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Exhibit 10.1
AMENDMENT NO. 3 TO FINANCING AGREEMENT AND WAIVER
THIS AMENDMENT
NO. 3 TO FINANCING AGREEMENT AND WAIVER, dated as of
June 1, 2005 (this "Amendment"), by and
among Solutia Inc., as a debtor and
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debtor-in-possession, a Delaware
corporation (the "Parent"), and Solutia
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Business Enterprises, Inc., as a debtor and
debtor-in-possession, a New York
corporation, ("Solutia Business" and
together with the Parent, each a
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"Borrower" and collectively, the
"Borrowers"), each subsidiary of the Parent
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listed as a "Guarantor" on the signature
pages hereto, each as a debtor and
debtor-in-possession (each a "Guarantor"
and collectively, the
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"Guarantors"), the lenders from time to
time party hereto (each a "Lender"
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and collectively, the "Lenders"), the
issuers from time to time party hereto
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(each an "Issuer" and collectively, the
"Issuers"), Citicorp USA, Inc.
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("CUSA"), as collateral agent for the
Lenders (in such capacity, the
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"Collateral Agent"), CUSA, as
administrative agent for the Lenders (in such
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capacity, the "Administrative Agent"), and
CUSA and Wells Fargo Foothill,
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LLC, as co-documentation agents for the
Lenders, (in such capacity, the
"Documentation Agent" and together with the
Collateral Agent and the
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Administrative Agent, each an "Agent" and
collectively, the "Agents").
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RECITALS:
WHEREAS, the
Borrowers, the Guarantors, the Lenders, the Issuers,
and the Agents have heretofore entered into
that certain Financing
Agreement, dated as of January 16, 2004, as
amended by that certain
Amendment No. 1 to Financing Agreement and
Waiver, dated as of March 1,
2004, and that certain Amendment No. 2 to
Financing Agreement and Waiver,
dated as of July 20, 2004 (as so amended,
the "Financing Agreement");
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WHEREAS, the
Borrowers, the Guarantors, the Lenders, the Issuers
and the Agents now desire to amend the
Financing Agreement in certain
respects, as hereinafter provided; and
WHEREAS, the
Borrowers have requested the Lenders to waive
compliance with certain provisions of the
Financing Agreement.
NOW, THEREFORE,
in consideration of the premises set forth above,
the terms and conditions contained herein
and other good and valuable
consideration, the receipt and sufficiency
of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless otherwise defined or the
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context otherwise requires, terms for which
meanings are provided in the
Financing Agreement shall have such
meanings when used in this Amendment.
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ARTICLE II
AMENDMENTS
Section 2.01 Amendments to Section 1.01 of the Financing
Agreement.
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(a) Section 1.01 of the Financing Agreement is hereby amended
by deleting the words "December 19, 2005,"
appearing in the definition of
"Final Maturity Date" and inserting in lieu
thereof the words "June 19,
2006,".
(b)
Section 1.01 of the Financing Agreement is hereby amended
by (i) deleting the figure "$125,000,000"
appearing in the definition of
"Consolidated Net Income" and inserting in
lieu thereof the figure
"$150,000,000", and (ii) deleting the words
"and $49,000,000 in 2005,"
appearing in clause (c)(ii) of such
definition and inserting in lieu thereof
the words "$49,000,000 in 2005, and
$25,000,000 for the period commencing
January 1, 2006, and ending upon the
scheduled Final Maturity Date,".
(c)
Section 1.01 of the Financing Agreement is hereby amended
by inserting after the words "Section
2.05(c)" appearing in the definition
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of "Extraordinary Receipts" the text
")".
(d) Section 1.01 of the Financing Agreement is hereby amended
by deleting the words "the Eurodollar Rate
Loan" appearing in the definition
of "Eurodollar Base Rate" and inserting in
lieu thereof the words "any
Eurodollar Rate Loan".
(e) Section 1.01 of the Financing Agreement is hereby amended
by deleting the words "Revolving Loan
Lender" each time such words appear in
the definition of "Eurodollar Lending
Office" and inserting in lieu thereof
the word "Lender".
(f) Section 1.01 of the Financing Agreement is hereby amended
by deleting the word "Revolving" appearing
in the definition of "Eurodollar
Rate Loan".
(g) Section 1.01 of the Financing Agreement is hereby amended
by inserting the following new definition
of "Eurodollar Rate Loan Lender"
in the proper alphabetical position:
"'Eurodollar Rate Loan Lender' means any Lender that has an
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outstanding Eurodollar Rate Loan."
(h) Section 1.01 of the Financing Agreement is hereby amended
by (i) deleting the words "one (1), two (2)
or three (3) months thereafter"
each time such words appear in the
definition of "Interest Period" and
inserting in lieu thereof the words "one
(1), two (2), three (3) or six (6)
months thereafter ", (ii) deleting the
words "Revolving Loans" appearing in
clause (d) of such definition and inserting
the words
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"Eurodollar Rate Loans" in lieu thereof,
and (iii) deleting clause (e) of
such definition and inserting the following
new clause (e) in lieu thereof:
"(e) there shall be outstanding at any one time in the
aggregate no
more than three (3) Interest Periods with respect to
Eurodollar Rate
Loans that are Revolving Loans, plus one (1) Interest
Period with
respect to Eurodollar Rate Loans that are Term Loans A and
one (1) Interest
Period with respect to Eurodollar Rate Loans that are
Term Loans
B."
Section 2.02 Amendments to Section 2.02 of the Financing
Agreement.
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Section 2.02 of the Financing Agreement is
hereby amended in the manner set
forth below:
(a) Section 2.02(a) of the Financing Agreement is hereby
amended by deleting the word "Revolving"
appearing in clause (vi) thereof.
(b) Section 2.02(b) is hereby amended by deleting the word
"Revolving" appearing in the last sentence
thereof.
Section 2.03 Amendment to Section 2.04 of the Financing
Agreement.
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Section 2.04(a)(ii) of the Financing
Agreement is hereby amended by deleting
the words "a rate per annum equal to the
greater of (i) the Reference Rate
plus 4.0% and (ii) 8.00%" appearing therein
and inserting in lieu thereof
the words "a rate per annum equal to the
Eurodollar Rate plus 4.25%".
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Section 2.04 Amendments to Section 2.05 of the Financing
Agreement.
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Section 2.05 of the Financing Agreement is
hereby amended in the manner set
forth below:
(a) Section 2.05(b)(ii) is hereby amended by deleting the
period appearing at the end thereof and
inserting in lieu thereof the words ";
provided, however, that if any prepayment
of any Eurodollar Rate Loan is
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made by the Borrowers other than on the
last day of an Interest Period for
such Term Loan, the Borrowers shall also
pay any amounts owing pursuant to
Section 2.10."
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(b) Section 2.05(b)(iii) is hereby amended by deleting the
word "Revolving" appearing in the proviso
at the end of the first sentence
thereof.
(c) Section 2.05(c)(i)(C) is hereby amended by deleting the
word "Revolving" appearing in the proviso
at the end thereof.
(d) Section 2.05(c)(ii) is hereby amended by deleting the
word "Revolving" appearing in the second
proviso at the end thereof.
(e) Section 2.05(c)(iii) is hereby amended by deleting the
first sentence thereof and inserting the
following text in lieu thereof:
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"Immediately upon any Disposition by any Loan Party or its
Subsidiaries
(other than (x) a Disposition of assets of Solutia Europe or
any of its
Subsidiaries, (y) a Disposition of assets pursuant to Sections
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8.02(c)(i)(D),
(E), or (L), or (z) a Disposition of assets pursuant to
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Section
8.02(c)(i)(K) of not more than $5,000,000 in the aggregate),
the
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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, after giving effect to amounts permitted
to be reinvested
pursuant to Section 2.05(c)(vii)(A) and amounts not
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required to be
prepaid pursuant to the limitation contained in Section
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2.05(c)(vii)(B);
provided, however, that so long as no Default or Event of
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Default has
occurred and is continuing on the date such Person receives
such Net Cash
Proceeds, (A) with respect to the first $10,000,000 (after
giving effect to
Section 2.05(c)(vii)) of Net Cash Proceeds received in
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respect of
Dispositions pursuant to Section 8.02(c)(i)(F) of assets
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listed on Part
III of Schedule 8.02(c)(i), no prepayment shall be
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required, and
(B) with respect to the next $10,000,000 (after giving
effect to
Section 2.05(c)(vii)) of Net Cash Proceeds received in respect
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of Dispositions
pursuant to Section 8.02(c)(i)(F) of assets listed on
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Part III of
Schedule 8.02(c)(i), the Borrowers shall prepay the
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outstanding
principal amount of the Loans in an amount equal to 50% of
the Net Cash
Proceeds received by such Person in connection with such
Disposition."
(f) Section 2.05(c)(iv) is hereby amended by inserting after
the words "100% of such Extraordinary
Receipts, net of any reasonable
expenses incurred in collecting such
Extraordinary Receipts" appearing
therein the words ", after giving effect to
amounts permitted to be
reinvested pursuant to Section
2.05(c)(vii)(A) and amounts not required to
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be prepaid pursuant to the limitation
contained in Section 2.05(c)(vii)(B)".
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(g) Section 2.05(c)(vii)(A) is hereby amended by deleting the
words "up to $5,000,000" appearing therein
and inserting in lieu thereof the
words "up to the sum of (I) such net
insurance proceeds or condemnation
awards otherwise required to be prepaid
plus (II) $5,000,000".
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(h) Section 2.05(c)(vii)(B) is hereby amended by (i) deleting
the figure "$7,500,000" in each place such
figure appears therein and
inserting in lieu thereof the figure
"$17,500,000", (ii) by deleting the
word "the" appearing after the words "under
such Sections shall be limited
to" appearing therein, and inserting the
word "such" in lieu thereof, and
(iii) by inserting after the words "unless
the aggregate amount of Net Cash
Proceeds" appearing therein the following
text:
"(excluding (I) Net Cash Proceeds received from (x) a
Disposition of
assets of Solutia Europe or any of its Subsidiaries,
(y) a
Disposition of assets pursuant to Sections 8.02(c)(i)(D), (E),
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or (L), or (z) a
Disposition of assets pursuant to Section 8.02(c)(i)(K)
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of not more than
$5,000,0000 in the aggregate and (II) Net Cash Proceeds
reinvested in
accordance with Section 2.05(c)(vii)(A))".
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Section 2.05 Amendments to Section 2.09 of the Financing
Agreement.
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Section 2.09 of the Financing Agreement is
hereby amended in the manner set
forth below:
(a) Section 2.09(a) is hereby amended by (i) deleting the
words "Reference Rate Loans or to continue
such Eurodollar Rate Loans"
appearing in clause (ii) thereof and
inserting the words "Reference Rate
Loans, or to continue Revolving Loans or
Term Loans which are Eurodollar
Rate Loans" in lieu thereof, (ii) deleting
the second sentence of such
Section and inserting the following new
sentence in lieu thereof:
"Each conversion or continuation of Revolving Loans which are
Eurodollar Rate
Loans shall be allocated among the Revolving Loans of each
Revolving Loan
Lender in accordance with its Pro Rata Share and each
conversion or
continuation of Term Loans A or Term Loans B shall be
allocated among
the Term Loans A or Term Loans B, as applicable, of each
Term Loan Lender
in accordance with its Pro Rata Share."
(b) Section 2.09(a) is hereby further amended by (i) deleting
the word "Revolving" appearing in clause
(A) of the third sentence thereof
and (ii) inserting at the end of such
Section the following new sentence:
"On or prior to the date as of which that certain Amendment
No. 3 to
Financing Agreement and Waiver becomes effective, the
Administrative
Borrower shall deliver to the Administrative Agent a Notice
of Continuation
or Conversion (as amended and restated pursuant to such
amendment) with
respect to all Term Loans outstanding on such date,
converting all
such Term Loans to Eurodollar Rate Loans."
(c) Section 2.09(b) is hereby amended by deleting the words
"Revolving Loan Lender" appearing therein
and inserting in lieu thereof the
words "applicable Eurodollar Rate
Lender".
(d) Section 2.09(c) is hereby amended by deleting the second
sentence of such Section and inserting the
following new sentence in lieu
thereof:
"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, (i) with respect to
Revolving Loans,
such Revolving Loans shall be automatically converted to
Reference Rate
Loans, and (ii) with respect to Term Loans, such Term Loans
shall be
automatically converted to Eurodollar Loans having an Interest
Period of one
(1) month."
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Section 2.06 Amendments to Section 2.10 of the Financing
Agreement.
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Section 2.10 of the Financing Agreement is
hereby amended in the manner set
forth below:
(a) Sections 2.10(b), (c), (d) and (e) of the Financing
Agreement is hereby amended by (i) deleting
the words "Required Revolving
Loan Lenders" each time they appear therein
and inserting the words
"Required Lenders" in lieu thereof, (ii)
deleting the words "Revolving Loan
Lender" each time they appear therein and
inserting the words "Eurodollar
Rate Loan Lender" in lieu thereof, (iii)
deleting the words "Revolving Loan
Lenders" each time they appear therein and
inserting the words "Eurodollar
Rate Loan Lenders" in lieu thereof, (iv)
deleting the words "Revolving Loan
Lender's" each time they appear therein and
inserting the words "Eurodollar
Rate Loan Lender's" in lieu thereof, (v)
deleting the words "Revolving Loan"
each time they appear therein and inserting
the words "Eurodollar Rate Loan"
in lieu thereof, and (vi) deleting the
words "Revolving Loans" each time
they appear therein and inserting the words
"Eurodollar Rate Loans" in lieu
thereof.
(b) Section 2.10(b) is hereby further amended by inserting at
the end of such Section the following new
sentence:
"At any time when, and so long as, any Term Loan A or Term
Loan B has been
converted to a Reference Rate Loan pursuant to this
Section 2.10(b),
the interest rate applicable to each Term Loan so
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converted for
purposes of Section 2.04(a)(ii) shall be a rate per
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annum equal to
the Reference Rate plus 1.75%."
Section 2.07 Amendments to Section 7.01 of the Financing
Agreement.
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Section 7.01 of the Financing Agreement is
hereby amended in the manner set
forth below:
(a) Section 7.01(i)(iii) of the Financing Agreement is hereby
amended by inserting after the words "filed
with the Internal Revenue
Service and" appearing therein the words
"(if required to be so delivered
pursuant to Section 8.01(a)(x)(C))".
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(b) Section 7.01(y)(iii) of the Financing Agreement is hereby
amended by inserting after the words "and
no union organizing activity
taking place with respect to any of the
employees of any Loan Party"
appearing therein the words "(in each case
that would be material to the
business of any Loan Party)".
Section 2.08 Amendments to Section 8.02 of the Financing
Agreement.
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Section 8.02 of the Financing Agreement is
hereby amended in the manner set
forth below:
(a) Section 8.02(g) of the Financing Agreement is hereby
amended by deleting the words "$72,700,000
in Fiscal Year 2004 and
$98,400,000 in Fiscal Year 2005" appearing
therein and inserting in lieu
thereof the words "$72,700,000 in Fiscal
Year 2004, $98,400,000 in Fiscal
Year 2005, and $95,000,000 for the period
commencing January 1, 2006, and
ending upon the scheduled Final Maturity
Date".
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(b) Section 8.02(p)(v) of the Financing Agreement is hereby
amended by deleting the period appearing at
the end thereof and inserting in
lieu thereof the words ", unless waived
pursuant to Section 412(d) of the
Code."
(c) Section 8.02(t) is hereby amended by deleting the words
"not otherwise prohibited hereunder"
appearing in clause (xiii) thereof and
inserting the words "not otherwise
permitted by this Section 8.02(t)" in
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lieu thereof.
Section 2.09 Amendments to Section 8.03 of the Financing
Agreement.
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Section 8.03(a) of the Financing Agreement
is hereby amended by inserting
the following text at the end of the table
appearing therein:
January 31, 2006
$ 130,000,000
February 28, 2006
$ 131,000,000
March 31,
