-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OqT/cBaqefbC+KvRTwQlyPmRqXzFEQFEuEYAu1Y6HuJ+Iv6TrwbZP8B7GLkQIA6g RVx62gxXVji+Y29uHmRx/A== 0001068800-05-000484.txt : 20050727 0001068800-05-000484.hdr.sgml : 20050727 20050727162159 ACCESSION NUMBER: 0001068800-05-000484 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050725 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050727 DATE AS OF CHANGE: 20050727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOLUTIA INC CENTRAL INDEX KEY: 0001043382 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 431781797 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13255 FILM NUMBER: 05977549 BUSINESS ADDRESS: STREET 1: 575 MARYVILLE CENTRE DRIVE STREET 2: P O BOX 66760 CITY: ST. LOUIS STATE: MO ZIP: 63166-6760 BUSINESS PHONE: 3146741000 MAIL ADDRESS: STREET 1: P O BOX 66760 CITY: ST. LOUIS STATE: MO ZIP: 63166-6760 FORMER COMPANY: FORMER CONFORMED NAME: QUEENY CHEMICAL CO DATE OF NAME CHANGE: 19970804 8-K 1 sol8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 25, 2005 SOLUTIA INC. ------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE -------- (STATE OF INCORPORATION) 001-13255 43-1781797 --------- ---------- (COMMISSION (IRS EMPLOYER FILE NUMBER) IDENTIFICATION NO.) 575 MARYVILLE CENTRE DRIVE, P.O. BOX 66760, ST. LOUIS, MISSOURI 63166-6760 --------------------------------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (314) 674-1000 -------------- REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT As previously reported, on December 17, 2003 Solutia Inc. ("Solutia") and its 14 U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the "Bankruptcy Code") in the U.S. Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). The cases were consolidated for the purpose of joint administration and were assigned case number 03-17949 (PCB). Solutia's subsidiaries outside the United States were not included in the Chapter 11 filing. On July 25, 2005, the Bankruptcy Court approved Amendment #3 to Financing Agreement and Waiver (the "Amendment") by and among Solutia and Solutia Business Enterprises, Inc., as debtors and debtors-in-possession (together, the "Borrowers"), each subsidiary of Solutia listed as a Guarantor on the signature pages to the Amendment (the "Guarantors"), the lenders and issuers party to the Amendment, as set forth on the signature pages thereto (the "Lenders" and the "Issuers," respectively), Citicorp USA, Inc. and Wells Fargo Foothill, LLC (together, the "Agents"). The Amendment amends that certain Financing Agreement by and among the Borrowers, the Guarantors, the Lenders, the Issuers and the Agents, dated as of January 16, 2004, as subsequently amended as of March 1, 2004 and July 20, 2004 (as so amended, the "Financing Agreement"). Terms used but not otherwise defined herein shall have the meaning given to them in the Financing Agreement and the Amendment. The Amendment makes a number of changes to the Financing Agreement, including the following: (i) extending the Final Maturity Date from December 19, 2005 to June 19, 2006; (ii) changing the interest rate on Term Loans from the greater of (a) the Reference Rate plus 4.0% and (b) 8.0%, to the Eurodollar Rate plus 4.25%; and (iii) increasing the amount of cash proceeds from asset sales and Extraordinary Receipts that Solutia may retain before it is required to use a portion of such proceeds to pay down the Facility. The Amendment also contains a number of other changes and other modifications required to make the remaining terms of the Financing Agreement consistent with the amendments set forth above. The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is attached hereto as Exhibit 10.1. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits: Exhibit Number Description - -------------- ----------- 10.1 Amendment No. 3 to the $525,000,000 Debtor-in-Possession Financing Agreement dated January 16, 2004 (as amended) between Solutia Inc., Solutia Business Enterprises, Inc. and the other parties thereto SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. SOLUTIA INC. ------------------------------- (Registrant) /s/ Rosemary L. Klein --------------------------- Senior Vice President, General Counsel and Secretary DATE: JULY 27, 2005 EX-10.1 2 ex10p1.txt 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 --------- debtor-in-possession, a Delaware corporation (the "Parent"), and Solutia ------ Business Enterprises, Inc., as a debtor and debtor-in-possession, a New York corporation, ("Solutia Business" and together with the Parent, each a ---------------- "Borrower" and collectively, the "Borrowers"), each subsidiary of the Parent -------- --------- listed as a "Guarantor" on the signature pages hereto, each as a debtor and debtor-in-possession (each a "Guarantor" and collectively, the --------- "Guarantors"), the lenders from time to time party hereto (each a "Lender" ---------- ------ and collectively, the "Lenders"), the issuers from time to time party hereto ------- (each an "Issuer" and collectively, the "Issuers"), Citicorp USA, Inc. ------ ------- ("CUSA"), as collateral agent for the Lenders (in such capacity, the ---- "Collateral Agent"), CUSA, as administrative agent for the Lenders (in such ---------------- capacity, the "Administrative Agent"), and CUSA and Wells Fargo Foothill, -------------------- LLC, as co-documentation agents for the Lenders, (in such capacity, the "Documentation Agent" and together with the Collateral Agent and the ------------------- Administrative Agent, each an "Agent" and collectively, the "Agents"). ----- ------ RECITALS: WHEREAS, the Borrowers, 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"); ------------------- 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 ----------- context otherwise requires, terms for which meanings are provided in the Financing Agreement shall have such meanings when used in this Amendment. ARTICLE II AMENDMENTS Section 2.01 Amendments to Section 1.01 of the Financing Agreement. ----------------------------------------------------- (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 --------------- 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 --------------------------- 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 2 "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. ----------------------------------------------------- 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. ---------------------------------------------------- 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%". ---- Section 2.04 Amendments to Section 2.05 of the Financing Agreement. ----------------------------------------------------- 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 - -------- ------- 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." - ------------ (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: 3 "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 -------- 8.02(c)(i)(D), (E), or (L), or (z) a Disposition of assets pursuant to ------------- --- --- Section 8.02(c)(i)(K) of not more than $5,000,000 in the aggregate), 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, after giving effect to amounts permitted to be reinvested pursuant to Section 2.05(c)(vii)(A) and amounts not ----------------------- required to be prepaid pursuant to the limitation contained in Section ------- 2.05(c)(vii)(B); provided, however, that so long as no Default or Event of --------------- -------- ------- 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 -------------------- respect of Dispositions pursuant to Section 8.02(c)(i)(F) of assets --------------------- listed on Part III of Schedule 8.02(c)(i), no prepayment shall be ------------------- 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 -------------------- of Dispositions pursuant to Section 8.02(c)(i)(F) of assets listed on --------------------- Part III of Schedule 8.02(c)(i), the Borrowers shall prepay the ------------------- 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 ----------------------- be prepaid pursuant to the limitation contained in Section 2.05(c)(vii)(B)". ----------------------- (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". ---- (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), ---------------------- --- or (L), or (z) a Disposition of assets pursuant to Section 8.02(c)(i)(K) --- --------------------- 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))". ----------------------- 4 Section 2.05 Amendments to Section 2.09 of the Financing Agreement. ----------------------------------------------------- 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." 5 Section 2.06 Amendments to Section 2.10 of the Financing Agreement. ----------------------------------------------------- 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 --------------- converted for purposes of Section 2.04(a)(ii) shall be a rate per ------------------- annum equal to the Reference Rate plus 1.75%." Section 2.07 Amendments to Section 7.01 of the Financing Agreement. ----------------------------------------------------- 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))". --------------------- (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. ----------------------------------------------------- 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". 6 (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 --------------- lieu thereof. Section 2.09 Amendments to Section 8.03 of the Financing Agreement. ----------------------------------------------------- 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, 2006 $ 132,000,000 April 30, 2006 $ 133,000,000 May 31, 2006 $ 134,000,000 Section 2.10 Amendments to Section 13.07 of the Financing Agreement. ------------------------------------------------------ Section 13.07 of the Financing Agreement is hereby amended in the manner set forth below: (a) Section 13.07(b) of the Financing Agreement is hereby amended by inserting after the words "to an Affiliate of such Lender or to an Approved Fund" appearing in clause (ii) of the proviso at the end of the first sentence thereof the words "or in respect of any assignment made pursuant to Section 13.07(e)". ---------------- (b) Section 13.07 is hereby amended by inserting the following new clause 13.07(e) at the end thereof: "(e) If, in connection with any proposed amendment, modification, waiver or termination requiring the consent of all affected Lenders, the consent of Required Lenders is obtained but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in this Section 13.07(e) being referred to as a ---------------- "Non-Consenting Lender"), then, as long as the Lender acting as the --------------------- Administrative Agent is not a Non-Consenting Lender, at the Administrative Borrower's request, any eligible assignee acceptable to the Administrative Agent and the Borrowers shall have the right with the Administrative Agent's consent and in the Administrative Agent's sole discretion (but shall have no obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting Lender agrees that it shall, upon the Administrative Agent's request, sell and assign to the Lender acting as the Administrative Agent or such eligible assignee, all of the Revolving Credit Commitments, Term Loan A Commitments, Term Loan B Commitments, and Loans of such Non-Consenting Lender for an amount equal to the principal balance of all Loans held by the Non-Consenting Lender and all accrued and unpaid interest and fees with respect thereto through the date of sale; provided, however, that such -------- ------- purchase and sale shall not be effective until (x) the Administrative Agent shall have received from such eligible 7 assignee an agreement in form and substance reasonably satisfactory to the Administrative Agent and the Administrative Borrower whereby such eligible assignee shall agree to be bound by the terms hereof and (y) such Non-Consenting Lender shall have received payments of all Loans held by it and all accrued and unpaid interest and fees with respect thereto through the date of the sale. Each Lender agrees that, if it becomes a Non-Consenting Lender, it shall execute and deliver to the Administrative Agent an Assignment and Acceptance to evidence such sale and purchase and shall deliver to the Administrative Agent any Note or Notes (if the assigning Lender's Loans are evidenced by a Note or Notes) subject to such Assignment and Acceptance; provided, however, that the failure of any -------- ------- Non-Consenting Lender to execute an Assignment and Acceptance shall not render such sale and purchase (and the corresponding assignment) invalid." Section 2.11 Amendment to Schedule 7.01(y) to the Financing Agreement. -------------------------------------------------------- Schedule 7.01(y) of the Financing Agreement is hereby amended and restated to read in its entirety as set forth in Exhibit A hereto. --------- Section 2.12 Amendment to Schedule 8.03 to the Financing Agreement. ----------------------------------------------------- Schedule 8.03 of the Financing Agreement is hereby amended and restated to read in its entirety as set forth in Exhibit B hereto. --------- Section 2.13 Amendment to Exhibit G to the Financing Agreement. ------------------------------------------------- Exhibit G to the Financing Agreement is hereby amended and restated to read in its entirety as set forth in Exhibit C hereto. --------- Section 2.14 Limited Waiver of Section 7.01(i)(iii) of the Financing ------------------------------------------------------- Agreement. For avoidance of doubt, the Lenders hereby waive compliance by - --------- the Loan Parties with the provisions of Section 7.01(i)(iii) of the Financing Agreement on a retroactive basis with respect any failure to deliver to the Administrative Agent and the Collateral Agent reports and schedules referred to therein, the delivery of which is not required pursuant to Section 8.01(a)(x)(C). Such waiver does not constitute a waiver --------------------- of any non-compliance with Section 7.01(i)(iii) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or a waiver of any other Default or Event of Default that may exist under the Financing Agreement or an acquiescence thereof. Section 2.15 Limited Waiver of Section 7.01(y) of the Financing -------------------------------------------------- Agreement. For avoidance of doubt, the Lenders hereby waive compliance by - --------- the Loan Parties with the provisions of Section 7.01(y) of the Financing Agreement on a retroactive basis with respect to matters listed on Schedule 7.01(y) (as amended and restated pursuant to this Amendment). Such waiver does not constitute a waiver of any non-compliance with Section 7.01(y) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or a waiver of any other Default or Event of Default that may exist under the Financing Agreement or an acquiescence thereof. 8 ARTICLE III CONDITIONS PRECEDENT Section 3.01 Conditions to Effectiveness of this Amendment. This --------------------------------------------- Amendment shall be effective as of the date hereof, upon the satisfaction of the conditions precedent that: (a) Amendment. The Administrative Agent shall have received --------- executed counterparts of this Amendment, duly executed by Lenders constituting at least Required Lenders, the Borrowers, each Guarantor, the Documentation Agent, the Administrative Agent, the Collateral Agent and the Issuer; provided, however, that with respect to the amendments to Sections -------- ------- 2.05(c)(iii), 2.05(c)(iv), and 2.05(c)(vii) of the Financing Agreement thereto contained in Sections 2.04(e) through (h) of this Amendment, the ---------------- --- amendments contained in such Section shall not be effective (without prejudice to the effectiveness of any other provision of this Amendment) until the Administrative Agent shall have received executed counterparts of this Amendment, duly executed by Lenders constituting at least Supermajority Consent, the Borrowers, each Guarantor, the Documentation Agent, the Administrative Agent, the Collateral Agent and the Issuer; provided further, ---------------- however, that with respect to the amendments to Sections 1.01 (definitions - ------- of "Final Maturity Date", "Consolidated Net Income", "Eurodollar Base Rate", "Eurodollar Lending Office", "Eurodollar Rate Loan", "Eurodollar Rate Loan Lender", "Interest Period"), 2.02, 2.04(a)(ii), 2.05(b), 2.05(c)(i)(C), 2.05(c)(ii), 2.09, 2.10, 8.02(g), and 8.03 of the Financing Agreement, Schedule 8.03 thereto, and Exhibit G thereto contained in Sections 2.01(a) ---------------- through (b), (d) through (h), 2.02, 2.03, 2.04(a) through (d), 2.05, 2.06, --- --- --- ---- ---- ------- --- ---- ---- 2.08(a), 2.09, 2.12 and 2.13 of this Amendment, the amendments contained in - ------- ---- ---- ---- such Sections shall not be effective (without prejudice to the effectiveness of any other provision of this Amendment) until the Administrative Agent shall have received executed counterparts of this Amendment, duly executed by each of the Lenders, the Borrowers, each Guarantor, the Documentation Agent, the Administrative Agent, the Collateral Agent and the Issuer. (b) Notice of Continuation and Conversion. The Borrowers ------------------------------------- shall have delivered to the Administrative Agent a Notice of Continuation or Conversion with respect to the Term Loans outstanding on the date hereof. (c) Representations and Warranties. As of the date hereof, ------------------------------ both before and after giving effect to this Amendment, all of the representations and warranties contained in the Financing Agreement and in each other Loan Document shall be true and correct in all material respects as though made on the date hereof, except to the extent such representation and warranty expressly relates to a specific prior date in which case such representation and warranty shall be true and correct in all material respects as of such date (and by its execution hereof, the Borrowers shall be deemed to have represented and warranted such). (d) Fees. The Borrowers shall have paid all costs, fees and ---- expenses referred to in Section 4.04 to the extent due on or prior to the ------------ date hereof. 9 (e) No Default. As of the date hereof, both before and after ---------- giving effect to this Amendment, no Default (other than with respect to the provisions of Sections 7.01(i)(iii) and 7.01(y) of the Financing Agreement that would, upon effectiveness of this Amendment, be waived pursuant to Sections 2.14 and 2.15 above) shall have occurred and be continuing (and by - ------------- ---- its execution hereof, the Borrowers shall be deemed to have represented and warranted such). (f) Bankruptcy Court Order. An order of the Bankruptcy Court ---------------------- approving this Amendment and the terms and conditions hereof, such order to be in form and substance satisfactory to the Administrative Agent in its sole discretion, shall have been entered by the Bankruptcy Court, 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 Administrative Agent. ARTICLE IV MISCELLANEOUS Section 4.01 Effect; Ratification. The amendments and waivers set -------------------- forth herein are effective solely for the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent to, or acknowledgment of, any amendment, waiver or modification of any other term or condition of the Financing Agreement or of any other instrument or agreement referred to therein or (ii) prejudice any right or remedy which the Agents or any other party may now have or may have in the future under or in connection with the Financing Agreement as amended hereby or any other instrument or agreement referred to therein. This Amendment shall be construed in connection with and as part of the Financing Agreement, and all terms, conditions, representations, warranties, covenants and agreements set forth in the Financing Agreement and each other instrument or agreement referred to therein, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect. Section 4.02 Due Authorization; Authority; No Conflicts; ------------------------------------------- Enforceability. The execution, delivery and performance by each Loan Party - -------------- of this Amendment (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 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. Other than the order referred to in Section 3.01(f) --------------- 10 hereof, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, including the Bankruptcy Court, is required in connection with the due execution, delivery and performance by any Loan Party of this Amendment. This Amendment, when delivered hereunder, is or will be, duly and validly executed and delivered by each of the Loan Parties which is a party hereto and each of this Amendment and the Financing Agreement as amended hereby constitutes the legal, valid and binding obligation of each of the Loan Parties which is a party hereto or thereto, enforceable in accordance with the terms hereof or thereof and subject to the entry of, and the terms of, the Bankruptcy Court order referred to in Section 3.01(f) hereof. - --------------- Section 4.03 No Novation. Neither this Amendment nor the replacement ----------- of the terms of the Financing Agreement by the terms of this Amendment shall extinguish the obligations for the payment of money outstanding under the Financing Agreement or discharge or release the Lien or priority of any security agreement, any pledge agreement or any other security therefor. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Financing Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby. Nothing expressed or implied in this Amendment or any other document contemplated hereby or thereby shall be construed as a release or other discharge of the Borrowers or any other Loan Party under any Loan Document from any of its obligations and liabilities thereunder. Each of the Financing Agreement and the other Loan Documents shall remain in full force and effect, until and except as modified hereby or in connection herewith. This Amendment is a Loan Document executed pursuant to the Financing Agreement and shall be construed, administered and applied in accordance with the terms and provisions thereof. Section 4.04 Costs, Fees and Expenses. The Borrowers jointly and ------------------------ severally agree (i) to reimburse the Agents and the Lenders upon demand in accordance with Section 13.04 of the Financing Agreement for all reasonable costs, fees and expenses (including the reasonable fees and expenses of counsel to the Agents and the Lenders) incurred in connection with the preparation, execution and delivery of this Amendment, and (ii) to pay all other fees otherwise payable with respect to this Amendment pursuant to any Loan Document. Section 4.05 Counterparts. This Amendment 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 Amendment by telecopier shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telecopier also shall deliver an original executed counterpart of this Amendment but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment. Section 4.06 Severability. Any provision of this Amendment 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 11 portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 4.07 CHOICE OF LAW. THIS AMENDMENT 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. Section 4.08 No Party Deemed Drafter. Each of the parties hereto ----------------------- agrees that no party hereto shall be deemed to be the drafter of this Amendment. Section 4.09 Ratification of Guaranty. Each Guarantor hereby ------------------------ consents to this Amendment and hereby confirms and agrees that (a) notwithstanding the effectiveness of this Amendment, the Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of this Amendment, each reference in the Guaranty to the "Agreement", "thereunder", "thereof" or words of like import referring to the Financing Agreement shall mean and be a reference to the Financing Agreement as amended by this Amendment, and (b) the Loan Documents to which it is a party and all of the Collateral described therein do, and shall continue to, secure the payment of all of the Obligations secured thereby. (Signature Page Follows) 12 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Assistant Treasurer SOLUTIA BUSINESS ENTERPRISES, INC., as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer GUARANTORS: ---------- AXIO RESEARCH CORPORATION, as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer 13 BEAMER ROAD MANAGEMENT COMPANY, as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer CPFILMS INC., as a debtor and a debtor-in- possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Assistant Treasurer MONCHEM, INC., as a debtor and a debtor- in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer MONCHEM INTERNATIONAL, INC., as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer SOLUTIA GREATER CHINA, INC., as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer 14 SOLUTIA INTER-AMERICA, INC., as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer SOLUTIA INTERNATIONAL HOLDING, LLC, as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer SOLUTIA INVESTMENTS, LLC, as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer SOLUTIA MANAGEMENT COMPANY, INC., as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer SOLUTIA OVERSEAS, INC., as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer 15 SOLUTIA SYSTEMS, INC., as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer SOLUTIA TAIWAN, INC., as a debtor and a debtor-in-possession By: /s/ James A. Tichenor -------------------------------------- Name: James A. Tichenor Title: Vice President & Treasurer 16 ADMINISTRATIVE AGENT, --------------------- COLLATERAL AGENT, CO-DOCUMENTATION ---------------------------------- AGENT AND A LENDER: ------------------ CITICORP USA, INC., for itself as the Administrative Agent, the Collateral Agent, a Co-Documentation Agent and a Lender By: /s/ David Jaffe -------------------------------------- Name: David Jaffe Title: Director/Vice President 17 CO-DOCUMENTATION AGENT AND A LENDER: ----------------------------------- WELLS FARGO FOOTHILL, LLC, for itself as a Co-Documentation Agent and a Lender By: /s/ Lan Wong -------------------------------------- Name: Lan Wong Title: Vice President 18 ISSUER: ------ CITIBANK, N.A., as an Issuer and a Lender By: /s/ David Jaffe -------------------------------------- Name: David Jaffe Title: Director/Vice President 19 LENDER: ------ Bayerische Hypo- und Vereinsbank AG, New York Branch, as a Lender By: /s/ Miriam Trautmann -------------------------------------- Name: Miriam Trautmann Title: Associate Director By: /s/ Salvatore Esposito -------------------------------------- Name: Salvatore Esposito Title: Managing Director 20 LENDER: ------ CITIGROUP FINANCIAL PRODUCTS, INC., as a Lender By: /s/ Vincent Farrell -------------------------------------- Name: Vincent Farrell Title: Authorized Signatory 21 LENDER: ------ CITIBANK N.A., as a Lender By: /s/ Janet Wallace-Himmler -------------------------------------- Name: Janet Wallace-Himmler Title: Attorney-In-Fact 22 LENDER: ------ SHEPHERD INVESTMENTS INTERNATIONAL, LTD., as a Lender By: /s/ Michael A. Roth -------------------------------------- Name: Michael A. Roth Title: Managing Member of Stark Offshore Management, LLC, Investment Manager 23 LENDER: ------ UBS AG, Stamford Branch, as a Term A Lender only By: /s/ Barbara Ezell-McMichael -------------------------------------- Name: Barbara Ezell-McMichael Title: Associate Director Banking Products Services, US By: /s/ Toba Lumbantobing -------------------------------------- Name: Toba Lumbantobing Title: Associate Director Banking Products Services, US 24 LENDER: ------ UBS AG, Stamford Branch, as a Lender in Term B only. By: /s/ Richard L. Tavrow -------------------------------------- Name: Richard L. Tavrow Title: Director Banking Products Services, US By: /s/ Toba Lumbantobing -------------------------------------- Name: Toba Lumbantobing Title: Associate Director Banking Products Services, US 25 LENDER: ------ WatchTower CLO I PLC By: Citadel Limited Partnership, Portfolio Manager By: Citadel Investment Group, L.L.C., its General Partner, as a Lender By: /s/ Matthew Hinerfeld -------------------------------------- Name: Matthew Hinerfeld Title: Deputy General Counsel 26 LENDER: ------ Wingate Capital Ltd. By: Citadel Limited Partnership, Portfolio Manager By: Citadel Investment Group, L.L.C., its General Partner, as a Lender By: /s/ Matthew Hinerfeld -------------------------------------- Name: Matthew Hinerfeld Title: Deputy General Counsel 27 LENDER: ------ CDL LOAN FUNDING LLC, as a Lender By: /s/ Jason Trala -------------------------------------- Name: Jason Trala Title: Attorney-In-Fact 28 LENDER: ------ Satellite Senior Income Fund, LLC, BY SATELLITE ASSET MANAGEMENT, L.P. ITS INVESTMENT MANAGER, as a Lender By: /s/ Simon Raykher -------------------------------------- Name: Simon Raykher Title: General Counsel 29 LENDER: ------ Satellite Senior Income Fund II, LLC, BY SATELLITE ASSET MANAGEMENT, L.P. ITS INVESTMENT MANAGER, as a Lender By: /s/ Simon Raykher -------------------------------------- Name: Simon Raykher Title: General Counsel 30 LENDER: ------ HIGHLAND LEGACY LIMITED By: Highland Capital Management, L.P. as Collateral Manager, as a Lender By: /s/ Todd Travers ---------------------------------------- Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P. 31 LENDER: ------ PAM CAPITAL FUNDING, L.P. By: Highland Capital Management, L.P. as Collateral Manager, as a Lender By: /s/ Todd Travers ---------------------------------------- Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P. 32 LENDER: ------ CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM By: Highland Capital Management, L.P. As Authorized Representatives of the Board, as a Lender By: /s/ Todd Travers ---------------------------------------- Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P. 33 LENDER: ------ Highland Loan Funding V Ltd. By: Highland Capital Management, L.P. As Collateral Manager, as a Lender By: /s/ Todd Travers ---------------------------------------- Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P. 34 LENDER: ------ RESTORATION FUNDING CLO, LTD By: Highland Capital Management, L.P. As General Partner, as a Lender By: /s/ Todd Travers ---------------------------------------- Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P. 35 LENDER: ------ Perry Principals Investments, L.L.C., as a Lender By: /s/ Randy Borkenstein -------------------------------------- Name: Randy Borkenstein Title: Member 36 LENDER: ------ CYRUS OPPORTUNITIES MASTER FUND, LTD. By: Cyrus Capital Partners, L.P., as Investment Manager By: Cyrus Capital Partners, GP, LLC, General Partner By: /s/ Robert A. Nisi -------------------------------------- Name: Robert A. Nisi Title: Partner, General Counsel 37 LENDER: ------ CYRUS OPPORTUNITIES MASTER FUND II, LTD. By: Cyrus Capital Partners, L.P., as Investment Manager By: Cyrus Capital Partners, GP, LLC, General Partner By: /s/ Robert A. Nisi -------------------------------------- Name: Robert A. Nisi Title: Partner, General Counsel 38 LENDER: ------ SMBC DIP Limited, as a Lender By: /s/ Susurnu Ogawa -------------------------------------- Name: Susurnu Ogawa Title: Director 39 -----END PRIVACY-ENHANCED MESSAGE-----