------------
Loans or (ii) at the end of any applicable Interest Period, to convert
Revolving Loans which are Eurodollar Rate Loans or any portion thereof into
Reference Rate Loans or to continue such Eurodollar Rate Loans or any
portion thereof for an additional Interest Period; provided, however, that
-------- -------
the aggregate amount of the Eurodollar Rate Loans for each Interest Period
must be in the amount of $15 million and $1 million dollar increments in
excess thereof. Each conversion or continuation shall be allocated among the
Revolving Loans of each Revolving Loan Lender in accordance with its Pro
Rata Share. Each such election shall be made by giving the Administrative
Agent at least three (3) Business Days' prior written notice (a "Notice of
---------
Conversion or Continuation"), which shall be in substantially the form of
- --------------------------
Exhibit G and shall specify (A) the amount and type of Revolving Loan being
- ---------
converted or continued, (B) in the case of a conversion to, or a
continuation of, Eurodollar Rate Loans, the applicable Interest Period and
(C) in the case of a conversion, the date of conversion (which date shall be
a Business Day and, if a conversion from Eurodollar Rate Loans, shall also
be the last day of the applicable Interest Period).
- 52 -
(b) Notice. The Administrative Agent shall
------
promptly notify each Revolving Loan Lender of its receipt of a Notice of
Conversion or Continuation and of the options selected therein.
(c) Event of Default; Failure to Give Appropriate
---------------------------------------------
Notice. Notwithstanding the foregoing, no conversion in whole or in part of
- ------
Reference Rate Loans to Eurodollar Rate Loans, and no continuation in whole
or in part of Eurodollar Rate Loans upon the expiration of any applicable
Interest Period, shall be permitted at any time at which (A) a Default or an
Event of Default shall have occurred and be continuing or (B) the
continuation of, or conversion into, a Eurodollar Rate Loan would violate
any provision of Section 2.10. If, within the time period required under the
------------
terms of this Section 2.09, the Administrative Agent does not receive a
------------
Notice of Conversion or Continuation from the Administrative Borrower
containing a permitted election to continue any Eurodollar Rate Loans for an
additional Interest Period or to convert any such Revolving Loans, then,
upon the expiration of the applicable Interest Period, such Revolving Loans
shall be automatically converted to Reference Rate Loans. Each Notice of
Conversion or Continuation shall be irrevocable.
Section 2.10 Special Provisions Governing Eurodollar Rate
--------------------------------------------
Loans. (a) Determination of Interest Rate. The Eurodollar Rate for each
- ----- ------------------------------
Interest Period for Eurodollar Rate Loans shall be determined by the
Administrative Agent pursuant to the procedures set forth in the definition
of "Eurodollar Rate." The Administrative Agent's determination shall be
presumed to be correct, absent manifest error, and shall be binding on the
Borrowers.
(b) Interest Rate Unascertainable, Inadequate or
--------------------------------------------
Unfair. In the event that: (i) the Administrative Agent determines that
- ------
adequate and fair means do not exist for ascertaining the applicable
interest rates by reference to which the Eurodollar Rate then being
determined is to be fixed or (ii) the Required Revolving Loan Lenders notify
the Administrative Agent that the Eurodollar Rate for any Interest Period
will not adequately reflect the cost to the Revolving Loan Lenders of making
or maintaining such Revolving Loans for such Interest Period, the
Administrative Agent shall forthwith so notify the Administrative Borrower
and the Revolving Loan Lenders, whereupon each Eurodollar Loan shall
automatically, on the last day of the current Interest Period for such
Revolving Loan, convert into a Reference Rate Loan and the obligations of
the Revolving Loan Lenders to make Eurodollar Rate Loans or to convert
Reference Rate Loans into Eurodollar Rate Loans shall be suspended until the
Administrative Agent shall notify the Administrative Borrower that the
Required Revolving Loan Lenders have determined that the circumstances
causing such suspension no longer exist.
(c) Increased Costs. If at any time any Revolving
---------------
Loan Lender shall determine that the introduction of, or any change in or in
the interpretation of, any law, treaty or governmental rule, regulation or
order (other than any change by way of imposition or increase of reserve
requirements included in determining the Eurodollar Rate) or the compliance
by such Revolving Loan Lender with any guideline, request or directive
promulgated or given on behalf of any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any
increase in the cost to such Revolving Loan Lender of agreeing to make or
making, funding or maintaining any Eurodollar Rate Loans, then the Borrowers
shall from time to time, upon demand by such Revolving Loan Lender (with a
copy of such demand to the
- 53 -
Administrative Agent), pay to the Administrative Agent for the account of
such Revolving Loan Lender additional amounts sufficient to compensate such
Revolving Loan Lender for such increased cost. If any Revolving Loan Lender
becomes entitled to claim any additional amount pursuant to this Section
-------
2.10(c), it shall promptly notify the Administrative Borrower (with a copy
- -------
to the Administrative Agent) of the event by reason of which it has become
so entitled. A certificate as to the amount of such increased cost,
submitted to the Administrative Borrower and the Administrative Agent by
such Revolving Loan Lender, shall be conclusive and binding for all
purposes, absent manifest error.
(d) Illegality. Notwithstanding any other
----------
provision of this Agreement, if any Revolving Loan Lender determines that
the introduction of, or any change in or in the interpretation of, any
Requirement of Law shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Revolving
Loan Lender or its Eurodollar Lending Office to make Eurodollar Rate Loans
or to continue to fund or maintain Eurodollar Rate Loans, then, on notice
thereof and demand therefor by such Revolving Loan Lender to the
Administrative Borrower through the Administrative Agent, (i) the obligation
of such Revolving Loan Lender to make or to continue Eurodollar Rate Loans
and to convert Reference Rate Loans into Eurodollar Rate Loans shall be
suspended, and each such Revolving Loan Lender shall make a Reference Rate
Loan as part of any requested borrowing of Eurodollar Rate Loans and (ii) if
the affected Eurodollar Rate Loans are then outstanding, the Borrowers shall
immediately convert each such Revolving Loan into a Reference Rate Loan. If,
at any time after a Revolving Loan Lender gives notice under this Section
-------
2.10(d), such Revolving Loan Lender determines that it may lawfully make
- -------
Eurodollar Rate Loans, such Revolving Loan Lender shall promptly give notice
of that determination to the Administrative Borrower and the Administrative
Agent, and the Administrative Agent shall promptly transmit the notice to
each other Revolving Loan Lender. The Administrative Borrower's right to
request, and such Revolving Loan Lender's obligation, if any, to make
Eurodollar Rate Loans, shall thereupon be restored.
(e) Breakage Costs. In addition to all amounts
--------------
required to be paid by the Borrowers pursuant to Section 2.04, the Borrowers
------------
shall compensate each Revolving Loan Lender, upon demand, for all losses,
expenses and liabilities (including any loss or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by
such Revolving Loan Lender to fund or maintain such Revolving Loan Lender's
Eurodollar Rate Loans to the Borrowers) that such Revolving Loan Lender may
sustain (i) if for any reason a proposed borrowing, conversion into or
continuation of Eurodollar Rate Loans does not occur on a date specified
therefor in a Notice of Borrowing or a Notice of Conversion or Continuation
given by the Administrative Borrower or in a telephonic request by it for
borrowing or conversion or continuation or a successive Interest Period does
not commence after notice therefor is given pursuant to Section 2.09, (ii)
------------
if for any reason any Eurodollar Rate Loan is prepaid (including mandatorily
pursuant to Section 2.05) on a date that is not the last day of the
------------
applicable Interest Period, (iii) as a consequence of a required conversion
of a Eurodollar Rate Loan to a Reference Rate Loan as a result of any of the
events indicated in Section 2.10(b) or (d) or (iv) as a consequence of any
--------------- ---
failure by the Borrowers to repay Eurodollar Rate Loans when required by the
terms hereof. The Revolving Loan Lender making demand for such compensation
shall deliver to the Administrative Borrower concurrently with such demand a
written statement as to such losses, expenses and liabilities, and this
statement shall be
- 54 -
conclusive as to the amount of compensation due to that Revolving Loan
Lender, absent manifest error.
ARTICLE III
LETTERS OF CREDIT
Section 3.01 Letters of Credit.
-----------------
(a) Obligation to Issue/Amend. On the terms and
-------------------------
subject to the conditions contained in this Agreement, each Issuer agrees to
Issue one or more Letters of Credit at the request of the Borrowers for the
account of the Borrowers and the Guarantors from time to time during the
period commencing on the Facility Effective Date and ending thirty (30) days
prior to the Final Maturity Date or such later date prior to the Final
Maturity Date as may be agreed to by the Administrative Agent; provided,
--------
however, that no Issuer shall be under any obligation to Issue any Letter of
- -------
Credit if:
(i) any order, judgment or decree of any
Governmental Authority shall purport by its terms to enjoin or restrain such
Issuer from Issuing such Letter of Credit or any Requirement of Law
applicable to such Issuer or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over
such Issuer shall prohibit, or request that such Issuer refrain from, the
Issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Issuer with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which such
Issuer is not otherwise compensated) not in effect on the date of this
Agreement or result in any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuer as of the date of this
Agreement and which such Issuer in good faith deems material to it;
(ii) such Issuer shall have received
written notice from the Administrative Agent, any Lender or any Borrower, on
or prior to the requested date of Issuance of such Letter of Credit, that
one or more of the applicable conditions contained in Section 6.01 and
------------
Section 6.02 is not then satisfied;
- ------------
(iii) after giving effect to the Issuance
of such Letter of Credit, the aggregate Letter of Credit Obligations would
at any time exceed the 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;
(iv) any fees due in connection with a
requested Issuance have not been paid; or
(v) such Letter of Credit is not
denominated in Dollars except with the consent of the Administrative Agent
in its sole discretion.
- 55 -
None of the Lenders (other than the Issuers in their capacity as such) shall
have any obligation to Issue any Letter of Credit. Any Letter of Credit
which has been Issued hereunder may be amended at any time to reduce the
amount outstanding thereunder; any Letter of Credit Request which seeks to
increase the amount outstanding under a Letter of Credit shall be subject to
the same conditions set forth hereinabove for Issuance.
(b) Expiration Date. In no event shall the
---------------
expiration date of any Letter of Credit (i) be more than one (1) year after
the date of issuance thereof or (ii) be less than thirty (30) days prior to
the Final Maturity Date; provided, however, that any Letter of Credit with a
-----------------
one-year term may provide for the renewal thereof for additional one-year
periods (which shall in no event extend beyond the expiry date referred to
in clause (ii) above); and provided, further, that Letters of Credit having
----------- -----------------
an expiration date after the date which is thirty (30) days prior to the
Final Maturity Date may be issued so long as the Borrowers agree to deliver
to the Administrative Agent on the date which is thirty (30) days prior to
the scheduled Final Maturity Date cash collateral in an amount equal to 105%
of the face amount of any such Letter of Credit which is a Standby Letter of
Credit and 107% of the face amount of any such Letter of Credit which is a
Documentary Letter of Credit.
(c) Contents of Letter of Credit Request. In
------------------------------------
connection with the Issuance or amendment of each Letter of Credit, the
Borrowers shall give the relevant Issuer and the Administrative Agent at
least two (2) Business Days' prior written notice, in substantially the form
of Exhibit F (or in such other written or electronic form as is acceptable
---------
to the Issuer), of the requested Issuance or amendment of such Letter of
Credit (a "Letter of Credit Request"). Such notice shall be irrevocable and
------------------------
shall specify: the Issuer of such Letter of Credit; the stated amount of the
Letter of Credit requested or to be amended, which in the case of an
Issuance such stated amount shall not be less than one hundred thousand
Dollars ($100,000) (or such lower amount as may be acceptable to the
Administrative Agent and the applicable Issuer in their sole discretion);
the date of Issuance or amendment of such requested Letter of Credit (which
day shall be a Business Day); the date on which such Letter of Credit is to
expire (which date shall be a Business Day); and the beneficiary of such
Letter of Credit. Such notice, to be effective, must be received by the
relevant Issuer and the Administrative Agent not later than 11:00 A.M. (New
York time) on the last Business Day on which notice can be given under the
immediately preceding sentence.
(d) Procedure for Issuance. Subject to the
----------------------
satisfaction of the conditions set forth in this Section 3.01, the relevant
------------
Issuer shall, on the requested date, Issue a Letter of Credit on behalf of
the Borrowers in accordance with such Issuer's usual and customary business
practices. No Issuer shall Issue any Letter of Credit in the period
commencing on the first Business Day after it receives written notice from
any Lender that one or more of the conditions precedent contained in Section
-------
6.02 shall not on such date be satisfied and ending when such conditions are
- ----
satisfied. The relevant Issuer shall not otherwise be required to determine
that, or take notice whether, the conditions precedent set forth in Section
-------
6.02 have been satisfied in connection with the Issuance of any Letter of
- ----
Credit.
(e) Compliance with Conditions Precedent. On the
------------------------------------
date of the proposed Issuance of the Letter of Credit, the Administrative
Agent shall confirm to the relevant Issuer that the applicable conditions
set forth in Section 6.01 and Section 6.02 are satisfied.
------------ ------------
- 56 -
(f) Execution of Letter of Credit Reimbursement
-------------------------------------------
Agreement. If requested by the relevant Issuer, prior to the Issuance of
- ---------
each Letter of Credit by such Issuer and as a condition of such Issuance and
of the participation of each Revolving Loan Lender in the Letter of Credit
Obligations arising with respect thereto, the Borrowers shall have delivered
to such Issuer a letter of credit reimbursement agreement, in such form as
the Issuer may employ in its ordinary course of business for its own account
(a "Letter of Credit Reimbursement Agreement"), signed by the Borrowers, and
----------------------------------------
such other documents or items as may be required pursuant to the terms
thereof. In the event of any conflict between the terms of any Letter of
Credit Reimbursement Agreement and this Agreement, the terms of this
Agreement shall govern.
(g) Obligations of the Issuer. Each Issuer shall:
-------------------------
(i) give the Administrative Agent written
notice (or telephonic notice confirmed promptly thereafter in writing),
which writing may be a telecopy or electronic mail, of the Issuance of a
Letter of Credit Issued by it, of all drawings under a Letter of Credit
issued by it and the payment (or the failure to pay when due) by the
Borrowers of any Reimbursement Obligation when due (which notice the
Administrative Agent shall promptly transmit by telecopy, electronic mail or
similar transmission to each Lender);
(ii) upon the request of any Lender,
furnish to such Lender copies of any Letter of Credit to which such Issuer
is a party; and
(iii) no later than ten (10) Business
Days following the last day of each calendar month, provide to the
Administrative Agent (and the Administrative Agent shall provide a copy to
each Lender requesting the same) and the Administrative Borrower separate
schedules for Documentary Letters of Credit and Standby Letters of Credit
issued by it, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth the aggregate Letter of Credit
Obligations outstanding at the end of each month and any information
requested by the Borrowers or the Administrative Agent relating thereto.
(h) Revolving Loan Lenders' Purchase of Interest
--------------------------------------------
and Participation. Immediately upon the issuance by an Issuer of a Letter of
- -----------------
Credit in accordance with the terms and conditions of this Agreement, such
Issuer shall, subject to the provisions of Section 2.02, be deemed to have
------------
sold and transferred to each Revolving Loan Lender, and each Revolving Loan
Lender shall be deemed irrevocably and unconditionally to have purchased and
received from such Issuer, without recourse or warranty, an undivided
interest and participation, to the extent of such Revolving Loan Lender's
Pro Rata Share, in the face amount of such Letter of Credit together the
corresponding obligations of the Borrowers with respect thereto (including
all Letter of Credit Obligations with respect thereto) and any security
therefor and guaranty pertaining thereto.
(i) Payment Obligations. The Borrowers, jointly
-------------------
and severally, irrevocably and unconditionally agree to reimburse the Issuer
of any Letter of Credit for any amounts paid by such Issuer upon any drawing
under any Letter of Credit, without presentment, demand, protest or other
formalities of any kind. The Borrowers agree to pay to the Issuer of any
Letter of Credit the amount of all Reimbursement Obligations (including
those described in the preceding sentence) owing to such Issuer under any
Letter of Credit issued for its account no later than the date (the
"Reimbursement Date") that is one (1) Business Day after the Administrative
------------------
- 57 -
Borrower receives written notice from such Issuer that payment has been made
under such Letter of Credit, irrespective of any claim, set-off, defense or
other right that the Borrowers may have at any time against such Issuer or
any other Person. In the event that any Issuer makes any payment under any
Letter of Credit and the Borrowers shall not have repaid such amount to such
Issuer pursuant to this clause (i) or such payment is rescinded or set aside
for any reason, such Reimbursement Obligation shall be payable on demand
with interest thereon computed from (i) the date on which such Reimbursement
Obligation arose to the Reimbursement Date, at the rate of interest
applicable to Revolving Loans and (ii) the Reimbursement Date to the date of
repayment in full in cash, at the rate of interest applicable to past due
Revolving Loans during such period, and such Issuer shall promptly notify
the Administrative Agent, which shall promptly notify each Revolving Loan
Lender of such failure, and each Revolving Loan Lender shall promptly and
unconditionally pay to the Administrative Agent for the account of such
Issuer the amount of such Revolving Loan Lender's Pro Rata Share of such
payment (as determined pursuant to clause (h) of this Section 3.01 in
------------
Dollars and in immediately available funds. If the Administrative Agent so
notifies such Revolving Loan Lender prior to 11:00 A.M. (New York time) on
any Business Day, such Revolving Loan Lender shall make available to the
Administrative Agent for the account of such Issuer its Pro Rata Share of
the amount of such payment on such Business Day in immediately available
funds. Upon such payment by a Revolving Loan Lender, such Revolving Loan
Lender shall, notwithstanding whether or not the conditions precedent set
forth in Section 6.02 shall have been satisfied (which conditions precedent
------------
the Lenders hereby irrevocably waive), be deemed to have made a Revolving
Loan to the Borrowers in the principal amount of such payment. Whenever any
Issuer receives from the Borrowers a payment of a Reimbursement Obligation
as to which the Administrative Agent has received for the account of such
Issuer any payment from a Revolving Loan Lender pursuant to this clause (i),
such Issuer shall pay to the Administrative Agent and the Administrative
Agent shall promptly pay to each Revolving Loan Lender, in immediately
available funds, an amount equal to such Revolving Loan Lender's Pro Rata
Share of the amount of such payment adjusted, if necessary, to reflect the
respective amounts the Revolving Loan Lenders have paid in respect of such
Reimbursement Obligation.
(j) Obligations Absolute. The Borrowers'
--------------------
obligation to pay each Reimbursement Obligation and the obligations of the
Revolving Loan Lenders to make payments to the Administrative Agent for the
account of the Issuers with respect to Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances
whatsoever, including the occurrence of any Default or Event of Default, and
irrespective of:
(i) any lack of validity or
enforceability of any Letter of Credit or any Loan Document, or any term or
provision therein;
(ii) any amendment or waiver of or any
consent to departure from all or any of the provisions of any Letter of
Credit or any Loan Document;
(iii) the existence of any claim, set
off, defense or other right that the Borrowers, any other party
guaranteeing, or otherwise obligated with, the Borrowers, any Subsidiary or
other Affiliate thereof or any other Person may at any time have against the
beneficiary under any Letter of Credit, any Issuer, the Administrative Agent
or any Lender or
- 58 -
any other Person, whether in connection with this Agreement, any other Loan
Document or any other related or unrelated agreement or transaction;
(iv) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Issuer under a Letter
of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or
delay of any kind of the Issuer, the Lenders, the Administrative Agent or
any other Person or any other event or circumstance whatsoever, whether or
not similar to any of the foregoing, that might, but for the provisions of
this Section 3.01, constitute a legal or equitable discharge of the
------------
Borrowers' obligations hereunder.
Any action taken or omitted to be taken by the relevant Issuer under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not put such Issuer under any
resulting liability to the Borrowers or any Lender. In determining whether
drafts and other documents presented under a Letter of Credit comply with
the terms thereof, the Issuer may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless
of any notice or information to the contrary and, in making any payment
under any Letter of Credit, the Issuer may rely exclusively on the documents
presented to it under such Letter of Credit as to any and all matters set
forth therein, including reliance on the amount of any draft presented under
such Letter of Credit, whether or not the amount due to the beneficiary
thereunder equals the amount of such draft and whether or not any document
presented pursuant to such Letter of Credit proves to be insufficient in any
respect, if such document on its face appears to be in order, and whether or
not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein
proves to be inaccurate or untrue in any respect whatsoever, and any
noncompliance in any immaterial respect of the documents presented under
such Letter of Credit with the terms thereof shall, in each case, be deemed
not to constitute willful misconduct or gross negligence of the Issuer.
(k) Non-Payment by a Revolving Loan Lender. If
--------------------------------------
and to the extent any Revolving Loan Lender shall not have so made its
payment required by clause (i) above available to the Administrative Agent
for the account of such Issuer, such Revolving Loan Lender agrees to pay to
the Administrative Agent for the account of such Issuer forthwith on demand
such amount together with interest thereon, for the first (1st) Business Day
after payment was first due at the Federal Funds Rate, and thereafter until
such amount is repaid to the Administrative Agent for the account of such
Issuer, at the rate per annum applicable to Revolving Loans hereunder. The
failure of any Revolving Loan Lender to make available to the Administrative
Agent for the account of such Issuer its payment shall not relieve any other
Revolving Loan Lender of its obligation hereunder to make available to the
Administrative Agent for the account of such Issuer its payment on the date
such payment is to be made, but no Lender shall be responsible for the
failure of any
- 59 -
other Lender to make available to the Administrative Agent for the account
of the Issuer such other Lender's payment.
(l) Pre-Petition Letters of Credit.
------------------------------
(i) Part I of Schedule 3.01(l) contains a schedule of
----------------
certain letters of credit issued prior to the Facility Effective
Date for the account of the Borrowers pursuant to the Existing
Pre-Petition Credit Agreement (the "Pre-Petition Letters of
-----------------------
Credit"). On or prior to the Facility Effective Date, the Borrower
------
shall either (x) cash collateralize such pre-Petition Letters of
Credit in a manner satisfactory to the Administrative Agent or (y)
make a Letter of Credit Request pursuant to which the Issuer shall
issue, subject to the terms and conditions of this Agreement and
pursuant to the terms of this Section 3.01, back-to-back Letters of
------------
Credit in the face amount of such Pre-Petition Letters of Credit.
No Pre-Petition Letter of Credit shall be amended, extended or
renewed without the prior written consent of the Administrative
Agent.
(ii) Part II of Schedule 3.01(l) contains a schedule of
----------------
all other letters of credit issued and outstanding as of the
Facility Effective Date (including those referenced in subclause
(iii) of this clause (l).
(iii) Part III of Schedule 3.01(l) contains a schedule of
----------------
certain letters of credit issued by Citibank, N.A. prior to the
Facility Effective Date for the account of a Borrower and for which
Citibank, N.A. currently holds cash collateral. On the Facility
Effective Date, (i) each such letter of credit listed on Part III
of Schedule 3.01(l), to the extent outstanding, shall be
----------------
automatically and without further action by the parties thereto
converted to Letters of Credit issued pursuant to this ARTICLE III
-----------
for the account of the Borrowers and subject to the provisions
hereof, and for this purpose the fees specified in Section 3.02
------------
shall be payable (in substitution for any fees set forth in the
applicable letter of credit reimbursement agreements or
applications relating to such letters of credit) as if such letters
of credit had been issued on the Facility Effective Date, (ii)
Citibank, N.A. shall be deemed to be the "Issuer" hereunder solely
for the purpose of maintaining such letters of credit, (iii) the
face amount of such letters of credit shall be included in the
calculation of Letter of Credit Obligations and (iv) all
liabilities of the Borrowers with respect to such letters of credit
shall constitute Obligations. No letter of credit converted in
accordance with this subclause (ii) shall be amended, extended or
renewed without the prior written consent of the Administrative
Agent.
Section 3.02 Letter of Credit Fees. The Borrower agrees to
---------------------
pay the following amounts (the "Letter of Credit Fees") with respect to
---------------------
Letters of Credit issued by any Issuer:
(a) to the Administrative Agent for the account
of each Issuer of a Letter of Credit, with respect to each Letter of Credit
issued by such Issuer, an issuance fee equal to one quarter of one percent
(0.25%) per annum of the maximum amount available from time to time to be
drawn under such Letter of Credit, payable in arrears (x) on the first
Business Day of each calendar month, commencing on the first such Business
Day following the issuance of such Letter of Credit and (y) on the Final
Maturity Date;
- 60 -
(b) to the Administrative Agent for the ratable
benefit of the Lenders, with respect to each Letter of Credit, an amount
equal to two percent (2.00%) per annum on the average daily outstanding
balance of such Letter of Credit for the immediately preceding month (or
portion thereof or, in the case of clause (y) below, since the end of the
last period in respect of which such fee was paid), payable in arrears (x)
on the first Business Day of each calendar month, commencing on the first
such Business Day following the issuance of such Letter of Credit and (y) on
the Termination Date; provided, however, that during the continuance of an
-------- -------
Event of Default, the fee provided for in this clause (b) shall be payable
on demand (including any amounts attributable to application of the
Post-Default Rate); and
(c) to the Issuer of any Letter of Credit, with
respect to the issuance, amendment or transfer of each Letter of Credit and
each drawing made thereunder, documentary and processing charges in
accordance with such Issuer's standard schedule for such charges in effect
at the time of issuance, amendment, transfer or drawing, as the case may be.
ARTICLE IV
SECURITY AND ADMINISTRATIVE PRIORITY
Section 4.01 Collateral; Grant of Lien and Security
--------------------------------------
Interest.
- --------
(a) As security for the full and timely payment
and performance of all of the Obligations each of the Loan Parties hereby,
as of the 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 (including the Additional 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 (pound)87,000,000, money, investment
property, deposit accounts, all commercial tort claims, including any and
all Specified Commercial Tort Claims, and all causes of action arising under
the Bankruptcy Code or otherwise, 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 4.01(a) being hereafter collectively
- ---------------
- 61 -
referred to as the "Collateral"). Notwithstanding the foregoing, the
----------
Collateral shall not include any Excluded Assets.
(b) Upon entry of the Bankruptcy Court Order, the
Liens and security interests in favor of the Collateral Agent referred to in
Section 4.01(a) 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 4.01 and in each
------------
other Loan Document and by the Bankruptcy Court Order shall be subject to
the prior payment of expenses to the extent set forth in clause "first" of
-----
the definition of 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 4.02 Administrative Priority. Subject to the
-----------------------
Bankruptcy Court Order, 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), 1113 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 4.03 Grants, Rights and Remedies. The Liens and
---------------------------
security interests granted pursuant to Section 4.01(a) and the
---------------
administrative priority granted pursuant to Section 4.02 may be
------------
independently granted by the Loan Documents and by other Loan Documents
hereafter entered into. This Agreement, the Bankruptcy Court Order 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 4.04 No Filings Required. The Liens and security
-------------------
interests referred to herein shall be deemed valid and perfected by entry of
the Bankruptcy Court Order and entry of the Bankruptcy Court Order shall
have occurred on or before the date of any Loan or the issuance of any
Letter of Credit. 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 or the Bankruptcy Court Order or any other Loan Document.
Section 4.05 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
Order 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
- 62 -
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 4.02, 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 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 4.01(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)
$1,250 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.
- 63 -
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
--------
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 6.02 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 Letters of Credit issued by an
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 Letters of Credit, and the amount
- 64 -
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 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, and the Fee Letter, the Letter of Credit Fees 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 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 any Issuer), expense reimbursements,
indemnities and other amounts then due to the Agents or any Issuer until
paid in full (other than in connection with Banking Services Obligations or
Hedging Obligations); (ii) second, ratably to pay the Obligations in respect
------
of any fees (including Letter of Credit Fees), expense reimbursements and
indemnities then due to the Revolving Loan Lenders until paid in full (other
than in connection with Banking Services Obligations or Hedging
Obligations); (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
- 65 -
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 relating to Standby Letters of Credit and 107%
of such Letters of Credit Obligations relating to Documentary Letters of
Credit) 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 (other than
in connection with Banking Services Obligations or Hedging Obligations);
(viii) eighth, ratably to pay Hedging Obligations (to the extent such
------
Hedging Obligations have been reserved from the Borrowing Base) and Banking
Services Obligations; (ix) ninth, ratably to pay interest due in respect of
-----
the Term Loan A and the Term Loan B until paid in full; (x) tenth, ratably
-----
to pay principal of the Term Loan A and the Term Loan B until paid in full;
(xi) eleventh, ratably to pay any other Hedging Obligations; and (xii)
--------
twelfth, 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 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 any 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 any Issuer or any Person controlling any such Lender, any such
Agent or such 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 any Issuer
or any Person controlling any such Lender, any such Agent or such Issuer (in
each case, whether or not having the force of law), shall (i) subject any
Lender, any Agent or any Issuer, or any Person controlling any such Lender,
any such Agent or such 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 issued by such Issuer, or change the basis of taxation of
payments to any Lender, any Agent or any Issuer or any Person controlling
any such Lender, any such Agent or such Issuer of any amounts payable
hereunder (except for taxes on the overall net income of any Lender, any
Agent or any Issuer or any Person controlling any such Lender, any such
Agent or such Issuer and any Taxes included or excluded by Section 2.08),
------------
(ii) impose, modify or deem applicable any reserve, special deposit or
similar requirement against any Loan, any Letter of Credit or against assets
of or held by, or deposits with or for the account of, or credit extended
by, any Lender, any Agent or any Issuer or any Person controlling any such
Lender, any such Agent or any such Issuer or (iii) impose on any Lender, any
Agent or any Issuer or any Person controlling any such Lender, any such
Agent or any such Issuer any other condition regarding this Agreement or any
Loan or Letter of Credit, 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 any Issuer of making any Loan,
- 66 -
issuing, guaranteeing or participating in any Letter of Credit, or agreeing
to make any Loan or issue, guaranty or participate in any Letter of Credit,
or to reduce any amount received or receivable by any Lender, any Agent or
any Issuer hereunder, then, upon demand by any such Lender, any such Agent
or any Issuer, the Borrowers shall pay to such Lender, such Agent or any
Issuer such additional amounts as will compensate such Lender, such Agent or
any Issuer for such increased costs or reductions in amount; provided, that
--------
the Borrowers shall not be required to compensate any Lender, any Agent or
any 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 any 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 any Issuer or any Person controlling such Lender,
such Agent or any 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 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 any Issuer or any
Person controlling such Lender, such Agent or any Issuer, and any Lender,
any Agent or any 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 issued or any participation with respect
thereto, any Lender's, any Agent's or any 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
any Issuer's any such other controlling Person's capital to a level below
that which such Lender, such Agent or such Issuer or such controlling Person
could have achieved but for such circumstances as a consequence of any Loans
made or maintained, Letter of Credit issued, or any participation with
respect thereto or any agreement to make Loans, to issue Letters of Credit
or such Lender's, such Agent's or such Issuer's or such other controlling
Person's other obligations hereunder (in each case, taking into
consideration, such Lender's, such Agent's or such Issuer's or such other
controlling Person's policies with respect to capital adequacy), then, upon
demand by any Lender, any Agent or such Issuer, the Borrowers shall pay to
such Lender, such Agent or such Issuer from time to time such additional
amounts as will compensate such Lender, such Agent or such 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 such Issuer's or such other
controlling Person's capital; provided, that the Borrowers shall not be
--------
required to compensate any Lender, any Agent or any 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 any Issuer until payment in full to such
Lender, such Agent or such Issuer at the Reference Rate. A certificate of
such Lender, such Agent or such 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 such 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
such Issuer's
- 67 -
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 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.
- 68 -
ARTICLE VI
CONDITIONS TO LOANS
Section 6.01 Conditions Precedent to Facility
--------------------------------
Effectiveness. This Agreement shall become effective as of the Business Day
- -------------
(the "Facility Effective Date") when each of the following conditions
-----------------------
precedent shall have been satisfied in a manner satisfactory to the
Administrative Agent:
(a) Bankruptcy Court Order. The Bankruptcy Court
----------------------
Order shall have been entered by the Bankruptcy Court and the Administrative
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.
(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 any Issuer pursuant hereto or thereto on or prior to the Facility
Effective Date are true and correct on and as of the 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 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 shall not contravene any law, rule or
regulation applicable to any Agent, any Lender or any Issuer.
(e) Delivery of Documents. The Administrative
---------------------
Agent and the Collateral Agent shall have received on or before the Facility
Effective Date the following, each in form and substance satisfactory to
each of the Administrative Agent and the Collateral Agent and, unless
indicated otherwise, dated on or as of the 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) [intentionally omitted];
(iii) the Fee Letter, duly executed by
the Borrowers;
(iv) a copy of the resolutions of each
Loan Party, certified as of the Facility Effective Date by a Secretary or an
Assistant Secretary thereof, authorizing (A) the
- 69 -
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 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 Facility Effective Date, together, if requested by
the Collateral Agent, with confirmation by telephone or telecopy (where
available) on the 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 Facility Effective
Date by a Secretary or an Assistant Secretary of such Loan Party;
(viii) an opinion of Gibson, Dunn &
Crutcher LLP, counsel to the Loan Parties, in form and substance
satisfactory to the Administrative Agent;
(ix) a certificate of an Authorized
Officer of each Loan Party, certifying as to the matters set forth in clause
(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), certified as
-------------------
of the 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
Administrative Agent in form and substance, as the Administrative Agent may
reasonably request.
- 70 -
(f) Material Adverse Effect. The Administrative
-----------------------
Agent shall have determined, in its sole judgment, that, no event or
development shall have occurred since the Filing Date 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 4.01(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 Letters of Credit 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 its counsel, and the Administrative Agent and such
counsel shall have received all such information and such counterpart
originals or certified or other copies of such documents as the
Administrative Agent or such counsel may reasonably request.
(j) Pre-Petition Obligations. The Pre-Petition
------------------------
Obligations (other than indemnification obligations for which no claim has
been asserted) shall have been Paid in Full with the proceeds of the initial
Loans (and each Pre-Petition Letter of Credit shall be treated as set forth
in clause (l) of this Section 3.01) on the Facility Effective Date.
------------
(k) Post-Petition Obligations. The Post-Petition
-------------------------
Obligations (other than indemnification obligations for which no claim has
been asserted) shall have been Paid in Full with the proceeds of the initial
Loans on the Facility Effective Date.
(l) Availability. After giving effect to all
------------
Loans to be made on the Facility Effective Date and the Letters of Credit to
be issued on the Facility Effective Date, (i) Availability shall not be less
than $20,000,000 (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.
(m) [intentionally omitted]
(n) Pledge Agreements. 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
- 71 -
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 permitted to convert all or 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.
Section 6.02 Conditions Precedent to All Loans and Letters
---------------------------------------------
of Credit. The obligation of any Agent or any Lender to make any Loan or of
- ---------
any Issuer to issue any Letter of Credit on or after the 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.
------------ -------------
(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, 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 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 prior to the
date of such Loan or the issuance of such Letter of Credit 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, 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 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 or the
--------
issuance of such Letter of Credit shall not contravene any law, rule or
regulation applicable to any Agent, any Lender or any Issuer.
(d) Notices. The Administrative Agent shall have
-------
received a Notice of Borrowing pursuant to Section 2.02.
------------
(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.
Section 6.03 Proceedings; Receipt of Documents. All
---------------------------------
proceedings in connection with the making of such Loan or the issuance of
such Letter of Credit and the other transactions
- 72 -
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.
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
Issuers 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 Order, 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 Order, 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.
- 73 -
(d) Execution and Binding Effect. Subject to the
----------------------------
entry of, and the terms of, the Bankruptcy Court Order, 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.
(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 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 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 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 the Filing Date 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 Facility Effective Date.
(ii) On or before the Facility Effective
Date, the Parent has heretofore furnished to each Agent and each Lender (A)
projected monthly balance sheets,
- 74 -
income statements and statements of cash flows of the Parent and its
Subsidiaries for the period from December 2003 through December 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 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 Facility Effective Date nor is reasonably
expected to result in a Material Adverse Effect after the 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
- 75 -
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 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 all material
-----------
foreign, 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, all such tax returns are true, complete and correct in
all material respects to the knowledge of the Loan Parties 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 applicable
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.
- 76 -
(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 Facility Effective Date, of the
location, by state and street address, of all real 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 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 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 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,
- 77 -
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 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;
- 78 -
(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;
(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 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 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).
----------------
- 79 -
(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 (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 Facility
Effective Date.
(t) Use of Proceeds. The proceeds of the Loans
---------------
shall be used (i) on the Facility Effective Date, such that all of the
Pre-Petition Obligations and all of the Post-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 and (iii) 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). Letters of Credit
issued hereunder will be used to backstop the Pre-Petition Letters of
Credit, 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 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 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
- 80 -
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.
(w) Material Contracts. Set forth on Schedule
------------------ --------
7.01(w) is a complete and accurate list as of the 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 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
- 81 -
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.
(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) contains a
-----------------
true, correct and complete list, as of the 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 Bankruptcy Court Order
Entry Date, 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), 1113
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 Bankruptcy Court
Order, 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) The 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 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.
- 82 -
(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) five (5)
Business Days after 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 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 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;
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(ii) upon the earlier of (A) five (5)
Business Days after 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 (except with respect to a "going concern" qualification), 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 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 C Business
Segment (provided that, solely with respect to 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 C Business Segment, each for such
fiscal month, in accordance with GAAP applied in a manner 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;
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(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 ten (10) Business 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 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 three (3) Business Days after the end of each week commencing
with the first week ending after the 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;
(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
- 85 -
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 three (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 fifteen (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 ten (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
ten (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 three (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) promptly and in any event within ten
(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 five (5) Business Days after service
of process with respect thereto on, or the
- 86 -
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 five (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 five (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
five (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
five (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 Chapter 11 Cases, other
than any such reports subject to privilege;
(xix) [intentionally omitted]; and
- 87 -
(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 Facility Effective Date, to execute and
deliver to the Collateral Agent promptly and in any event within ten (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 as shall be satisfactory to the Collateral Agent, 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 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
ten (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.
- 88 -
(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 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
- 89 -
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 that required by any Mortgage to which it or any Subsidiary is a party
and the insurance maintained by the Parent and its Subsidiaries on the
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 set
forth in any Mortgage or 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, 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
- 90 -
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 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,
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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.
(k) Further Assurances. Subject to the terms of
------------------
the Bankruptcy Court Order, 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 (pound)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 each 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
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Order, 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 necessary or desirable
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 Order) 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 Order 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 ten (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 five (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 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
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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
satisfactory to the Collateral Agent, 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.
(p) Use of Proceeds. Use the proceeds of the
---------------
Loans and the Letters of Credit in accordance with Section 7.01(t).
---------------
(q) Specified Environmental Receipts. All
--------------------------------
Specified Environmental Receipts shall be deposited directly to a segregated
account not subject to the Lien of the Loan Documents and the Bankruptcy
Court Order, and no proceeds of any Specified Environmental Receipts shall
be commingled with any cash Collateral.
(r) Post-Closing Deliveries.
-----------------------
(i) As soon as practicable but not later than 30 days
following the Facility Effective Date, deliver to the Collateral
Agent 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
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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 (pound)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 (i)(A), (i)(B), (i)(C), (i)(D) and (i)(E) above
complies with the requirements of law of Belgium, England and Wales
and The Netherlands, respectively, in each case in form and
substance satisfactory to the Collateral Agent.
(ii) As soon as practicable but not later than 30 days
following the Facility Effective Date, deliver to the Collateral
Agent 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 Facility Effective Date, which
together shall provide title insurance in an aggregate amount of
not less than $525,000,000, 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) As soon as practicable but not later than 14 days
following the Facility Effective Date, deliver to the Collateral
Agent 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 reasonably request with respect to the Loan Parties'
cash management system.
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
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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:
-------- -------
(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
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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 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
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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:
(i) investments existing on the date
hereof, as set forth on Schedule 8.02(e), 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",
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(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 issued on the
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.
(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 Facility Effective Date owing by all Loan
Parties and their Subsidiaries in any Fiscal Year to exceed the amounts set
forth in Section 8.02(g), 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 Facility Effective Date owing by
all Loan Parties and their Subsidiaries in any Fiscal Year to exceed
$10,000,000.
(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 $72,700,000 in Fiscal Year 2004 and $98,400,000 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
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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.
(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);
- 100 -
(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 Section 8.02(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
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
clause (ii) of Section 8.02(m).
---------------
(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
- 101 -
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 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.
(s) Bankruptcy Court Order; 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 Order, 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
- 102 -
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,
1113 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 4.02 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) Carve-Out 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 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 (excluding payments effected by a setoff
of obligations as permitted by Section 553 of the Bankruptcy Code), 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
- 103 -
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 have been approved by the Bankruptcy Court on the Filing Date
as part of the "first day" Bankruptcy Court orders relating to the Chapter
11 Cases; (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.
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
------------------------- -------------------
January 31, 2004 $ 73,600,000
February 29, 2004 $ 76,200,000
March 31, 2004 $ 75,500,000
April 30, 2004 $ 82,900,000
May 31, 2004 $ 88,300,000
June 30, 2004 $ 87,000,000
July 31, 2004 $ 86,900,000
August 31, 2004 $ 87,600,000
September 30, 2004 $ 98,100,000
October 31, 2004 $ 97,900,000
November 30, 2004 $101,400,000
December 31, 2004 $110,300,000
January 31, 2005 $120,700,000
February 28, 2005 $121,100,000
March 31, 2005 $126,600,000
- 104 -
Twelve-Month Period Ended Consolidated EBITDA
------------------------- -------------------
April 30, 2005 $127,200,000
May 31, 2005 $127,100,000
June 30, 2005 $127,800,000
July 31, 2005 $130,400,000
August 31, 2005 $132,300,000
September 30, 2005 $132,200,000
October 31, 2005 $133,400,000
November 30, 2005 $129,200,000
December 31, 2005 $129,600,000
(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.
- -------------
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 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 Cash Management Account (other than an
operating/check disbursement account) or the Concentration Accounts. On or
prior to the 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
- 105 -
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 clause (ii) of Section 2.05(c) to reduce the then
---------------
principal balance of the Revolving Loans, conditional upon final payment to
the Administrative Agent. 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.
(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 clause (iii), (iv) or (v) of
- 106 -
Section 2.05(c), 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).
---------------
(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
- 107 -
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.
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:
(i) on a regular basis as required by the
Administrative 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
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;
- 108 -
(iii) upon the Administrative 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 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 to follow the
Administrative Agent's instructions with respect to further services at any
time that an Event of Default has occurred and is continuing.
Section 9.04 Accounts Covenants.
------------------
(a) The Borrowers shall notify the Administrative
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. 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 schedule
thereof delivered to the Administrative 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 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, (iv) there shall
be no setoffs, deductions, contras, defenses, counterclaims or
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disputes existing or asserted with respect thereto except as reported to the
Administrative 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, keeping correct and
accurate records itemizing and describing the kind, type, quality and
quantity of Inventory, such Loan Party's cost 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 may request on
or after an Event of Default, and promptly following such physical inventory
shall supply the Administrative Agent with a report in the form and with
such specificity as may be satisfactory to the Administrative 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 request,
the Borrowers shall, at their expense, but at any time or times as the
Administrative Agent may request on or after an Event of Default, deliver or
cause to be delivered to the Administrative Agent written appraisals as to
the Inventory in form, scope and methodology acceptable to the
Administrative Agent and by an appraiser acceptable to the Administrative
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)
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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 or the specific identification of such Inventory in a
report with respect thereto provided by the Administrative Borrower to the
Administrative Agent pursuant to Section 9.03(a), acquire or accept any
--------------
Inventory on consignment or approval.
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 any 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 five
(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 five (5) days, (iv) clauses (a)(v),
(a)(x), and (a)(xvii) of Section 8.01 and such failure shall remain
------------
unremedied for three (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 one
------------
(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 fifteen (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;
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(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;
(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 Letters of Credit in an amount equal to
105% of the aggregate undrawn amount of all outstanding Letters of Credit
which are Standby Letters of Credit and 107% of the aggregate amount of all
outstanding Letters of Credit which are Documentary Letters of Credit, in
each case 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 Letters of Credit in an amount equal to 105% of the
aggregate undrawn amount of all outstanding Letters of Credit which are
Standby Letters of Credit and 107% of the aggregate undrawn amount of all
outstanding Letters of Credit which are Documentary Letters of Credit;
(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
Order, 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;
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(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 Order 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 Agent and/or the Lenders created by
the Bankruptcy Court Order 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 Order;
(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 Order
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 fifteen (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
- 113 -
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;
(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;
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(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;
(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 thirty (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
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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.
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
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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 no Issuer shall be
-------- -------
required to refuse to honor a drawing under any Letter of Credit 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.
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 Administrative Agent receives written notice of the assignment or
transfer thereof, pursuant to Section 13.07, signed by such payee and in
-------------
form satisfactory to the Administrative 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
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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 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 any Issuer is not reimbursed and indemnified by any Loan Party, the
Lenders will reimburse and indemnify such Agent and such 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 such 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 such 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 such 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
- 118 -
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.
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 subsections (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
- 119 -
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 one (1) Business Day 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 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.
- 120 -
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 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, as primary obligor
and not merely as surety, 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 Issuers 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 Issuers 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
Issuers 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
- 121 -
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 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 any 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 Issuers 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
Issuers 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 Issuers 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
Issuers 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 any 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 Issuers 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.
- 122 -
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 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 Issuers 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 Issuers 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 Issuers and shall forthwith be paid to the Agents, the
Lenders and the Issuers 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 Issuers 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 Issuers 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.
- 123 -
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
Telecopier: 314-674-2721
with a copy to:
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Kathy Swien
Telecopier: 312-558-5700
and
Gibson, Dunn & Crutcher LLP
Post Montgomery Center, 26th Floor
San Francisco, California 94104
Attention: Kathryn A. Coleman
Telecopier: 415-374-8417
if to the Administrative Agent, Collateral Agent or
Documentation Agent, to it at the following address:
Citicorp USA, Inc.
390 Greenwich Street
New York, New York 10013
Attention: David Jaffe
Telecopier: 212-816-2613
in each case, with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
333 West Wacker Drive
Chicago, Illinois 60606
Attention: Seth E. Jacobson, Esq.
Telecopier: 312-407-0411
- 124 -
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 (3) 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 any Issuer pursuant to ARTICLE
-------
II and ARTICLE III shall not be effective until received by such Agent or
- -- -----------
such 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.
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 each Lender, (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, (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 2.05(b), 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), (vii) amend the definition of "Accounts", "Book Value",
"Borrowing Base", "Eligible Accounts", "Eligible Inventory", "Inventory",
"Net Amount of Eligible Accounts" or "Total Revolving Credit Commitment" or
"Total Term Loan Commitment", without the written consent of each Lender,
(viii) increase the advance rates set forth in the definition of "Borrowing
Base" with respect to Eligible Accounts and Eligible Inventory without
Supermajority Consent, (ix) decrease the percentage set forth in the
definition of "Dilution Reserve" without the consent of each Lender or (x)
amend, modify or waive Section 2.05(c) or Section 2.05(d) of this Agreement
--------------- ---------------
without Supermajority Consent. Notwithstanding the foregoing, no amendment,
waiver or consent shall,
- 125 -
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, 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
- 126 -
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
broker fees that may become due in connection with the transactions
contemplated by this Agreement and the other Loan Documents, and (y) 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, 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 Administrative Agent (such consent not to be unreasonably withheld),
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
- 127 -
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 Administrative Agent (such consent not to be
unreasonably withheld), 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; 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 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 Administrative Agent
(such consent not to be unreasonably withheld), 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
Administrative 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 Administrative 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), and (iii) no written consent of the Administrative 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. 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 Administrative Agent, and
the Administrative 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 (3) Business Days after the delivery thereof to the
Administrative Agent (or such shorter period as shall be agreed to by the
Administrative 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
- 128 -
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 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 Administrative 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, interest on and principal
amount of the Loans (the "Registered Loans") and Letter of Credit
----------------
Obligations owing to each Lender from time to time. 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.
(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 Administrative
Agent shall, if the Administrative 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 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.
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(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-8 or W-8 ECI, as applicable, or a substantially similar form for such
purchaser, participant or any other affiliate who is a holder of beneficial
interests in the Registered Loan and shall comply with the requirements of
Section 2.08(d) to the extent it is legally entitled to do so.
- ---------------
(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, Section 2.10 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 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
- 130 -
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.
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
- 131 -
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 any Issuer for repayment or
recovery of any amount or amounts received by such Agent, such Lender or
such Issuer in payment or on account of any of the Obligations, such Agent,
such Lender or such 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 such 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 such 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 such 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 such 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 such Issuer.
- 132 -
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 each 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 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 any Issuer's issuing of
Letters of Credit 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 is
caused by the gross negligence or willful misconduct of such Indemnitee, as
determined by a final judgment of a court of competent jurisdiction.
- 133 -
(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 fees
payable pursuant to the Fee Letter, the Unused Line Fee, the Term A Loan
Commitment Fee and the Letter of Credit Fees) 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.
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
- 134 -
conditions precedent set forth in Section 6.01 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.
-------------
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
- 135 -
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 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 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 for purposes of Section 1.6011-4(b)(3)
(or any successor provision) of the Treasury Regulations
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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 corresponding Obligations. The Collateral Agent, acting in
its individual capacity, hereby agrees
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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
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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
- 140 -
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 debtor 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
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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
- 142 -
ADMINISTRATIVE AGENT, COLLATERAL AGENT,
---------------------------------------
DOCUMENTATION AGENT AND A LENDER:
---------------------------------
CITICORP USA, INC., for itself as the
Administrative Agent, Collateral Agent,
Documentation Agent and a Lender
By: /s/ David Jaffe
---------------
Name: David Jaffe
Title: Vice President
- 143 -
ISSUER:
-------
CITIBANK, N.A., as an Issuer
By: /s/ David Jaffe
---------------
Name: David Jaffe
Title: Vice President
- 144 -