Exhibit 10(r)
EXECUTION COPY
AMENDMENT ▇▇. ▇
▇▇▇▇▇▇▇▇▇ ▇▇. ▇ (▇▇▇▇ "▇▇▇▇▇▇▇▇▇ ▇▇. ▇") dated as of December
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24, 2002 between:
SOLUTIA INC., a Delaware corporation (the "Company"); and
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CITIBANK, N.A., as administrative agent for the Lenders (in
such capacity, together with its successors in such capacity, the
"Administrative Agent").
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The Company, certain lenders (the "Lenders"), Bank of America,
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N.A., as syndication agent (the "Syndication Agent"), and the Administrative
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Agent are parties to a Second Amended and Restated Credit Agreement dated as of
July 25, 2002 (as heretofore amended, the "Credit Agreement"). The parties
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hereto desire to amend the Credit Agreement in certain respects and, in that
connection, the Administrative Agent has been granted authority by the Majority
Lenders (as defined in the Credit Agreement) to execute and deliver this
Amendment No. 2. Accordingly, the Company, and the Administrative Agent on
behalf of the Majority Lenders, hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this
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Amendment No. 2, terms defined in the Credit Agreement are used herein as
defined therein.
Section 2. Amendment. Subject to the conditions specified in
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Section 6 hereof, but effective as of the date hereof:
2.01. Certain Defined Terms. Section 1.01 of the Credit
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Agreement is amended by adding the following definitions in the appropriate
alphabetic locations (in the case of any new definition) and amending in their
entirety the following definitions (to the extent already included in Section
1.01 of the Credit Agreement):
"Adjusted EBITDA" means, for any period, the sum, for the
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Company and its Consolidated Subsidiaries (determined on a Consolidated
basis without duplication in accordance with GAAP), of the following:
(a) net income (calculated before taxes, Interest Expense,
extraordinary and unusual items and income or loss attributable to
equity in Affiliates (other than Affiliates that are Consolidated
Subsidiaries and, for any portion of such period ending on or before
September 30, 2002, Specified Joint Ventures)) for such period plus (b)
with respect to any Specified Joint Venture for any portion of such
period ending after September 30, 2002, the aggregate amount of
dividends paid by such Specified Joint Venture during such period to
the Company and its Consolidated Subsidiaries (net of Investments made
by the Company and its Consolidated Subsidiaries in such Specified
Joint Venture during such period), excluding any portion thereof that
shall exceed the net income of such Specified Joint Venture for such
period) plus (c) depreciation and amortization (to the extent deducted
in determining
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net income) for such period plus (d) impairments of goodwill (to the
extent deducted in determining net income) for such period; provided
that:
(1) charges taken and reserves established by the
Company, its Consolidated Subsidiaries and Specified Joint
Ventures in connection with (a) restructuring of existing
operations, (b) maintenance of reserves for self-insurance and
environmental remediation (except as provided in clause (4) of
Part B of Schedule 2) and (c) asset impairments (all on or
before December 31, 2001), in each case in the respective
amounts and categories set forth on Part A of Schedule 2
hereto shall be added back to net income for such period (to
the extent such charges and reserves were deducted in
determining net income for such period);
(2) gains or losses in connection with the sales of
the Astaris LLC joint venture and the Flexsys L. P. joint
venture shall be deducted from or added back to net income for
such period (to the extent such gains or losses were added or
deducted in determining net income for such period);
(3) losses in connection with the anticipated
pay-down of the Company's obligations under the Co-gen
Participation Agreement and the Co-gen Lease shall be added
back to net income for such period (to the extent such losses
were deducted in determining net income for such period); and
(4) the cash charges, other charges and reserves
referred to in Part B of Schedule 2 hereto shall be added back
to net income for such period (to the extent such charges and
reserves were deducted in determining net income for such
period) all to the extent specified in Part B of said Schedule
2.
"Applicable Date" means the earlier of (a) March 31, 2003 or
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(b) the date of consummation of the UCB Asset Sale.
"Capital Expenditures" means, for any period, expenditures
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(including the aggregate amount of Capitalized Lease Obligations
incurred during such period) made by the Company or any of its
Subsidiaries to acquire or construct fixed assets, plant and equipment
(including renewals, improvements and replacements, but excluding
normal replacements and maintenance which are properly charged to
current operations) during such period computed in accordance with
GAAP. For the purposes hereof, (i) the acquisition of any capital asset
by the Company or any of its Subsidiaries constituting a reinvestment
of proceeds of any casualty event or condemnation, shall constitute a
"Capital Expenditure" hereunder only to the extent of any consideration
paid by the Company and its Subsidiaries in excess of such proceeds so
reinvested, (ii) obligations of the Company payable after December 31,
2002 and arising in connection with the settlement of any liability of
the Company under Fluor ▇▇▇▇▇▇ Corporation v. Solutia Inc., filed on
February 8, 2001, in the United States District Court for the Southern
District of Texas, shall be treated as "Capital Expenditures" in any
period only to the extent payments are made by the Company during such
period and (iii) payments by the Company of principal in respect of the
Co-gen Instruments shall not constitute "Capital Expenditures"
hereunder.
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"UCB Asset Sale" means the sale of (i) capital stock and
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comparable ownership interests and (ii) other assets of the Company and
its Subsidiaries as contemplated by the UCB Stock and Asset Purchase
Agreement.
"UCB Stock and Asset Purchase Agreement" means the Stock and
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Asset Purchase Agreement dated as of December 2, 2002 by and between
UCB, S.A., as "Purchaser" and the Company, as "Seller", as originally
in effect and without giving effect to any modification after the date
of Amendment No. 2 hereto (other than non-material modifications that
do not expand in any material respect the scope of the assets being
sold, or reduce in any material respect the type and amount of
consideration to be received pursuant thereto).
2.02. Foreign Intellectual Property. Section 6.01(p) of the
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Credit Agreement is hereby amended to read in its entirety as follows:
"(p) Foreign Intellectual Property Security Documents. The
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Company will take, and cause CPFilms Inc. and Solutia Germany to take,
such action to deliver the documents, agreements and other instruments
contemplated in the definition of the term "Intellectual Property
Security Documents" in Section 1.01, covering the intellectual property
listed on Schedule 6 hereto filed or registered in Europe, each of
which shall have been executed (and, where appropriate, acknowledged)
by Persons satisfactory to the Administrative Agent and, to the extent
requested by the Administrative Agent, accompanied by one or more
opinions of local counsel covering such matters, as the Administrative
Agent may reasonably request (and the Company hereby instructs such
counsel to deliver such opinions to the Lenders and the Administrative
Agent). Notwithstanding the foregoing, for the period from the
effectiveness of Amendment No. 2 hereto through and including March 31,
2003 (or until such earlier date, if any, as the UCB Stock and Asset
Purchase Agreement shall be terminated), the obligation of the Company,
CPFilms Inc. and Solutia Germany to take such actions shall (except in
the case of filings and registrations to be made in Belgium, France,
Germany and the United Kingdom with respect to the assets of the
Company and CPFilms Inc. which are not included in the UCB Asset Sale)
be suspended, provided that if the UCB Asset Sale is not consummated by
March 31, 2003 (or, if the UCB Stock and Asset Purchase Agreement shall
be earlier terminated), then the Company, CPFilms Inc. and Solutia
Germany shall have until April 30, 2003 (or until the date 30 days
after such termination) to complete the actions specified above."
2.03. Liens, Etc. Clause (iii) of Section 6.02(a) of the
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Credit Agreement is hereby amended to read in its entirety as follows:
"(iii) Liens securing Debt, judgments and ERISA claims
existing on the date hereof and identified in Schedule 1 hereto, and
Liens arising out of Capitalized Lease Obligations of AMCIS, AG
relating to certain machinery and equipment securing Debt in an
aggregate amount up to but not exceeding 7,500,000 Swiss francs; and"
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2.04. Indebtedness and Letters of Credit. Clause (ii) of
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Section 6.02(f) of the Credit Agreement is hereby amended to read in its
entirety as follows:
"(ii) Debt existing on the date hereof and set forth in
Schedule 4 hereto (including Debt, if any, in respect of Designated
Letters of Credit, and drawn and undrawn amounts under agreements set
forth on such Schedule 4), and Debt in respect of Capitalized Lease
Obligations of AMCIS, AG referred to in Section 6.02(a)(iii) in an
aggregate amount up to but not exceeding 7,500,000 Swiss francs,
together with extensions, renewals and replacements of any such Debt
that do not increase the outstanding principal amount thereof;"
2.05. Debt to Adjusted EBITDA Ratio. Section 6.03(a) of the
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Credit Agreement is hereby amended to read in its entirety as follows:
"(a) Debt to Adjusted EBITDA Ratio. The Company will not
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permit the Debt to Adjusted EBITDA Ratio to exceed the following ratios
at any time during the following respective periods:
Period Ratio
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From the Restatement Date
through December 30, 2002 5.00 to 1
From December 31, 2002
up to the Applicable Date 5.00 to 1
From the Applicable Date
through June 29, 2003 4.00 to 1
From June 30, 2003
through September 29, 2003 4.00 to 1
From September 30, 2003
through December 30, 2003 3.75 to 1
From December 31, 2003
through March 30, 2004 3.50 to 1
From March 31, 2004
and at all times thereafter 3.25 to 1"
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2.06. Interest Coverage Ratio. Section 6.03(b) of the Credit
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Agreement is hereby amended to read in its entirety as follows:
"(b) Interest Coverage Ratio. The Company will not permit the
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Interest Coverage Ratio to be less than the following respective ratios at any
time during the following respective periods:
Period Ratio
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From June 30, 2002
through December 30, 2002 2.50 to 1
From December 31, 2002
through March 30, 2003 2.00 to 1
From March 31, 2003
through June 29, 2003 1.50 to 1
From June 30, 2003
through September 29, 2003 1.50 to 1
From September 30, 2003
through December 30, 2003 1.75 to 1
From December 31, 2003
through March 30, 2004 2.00 to 1
From March 31, 2004
and at all times thereafter 2.50 to 1"
2.07. Schedule. Schedule 2 to the Credit Agreement is hereby
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amended to read in its entirety as set forth on Schedule 2 hereto.
Section 3. Consents. The Majority Lenders hereby consent to
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the consummation of the UCB Asset Sale pursuant to the UCB Stock and Asset
Purchase Agreement, subject, however, to the prepayment of the Revolving Credit
and Term Advances, the Co-gen Instruments, and the provision of cover for the
Designated Letters of Credit and Letter of Credit Exposure, all as contemplated
by Section 2.10(h) of the Credit Agreement from the Net Cash Proceeds thereof
and all without reduction of Revolving Credit Commitments. The Majority Lenders
also hereby waive any requirement that all Advances made to the Company be paid
in full before any Term Advances made to the European Borrowers may be prepaid,
and any right of any Term Lender to decline any prepayment pursuant to Section
2.10(j) of the Credit Agreement.
Section 4. Authorization to Collateral Agent. Without limiting
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the generality of Section 6.03 of the Non-Sharing Intercreditor Agreement, the
Majority Lenders hereby agree that the Collateral Agent is authorized and
directed to release any Collateral (as such term is defined
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in the Non-Sharing Intercreditor Agreement) that is the subject of the UCB Asset
Sale, and is authorized and directed to release all Liens upon the property of
the European Borrowers upon the termination of their status as Designated
Borrowers and the repayment in full of the principal of and interest on all Term
Advances in connection with the UCB Asset Sale.
Section 5. Representations and Warranties. The Company hereby
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represents and warrants to the Administrative Agent and the Lenders that:
(a) the representations and warranties contained in the Credit
Agreement (giving effect to all amendments thereto contemplated
hereunder) are correct on and as of the date hereof, as though made on
and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date);
(b) after giving effect to this Amendment No. 2, no event has
occurred and is continuing that constitutes a Default or an Event of
Default; and
(c) the Company has heretofore delivered to the Administrative
Agent, and made available to each Lender through Intralinks, a true and
complete copy (including all Schedules (other than Schedules 1.2(i),
3.2(g), 10(a)(i), 10.1(c)(i) and 10(f)(ii)), but excluding Disclosure
Schedules and Exhibits, thereto) of the UCB Stock and Asset Purchase
Agreement duly executed and delivered by each of the parties thereto.
Section 6. Conditions Precedent. As provided in Section 2, the
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amendments to the Credit Agreement set forth in Section 2 are subject to, and
will become effective upon, the satisfaction of the following conditions
precedent (including, with respect to each document required below to be
delivered, that the Administrative Agent shall have received each such document,
which shall be satisfactory in form and substance to the Administrative Agent):
(a) Execution. This Amendment No. 2 shall have been duly
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executed and delivered by the Company and the Administrative Agent as
provided on the signature pages hereof.
(b) Certain Consents and Authorizations. The requisite lenders
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under the Astaris Credit Agreement, to the extent necessary under the
Astaris Guaranty Agreement, shall have executed and delivered a consent
to the transactions contemplated hereby pursuant to an instrument in
form and substance satisfactory to the Administrative Agent. In
addition, the purchasers under the Co-gen Participation Agreement, to
the extent necessary under the Co-gen Guaranty Agreement and the Co-gen
Lease, shall have consented to the transactions contemplated hereby
pursuant to an instrument in form and substance satisfactory to the
Administrative Agent.
(c) Fees and Expenses. The Administrative Agent shall have
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received, for the account of each Lender that has authorized the
Administrative Agent to execute and deliver this Agreement on its
behalf not later than 5 p.m. New York City time on
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December 24, 2002, an amendment fee in an amount equal to 0.15% of the
sum of such Lender's Revolving Credit Commitments and Term Advances.
(d) Other Documents. The Administrative Agent shall have
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received such other documents as the Administrative Agent or Milbank,
Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special New York counsel to the
Administrative Agent, may reasonably request.
Section 7. Miscellaneous. Except as herein provided, the
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Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 2 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Amendment No. 2 by signing any such counterpart.
This Amendment No. 2 shall be governed by, and construed in accordance with, the
law of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
SOLUTIA INC.
By: ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: C. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and Treasurer
Solutia Inc.
CITIBANK, N.A., as Administrative Agent
and on behalf of the Majority Lenders
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Citibank, N.A.
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