Exhibit 10.3
 
 
$400,000,000
CREDIT AGREEMENT
Dated as of February 28, 2008
among
SOLUTIA INC.,
as Borrower,
THE LENDERS REFERRED TO HEREIN,
CITIBANK, N.A.,
as Administrative Agent,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Syndication Agent,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Documentation Agent,
and
CITIGROUP GLOBAL MARKETS INC.,
GOLDMAN SACHS CREDIT PARTNERS L.P. and
DEUTSCHE BANK SECURITIES INC.,
as Joint Lead Arrangers and as Joint Bookrunners
 
 

 

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TABLE OF CONTENTS

                      Page  
 
           
 
  ARTICLE I        
 
           
 
  DEFINITIONS        
 
           
SECTION 1.01.
  Defined Terms     1  
SECTION 1.02.
  [Reserved]     29  
SECTION 1.03.
  Terms Generally; Currency Translation; Accounting Terms; GAAP     29  
SECTION 1.04.
  Resolution of Drafting Ambiguities     30  
 
           
 
  ARTICLE II        
 
           
 
  THE CREDITS        
 
           
SECTION 2.01.
  Commitments     30  
SECTION 2.02.
  Procedure for Borrowing     30  
SECTION 2.03.
  [Reserved]     30  
SECTION 2.04.
  Optional and Mandatory Prepayments of Loans     30  
SECTION 2.05.
  Repayment of Loans; Evidence of Debt     32  
SECTION 2.06.
  Interest Rates and Payment Dates; Default Interest     32  
SECTION 2.07.
  Computation of Interest     33  
SECTION 2.08.
  Fees     33  
SECTION 2.09.
  Termination of Commitments     33  
SECTION 2.10.
  [Reserved]     33  
SECTION 2.11.
  Pro Rata Treatment and Payments     33  
SECTION 2.12.
  [Reserved]     34  
SECTION 2.13.
  Requirements of Law     34  
SECTION 2.14.
  Taxes     35  
SECTION 2.15.
  [Reserved]     38  
SECTION 2.16.
  Change of Lending Office     38  
SECTION 2.17.
  Sharing of Setoffs     38  
SECTION 2.18.
  Assignment of Commitments Under Certain Circumstances     39  
SECTION 2.19.
  Notice of Certain Costs     39  
SECTION 2.20.
  Exchange Notes     39  
 
           
 
  ARTICLE III        
 
           
 
  REPRESENTATIONS AND WARRANTIES        
 
           
SECTION 3.01.
  Organization, etc.     40  
SECTION 3.02.
  Due Authorization, Non-Contravention, etc.     41  
SECTION 3.03.
  Government Approval, Regulation, etc.     41  
SECTION 3.04.
  Validity, etc.     42  
SECTION 3.05.
  Financial Information     42  
SECTION 3.06.
  No Material Adverse Effect     42  
SECTION 3.07.
  Litigation     42  
SECTION 3.08.
  Compliance with Laws and Agreements     43  

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                      Page  
SECTION 3.09.
  Ownership of Subsidiaries     43  
SECTION 3.10.
  Ownership of Properties     43  
SECTION 3.11.
  Intellectual Property     44  
SECTION 3.12.
  Taxes     44  
SECTION 3.13.
  Pension and Welfare Plans     45  
SECTION 3.14.
  Environmental     45  
SECTION 3.15.
  Federal Reserve Regulations     47  
SECTION 3.16.
  Disclosure; Accuracy of Information; Pro Forma Balance Sheets and Projected
Financial Statements     47  
SECTION 3.17.
  Insurance     48  
SECTION 3.18.
  Labor Matters     48  
SECTION 3.19.
  Solvency     49  
SECTION 3.20.
  Consummation of the Reorganization Plan and Related Agreements     49  
SECTION 3.21.
  [Reserved]     49  
SECTION 3.22.
  Use of Proceeds     49  
SECTION 3.23.
  Anti-Terrorism Laws     49  
SECTION 3.24.
  Status as Senior Debt     50  
 
           
 
  ARTICLE IV        
 
           
 
  CONDITIONS        
 
           
SECTION 4.01.
  Effective Date     50  
 
           
 
  ARTICLE V        
 
           
 
  AFFIRMATIVE COVENANTS        
 
           
SECTION 5.01.
  Financial Information, Reports, Notices, etc.     53  
SECTION 5.02.
  Compliance with Laws, etc.     56  
SECTION 5.03.
  Maintenance of Properties     56  
SECTION 5.04.
  Insurance     56  
SECTION 5.05.
  Books and Records; Visitation Rights; Lender Meetings     57  
SECTION 5.06.
  Environmental Covenant     57  
SECTION 5.07.
  [Reserved]     57  
SECTION 5.08.
  Existence; Conduct of Business     57  
SECTION 5.09.
  Performance of Obligations     57  
SECTION 5.10.
  Casualty and Condemnation     57  
SECTION 5.11.
  [Reserved]     58  
SECTION 5.12.
  Further Assurances     58  
SECTION 5.13.
  Use of Proceeds     58  
SECTION 5.14.
  Payment of Taxes and Claims     58  
SECTION 5.15.
  Additional Guarantors     58  
SECTION 5.16.
  Interest Rate Protection     58  
SECTION 5.17.
  [Reserved]     59  
SECTION 5.18.
  Designation of Subsidiaries     59  
SECTION 5.19.
  Permitted Restructuring     59  
SECTION 5.20.
  Securities Demand; Cooperation in Financing     60  

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                      Page  
 
           
 
  ARTICLE VI        
 
           
 
  NEGATIVE COVENANTS        
 
           
SECTION 6.01.
  Indebtedness     61  
SECTION 6.02.
  Liens     64  
SECTION 6.03.
  Fundamental Changes; Line of Business     67  
SECTION 6.04.
  Investments, Loans, Advances, Guarantees and Acquisitions     68  
SECTION 6.05.
  Asset Sales     70  
SECTION 6.06.
  Sale and Leaseback Transactions     72  
SECTION 6.07.
  Restricted Payments     72  
SECTION 6.08.
  Transactions with Affiliates     72  
SECTION 6.09.
  Restrictive Agreements     73  
SECTION 6.10.
  Amendments or Waivers of Certain Documents; Prepayments of Certain
Indebtedness     74  
SECTION 6.11.
  Accounting Treatment; Fiscal Year     74  
SECTION 6.12.
  Hedging Agreements     74  
SECTION 6.13.
  Assets, Liabilities and Actions of SFC     75  
 
           
 
  ARTICLE VII        
 
           
 
  EVENTS OF DEFAULT        
 
           
SECTION 7.01.
  Listing of Events of Default     75  
SECTION 7.02.
  Action if Bankruptcy     77  
SECTION 7.03.
  Action if Other Event of Default     77  
 
           
 
  ARTICLE VIII        
 
           
 
  THE ADMINISTRATIVE AGENT        
 
           
SECTION 8.01.
  Appointment and Authority     77  
SECTION 8.02.
  Administrative Agent Individually     78  
SECTION 8.03.
  Duties of Administrative Agent; Exculpatory Provisions     79  
SECTION 8.04.
  Reliance by Administrative Agent     80  
SECTION 8.05.
  Delegation of Duties     80  
SECTION 8.06.
  Resignation of Administrative Agent     80  
SECTION 8.07.
  Non-Reliance on Administrative Agent and Other Lenders     81  
SECTION 8.08.
  No Other Duties, etc     82  
 
           
 
  ARTICLE IX        
 
           
 
  MISCELLANEOUS        
 
           
SECTION 9.01.
  Notices     82  
SECTION 9.02.
  Survival of Agreement     83  
SECTION 9.03.
  Binding Effect     83  
SECTION 9.04.
  Successors and Assigns     83  
SECTION 9.05.
  Expenses; Indemnity     86  
SECTION 9.06.
  Right of Setoff     88  

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                      Page  
 
           
SECTION 9.07.
  Applicable Law     88  
SECTION 9.08.
  Waivers; Amendment     88  
SECTION 9.09.
  Interest Rate Limitation     91  
SECTION 9.10.
  Entire Agreement     92  
SECTION 9.11.
  WAIVER OF JURY TRIAL     92  
SECTION 9.12.
  Severability     92  
SECTION 9.13.
  Counterparts     92  
SECTION 9.14.
  Headings     92  
SECTION 9.15.
  Jurisdiction; Consent to Service of Process     92  
SECTION 9.16.
  Confidentiality     93  
SECTION 9.17.
  Posting of Approved Electronic Communications     94  
SECTION 9.18.
  Treatment of Information     95  
SECTION 9.19.
  USA PATRIOT Act Notice     96  
SECTION 9.20.
  No Fiduciary Duty     96  

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EXHIBIT A
  Form of Administrative Questionnaire
EXHIBIT B
  Form of Borrowing Request
EXHIBIT C
  Form of Assignment and Assumption
EXHIBIT D
  Form of Compliance Certificate
EXHIBIT E
  Form of Indemnity, Subrogation and Contribution Agreement
EXHIBIT F
  Form of Note
EXHIBIT G
  Form of Closing Certificate
EXHIBIT H
  Form of Guarantee Agreement
EXHIBIT I
  Form of Exemption Certificate
EXHIBIT J
  Form of Solvency Certificate
EXHIBIT K
  Description of Exchange Notes
 
   
SCHEDULE 1.01(a)
  Immaterial Restricted Subsidiaries
SCHEDULE 1.01(b)
  Permitted Restructuring
SCHEDULE 1.01(c)
  Specified Asset Sales
SCHEDULE 2.01
  Lenders and Commitments
SCHEDULE 3.05
  Financial Information
SCHEDULE 3.09(a)
  Subsidiaries
SCHEDULE 3.09(b)
  Securities
SCHEDULE 3.10(a)
  Options, Rights of First Refusal, Etc.
SCHEDULE 3.10(b)
  Leased and Owned Real Property
SCHEDULE 3.17
  Insurance
SCHEDULE 4.01(f)
  Local Counsel Jurisdictions
SCHEDULE 5.19
  Permitted Restructuring Conditions
SCHEDULE 6.01(ii)(A)
  Existing Indebtedness
SCHEDULE 6.01(ii)(B)
  Existing Indebtedness
SCHEDULE 6.01(xxi)
  Intercompany Notes
SCHEDULE 6.02(iv)(A)
  Existing Liens
SCHEDULE 6.02(iv)(B)
  Existing Liens
SCHEDULE 6.04
  Existing Investments
SCHEDULE 6.09
  Existing Restrictions

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          CREDIT AGREEMENT (this “Agreement”) dated as of February 28, 2008,
among SOLUTIA INC., a Delaware corporation (the “Borrower”); each of the Lenders
(as defined in Section 1.01); CITIBANK, N.A. (“Citibank”), as administrative
agent for the Lenders (together with its successors in such capacity, the
“Administrative Agent”); GOLDMAN SACHS CREDIT PARTNERS L.P. (“GSCP”), as
syndication agent (in such capacity, the “Syndication Agent”); DEUTSCHE BANK AG,
NEW YORK BRANCH (“DBNY”), as documentation agent (in such capacity, the
“Documentation Agent”); and CITIGROUP GLOBAL MARKETS INC. (“CGMI”), GSCP and
DEUTSCHE BANK SECURITIES INC. (“DBSI”), as joint lead arrangers and as joint
bookrunners (collectively, in such capacities, the “Joint Lead Arrangers and
Bookrunners”).
          The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
          SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
          “Acquisition Consideration” means the purchase consideration for any
Permitted Acquisition and all other payments by the Borrower or any of its
Restricted Subsidiaries in exchange for, or as part of, or in connection with
any Permitted Acquisition, whether paid in cash or by exchange of Equity
Interests or of assets, by the assumption of Indebtedness or otherwise and
whether payable at or prior to the consummation of such Permitted Acquisition or
deferred for payment at any future time, whether or not any such future payment
is subject to the occurrence of any contingency, and includes any and all
payments representing the purchase price and any assumptions of Indebtedness,
“earn-outs” and other agreements to make any payment the amount of which is, or
the terms of payment of which are, in any respect subject to or contingent upon
the revenues, income, cash flow or profits (or the like) of any Person or
business.
          “Activities” has the meaning assigned to such term in Section 8.02(b).
          “Administrative Agent” has the meaning assigned to such term in the
preamble hereto.
          “Administrative Questionnaire” means an Administrative Questionnaire
in the form of Exhibit A or otherwise in the form supplied by the Administrative
Agent.
          “Affiliate” of any Person means any other Person which, directly or
indirectly through one or more intermediaries, Controls, is Controlled by or is
under common Control with such Person (excluding any trustee under, or any
committee with responsibility for administering, any Plan); provided, however,
that for purposes of Section 6.08, the term “Affiliate” shall also include
(i) any Person that directly or indirectly owns more than 10% of Equity
Interests having ordinary voting power for the election of directors (or Persons
performing similar functions) of the Person specified or (ii) any Person that is
an executive officer or director of the Person specified.
          “Agents’ Groups” has the meaning assigned to such term in
Section 8.02(b).
          “Agreement” has the meaning assigned to such term in the preamble
hereto.
          “Anti-Terrorism Laws” has the meaning assigned to such term in
Section 3.23(a).

 

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          “Applicable Interest Rate” means 15.50% per annum commencing on the
Effective Date.
          “Applicable Ratio” means, as of the last day of any Test Period ending
(i) on or prior to June 30, 2008, 5.00:1.00, (ii) on September 30, 2008,
4.75:1.00, (iii) on December 31, 2008, 4.50:100 and (iv) on March 31, 2009,
4.25:1.00.
          “Approved Electronic Communications” means each Communication that any
Loan Party is obligated to, or otherwise chooses to, provide to the
Administrative Agent pursuant to any Loan Document or the transactions
contemplated therein, including any financial statement, financial and other
report, notice, request, certificate and other information material; provided,
however, that, solely with respect to delivery of any such Communication by any
Loan Party to the Administrative Agent and without limiting or otherwise
affecting either the Administrative Agent’s right to effect delivery of such
Communication by posting such Communication to the Approved Electronic Platform
or the protections afforded hereby to the Administrative Agent in connection
with any such posting, “Approved Electronic Communication” shall exclude (i) any
notice of borrowing and any other notice, demand, communication, information,
document and other material relating to a request for a Loan, (ii) any notice
pursuant to Section 2.04 and any other notice relating to the payment of any
principal or other amount due under any Loan Document prior to the scheduled
date therefor, (iii) all notices of any Default or Event of Default and (iv) any
notice, demand, communication, information, document and other material required
to be delivered to satisfy any of the conditions set forth in Article IV or any
other condition to making any Loan hereunder or any condition precedent to the
effectiveness of this Agreement.
          “Approved Electronic Platform” has the meaning assigned to such term
in Section 9.17(a).
          “Asset Sale” means any direct or indirect sale, transfer, lease (as
lessor), conveyance or other disposition (including by way of merger or
consolidation and including any Sale and Leaseback Transaction) by the Borrower
or any of its Restricted Subsidiaries of any of its Property (other than
dispositions of cash and cash equivalents in the ordinary course of its
business), including any sale or issuance of any Equity Interests of any
Subsidiary; provided that any such sales, transfers, leases, conveyances or
other dispositions of Property and/or such sales or issuances of Equity
Interests (i) from a Loan Party to another Loan Party or (ii) by a Non-Guarantor
Restricted Subsidiary to any other Non-Guarantor Restricted Subsidiary shall not
constitute Asset Sales under the Loan Documents.
          “Asset Sale Cap” means, as of any date of determination, an amount
equal to 5.0% of Consolidated Net Tangible Assets as determined as at the end of
the most recently ended Fiscal Year for which financial statements have been
delivered, or are required to have been delivered, pursuant to Sections 4.01(h)
or 5.01(b) as of the date of determination.
          “Asset Sale Prepayment Event” means any Asset Sale, except (a) Asset
Sales permitted by Section 6.05 (other than Sections 6.05(viii) and 6.05(xii)
thereof), (b) Small Asset Sales and (c) any such transaction or series of
transactions which, if otherwise constituting an Asset Sale Prepayment Event, do
not generate Net Proceeds in excess of $5.0 million (or, when taken together
with all other such transactions (and any Destructions and Takings in such
Fiscal Year), do not generate Net Proceeds in excess of $25.0 million in the
aggregate in such Fiscal Year); provided that each Specified Asset Sale shall
constitute an Asset Sale Prepayment Event.
          “Assignment and Assumption” means an assignment and assumption entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04(b)), and

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accepted by the Administrative Agent in accordance with Section 9.04(b), in the
form of Exhibit C or such other form as shall be approved by the Administrative
Agent.
          “Authorized Officer” means, with respect to the Borrower, those of its
officers whose signature and incumbency has been certified to the Administrative
Agent and the Lenders by the Secretary of the Borrower in a certificate dated
the Effective Date, or any successor certificate thereto.
          “Bankruptcy Code” means the United States Bankruptcy Code.
          “Bankruptcy Court” means the United States Bankruptcy Court for the
Southern District of New York.
          “Board of Governors” means the Board of Governors of the Federal
Reserve System of the United States, or any successor thereto.
          “Borrower” has the meaning assigned to such term in the preamble to
this Agreement.
          “Borrowing Request” has the meaning assigned to such term in
Section 2.02(a).
          “Business Day” means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
          “Capital Lease Obligations” means all monetary obligations of the
Borrower and its Restricted Subsidiaries under any leasing or similar
arrangement conveying the right to use real or personal property, or a
combination thereof, which, in accordance with GAAP, is required to be
classified and accounted for as capital leases, and the amount of such monetary
obligations shall be the capitalized amount thereof determined in accordance
with GAAP (except for temporary treatment of construction-related expenditures
paid by any Person other than the Borrower or any of its Subsidiaries under EITF
97-10, “The Effect of Lessee Involvement in Asset Construction”, which will
ultimately be treated as operating leases upon a Sale and Leaseback Transaction
permitted under this Agreement) and the stated maturity thereof shall be the
date of the last payment of rent or any other amount due under such lease or
other arrangement prior to the first date on which such lease may be terminated
by the lessee without payment of a penalty.
          “Captive Insurance Restricted Subsidiary” means any Restricted
Subsidiary that is subject to regulation as an insurance company under
applicable Requirements of Law.
          “Cash Equivalents” means Permitted Investments (other than as
described in clause (i) of the definition thereof).
          “Cash Interest” has the meaning assigned to such term in
Section 2.06(a).
          “CERCLA” means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C. § 9601 et seq.
          “CERCLIS” means the Comprehensive Environmental Response, Compensation
and Liability Information System List.
          “CGMI” has the meaning assigned to such term in the preamble hereto.

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          “Change of Control” means any one or more of the following events
shall occur and be continuing:
     (i) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this
clause such person or group shall be deemed to have “beneficial ownership” of
all securities that such person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of Voting Stock representing 35% or more (or 40% or more in the case
of any such “person” or “group” that is, on the Effective Date, the beneficial
owner (as defined above) of 25% or more of such Voting Stock after giving effect
to the Equity Rights Offering, the Creditors Rights Offering and the substantial
consummation of the Reorganization Plan) of the voting power of the total
outstanding Voting Stock of the Borrower;
     (ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of the Borrower
(together with any new directors whose election to the Board of Directors or
whose nomination for election by the shareholders of the Borrower was approved
by a vote of the majority of the directors of the Borrower then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the board of directors of the Borrower then in office;
or
     (iii) at any time a “Change of Control” (or any other defined term having a
similar purpose) occurs under any Material Indebtedness.
          For purposes of this definition, a Person shall not be deemed to have
beneficial ownership of Voting Stock subject to a stock purchase agreement,
merger agreement or similar agreement until the consummation of the transactions
contemplated by such agreement.
          “Charges” has the meaning assigned to such term in Section 9.09.
          “Citibank” has the meaning assigned to such term in the preamble
hereto.
          “Citicorp” means Citicorp USA, Inc.
          “Closing Certificate” means a certificate substantially in the form of
Exhibit G.
          “Code” means the Internal Revenue Code of 1986, as amended.
          “Commitment” means, with respect to each Lender, the commitment, if
any, of such Lender to make a Loan hereunder on the Effective Date. The initial
amount of each Lender’s Commitment is set forth on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender shall have assumed its
Commitment, as applicable. The initial aggregate amount of the Lenders’
Commitments is $400.0 million.
          “Commitment Letter” means the Commitment Letter, dated October 25,
2007, among CGMI, GSCP, DBTCA, DBSI and the Borrower.
          “Communications” means each notice, demand, communication,
information, document and other material provided for hereunder or under any
other Loan Document or otherwise transmitted

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between the parties hereto relating this Agreement, the other Loan Documents,
any Loan Party or its Affiliates, or the transactions contemplated by this
Agreement or the other Loan Documents, including all Approved Electronic
Communications.
          “Compliance Certificate” has the meaning assigned to such term in
Section 5.01(a) and shall be substantially in the form of Exhibit D.
          “Confirmation Order” means a final non-appealable order entered by the
Bankruptcy Court that (i) confirms the Reorganization Plan, (ii) is not subject
to any stay or appeal of any kind and (iii) is in a form reasonably acceptable
to the Joint Lead Arrangers and Bookrunners.
          “Consolidated Current Liabilities” means, as at any date of
determination, the total liabilities of the Borrower and its Restricted
Subsidiaries which may properly be classified as current liabilities on a
consolidated balance sheet of the Borrower and its Restricted Subsidiaries in
accordance with GAAP (other than the current portion of any Loans).
          “Consolidated EBITDA” means, for any period, the sum of Consolidated
Net Income for such period, plus, without duplication, the following to the
extent deducted in calculating such Consolidated Net Income: (a) Consolidated
Interest Expense for such period, (b) income tax expense determined on a
consolidated basis in accordance with GAAP, (c) depreciation expense determined
on a consolidated basis in accordance with GAAP, (d) amortization expense
determined on a consolidated basis in accordance with GAAP, (e) amounts
attributable to minority interest, (f) any unusual or non-recurring non-cash
charges (including any impairment charge or asset write-off pursuant to GAAP)
(provided that if any such non-cash charge represents an accrual or reserve for
potential cash items in any future period, the cash payment in respect thereof
in such future period shall be subtracted from Consolidated EBITDA to such
extent, and excluding amortization of a prepaid cash item that was paid in a
prior period), (g) non-cash stock compensation expenses, including any such
non-cash expenses arising from stock options, stock grants or other
equity-incentive programs, the granting of stock appreciation rights and similar
arrangements, (h) to the extent the related loss is not added back in
calculating such Consolidated Net Income, proceeds of business interruption
insurance policies to the extent of such related loss, (i) costs and expenses
arising from or related to the incurrence or issuance of, or otherwise in
connection with, the Equity Rights Offering, the Loan Documents, the Term Loan
Documents and the Revolving Credit Loan Documents and otherwise arising from or
related to the Transactions or the Borrower’s emergence from chapter 11
protection, in each case which were incurred on or prior to the first
anniversary of the Effective Date, and (j) to the extent non-recurring and not
capitalized, any fees, costs and expenses of the Borrower and its Restricted
Subsidiaries incurred as a result of Permitted Acquisitions, Investments, Asset
Sales permitted hereunder and the issuance of Equity Interests or Indebtedness
permitted hereunder; and minus, without duplication, (i) all non-cash items
increasing such Consolidated Net Income (excluding (x) any non-cash item to the
extent that it represents an accrual of cash receipts to be received in a
subsequent period and (y) the amount attributable to minority interests),
(ii) any unusual or non-recurring gains and (iii) amounts paid in cash as
dividends or other distributions to holders of minority interests.
          Consolidated EBITDA shall be calculated on a Pro Forma Basis to give
effect to the Transactions, the acquisition of Acquired Technology, Inc. which
was acquired by the Borrower on November 13, 2007, any Permitted Acquisition and
Asset Sales consummated at any time on or after the first day of the Test Period
thereof as if the Transactions and each such Permitted Acquisition and Asset
Sale had been effected on the first day of such Test Period.

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          Notwithstanding any of the foregoing, (i) Consolidated EBITDA for the
Fiscal Quarter ended June 30, 2007 shall be deemed to be $101.2 million and
(ii) Consolidated EBITDA for the Fiscal Quarter ended September 30, 2007 shall
be deemed to be $105.8 million.
          “Consolidated Indebtedness” means, at a particular date, the aggregate
stated balance sheet amount of all Indebtedness of the Borrower and its
Restricted Subsidiaries determined on a consolidated basis in accordance with
GAAP at such date, plus, without duplication, the principal amount of
Indebtedness of the Borrower and its Restricted Subsidiaries constituting
original issue discount.
          “Consolidated Interest Expense” means, for any period, the sum,
without duplication, of:
          (a) the interest expense of the Borrower and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP consistently applied (including (i) amortization of debt issuance
costs and debt discount, (ii) the net payments, if any, under Hedging Agreements
(including amortization of discounts), (iii) the interest portion of any
deferred payment obligation, (iv) accrued interest and (v) commissions,
discounts and other fees and charges incurred in respect of letters of credit or
bankers-acceptance financings);
          (b) the interest component of all Capital Lease Obligations paid or
accrued during such period;
          (c) all interest capitalized during such period; and
          (d) the product of (x) the amount of all dividends on any series of
Preferred Equity Interests of the Borrower and its Restricted Subsidiaries
(other than dividends paid in Equity Interests (other than Disqualified Equity
Interests) and other than dividends paid to the Borrower or to a Restricted
Subsidiary) paid, accrued or scheduled to be paid or accrued during such period
times (y) a fraction, the numerator of which is one and the denominator of which
is one minus the then current effective consolidated Federal, state and local
tax rate of the Borrower, expressed as a decimal.
          Consolidated Interest Expense shall be calculated on a Pro Forma Basis
to give effect to any Indebtedness incurred, assumed or permanently repaid or
extinguished during the relevant Test Period in connection with the
Transactions, any Permitted Acquisitions and Asset Sales as if such incurrence,
assumption, repayment or extinguishing had been effected on the first day of
such Test Period.
          “Consolidated Net Income” means, for any period, the net income (or
loss) of the Borrower and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP consistently applied;
provided that there shall not be included in such Consolidated Net Income:
          (a) any extraordinary gains or losses or expenses;
          (b) any net income or loss of any Person if such Person is not a
Restricted Subsidiary, except Consolidated Net Income shall be increased by the
amount of cash actually distributed by such Person during such period to the
Borrower or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution paid to a Restricted
Subsidiary, to the limitations contained in clause (c) below);

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          (c) the net income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income is not at the time permitted, directly or indirectly, without
prior approval (that has not been obtained), pursuant to the terms of its
charter or any agreement, instrument and governmental regulation applicable to
such Restricted Subsidiary or its equityholders;
          (d) any gain or loss realized upon the sale or other disposition of
(x) any assets (including pursuant to Sale and Leaseback Transactions) which is
not sold or otherwise disposed of in the ordinary course of business or (y) any
Equity Interests of any Person;
          (e) any net after-tax income or loss from discontinued operations; and
          (f) the cumulative effect of a change in accounting principles.
          “Consolidated Net Indebtedness” means, at a particular date, (a) the
aggregate stated balance sheet amount of all Funded Indebtedness of the Borrower
and its Restricted Subsidiaries determined on a consolidated basis in accordance
with GAAP at such date less (b) Unrestricted cash and Unrestricted Cash
Equivalents of the Borrower and its Restricted Subsidiaries on such date.
          “Consolidated Net Interest Expense” means, for any period,
Consolidated Interest Expense for such period, net of gross interest income of
the Borrower and its Restricted Subsidiaries for such period.
          “Consolidated Net Tangible Assets” means, as of any date of
determination, the total assets less the sum of (i) the goodwill, net, and other
intangible assets and (ii) all Consolidated Current Liabilities, in each case,
reflected on the consolidated balance sheet of the Borrower and its Restricted
Subsidiaries as at the end of the most recently ended Fiscal Quarter for which
financial statements have been or are required to have been delivered pursuant
to Sections 4.01(h), 5.01(a) or 5.01(b), as applicable, as of the date of
determination, determined on a consolidated basis in accordance with GAAP (and,
in the case of any determination relating to any Investment, on a Pro Forma
Basis including any property or assets being acquired in connection therewith).
          “Control” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person
whether by ownership of voting securities, by contract or otherwise, and the
terms “Controlling” and “Controlled” shall have meanings correlative thereto.
          “Creditors Rights Offering” means an equity rights offering pursuant
to which certain eligible creditors purchase shares of the Borrower’s common
Equity Interests to occur on the Effective Date.
          “DBNY” has the meaning assigned to such term in the preamble hereto.
          “DBSI” has the meaning assigned to such term in the preamble hereto.
          “Debt Incurrence” has the meaning assigned to such term in
Section 2.04(b)(i).
          “Debt Securities Notice” has the meaning assigned to such term in
Section 5.20.
          “Default” means any Event of Default and any event or condition which
upon notice, lapse of time or both would constitute an Event of Default.

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          “Defaulting Lender” has the meaning assigned to such term in
Section 2.11(b).
          “Designation Date” has the meaning assigned to such term in
Section 5.18.
          “Destruction” means any and all damage to, or loss or destruction of,
or loss of title to, all or any portion of the Property of the Borrower or any
of its Restricted Subsidiaries.
          “Disqualified Equity Interest” means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, (i) matures or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is or may become redeemable or repurchaseable at the option of the holder
thereof, in whole or in part, or (iii) is convertible or exchangeable (unless at
the sole option of the issuer thereof) for Indebtedness or Equity Interests
described in this definition, in each case, prior to the 366th day following the
Final Maturity Date.
          “Documentation Agent” has the meaning assigned to such term in the
preamble hereto.
          “Dollar Equivalent” means, as to any amount denominated in any
currency other than Dollars as of any date of determination, the amount of
Dollars that would be required to purchase the amount of such currency based
upon the Spot Selling Rate as of such date, and as to any amount denominated in
Dollars, such amount in Dollars.
          “Dollars” or “$” means lawful money of the United States of America.
          “Domestic Person” means any “United States person” under and as
defined in Section 7701(a)(30) of the Code.
          “Domestic Restricted Subsidiary” means any Restricted Subsidiary that
is not a Non-U.S. Restricted Subsidiary.
          “Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.08).
          “Engagement Letter” means the Engagement Letter, dated October 25,
2007, among CGMI, GS&C, DBSI and the Borrower.
          “Environment” means ambient and indoor air, surface water and
groundwater (including potable water, navigable water and wetlands), the land
surface or subsurface strata, natural resources such as flora and fauna, or as
otherwise defined in any Environmental Law.
          “Environmental Claim” means any accusation, allegation, notice of
violation, claim, demand, order, directive, proceeding, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
other Person for damages, injunctive or equitable relief, personal injury
(including sickness, disease or death), Remedial Action costs, tangible or
intangible property damage, natural resource damages, nuisance, pollution, any
adverse effect on the Environment caused by any Hazardous Material, or for
fines, penalties or restrictions, resulting from or based upon: (a) the
existence, or the continuation of the existence, of a Release or threatened
Release (including sudden or non-sudden, accidental or non-accidental Releases);
(b) exposure to any Hazardous Material; (c) the presence, generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Material; or (d) the

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violation or alleged violation of, or any other potential liability arising
under, any Environmental Law or Environmental Permit.
          “Environmental Laws” means any and all applicable treaties, laws
(including common law), statutes, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions or binding agreements or other Requirements of
Law issued, promulgated or entered into by any Governmental Authority, relating
in any way to the protection of public health from environmental hazards,
protection of the Environment, preservation or reclamation of natural resources,
natural resource damages, occupational safety or health, the management, Release
or threatened Release of, or exposure to, any Hazardous Material, and any and
all Environmental Permits.
          “Environmental Liability” means any liability, contingent or otherwise
(including, but not limited to, any liability for damages, natural resource
damage, costs of environmental investigation, remediation and other response
costs, administrative oversight costs, fines, penalties or indemnities), of the
Borrower or any of its Restricted Subsidiaries directly or indirectly resulting
from or based upon (a) the existence, or the continuation of the existence, of a
Release or threatened Release (including sudden or non-sudden, accidental or
non-accidental Releases); (b) exposure to any Hazardous Material; (c) the
presence, generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Material; or (d) the violation or alleged violation of
any Environmental Law or Environmental Permit.
          “Environmental Permit” means any permit, approval, authorization,
certificate, license, registration, notification, exemption, variance, filing or
permission required by or from any Governmental Authority pursuant to any
Environmental Law.
          “Equity Interests” means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.
          “Equity Issuance” means any issuance and sale of Equity Interests of
the Borrower or any of its Restricted Subsidiaries in exchange for cash or Cash
Equivalents other than any Excluded Equity Issuance.
          “Equity Rights” means all securities convertible or exchangeable for
Equity Interests and all warrants, options or other rights to purchase or
subscribe for any Equity Interests, whether or not presently convertible,
exchangeable or exercisable.
          “Equity Rights Offering” means that certain issuance of the Borrower’s
new common Equity Interests for gross cash proceeds in the amount of
$175.0 million to occur on the Effective Date.
          “ERISA” means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
          “ERISA Affiliate” means any trade or business (whether or not
incorporated) that, together with the Borrower or any Restricted Subsidiary, is
treated as a single employer under Sections 414(b) or (c) of the Code, and for
the purpose of Section 302 of ERISA and/or Section 412, 4971, 4977, 4980D, 4980E
and/or each “applicable section” under Section 414(t)(2) of the Code, within the
meaning of Section 414(b), (c), (m) or (o) of the Code.

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          “ERISA Event” means (a) any “reportable event”, as defined in Section
4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension
Plan (other than an event for which the 30-day notice period is waived by
regulation); (b) the existence with respect to any Pension Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived, the failure to make by its due
date a required installment under Section 412(m) of the Code with respect to any
Pension Plan or the failure to make any required contribution to a Multiemployer
Plan; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Pension Plan; (d) the incurrence by the Borrower or any
Restricted Subsidiary or ERISA Affiliate of any liability under Title IV of
ERISA with respect to any Pension Plan; (e) the receipt by the Borrower or any
Restricted Subsidiary or ERISA Affiliate from the PBGC or a plan administrator
of any notice relating to an intention to terminate any Pension Plan, to appoint
a trustee to administer any Pension Plan, or to take any other action with
respect to a Pension Plan that could result in material liability to the
Borrower or any Restricted Subsidiary or ERISA Affiliate, or the occurrence of
any event or condition which could reasonably be expected to constitute grounds
under ERISA for the termination of or the appointment of a trustee to
administer, any Pension Plan; (f) the incurrence by the Borrower or any
Restricted Subsidiary or ERISA Affiliate of any liability with respect to the
withdrawal or partial withdrawal from any Pension Plan or Multiemployer Plan;
(g) the receipt by the Borrower or any Restricted Subsidiary or ERISA Affiliate
of any notice concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, Insolvent or
in Reorganization or is, or is reasonably expected to be, in endangered or
critical status within the meaning of Section 305 of ERISA; (h) any act or
omission with respect to a Pension Plan that could result in the imposition of a
lien on any assets of the Borrower or any Restricted Subsidiary or the posting
of a bond or other security in favor of the participants and/or beneficiaries of
any Pension Plan, the PBGC or any other Person; (i) the occurrence of a
nonexempt prohibited transaction (within the meaning of Section 4975 of the Code
or Section 406 of ERISA) which could result in liability to the Borrower or any
Restricted Subsidiary or ERISA Affiliate; or (j) a Pension Plan that is, or is
reasonably expected to be, in an “at risk” status within the meaning of Title IV
of ERISA.
          “Event of Default” has the meaning assigned to such term in
Section 7.01.
          “Exchange Act” means the Securities Exchange Act of 1934.
          “Exchange Date” has the meaning assigned to such term in
Section 2.20(b).
          “Exchange Note Trustee” means the trustee under the Exchange Notes
Indenture.
          “Exchange Notes” has the meaning assigned to such term in
Section 2.20(a).
          “Exchange Notes Indenture” means the indenture to be entered into
relating to the Exchange Notes, with terms and conditions consistent with
Exhibit K with such changes being not materially adverse to the Lenders as the
Exchange Note Trustee may require and as otherwise reasonably agreed upon by the
Borrower and the Administrative Agent (with such changes to cure any ambiguity,
omission, defect or inconsistency as the Administrative Agent and the Borrower
shall approve).
          “Exchange Notes Registration Rights Agreement” means the registration
rights agreement to be entered into relating to the Exchange Notes, with terms
and conditions consistent with Exhibit K and as otherwise reasonably agreed upon
by the Borrower and the Administrative Agent.
          “Exchange Notice” has the meaning assigned to such term in
Section 2.20(a).

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          “Exchange Trigger Event” shall be deemed to have occurred on each date
that the Administrative Agent shall have received requests in accordance with
Section 2.20 to exchange at least an aggregate of $50.0 million principal amount
of Loans (that are outstanding as Loans at such time) for Exchange Notes.
          “Excluded Equity Issuances” means (a) the Creditors Rights Offering,
(b) the Equity Rights Offering, (c) the issuance of Equity Interests required by
Requirements of Law to qualify directors and officers of the Borrower or any
Restricted Subsidiary and (d) the issuance of Equity Interests of any Restricted
Subsidiary to the Borrower or any Wholly Owned Restricted Subsidiary.
          “Excluded Non-U.S. Restricted Subsidiary” means any Non-U.S.
Restricted Subsidiary to the extent that such Subsidiary’s Guarantee of the
Obligations would, in the good faith judgment of the Borrower, result in
material adverse tax consequences to the Borrower or its Restricted
Subsidiaries.
          “Excluded Subsidiaries” means, collectively, (a) each Immaterial
Restricted Subsidiary, (b) each Unrestricted Subsidiary, (c) each Excluded
Non-U.S. Restricted Subsidiary, (d) each Restricted Subsidiary of a Non-U.S.
Restricted Subsidiary that is organized under the laws of the United States, any
State thereof or the District of Columbia, to the extent such Subsidiary’s
Guarantee of the Obligations would, in the good faith judgment of the Borrower,
result in material adverse tax consequences to the Borrower or its Restricted
Subsidiaries, (e) each Captive Insurance Restricted Subsidiary, (f) each
Non-Profit Restricted Subsidiary, (g) each Non-Wholly Owned Restricted
Subsidiary that was a Non-Wholly Owned Restricted Subsidiary on the Effective
Date, to the extent that Requirements of Law or the terms of such Person’s
Organizational Documents prohibit such Person from providing a Guarantee of the
Obligations and (h) SFC, to the extent that Requirements of Law or the terms of
SFC’s Organizational Documents or the terms of the Monsanto Settlement Agreement
prohibit SFC from providing a Guarantee of the Obligations.
          “Executive Order” has the meaning assigned to such term in
Section 3.23(a).
          “Existing Credit Agreement” means the Financing Agreement, dated as of
January 16, 2004, as amended, by and among the Borrower, as a debtor and
debtor-in-possession, and Solutia Business Enterprises, Inc., a New York
corporation, as a debtor and debtor-in-possession, each subsidiary of the
Borrower listed as a “Guarantor” on the signature pages thereto, each as a
debtor and debtor-in-possession, the lenders from time to time party thereto,
and Citicorp, as collateral agent, as administrative agent, and as documentation
agent.
          “Federal Funds Rate” means, for any period, a fluctuating interest
rate per annum equal for each day during such period to 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 for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that 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 February 28, 2008, among
CGMI, GSCP, GS&C, DBSI and the Borrower.

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          “Financial Officer” of any corporation, partnership or other entity
means the chief financial officer, the chief executive officer, the principal
accounting officer, treasurer, assistant treasurer or controller of such
corporation, partnership or other entity.
          “Fiscal Quarter” means any quarter of a Fiscal Year.
          “Fiscal Year” means any period of twelve consecutive calendar months
which form the basis for the Borrower’s financial statements in its Form 10-K;
references to a Fiscal Year with a number corresponding to any calendar year
(e.g., the “2008 Fiscal Year”) refer to the Fiscal Year as disclosed in the
Borrower’s SEC filings.
          “Final Maturity Date” means the seven year anniversary of the
Effective Date.
          “Foreign Plan” means any employee benefit plan, program, policy,
arrangement or agreement maintained or contributed to outside the United States
by any Loan Party or any Restricted Subsidiary primarily for the benefit of
employees of any Loan Party or any Restricted Subsidiary employed outside the
United States.
          “Funded Indebtedness” means, with respect to the Borrower and its
Restricted Subsidiaries, all Indebtedness of such Person for borrowed money
(including, in respect of the Borrower and its Restricted Subsidiaries, the
Loans, the Term Loans and the Revolving Credit Loans) that by its terms matures
more than one year after the date of its creation or matures within one year
from such date but is renewable or extendible, at the option of such Person, to
a date more than one year after such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during a
period of more than one year after such date, including all amounts of Funded
Indebtedness of such Person required to be paid or prepaid within one year after
the date of determination.
          “GAAP” means generally accepted accounting principles in the United
States applied on a consistent basis.
          “Governmental Authority” means the government of the United States or
any other nation, or of any political subdivision thereof, whether state,
provincial or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank).
          “GSCP” has the meaning assigned to such term in the preamble hereto.
          “GS&C” means Goldman, Sachs & Co.
          “Guarantee” of or by any Person (the “guarantor”) means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof
(including pursuant to a “synthetic lease”), (c) to maintain working capital,
equity capital or any other financial statement condition or liquidity of the
primary obligor so as

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to enable the primary obligor to pay such Indebtedness or other obligation or
(d) as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation, and the term “Guaranteed”
shall have a meaning correlative thereto; provided that the term “Guarantee”
shall not include endorsements for collection or deposit in the ordinary course
of business of the Borrower and its Restricted Subsidiaries. The amount of the
obligation under any Guarantee shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Guarantee is made (including principal, interest and fees) and
(b) the maximum amount for which such guarantor may be liable pursuant to the
terms of the instrument embodying such Guarantee, unless such primary obligation
and the maximum amount for which such guarantor may be liable are not stated or
determinable, in which case the amount of the obligation under such Guarantee
shall be such guarantor’s maximum reasonably anticipated liability in respect
thereof as determined by the guarantor in good faith; irrespective, in any such
case, of any amount thereof that would, in accordance with GAAP, be required to
be reflected on a balance sheet of such Person.
          “Guarantee Agreement” means the Guarantee Agreement, substantially in
the form of Exhibit H, made by the Restricted Subsidiaries party thereto.
          “Hazardous Materials” means all pollutants, contaminants, wastes,
substances, chemicals, materials and constituents, including crude oil,
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls (“PCBs”) or PCB-containing equipment, radon or any
other radioactive materials including any source, special nuclear or by-product
material, mold, fungi, or other biological materials of any nature, which could
reasonably be expected to have an adverse effect on human health or the
environment, or which can give rise to liability under, or are subject to
regulation pursuant to, any Environmental Law.
          “Headquarters Building” means that certain Real Property located at
575 Maryville Centre Drive, St. Louis, Missouri.
          “Hedging Agreement” means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement
and any swap, forward, future or derivative transaction or option and all other
similar agreements or arrangements designed to alter the risks of any Person
arising from fluctuations in interest rate, currency values or commodity prices.
          “Hedging Obligations” means obligations under or with respect to
Hedging Agreements.
          “Immaterial Restricted Subsidiary” means, at any date of
determination, any Restricted Subsidiary (other than any Loan Party) designated
as such in writing by the Borrower to the Administrative Agent that, together
with all other Restricted Subsidiaries constituting Immaterial Restricted
Subsidiaries (i) contributed 2.5% or less of Consolidated EBITDA for the period
of four Fiscal Quarters most recently ended for which financial statements have
been or are required to have been delivered pursuant to Sections 4.01(h),
5.01(a) or 5.01(b), as applicable, as of the date of determination and (ii) had
consolidated assets representing 2.5% or less of the consolidated total assets
of the Borrower and its Subsidiaries on the last day of the most recent Fiscal
Quarter ended for which financial statements have been or are required to have
been delivered pursuant to Sections 4.01(h), 5.01(a) or 5.01(b), as applicable,
as of the date of determination. The Immaterial Restricted Subsidiaries as of
the Effective Date are listed on Schedule 1.01(a).

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          “Impermissible Qualification” means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or
certification:
     (a) which is of a “going concern” or similar nature; or
     (b) which relates to the limited scope of examination of matters relevant
to such financial statement.
     “Increased Cost Lender” has the meaning assigned to such term in
Section 2.18.
          “Indebtedness” of any Person means, without duplication,
(i) obligations of such Person for borrowed money or evidenced by bonds,
debentures, notes and similar instruments; (ii) all Capital Lease Obligations of
such Person; (iii) all Indebtedness of others secured by any Lien on any
Property of such Person, whether or not the obligations secured thereby have
been assumed; provided that if such Indebtedness shall not have been assumed by
such Person and is otherwise non-recourse to such Person, the amount of such
obligation treated as Indebtedness shall not exceed the fair market value of
such Property; (iv) all indebtedness of such Person representing the deferred
purchase price of Property or services (excluding (A) trade payables and accrued
expenses incurred in the ordinary course of business of the Borrower and its
Restricted Subsidiaries and (B) any earn-out obligation until such obligation
becomes a liability on the balance sheet of such Person in accordance with GAAP
and if not paid after becoming due and payable); (v) all obligations of such
Person for the reimbursement of any obligor in respect of letters of credit,
letters of guaranty, bankers’ acceptances and similar credit transactions; (vi)
all obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person; (vii) all net Hedging
Obligations; (viii) all Disqualified Equity Interests of such Person; and
(ix) all Guarantees by such Person in respect of liabilities, obligations or
indebtedness of the kind described in clauses (i) through (viii). The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except (other than in the
case of general partner liability) to the extent that terms of such Indebtedness
expressly provide that such Person is not liable therefor. The amount of any net
Hedging Obligations on any date shall be deemed to be the Termination Value.
          “Indemnified Taxes” has the meaning assigned to such term in
Section 2.14(a).
          “Indemnity, Subrogation and Contribution Agreement” means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit E.
          “Information” has the meaning assigned to such term in Section 9.16.
          “Information Memorandum” means the confidential information memorandum
dated January 2008 in the form approved by the Borrower concerning the Loan
Parties and their Subsidiaries which, at the Borrower’s request and on its
behalf, was prepared in relation to the Transactions.
          “Initial Lenders” means Citibank, N.A., Goldman Sachs Credit Partners
L.P. and Deutsche Bank AG, New York Branch.
          “Initial Maturity Date” means the one year anniversary of the
Effective Date.

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          “Insolvent” means, with respect to any Multiemployer Plan, the
condition that such plan is insolvent within the meaning of Section 4245 of
ERISA.
          “Intellectual Property” has the meaning assigned to such term in
Section 3.11.
          “Interest Election Notice” has the meaning assigned to such term in
Section 2.06(a).
          “Interest Payment Date” means the last Business Day of each March,
June, September and December.
          “Investment” has the meaning assigned to such term in Section 6.04.
          “Joint Lead Arrangers and Bookrunners” has the meaning assigned to
such term in the preamble hereto.
          “Joint Venture” means any Person not more than 50% of the voting
Equity Interests of which is owned by the Borrower or any Restricted Subsidiary
but which is not a Wholly Owned Restricted Subsidiary and which is engaged in a
line of business permitted under Section 6.03.
          “Leased Real Property” has the meaning assigned to such term in
Section 3.10(b).
          “Lender Affiliate” means (a) with respect to any Lender, (i) an
Affiliate of such Lender or (ii) any entity (whether a corporation, partnership,
trust or otherwise) that is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary course
and is administered or managed by a Lender or an Affiliate of such Lender and
(b) with respect to any Lender that is a fund which invests in bank loans and
similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same investment advisor as
such Lender or by an Affiliate of such investment advisor.
          “Lender Appointment Period” has the meaning assigned to such term in
Section 8.06.
          “Lender Parties” has the meaning assigned to such term in
Section 9.20.
          “Lenders” means the banks, financial institutions and other
institutional lenders listed on the signature pages hereof as the initial
Lenders and each Person that shall become a Lender hereunder pursuant to
Section 9.04 for so long as such initial Lender or Person, as the case may be,
shall be a party to this Agreement as a Lender.
          “Lien” means, with respect to any Property, (a) any mortgage, deed of
trust, deed to secure debt, lien, pledge, encumbrance, charge, assignment,
hypothecation or security interest in or on such Property, or any arrangement to
provide priority or preference or any filing of any financing statement under
the UCC or any other similar notice of lien under any similar notice or
recording statute of any Governmental Authority, including any easement,
right-of-way or other encumbrance on title to Real Property, in each of the
foregoing cases whether voluntary or imposed by law, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such Property, (c) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities, (d) in the case of any investment property or
deposit account, any contract or other agreement under which any third party has
“control” (as defined in the UCC) of such investment property or deposit account
and (e) any other agreement intended to give or create any of the foregoing.

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          “Loan Documents” means this Agreement, the Indemnity, Subrogation and
Contribution Agreement, the Guarantee Agreement, any Non-U.S. Guarantee
Agreements, each Note and, solely for purposes of Section 7.01(a), the Fee
Letter.
          “Loan Parties” means the Borrower and the Subsidiary Guarantors.
          “Loans” means the Loans made pursuant to Section 2.01(a).
          “Material Adverse Effect” means (a) a material adverse effect on the
business, assets, operations, properties, prospects or financial condition of
the Borrower and its Subsidiaries, taken as a whole, or (b) material impairment
of the ability of any of the Loan Parties to perform their obligations under any
Loan Document, or (c) material impairment of the rights of or benefits available
to the Lenders or the Administrative Agent under any Loan Document; provided,
however, for the purposes of the conditions under Section 4.01 or any other
conditions precedent to the initial funding and closing of the Loans on the
Effective Date, nothing as disclosed in (i) the Borrower’s Annual Report on Form
10-K for the Fiscal Year ended December 31, 2006, (ii) the Borrower’s Quarterly
Report on Form 10-Q for the Fiscal Quarters ended March 31, 2007 and June 30,
2007, each as filed prior to October 25, 2007, and/or (iii) the Disclosure
Statement filed in connection with the Reorganization Plan prior to October 25,
2007 shall, in any case, in and of itself and based solely on facts as disclosed
therein (without giving effect to any developments not disclosed therein), be
deemed to constitute a Material Adverse Effect.
          “Material Indebtedness” means (a) Indebtedness under the Revolving
Credit Loan Documents, (b) Indebtedness under the Term Loan Documents and
(c) other Indebtedness (other than the Loans) and Hedging Obligations of any one
or more of the Borrower and its Restricted Subsidiaries, individually or in an
aggregate principal amount exceeding $25.0 million. For purposes of determining
Material Indebtedness, the “principal amount” of any Hedging Obligations of the
Borrower or any Restricted Subsidiary at any time shall be the Termination Value
thereof at such time.
          “Maximum Rate” has the meaning assigned to such term in Section 9.09.
          “Maximum Revolving Credit Facility Amount” means $450.0 million.
          “Maximum Term Loan Facility Amount” means $1,200.0 million.
          “Monsanto Settlement Agreement” means the Amended and Restated
Settlement Agreement, dated the date hereof, among the Borrower, Monsanto
Company and SFC.
          “Moody’s” means Moody’s Investors Service, Inc., and any successor
thereto.
          “Multiemployer Plan” means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA (i) to which any Loan Party or ERISA Affiliate is
then making or has an obligation to make contributions, (ii) to which any Loan
Party or ERISA Affiliate has within the preceding six plan years made
contributions, including any Person which ceased to be an ERISA Affiliate during
such six year period, or (iii) with respect to which any Loan Party or any ERISA
Affiliate could incur liability.
     “Net Interest Expense Coverage Ratio” means, as of any date for any Test
Period, the ratio of (a) Consolidated EBITDA to (b) Consolidated Net Interest
Expense, in each case for such Test Period. For purposes of determining the Net
Interest Expense Coverage Ratio for the period of four consecutive Fiscal
Quarters ended March 31, 2008, June 30, 2008, September 30, 2008 and
December 31,

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2008, Consolidated Net Interest Expense shall be deemed to be equal to the
product of (x) Consolidated Net Interest Expense since the Effective Date to the
date in question and (y) a fraction, the numerator of which is 365 and the
denominator of which is the number of days since the Effective Date.
          “Net Proceeds” means, with respect to any Debt Incurrence, Equity
Issuance, Asset Sale, Destruction or Taking, (a) the cash proceeds actually
received in respect of such event, including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, and (ii) in the case of a
Destruction or a Taking, insurance proceeds, condemnation awards and similar
payments, only to the extent in excess of $5.0 million for any individual
Destruction or Taking, or in excess of $25.0 million in the aggregate for all
such events (together with all Asset Sales (other than Asset Sales described in
clauses (a) and (b) of the definition of Asset Sale Prepayment Event) in such
Fiscal Year) in any Fiscal Year, net of (b) the sum of (i) all reasonable fees
and out-of-pocket expenses paid by the Borrower and its Restricted Subsidiaries
in connection with such event, (ii) the amount of all taxes paid (or reasonably
and in good faith estimated to be payable) by the Borrower and its Restricted
Subsidiaries in connection with such event, including any withholding taxes
imposed on the repatriation of proceeds, (iii) in the case of an Asset Sale,
Destruction or Taking, the principal amount, premium or penalty, if any,
interest and other amounts on any Indebtedness for borrowed money which is
secured by a Lien on the properties subject to such Asset Sale, Destruction or
Taking (so long as such Lien was permitted to encumber such properties under the
Loan Documents at the time of such Asset Sale, Destruction or Taking) and which
is repaid with such proceeds (other than any such Indebtedness assumed by the
purchaser of such properties), and (iv) the amount of any reasonable reserves
established by, and reflected on the financial statements of, the Borrower and
its Restricted Subsidiaries in accordance with GAAP (other than any taxes
deducted pursuant to clause (ii) above) (x) associated with the assets that are
the subject of such event and (y) retained by the Borrower or any Restricted
Subsidiary to fund contingent liabilities that are directly attributable to such
event and that are reasonably estimated to be payable by the Borrower or any
Restricted Subsidiary within 18 months following the date that such event
occurred (other than in the case of contingent tax liabilities, which shall be
reasonably estimated to be payable within the current or immediately succeeding
tax year); provided that any amount by which such reserves are reduced for
reasons other than payment of any such contingent liabilities shall be
considered “Net Proceeds” on the date of such reduction.
          “Non-Consenting Lender” has the meaning assigned to such term in
Section 2.18.
          “Non-Guarantor Restricted Subsidiary” means each Restricted Subsidiary
that is not a Subsidiary Guarantor.
          “Non-Profit Subsidiaries” means any Restricted Subsidiary that is
exempt from income taxes and is organized and operated exclusively for
charitable, scientific, testing for public safety or educational purposes
(within the meaning of Section 501(c)(3) of the Code or, in the case of any
Non-U.S. Restricted Subsidiary, any similar provision under the laws of the
jurisdiction in which such Non-U.S. Restricted Subsidiary is organized). As of
the Effective Date, there are no Non-Profit Subsidiaries.
          “Non-U.S. Guarantee Agreements” means one or more guarantee agreements
in form and substance reasonably satisfactory to the Administrative Agent,
providing for the guarantee of the Obligations by the Non-U.S. Restricted
Subsidiaries party thereto, made by the Non-U.S. Restricted Subsidiaries party
thereto.
          “Non-U.S. Jurisdiction” means each jurisdiction of organization of a
Subsidiary of the Borrower other than the United States (or any State thereof)
or the District of Columbia.

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          “Non-U.S. Lender” means (a) each Lender (or Agent) that is not a
United States person as defined in Section 7701(a)(30) of the Code and (b) each
Lender (or Agent) that is a wholly-owned domestic entity that is disregarded for
United States federal tax purposes under Treasury Regulations
Section 301.7701-2(c)(2) as an entity separate from its owner and whose single
owner is not a United States person as defined in Section 7701(a)(30) of the
Code.
          “Non-U.S. Restricted Subsidiary” means any Restricted Subsidiary that
is or becomes organized under the laws of a Non-U.S. Jurisdiction.
          “Non-U.S. Subsidiary” means any Subsidiary that is or becomes
organized under the laws of a Non-U.S. Jurisdiction.
          “Non-Wholly Owned Restricted Subsidiary” means each Restricted
Subsidiary that is not a Wholly Owned Restricted Subsidiary.
          “Note” means a note substantially in the form of Exhibit F.
          “Obligations” means, collectively, the Loans and all other amounts,
obligations, covenants and duties owing by any Loan Party to the Administrative
Agent, any Lender, any Affiliate of any of them or any Indemnitee, of every type
and description (whether by reason of an extension of credit, loan, guaranty,
indemnification or otherwise), present or future, arising under this Agreement
or any other Loan Document, whether direct or indirect (including those acquired
by assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired and whether or not evidenced by any note,
guaranty or other instrument or for the payment of money, including all fees,
interest (including interest accruing after the maturity of the Loans made to
the Borrower and interest accruing (or that would accrue but for the
commencement of any bankruptcy, insolvency, reorganization or like proceeding)
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), charges,
expenses, attorneys’ fees and disbursements and other sums chargeable to the
Borrower or any other Loan Party under this Agreement or any other Loan
Document.
          “Organizational Document” means (i) relative to each Person that is a
corporation, its charter and its by-laws (or similar documents) and all
shareholder agreements, voting trusts and similar arrangements applicable to any
of its authorized Equity Interests, (ii) relative to each Person that is a
limited liability company, its certificate of formation and operating agreement
(or similar documents) and any other similar arrangements applicable to any
membership interests or other Equity Interests in such Person, (iii) relative to
each Person that is a limited partnership, its certificate of formation and
limited partnership agreement (or similar documents) and any other similar
arrangements applicable to any partnership interests or other Equity Interests
in such Person, (iv) relative to each Person that is a general partnership, its
partnership agreement (or similar document) and any other similar arrangements
applicable to any partnership interests or other Equity Interests in such Person
and (v) relative to any Person that is any other type of legal entity, such
documents as shall be the functional legal equivalent of the foregoing.
          “Other Taxes” has the meaning assigned to such term in
Section 2.14(b).
          “Overnight Rate” means, for any day, the greater of (a) the Federal
Funds Rate and (b) an overnight rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.

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          “Participant” has the meaning assigned to such term in
Section 9.04(f).
          “PATRIOT Act” has the meaning assigned to such term in Section 9.19.
          “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
          “Pension Plan” means a “pension plan,” as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
Multiemployer Plan) and to which any Loan Party or any ERISA Affiliate may have
liability, including any liability by reason of having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under Section 4069 of ERISA.
          “Permitted Acquisition” means any acquisition, whether by purchase,
merger, consolidation or otherwise, by the Borrower or any Restricted Subsidiary
of all or substantially all the assets of, or all the Equity Interests in, a
Person or a division, line of business or other business unit of a Person so
long as:
     (a) such acquisition shall have been approved by the board of directors of
the Person (or similar governing body if such Person is not a corporation) which
is the subject of such acquisition and such Person shall not have announced that
it will oppose such acquisition;
     (b) such assets are to be used in, or such Person so acquired is engaged
in, as the case may be, a business of the type conducted by the Borrower and its
Restricted Subsidiaries on the Effective Date or in a business reasonably
related or ancillary thereto or otherwise permitted by Section 6.03(c);
     (c) no Default has occurred and is continuing or would result therefrom;
     (d) (i) all transactions related thereto are consummated in all material
respects in accordance with applicable Requirements of Law, (ii) (x) in the case
of an acquisition of Equity Interests, the Person acquired shall become,
immediately after giving effect thereto, a Restricted Subsidiary or be merged
into the Borrower or a Restricted Subsidiary and (y) in the case of an
acquisition of assets or a division, line of business or other business unit,
immediately after giving effect thereto, the Property acquired shall be conveyed
to the Borrower or a Restricted Subsidiary, and, in the case of each of the
foregoing clauses (x) and (y), all actions required to be taken under
Sections 5.12 and 5.15 shall have been taken, (iii) immediately after giving
effect thereto, on a Pro Forma Basis after giving effect to such acquisition,
the Total Leverage Ratio as of the last day of the most recently ended Test
Period is less than the Applicable Ratio, computed as if such acquisition (and
any related incurrence or repayment of Indebtedness) had occurred on the first
day of the relevant Test Period, and (iv) any Indebtedness that is incurred,
acquired or assumed in connection with such acquisition shall be in compliance
with Section 6.01; and
     (e) the Borrower has delivered to the Administrative Agent an officers’
certificate certifying that (i) such transaction complies with this definition
(which shall have attached thereto reasonably detailed backup data and
calculations showing such compliance, including compliance with clause
(d) above) and (ii) such transaction could not reasonably be expected to result
in a Material Adverse Effect, together with all other relevant financial
information for the Person or assets to be acquired.

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          “Permitted Guarantor Factoring Transactions” means the factoring of
receivables solely for cash consideration on a non-recourse basis by the
Borrower or any of its Restricted Subsidiaries structured as a true sale to a
Person that is not an Affiliate of the Borrower or any of its Subsidiaries
pursuant to a structured factoring program on fair market terms; provided that
the book value of all receivables subject to such factoring programs at any one
time outstanding shall not exceed an aggregate of $15.0 million; provided,
further, however, for the avoidance of doubt the internal factoring of
receivables by Solutia Systems, Inc. with another Loan Party shall not
constitute a use of this definition.
          “Permitted Investments” means:
     (a) marketable direct obligations issued by, or unconditionally guaranteed
by, the United States Government or issued by any agency or instrumentality
thereof and backed by the full faith and credit of the United States of America,
in each case maturing within one year from the date of acquisition thereof;
     (b) marketable direct obligations issued by any State of the United States
of America or any political subdivision of any such State or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody’s;
     (c) commercial paper issued by any Person organized in the United States of
America and maturing no more than one year from the date of creation thereof
and, at the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody’s;
     (d) time deposits, demand deposits, certificates of deposit, Eurodollar
time deposits or bankers’ acceptances maturing within one year from the date of
acquisition thereof or overnight bank deposits, in each case, issued by any bank
organized under the laws of the United States of America or any State thereof or
the District of Columbia or any U.S. branch of a foreign bank, in any case,
having at the date of acquisition thereof combined capital and surplus of not
less than $500.0 million;
     (e) repurchase obligations with a term of not more than 90 days for
underlying securities of the types described in clause (a) above entered into
with any bank meeting the qualifications specified in clause (d) above;
     (f) with respect to any Non-U.S. Restricted Subsidiary, non-Dollar
denominated (i) certificates of deposit of, bankers acceptances of, or time
deposits with, any commercial bank having combined capital and surplus of not
less than $500.0 million (or the Dollar Equivalent thereof); which is organized
and existing under the laws of the country in which such Person maintains its
chief executive office or principal place of business or is organized provided
such country is a member of the Organization for Economic Cooperation and
Development, and which has a short-term commercial paper rating of at least A-1
or the equivalent thereof from S&P or of at least P-1 or the equivalent thereof
from Moody’s (any such bank being an “Approved Foreign Bank”) and maturing
within one year of the date of acquisition and (ii) equivalents of demand
deposit accounts which are maintained with an Approved Foreign Bank;
     (g) readily marketable obligations issued or directly and fully guaranteed
or insured by the government or any agency or instrumentality of any member
nation of the European Union (and the United Kingdom) whose legal tender is the
Euro or British Pounds Sterling and which

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are denominated in Euros or British Pounds Sterling or any other foreign
currency comparable in credit quality and tenor to those referred to above and
customarily used by corporations for cash management purposes in any
jurisdiction outside the United States to the extent reasonably required in
connection with any business conducted by any Non-U.S. Restricted Subsidiary
organized in such jurisdiction, maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody’s or a comparable rating
from an international recognized rating agency; provided that the full faith and
credit of any such member nation of the European Union is pledged in support
thereof;
     (h) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (a) through (g) above;
and
     (i) Hedging Agreements entered into for non-speculative purposes.
          “Permitted Lien” has the meaning assigned to such term in
Section 6.02.
          “Permitted Non-Guarantor Factoring Transactions” means the factoring
of receivables solely for cash consideration on a recourse or non-recourse basis
by Non-Guarantor Restricted Subsidiaries structured as a true sale to a Person
that is not an Affiliate of the Borrower or any of its Subsidiaries pursuant to
a structured factoring program on fair market terms; provided that the book
value of all receivables subject to such factoring programs at any one time
outstanding shall not exceed an aggregate of $50.0 million.
          “Permitted Refinancing” means, with respect to any Indebtedness, any
refinancing, refunding, extension or renewal thereof; provided, however, that
(i) no Default shall have occurred and be continuing or would immediately arise
therefrom, (ii) any such refinanced, refunded, extended or renewed Indebtedness
shall (a) not have a final maturity date or Weighted Average Life to Maturity,
respectively, that is shorter than the final maturity date or Weighted Average
Life to Maturity, respectively, of the Indebtedness being refinanced, refunded,
extended or renewed, (b) be at least as subordinate to the Loans and other
Obligations as the Indebtedness being refinanced, refunded, extended or renewed
(and unsecured if the refinanced, refunded, extended or renewed Indebtedness is
unsecured (except, in the case of Indebtedness permitted under
Section 6.01(ii)(A), to the extent such Indebtedness may be secured under
Section 6.02(xvi))), and the covenants, events of default and other provisions
thereof (including any guarantees thereof) shall be, in the aggregate, no less
favorable to the Lenders than those contained in the Indebtedness being
refinanced, refunded, extended or renewed and (c) be in an aggregate principal
amount (or accreted value, if applicable) that does not exceed the aggregate
principal amount (or accreted value, if applicable) of the Indebtedness so
refinanced, refunded, extended or renewed, plus an amount equal to all accrued
and unpaid interest thereon, plus the stated amount of any premium and other
reasonable amounts required to be paid in connection with such refinancing,
refunding, extension or renewal pursuant to the terms of the Indebtedness being
refinanced, refunded, extended or renewed, plus the amount of reasonable
expenses of the Borrower or any of its Restricted Subsidiaries incurred in
connection with such refinancing, refunding, extension or renewal, (iii) in the
case of any Indebtedness of a Non-Guarantor Restricted Subsidiary being
refinanced, refunded, extended or renewed, no Loan Party that is not already an
obligor on such Indebtedness being refinanced, refunded, extended or renewed
shall become an obligor on such refinanced, refunded, extended or renewed
Indebtedness, and (iv) in the case of any Indebtedness of a Loan Party being
refinanced, refunded, extended or renewed, no Non-Guarantor Restricted
Subsidiary that is not already an obligor on such Indebtedness being refinanced,
refunded, extended or renewed shall become an obligor on such refinanced,
refunded, extended or renewed Indebtedness.

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          “Permitted Restructuring” means the corporate restructuring of the
Borrower and its Subsidiaries described on Schedule 1.01(b) and consummated in
accordance with Section 5.19.
          “Person” or “person” means any natural person, corporation, trust,
joint venture, association, company, partnership, limited liability company,
Governmental Authority or other entity.
          “PIK Interest” has the meaning assigned to such term in
Section 2.06(a).
          “Plan” means any Pension Plan or Welfare Plan.
          “Preferred Equity Interests” means, with respect to any Person, any
and all preferred or preference Equity Interests (however designated) of such
Person, whether or not outstanding or issued on the Effective Date.
          “Pro Forma Basis” means (i) on a pro forma basis in accordance with
Regulation S-X under the Exchange Act and otherwise reasonably satisfactory to
the Administrative Agent; and (ii) for purposes of calculating Consolidated
EBITDA in connection with a Permitted Acquisition, other Investment or an Asset
Sale and with respect to compliance with any test or covenant hereunder, the
following transactions in connection therewith shall be deemed to have occurred
as of the first day of the applicable period of measurement in such covenant:
(a) income statement items (whether positive or negative) attributable to the
Property or Person subject to such transaction, (i) in the case of a Permitted
Acquisition or Investment shall be included and (ii) in the case of an Asset
Sale of all or substantially all of the assets of or all of the Equity Interests
of any Subsidiary of the Borrower or any division or project line of the
Borrower or any of its Restricted Subsidiaries, shall be excluded, (b) any
retirement of Indebtedness, and (c) any Indebtedness incurred or assumed by the
Borrower or any of its Restricted Subsidiaries in connection therewith and if
such Indebtedness has a floating or formula rate, shall have an implied rate of
interest for the applicable period for purposes of this definition determined by
utilizing the rate which is or would be in effect with respect to such
Indebtedness as at the relevant date of determination; provided that the
foregoing pro forma adjustments may be applied solely to the extent such
adjustments are consistent with the definition of Consolidated EBITDA and give
effect to events that are (x) directly attributable to such transaction,
(y) expected to have a continuing impact on the Borrower and its Restricted
Subsidiaries and (z) factually supportable.
          “Projected Financial Statements” has the meaning assigned to such term
in Section 3.16(c).
          “Property” or “property” means any right, title or interest in or to
property or assets of any kind whatsoever, whether real, personal or mixed and
whether tangible or intangible and including any ownership interests of any
Person.
          “Real Property” means all right, title and interest of any Restricted
Subsidiary in and to a parcel of real property owned or leased by any Restricted
Subsidiary together with, in each case, all improvements and appurtenant
fixtures, easements and other property and rights incidental to the ownership,
lease or operation thereof.
          “Refinancing” means the distributions on Allowed Claims (as defined in
the Reorganization Plan) and the other payments required pursuant to the
Reorganization Plan (including the repayment in full of certain Indebtedness of
the Borrower and its Subsidiaries in existence before the Effective Date and the
making of certain contributions to Plans of the Borrower and its Subsidiaries).

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          “Register” has the meaning assigned to such term in Section 9.04(d).
          “Regulation U” means Regulation U of the Board of Governors as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
          “Regulation X” means Regulation X of the Board of Governors as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
          “Related Parties” means, with respect to any Person, such Person’s
Affiliates and such Person’s and such Person’s Affiliates respective managers,
administrators, trustees, partners, directors, officers, employees, agents, fund
managers and advisors.
          “Release” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the Environment.
          “Remedial Action” means (a) “remedial action” as such term is defined
in CERCLA, 42 USC Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) clean up, remove,
treat, abate or otherwise take corrective action to address any Hazardous
Material in the Environment; (ii) prevent the Release or threat of Release, or
minimize the further Release of any Hazardous Material so it does not migrate or
endanger or threaten to endanger public health, welfare or the Environment; or
(iii) perform studies and investigations in connection with, or as a
precondition to, (i) or (ii) above.
          “Reorganization” means, with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
          “Reorganization Plan” means the Borrower’s Fifth Amended Joint Plan of
Reorganization, dated October 15, 2007 (as amended, restated or supplemented
from time to time prior to the Effective Date).
          “Requirement of Law” means, as to any Person, collectively, any and
all requirements of an arbitrator or a court or other Governmental Authority,
including any and all laws, judgments, orders, decrees, ordinances, rules,
regulations or statutes, in each case applicable to or binding upon such Person
or any of its property or assets or to which such Person or any of its property
or assets is subject.
          “Requisite Lenders” means, at any time, Lenders having more than 50%
of the aggregate outstanding amount of all Loans at such time.
          “Restricted” means, when referring to cash or Cash Equivalents of the
Borrower or any of its Restricted Subsidiaries, that such cash or Cash
Equivalents (a) appears (or would be required to appear) as “restricted” on a
consolidated balance sheet of the Borrower or of any such Restricted Subsidiary
(unless such appearance is related solely to the Loan Documents or Liens created
thereunder or the Revolving Credit Loan Documents or Liens created thereunder),
(b) are subject to any Lien in favor of any Person other than the Term Loan
Collateral Agent for the benefit of the Term Loan Secured Parties or the
Revolving Credit Collateral Agent for the benefit of the Revolving Credit
Secured Parties (other than Liens permitted by Section 6.02(xv)) or (c) are not
otherwise generally available for use by the Borrower or such Restricted
Subsidiary.

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          “Restricted Payment” means any direct or indirect dividend or other
distribution (whether in cash, securities or other property) with respect to any
Equity Interests or Equity Rights in the Borrower or any Restricted Subsidiary,
or any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Equity Interests or
Equity Rights in the Borrower or any Restricted Subsidiary. Without limiting the
foregoing, “Restricted Payments” with respect to any Person shall also include
all payments made or required to be made by such Person with respect to any
stock appreciation rights, plans, equity incentive or achievement plans or any
similar plans or setting aside of any funds for the foregoing purposes.
          “Restricted Subsidiary” means any Subsidiary of the Borrower other
than an Unrestricted Subsidiary.
          “Restricting Information” has the meaning assigned to such term in
Section 9.18(a).
          “Revolving Credit Administrative Agent” means Citibank, in its
capacity as administrative agent under the Revolving Credit Agreement, together
with its successors in such capacity.
          “Revolving Credit Agreement” means (i) that certain Credit Agreement,
dated as of the date hereof, among the Borrower, as the U.S. borrower, Solutia
Europe SA/NV and Flexsys SA/NV, as European borrowers, the lenders from time to
time party thereto, the Revolving Credit Administrative Agent, the Revolving
Credit Collateral Agent, Citibank International plc, as European collateral
agent, DBNY, as syndication agent, GSCP, as documentation agent and CGMI, GSCP
and DBSI, as joint lead arrangers and as joint bookrunners, as amended,
restated, supplemented or modified from time to time to the extent permitted by
this Agreement and (ii) any other credit agreement, loan agreement, note
agreement, promissory note, indenture or other agreement or instrument
evidencing or governing the terms of any indebtedness or other financial
accommodation that has been incurred to extend (subject to the limitations set
forth herein) or refinance in whole or in part the indebtedness and other
obligations outstanding under the (x) credit agreement referred to in clause
(i) or (y) any refinancing or renewal of the Revolving Credit Agreement, unless
such agreement or instrument expressly provides that it is not intended to be
and is not a refinancing or renewal of the Revolving Credit Agreement. Any
reference to the Revolving Credit Agreement hereunder shall be deemed a
reference to any Revolving Credit Agreement then in existence.
          “Revolving Credit Collateral Agent” means Citibank, in its capacity as
collateral agent under the Revolving Credit Agreement, together with its
successors in such capacity.
          “Revolving Credit Loan Documents” means the Revolving Credit Agreement
and the other “Loan Documents” as defined in the Revolving Credit Agreement,
including the mortgages and other security documents, the guarantees and the
notes issued thereunder.
          “Revolving Credit Loans” means the revolving loans and swingline loans
outstanding under the Revolving Credit Agreement.
          “Revolving Credit Secured Parties” means the Revolving Credit
Collateral Agent and each other Person that is a “Secured Party” under the
Revolving Credit Agreement and the other Revolving Credit Loan Documents.

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          “S&P” means Standard & Poor’s Ratings Group, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.
          “Sale and Leaseback Transaction” has the meaning assigned to such term
in Section 6.06.
          “SEC” means the Securities and Exchange Commission.
          “SFC” means SFC LLC, a Delaware limited liability company, a
bankruptcy-remote entity which will receive certain proceeds under the Creditors
Rights Offering on the Effective Date.
          “SFC Limited Liability Company Agreement” means the Limited Liability
Company Agreement of SFC in the form attached as Exhibit O2 to the Monsanto
Settlement Agreement.
          “Securities” has the meaning assigned to such term in Section 5.20.
          “Small Asset Sale” means any sale or other disposition by the Borrower
or any of its Restricted Subsidiaries, of Property, that, when taken together
with the fair market value of any other Property sold or otherwise disposed of
by the Borrower or any of its Restricted Subsidiaries in any related sales or
dispositions, has an aggregate fair market value of not more than $500,000.
          “Specified Asset Sales” means the sale or other disposition of the
Property described on Schedule 1.01(c); provided that (i) no Default has
occurred and is continuing or would immediately result therefrom and
(ii) immediately after giving effect to such sale or other disposition (and any
related repayment of the Loans), the Total Net Leverage Ratio (computed on a Pro
Forma Basis as at the date of the last ended Test Period, as if such sale or
other disposition (and any related repayment of the Loans) had occurred on the
first day of such Test Period) would be lower than the Total Net Leverage Ratio
as at the date of the last ended Test Period without giving effect to such
transactions and, prior to the consummation thereof, the Borrower shall deliver
to the Administrative Agent a certificate of a Financial Officer of the Borrower
setting forth in reasonable detail the calculations demonstrating compliance
with the foregoing.
          “Spot Selling Rate” means, on any date of determination, the spot
selling rate determined by the Administrative Agent which shall be the spot
selling rate posted by Reuters on its website for the sale of the applicable
currency for Dollars at approximately 5:00 p.m., New York City time, on the
prior Business Day; provided that if such rate is not available, such rate shall
be the spot selling rate posted by the Federal Reserve Bank of New York on its
website for the sale of the applicable currency for Dollars at approximately
5:00 p.m., New York City time, on the prior Business Day.
          “Subordinated Debt” means Indebtedness of the Borrower or any
Restricted Subsidiary that is by its terms expressly subordinated in right of
payment to the Obligations of the Borrower or such Restricted Subsidiary, as
applicable, but excluding intercompany Indebtedness.
          “Subordinated Debt Documents” means each document governing or
pursuant to which is issued any Subordinated Debt, as the same may be in effect
from time to time in accordance with the terms hereof and thereof.
          “Subsidiary” means, with respect to any Person (“parent”), (i) any
corporation, limited liability company, association or other business entity of
which more than 50% of the outstanding Equity Interests having ordinary voting
power to elect a majority of the board of directors of such corporation,

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limited liability company, association or other business entity (irrespective of
whether at the time any other class or classes of Equity Interests of such
corporation, limited liability company, association or other business entity
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned by the parent, by the parent and one or
more other Subsidiaries of the parent, or by one or more other Subsidiaries of
the parent; (ii) any partnership of which more than 50% of the outstanding
partnership interests having the power to act as a general partner of such
partnership (irrespective of whether at the time any partnership interests other
than general partnership interests of such partnership shall or might have
voting power upon the occurrence of any contingency) are at the time directly or
indirectly owned by the parent, by the parent and one or more other Subsidiaries
of the parent, or by one or more other Subsidiaries of the parent; or (iii) any
other Person that is otherwise Controlled by the parent, by the parent and one
or more other Subsidiaries of the parent, or by one or more other Subsidiaries
of the parent. Unless otherwise indicated, when used in this Agreement, the term
“Subsidiary” shall refer to a Subsidiary of the Borrower.
          “Subsidiary Guarantor” means each of the Borrower’s Restricted
Subsidiaries that Guarantees the Obligations pursuant to (a) the Guarantee
Agreement or (b) a Non-U.S. Guarantee Agreement and has not been released from
such guarantees. For the avoidance of doubt, “Subsidiary Guarantor” shall
exclude each Excluded Subsidiary (other than Excluded Subsidiaries executing the
Guarantee Agreement on the Effective Date).
          “Syndication Agent” has the meaning assigned to such term in the
preamble hereto.
          “Taking” means any taking of any Property of the Borrower or any
Restricted Subsidiary or any portion thereof, in or by condemnation or other
eminent domain proceedings pursuant to any law, general or special, or by reason
of the temporary requisition or use of any Property of the Borrower or any
Restricted Subsidiary or any portion thereof, by any Governmental Authority.
          “Tax Return” means all returns, statements, filings, attachments and
other documents or certifications required to be filed in respect of Taxes.
          “Taxes” means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.
          “Term Loan Administrative Agent” means Citibank, in its capacity as
administrative agent under the Term Loan Credit Agreement, together with its
successors in such capacity.
          “Term Loan Credit Agreement” means (i) that certain Credit Agreement,
dated as of the date hereof, among the Borrower, the lenders from time to time
party thereto, the Term Loan Administrative Agent, the Term Loan Collateral
Agent, DBNY, as documentation agent, GSCP, as syndication agent, and CGMI, GSCP
and DBSI, as joint lead arrangers and as joint bookrunners, as amended,
restated, supplemented or modified from time to time to the extent permitted by
this Agreement, and (ii) any other credit agreement, loan agreement, note
agreement, promissory note, indenture or other agreement or instrument
evidencing or governing the terms of any indebtedness or other financial
accommodation that has been incurred to extend (subject to the limitations set
forth herein) or refinance in whole or in part the indebtedness and other
obligations outstanding under the (x) credit agreement referred to in clause
(i) or (y) any refinancing or renewal of the Term Loan Credit Agreement, unless
such agreement or instrument expressly provides that it is not intended to be
and is not a refinancing or renewal of the Term

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Loan Credit Agreement. Any reference to the Term Loan Credit Agreement hereunder
shall be deemed a reference to any Term Loan Credit Agreement then in existence.
          “Term Loan Collateral Agent” means Citibank, in its capacity as
collateral agent under the Term Loan Credit Agreement, together with its
successors in such capacity.
          “Term Loan Documents” means the Term Loan Credit Agreement and the
other “Loan Documents” as defined in the Term Loan Credit Agreement, including
the mortgages and other security documents, the guarantees and the notes issued
thereunder.
          “Term Loans” means the term loans outstanding under the Term Loan
Credit Agreement.
          “Term Loan Secured Parties” means the Term Loan Collateral Agent and
each other Person that is a “Secured Party” under the Term Loan Credit Agreement
and the other Term Loan Documents.
          “Terminated Lender” has the meaning assigned to such term in
Section 2.18.
          “Termination Value” means, on any date in respect of any Hedging
Agreement, after taking into account the effect of any netting agreement
relating to such Hedging Agreement, (a) if such Hedging Agreement has been
terminated as of such date, an amount equal to the termination value determined
in accordance with such Hedging Agreement and (b) if such Hedging Agreement has
not been terminated as of such date, an amount equal to the mark-to-market value
for such Hedging Agreement, which mark-to-market value shall be determined by
the Administrative Agent by reference to one or more mid-market or other readily
available quotations provided by any recognized dealer (including any Lender or
an Affiliate of any Lender) of such Hedging Agreements.
          “Test Period” means the four consecutive complete Fiscal Quarters then
last ended as of the time indicated.
          “Total Leverage Ratio” means, at any date, the ratio of
(a) Consolidated Indebtedness as of such date to (b) Consolidated EBITDA for the
Test Period most recently ended.
          “Total Net Leverage Ratio” means, at any date, the ratio of
(a) Consolidated Net Indebtedness as of such date to (b) Consolidated EBITDA for
the Test Period most recently ended.
          “Transaction Documents” means the Loan Documents, the Revolving Credit
Loan Documents, the Term Loan Documents and the Reorganization Plan.
          “Transactions” means, collectively, the transactions to occur on or
prior to the Effective Date pursuant to the Transaction Documents, including
(a) the execution, delivery and performance of the Loan Documents and the Loans
made hereunder on the Effective Date; (b) the execution, delivery and
performance of the Revolving Credit Loan Documents and the initial borrowings
thereunder on the Effective Date; (c) the execution, delivery and performance of
the Term Loan Documents and the borrowings thereunder on the Effective Date;
(d) the Refinancing; and (e) the payment of all fees and expenses to be paid on
or prior to the Effective Date and owing in connection with the foregoing and
the Borrower’s emergence from chapter 11 protection.

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          “Treasury Regulations” means the final and temporary (but not
proposed) income tax regulations promulgated under the Code, as such regulations
may be amended from time to time (including corresponding provisions of
succeeding regulations).
          “Treasury Services Agreements” means, with respect to the Borrower or
any of its Restricted Subsidiaries, any direct or indirect liability, contingent
or otherwise, of such Person in respect of cash pooling services, cash
management services (including treasury, depository, overdraft (daylight and
temporary), credit or debit card, electronic funds transfer and other cash
management arrangements), including obligations for the payment of fees,
interest, charges, expenses, attorneys’ fees and disbursements in connection
therewith to the extent provided for in the documents evidencing such cash
management services.
          “UCC” means the Uniform Commercial Code as in effect from time to time
in any applicable state or jurisdiction.
          “Unrestricted” means, when referring to cash or Cash Equivalents of
the Borrower or any of its Restricted Subsidiaries, that such cash or Cash
Equivalents are not Restricted.
          “Unrestricted Subsidiary” means any Subsidiary of the Borrower
designated as an Unrestricted Subsidiary pursuant to Section 5.18 following the
Effective Date.
          “Voting Stock” of a Person means all classes of Equity Interests of
such Person then outstanding and normally entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof.
          “Weighted Average Life to Maturity” means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the
original aggregate principal amount of such Indebtedness into (b) the sum of the
total of the products obtained by multiplying (i) the amount of each scheduled
installment, sinking fund, serial maturity or other required payment of
principal including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
          “Welfare Plan” means a “welfare plan,” as such term is defined in
Section 3(1) of ERISA, that is maintained or contributed to by a Loan Party or
any Subsidiary or with respect to which a Loan Party or any Subsidiary could
incur liability.
          “Wholly Owned Restricted Subsidiary” means any Restricted Subsidiary
that is a Wholly Owned Subsidiary of the Borrower.
          “Wholly Owned Subsidiary” means, with respect to any Person, any
corporation, partnership or other entity of which all of the Equity Interests
(other than, in the case of a corporation, directors’ qualifying shares) are
directly or indirectly owned or controlled by such Person or one or more Wholly
Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned
Subsidiaries of such Person.
          “Withdrawal Liability” means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part 1 of Subtitle E of Title IV of ERISA.

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          SECTION 1.02. [Reserved].
          SECTION 1.03. Terms Generally; Currency Translation; Accounting Terms;
GAAP. (a) The definitions of terms herein shall apply equally to both 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 or otherwise specified in any applicable Loan
Document, (a) any definition of or reference to any Loan Document, agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to
any law or regulation herein shall refer to such law or regulation as amended,
modified or supplemented from time to time, and (f) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. For purposes of this Agreement and the
other Loan Documents, where the permissibility of a transaction or
determinations of required actions or circumstances depend upon compliance with,
or are determined by reference to, amounts stated in Dollars, such amounts shall
be deemed to refer to Dollars or Dollar Equivalents and any requisite currency
translation shall be based on the Spot Selling Rate in effect on the Business
Day immediately preceding the date of such transaction or determination and the
permissibility of actions taken under Article VI shall not be affected by
subsequent fluctuations in exchange rates (provided that if Indebtedness is
incurred to refinance or renew other Indebtedness, and such refinancing or
renewal would cause the applicable Dollar denominated limitation to be exceeded
if calculated at the Spot Selling Rate in effect on the Business Day immediately
preceding the date of such refinancing or renewal, such Dollar denominated
restriction shall be deemed not to have been exceeded so long as (x) such
refinancing or renewal Indebtedness is denominated in the same currency as such
Indebtedness being refinanced or renewed and (y) the principal amount of such
refinancing or renewal Indebtedness does not exceed the principal amount of such
Indebtedness being refinanced or renewed except as permitted by the definition
of Permitted Refinancing (or in the case of a refinancing or renewal of the
Indebtedness incurred under (i) the Revolving Credit Agreement, the Maximum
Revolving Credit Facility Amount or (ii) the Term Loan Credit Agreement, the
Maximum Term Loan Facility Amount)). For purposes of this Agreement and the
other Loan Documents, unless the context otherwise requires, the word “foreign”
shall refer to jurisdictions other than the United States, the States thereof
and the District of Columbia.
          (b) Except as otherwise specified, if any payment under this Agreement
or any other Loan Document shall be due on any day that is not a Business Day,
the date for payment shall be extended to the next succeeding Business Day, and
in the case of any payment accruing interest, interest thereon shall be paid for
the period of such extension.
          (c) All terms of an accounting or financial nature shall be construed
in accordance with GAAP, as in effect from time to time; provided, however, that
for purposes of determining compliance with the covenants contained in
Article VI, all accounting terms herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP as in effect on
the Effec—

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tive Date and applied on a basis consistent with the application used in the
financial statements referred to in Section 3.05(a).
          SECTION 1.04. Resolution of Drafting Ambiguities. The Borrower
acknowledges and agrees, on behalf of itself and the other Loan Parties, that
each of the Loan Parties was represented by counsel in connection with the
execution and delivery of the Loan Documents to which it is a party, that it and
its counsel reviewed and participated in the preparation and negotiation hereof
and thereof and that any rule of construction to the effect that ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation hereof or thereof.
ARTICLE II
THE CREDITS
          SECTION 2.01. Commitments. (a) Subject to the terms and conditions
hereof, each Lender severally agrees to make a single Loan in Dollars to the
Borrower on the Effective Date in a principal amount equal to such Lender’s
Commitment.
          (b) Each Loan shall be made by the Lenders ratably in accordance with
their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender’s failure to make Loans as
required.
          (c) Amounts repaid or prepaid in respect of Loans may not be
reborrowed.
          SECTION 2.02. Procedure for Borrowing. (a) The Borrower may borrow
under the Commitments by giving the Administrative Agent notice substantially in
the form of Exhibit B (a “Borrowing Request”), which notice must be received by
the Administrative Agent prior to 2:00 p.m., New York City time, on the Business
Day prior to the Effective Date. The Borrowing Request shall specify (i) the
amount to be borrowed, (ii) the proposed Effective Date and (iii) the location
and number of the account or accounts to which funds are to be disbursed, which
shall comply with the requirements of this Agreement.
          (b) Upon receipt of the Borrowing Request, the Administrative Agent
shall promptly notify each Lender of the aggregate amount of the Loans and of
the amount of such Lender’s pro rata portion thereof, which shall be based on
their respective Commitments. Each Lender will make the amount of its pro rata
portion of the Loans available to the Administrative Agent for the account of
the Borrower at the office of the Administrative Agent specified in Section 9.01
prior to 10:00 a.m., New York City time, on the Effective Date in funds
immediately available to the Administrative Agent. Amounts so received by the
Administrative Agent will promptly be made available to the Borrower by the
Administrative Agent depositing in the account or accounts specified in the
Borrowing Request the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
          SECTION 2.03. [Reserved]
          SECTION 2.04. Optional and Mandatory Prepayments of Loans. (a) The
Borrower may at any time and from time to time prepay the Loans (without premium
or penalty), in whole or in part, upon irrevocable notice to the Administrative
Agent not later than 2:00 p.m., New York City time,

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three Business Days before the date of prepayment, specifying the date and
amount of prepayment. Upon receipt of any such notice the Administrative Agent
shall promptly notify each Lender thereof. If any such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount prepaid.
Partial prepayments of Loans shall be in an aggregate principal amount of
$1.0 million or a whole multiple of $500,000 in excess thereof (or, if less, the
remaining outstanding principal amount thereof).
          (b) (i) If the Borrower or any of its Restricted Subsidiaries
consummates an Equity Issuance or issues or incurs any Indebtedness under
Section 6.01(iii) or any Indebtedness not expressly permitted to be incurred or
issued pursuant to Section 6.01 (each, a “Debt Incurrence”), in each case 100%
of the Net Proceeds thereof shall be applied within three Business Days after
receipt thereof toward the prepayment of the Loans.
          (ii) If the Borrower or any of its Restricted Subsidiaries shall
receive Net Proceeds from any Asset Sale Prepayment Event, 100% of such Net
Proceeds shall be applied within five Business Days after receipt thereof toward
the prepayment of the Loans; provided that the Net Proceeds from Asset Sale
Prepayment Events permitted by Section 6.05 (other than Specified Asset Sales to
the extent necessary to satisfy the condition set forth in clause (ii) of the
definition of Specified Asset Sales) shall not be required to be applied toward
the prepayment of the Loans as provided herein on such date if and to the extent
that such Net Proceeds are applied to the permanent prepayment of Term Loans
pursuant to the terms of the Term Loan Credit Agreement (as in effect on the
Effective Date) on or prior to such date or (1) no Event of Default or Default
under Section 7.01(a) or under Section 7.01(i) then exists or would immediately
arise therefrom and (2) the Borrower delivers an officers’ certificate to the
Administrative Agent on or prior to or within five Business Days after the date
of such Asset Sale Prepayment Event stating that such Net Proceeds shall be
reinvested or committed to be reinvested in assets used or useful in the
business of the Borrower or any Restricted Subsidiary in each case within
365 days following the date of such Asset Sale Prepayment Event (which
certificate shall set forth the estimates of the proceeds to be so expended),
and if all or any portion of such Net Proceeds not so applied as provided herein
is not so used within such 365-day period (or if, prior to such 365th day, the
Borrower or any such Subsidiary shall have entered into a binding agreement to
so use any such Net Proceeds, within 180 days following the end of such 365-day
period), such remaining portion shall be applied toward the prepayment of the
Loans on the first Business Day to occur following such period as specified in
this Section 2.04(b)(ii).
          (iii) If the Borrower or any of its Restricted Subsidiaries shall
receive Net Proceeds from insurance or condemnation recoveries in respect of any
Destruction or any Net Proceeds in respect of any Taking, 100% of the Net
Proceeds thereof shall be applied within three Business Days after receipt
thereof toward the prepayment of the Loans; provided, that such Net Proceeds
shall not be required to be so applied on such date if and to the extent that
such Net Proceeds are applied to the permanent prepayment of Term Loans pursuant
to the terms of the Term Loan Credit Agreement (as in effect on the Effective
Date) on or prior to such date or (x) so long as no Event of Default or Default
under Section 7.01(a) or under Section 7.01(i) then exists or would arise
therefrom, to the extent that the Borrower has delivered an officers’
certificate to the Administrative Agent promptly following the receipt of such
Net Proceeds stating that such proceeds shall be used to (1) repair, replace or
restore any Property in respect of which such Net Proceeds were paid or (2) fund
the substitution of other Property used or usable in the business of the
Borrower or the Restricted Subsidiaries, in each case within 365 days following
the date of the receipt of such Net Proceeds and (y) if all or any portion of
such Net Proceeds not so applied as provided herein is not so used within
365 days (or if, prior to such 365th day, the Borrower or any such Subsidiary
shall have entered into a binding agreement to so use any such Net Proceeds,
within 180 days

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following the end of such 365-day period) after the date of the receipt of such
Net Proceeds, such remaining portion shall be applied on the first Business Day
to occur following such period as specified in this Section 2.04(b)(iii);
provided, further, notwithstanding the foregoing, no notice or officers’
certificate shall be required to be delivered in connection with any such
reinvestment hereunder if the proceeds of the Destruction, Taking or other such
events described in this clause, do not exceed $7.5 million.
          SECTION 2.05. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan on the
Initial Maturity Date; provided that, notwithstanding the foregoing, unless an
Event of Default under Section 7.01(a) or under Section 7.01(i) has occurred and
is continuing on the Initial Maturity Date, the unpaid principal amount of each
Loan shall not be required to be repaid pursuant to this Section 2.05(a) until
the Final Maturity Date. The Borrower hereby further agrees to pay interest in
immediately available funds at the office of the Administrative Agent specified
in Section 2.11(a) on the unpaid principal amount of the Loans made to it from
time to time from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in Section 2.06. All payments required
hereunder shall be made in Dollars.
          (b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender from time to time, including
the amounts of principal and interest payable and paid to such Lender from time
to time under this Agreement.
          (c) The Administrative Agent shall maintain the Register pursuant to
Section 9.04, and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each such Loan,
(ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder in respect of each such
Loan and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower in respect of each such Loan and each Lender’s share
thereof.
          (d) The entries made in the Register and accounts maintained pursuant
to paragraphs (b) and (c) of this Section 2.05 and the Notes maintained pursuant
to paragraph (e) of this Section 2.05 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain such account, such
Register or such subaccount, as applicable, or any error therein, shall not in
any manner affect the obligation of the Borrower to repay (with applicable
interest) the Loans in accordance with the terms of this Agreement.
          (e) If requested by any Lender (which request shall be made to the
Administrative Agent), the Borrower shall duly execute and deliver to such
Lender a Note or Notes, in substantially the form attached hereto as Exhibit F,
with the blanks appropriately filled, payable to such Lender and its registered
assigns, to evidence such Lender’s Loans.
          SECTION 2.06. Interest Rates and Payment Dates; Default Interest.
(a) Each Loan shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) at a rate per annum equal to the
Applicable Interest Rate. The Borrower may, at its option, elect to pay interest
on the Loans (i) entirely in cash (“Cash Interest”) or (ii) by paying Cash
Interest and by increasing the principal amount of the outstanding Loans (“PIK
Interest”); provided, however, that (A) for the period commencing on the
Effective Date and ending on the day immediately preceding the first anniversary
of the Effective Date, no more than 3.50% per annum may be paid in the form of
PIK Interest, (B) for the

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period commencing on the first anniversary of the Effective Date and ending on
the day immediately preceding the second anniversary of the Effective Date, no
more than 2.50% per annum may be paid in the form of PIK Interest and
(C) commencing on the second anniversary of the Effective Date and there after,
no more than 1.50% per annum may be paid in the form of PIK Interest. The
Borrower may elect the form of interest payment by delivering a notice
(“Interest Election Notice”) to the Administrative Agent at least three months
prior to the applicable Interest Payment Date. Each Interest Election Notice
shall include information to the following effect: (1) the relevant Interest
Payment Date, (2) whether interest shall be paid entirely as Cash Interest or as
Cash Interest and PIK Interest, (3) if interest shall be paid as PIK Interest,
the increase in the principal amount of the Loans to be effective upon the
relevant Interest Payment Date as a result of such payment and the principal
amount of the Loans outstanding as of such Interest Payment Date giving effect
to such payment. The Administrative Agent shall promptly deliver a corresponding
notice to the Lenders. In the absence of such an Interest Election Notice for
any Interest Payment Date, interest will be payable in PIK Interest on such
Interest Payment Date to the fullest extent permitted under this Section 2.06(a)
for such Interest Payment Date and the remainder shall be paid in Cash Interest.
All PIK Interest shall be treated as principal of the applicable Loans for all
purposes of this Agreement (regardless of whether evidenced by a Note).
          (b) If all or a portion of (i) the principal amount of any Loan,
(ii) any interest payable thereon or (iii) any other amount payable hereunder
shall not be paid when due (whether at the stated maturity thereof or by
acceleration or otherwise), such overdue amount (whether principal, interest or
other amount) shall bear interest at a rate per annum equal to the Applicable
Interest Rate plus 2.00% per annum, in each case from the date of such
nonpayment to (but excluding) the date on which such amount is paid in full
(after as well as before judgment).
          (c) Interest shall be payable in arrears on each Interest Payment
Date; provided that (i) interest accrued pursuant to paragraph (b) of this
Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan, accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment, and
(iii) in the case of any Loan exchanged for an Exchange Note other than on an
Interest Payment Date, on such date of exchange.
          (d) Notwithstanding paragraph (a) of this Section, except for any
increase in the interest rate applicable to the Loans contemplated by paragraph
(b) of this Section, at no time shall the interest rate on any Loan exceed
15.50% per annum.
          SECTION 2.07. Computation of Interest. Each determination of an
interest rate by the Administrative Agent pursuant to any provision of this
Agreement shall be conclusive and binding on the Borrower and the Lenders in the
absence of manifest error.
          SECTION 2.08. Fees. The Borrower agrees to pay to the Administrative
Agent, for the account of the applicable Lenders, fees payable in the amounts
and at the times separately agreed upon between the Borrower and the Initial
Lenders.
          SECTION 2.09. Termination of Commitments. Unless previously
terminated, the Commitments shall terminate at 5:00 p.m., New York City time, on
the Effective Date.
          SECTION 2.10. [Reserved]
          SECTION 2.11. Pro Rata Treatment and Payments. (a) Each payment
(including each prepayment) by the Borrower on account of principal of and
interest on Loans shall be made pro rata ac-

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cording to the respective outstanding principal amounts of such Loans then held
by the Lenders. All such payments shall be made to the Administrative Agent at
the Administrative Agent’s office as set forth in Section 9.01(a) or at such
other office as the Administrative Agent shall specify for such purpose by
notice to the Borrower, except payments pursuant to Sections 2.14 and 9.05 shall
be made directly to the Persons entitled thereto and payments pursuant to other
Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
          (b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to the Effective Date that such Lender will not make
the amount that would constitute its share of the Loans available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Lender (a “Defaulting Lender”) and the
Administrative Agent has made available such amount to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount from
such Lender. If such Lender does not pay such corresponding amount forthwith
upon the Administrative Agent’s demand therefor the Administrative Agent shall
promptly notify the Borrower and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent shall
also be entitled to recover from such Lender or the Borrower interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (i) if paid by such Lender, the Overnight Rate or
(ii) if paid by the Borrower, the then-applicable rate of interest, calculated
in accordance with Section 2.06, for the respective Loans.
          (c) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
          SECTION 2.12. [Reserved]
          SECTION 2.13. Requirements of Law. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other Governmental Authority after the Effective Date affects or would affect
the amount of capital required or expected to be maintained by any Lender (or a
holding company controlling such Lender) and such Lender reasonably determines
that the rate of return on its capital (or the capital of its holding company,
as the case may be) as a consequence of the Loans made by it is reduced to a
level below that which such Lender (or its holding company) could have achieved
but for the occurrence of any such circumstance, then, in any such case upon
written notice from time to time by such Lender to the Borrower, the Borrower
shall, within 20 days of the Borrower’s receipt of such notice, pay directly to
such Lender additional amounts sufficient to compensate such Lender (or its
holding company) for such reduction in rate of return. A statement of such
Lender as to any such additional amount or amounts (including calcula-

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tions thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding. In determining such amount, such Lender may use any
reasonable method of averaging and attribution that it shall deem applicable.
          SECTION 2.14. Taxes. (a) Subject to Section 2.14(g), any and all
payments by any Loan Party under any Loan Document shall be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges, fees, duties, or withholdings of any nature
whatsoever and all liabilities (including for penalties, interest and reasonable
expenses) arising therefrom or with respect thereto, but excluding (i) taxes
imposed on or measured by the recipient’s net income or net profits (including
branch profits or similar taxes imposed in lieu of net income taxes), and
franchise taxes imposed in lieu of net income taxes, by a jurisdiction (or
political subdivision thereof) under the laws of which such Lender or the
Administrative Agent (as the case may be) is organized or, in the case of a
Lender, has its applicable lending office, and (ii) any U.S. withholding taxes
imposed on amounts payable to a Lender under the Loan Documents under laws
(including any statue, treaty or regulation) in effect on the date hereof (or,
in the case of (x) an assignee, the date of the relevant Assignment and
Assumption, but not excluding U.S. withholding taxes to the extent that its
assignor was entitled at the date of the Assignment and Assumption to receive
additional amounts from the Borrower with respect to such U.S. withholding taxes
and (y) a successor Administrative Agent, the date of the appointment of such
successor Administrative Agent, but not excluding U.S. withholding taxes to the
extent that the predecessor Administrative Agent was entitled at the date of the
appointment to receive additional amounts from the Borrower with respect to such
U.S. withholding taxes), but not excluding any U.S. withholding taxes payable as
a result of any change in such laws occurring after the date such Lender becomes
a party hereto (or the date of such Assignment and Assumption or the date of
such appointment as the case may be) (such non-excluded items being called
“Indemnified Taxes”). In the event that any withholding or deduction from or in
respect of any payment under any Loan Document is required in respect of any
Indemnified Taxes pursuant to any applicable law then the Borrower will, or will
cause each relevant Loan Party to, (i) make such required withholding or
deduction and pay directly to the relevant authority the full amount required to
be so withheld or deducted in accordance with applicable law, (ii) promptly
forward to the Administrative Agent at its address referred to in Section 9.01
documentation reasonably satisfactory to the Administrative Agent evidencing
such payment to such authority and (iii) pay to the Administrative Agent for the
account of the Lenders and the Administrative Agent such additional amount or
amounts as are necessary to ensure that the net amount actually received by each
Lender or the Administrative Agent (as the case may be), after making all
required withholdings and deductions (including withholdings and deductions
applicable to additional sums payable under this Section 2.14), will equal the
full amount such Lender or the Administrative Agent (as the case may be) would
have received had no such withholding or deduction been required.
          (b) In addition, the Borrower will, and will cause each relevant Loan
Party to, pay any present or future stamp or documentary taxes or any other
excise, property, intangible, mortgage, recording or similar taxes, charges or
similar levies of any jurisdiction, and all liabilities (including for
penalties, interest and reasonable expenses) arising therefrom or with respect
thereto, in each case arising from any payment made under any Loan Document or
from the execution, delivery or registration of, or otherwise with respect to,
any Loan Document (collectively, “Other Taxes”).
          (c) The Borrower will, and will cause each other Loan Party to,
jointly and severally, indemnify each Lender and the Administrative Agent for
the full amount of Indemnified Taxes and Other Taxes (including any Indemnified
Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.14) paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including for penalties, interest and reasonable and
documented expenses) arising

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therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legal asserted. In addition, the Borrower will,
and will cause each other Loan Party to, jointly and severally, indemnify each
Lender and the Administrative Agent, upon the written request of such Lender or
the Administrative Agent, for taxes imposed on or measured by the net income of
such Person, as such Person shall reasonably determine are or were payable by
such Person, in respect of amounts payable to such Person pursuant to this
Section 2.14 taking into account the amount of Indemnified Taxes that are
(x) allowed as a deduction in determining taxes imposed on or measured by the
net income or allowed as a credit against any taxes imposed on or measured by
net income and (y) payable to such Person pursuant to this Section 2.14. This
indemnification shall be made within 20 days after the date such Lender or the
Administrative Agent (as the case may be) makes written demand therefore. Such
written demand shall set forth the amount of such indemnification, and shall be
presumed to be correct in the absence of manifest error. The Borrower or other
relevant Loan Party shall not be obligated to make a payment to any Lender or
the Administrative Agent pursuant to this Section 2.14 in respect of any
penalties, interest and other liabilities attributable to any Indemnified Taxes
and Other Taxes if such penalties, interest and other liabilities are
attributable to the gross negligence or willful misconduct of such Lender or the
Administrative Agent. After a Lender or the Administrative Agent receives notice
of the imposition of the Indemnified Taxes or Other Taxes that are subject to
this Section, such Lender or the Administrative Agent will act in good faith to
promptly notify the Borrower of its obligations thereunder; provided, that the
failure to provide such notice shall not relieve the Borrower of the Borrower’s
obligation to indemnify such Lender or the Administrative Agent pursuant to this
Section 2.14. For purposes of this Section 2.14, a distribution hereunder by the
Administrative Agent to or for the account of any Lender or the Administrative
Agent shall be deemed a payment by the Borrower or such other relevant Loan
Party.
          As soon as practical after the date of any payment of Indemnified
Taxes or Other Taxes by any Loan Party pursuant to this Section 2.14, the
Borrower will, or will cause the relevant Loan Party to, furnish to the
Administrative Agent, at its address referred to in Section 9.01, evidence of
such payment reasonably satisfactory to the Administrative Agent. If the
Borrower or other relevant Loan Party fails to remit to the Administrative
Agent, for the account of the respective Lenders and the Administrative Agent,
such documentary evidence, the Borrower shall indemnify the Lenders and the
Administrative Agent for any incremental taxes, interest, penalties or other
costs (including reasonable attorneys’ fees and expenses) that may become
payable by any Lender or the Administrative Agent as a result of any such
failure.
          For the avoidance of doubt, any amount payable by the Borrower or each
relevant Loan Party pursuant to this Section 2.14(c) shall not be duplicative of
any amounts otherwise payable by the Borrower or such relevant Loan Party
pursuant to Section 2.14(a) or 2.14(b).
          (d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of the Obligations and the
termination of this Agreement.
          (e) Prior to the date hereof in the case of each Non-U.S. Lender that
is a signatory hereto (and on the date of the Assignment and Assumption pursuant
to which it becomes a Lender in the case of an assignee) and from time to time
thereafter if reasonably requested by the Borrower or the Administrative Agent,
each Non-U.S. Lender that is entitled at such time to an exemption from United
States withholding tax, or that is subject to such U.S. tax at a reduced rate
under an applicable tax treaty, shall provide, if legally able to do so, the
Administrative Agent and the Borrower with two completed signed originals of the
following: (i) Form W-8ECI (claiming exemption from U.S. withholding tax because
the income is effectively connected with a U.S. trade or business) or any
successor form, (ii) Form

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W-8BEN (claiming exemption from, or a reduction of, U.S. withholding tax under
an income tax treaty) or any successor form, (iii) in the case of such a Lender
claiming the benefits of the exemption for portfolio interest under Section
881(c) of the Code, (x) a certificate, in substantially the form of Exhibit I,
or any other form approved by the Administrative Agent and the Borrower, to the
effect that such Lender is not (A) a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly
completed copies of United States Internal Revenue Service Form W-8BEN or
(iv) any other applicable form, certificate or document prescribed by the IRS
certifying as to such Non-U.S. Lender’s entitlement to such exemption from
United States withholding tax or reduced rate with respect to all payments to be
made to such Non-U.S. Lender under the Loan Documents. Each Non-U.S. Lender
shall also provide to each of the Borrower and the Administrative Agent two
completed copies of the relevant forms (or successor forms), certificates or
documents described in clauses (i) through (iv) of the immediately preceding
sentence (x) promptly upon request prior to the date that the most recent form,
certificate or document previously provided expires or becomes obsolete and
(y) promptly after the occurrence of any event requiring a change in the most
recent form, certificate or document previously provided, in each case, if
legally able to do so, certifying that such Non-U.S. Lender is exempt from or
entitled to a reduced rate of U.S. withholding tax on payments made under any
Loan Document or to or for such Non-U.S. Lender, unless a change in law
(including any change in treaty or regulation) has occurred prior to the date on
which any such delivery would otherwise be required that renders all such
documentation inapplicable or that would prevent such Non-U.S. Lender from duly
completing and delivering any documentation with respect to it. Unless the
Borrower and the Administrative Agent have received, prior to making any
payments under any Loan Document to or for a Non-U.S. Lender, forms or other
documents satisfactory to them indicating that such payments are not subject to
U.S. withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Loan Parties and the Administrative Agent shall
withhold U.S. withholding taxes required to be withheld by applicable
Requirements of Law from such payments at the applicable U.S. statutory rate.
          (f) Each Lender and the Administrative Agent that is a Domestic Person
and that is not an “exempt recipient” (as defined in Treasury Regulations
Section 1.6049-4(c)) with respect to which no back-up withholding is required
shall, on or prior to the date of its execution and delivery of this Agreement
in the case of each Lender and the Administrative Agent that is a signatory
hereto, and on or prior to the date of the Assignment and Assumption pursuant to
which it becomes a Lender in the case of each assignee (and on or prior to the
date on which a successor Administrative Agent becomes the Administrative
Agent), provide to the Borrower and the Administrative Agent two complete copies
or Form W-9 (certifying that such Person is entitled to an exemption from U.S.
backup withholding tax) or any successor from. Each of such Lender and the
Administrative Agent shall also provide to each of the Borrower and the
Administrative Agent two completed copies of the relevant forms (or successor
forms) in the immediately preceding sentence (x) promptly upon request by the
Borrower or the Administrative Agent prior to the date that the most recent
form, certificate or document previously provided expires or become obsolete and
(y) promptly after the occurrence of any event requiring a change in the most
recent form, certificate or document previously provided, in each case, if
legally able to do so, certifying that such Lender or the Administrative Agent
is entitled to an exemption from U.S. backup withholding tax unless a change in
law (including any change in treaty or regulation) has occurred prior to the
date on which any such delivery would otherwise be required that renders all
such documentation inapplicable or that would prevent such Lender or
Administrative Agent from duly completing and delivering any documentation with
respect to it.

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          (g) For any period (or portion of a period) with respect to which any
Lender has failed to comply with Section 2.14(e) or Section 2.14(f), such Lender
shall not be entitled to indemnification under Section 2.14(a) or
Section 2.14(c) of any Indemnified Taxes or Other Taxes imposed for such period
(or portion of a period) by reason of such failure.
          (h) If the Administrative Agent or a Lender determines, in its good
faith discretion, that it has received a refund in respect of any Indemnified
Tax or Other Taxes with respect to which the Borrower has paid additional amount
pursuant to this Section 2.14, it shall pay over such refund to the Borrower
(but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower or other relevant Loan Party under this Section 2.14 with
respect to the Taxes giving rise to such refund), net of all out-of-pocket
expenses of such Lender or Administrative Agent and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Borrower, upon the request of such Lender or
Administrative Agent, agrees to repay the amount paid over to the Borrower (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section 2.14 shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.
          SECTION 2.15. [Reserved]
          SECTION 2.16. Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.13 or 2.14
with respect to such Lender, it will, if requested by the Borrower, use
commercially reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event with the object of avoiding the consequences of such event; provided that
such designation is made on terms that, in the sole judgment of such Lender,
cause such Lender and its respective lending offices to suffer no material
economic, legal or regulatory disadvantage; and provided, further, that nothing
in this Section 2.16 shall affect or postpone any of the obligations of the
Borrower or the rights of any Lender pursuant to Sections 2.13 and 2.14.
          SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker’s lien, setoff or counterclaim against
the Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loans which at the time
shall be due and payable as a result of which the unpaid principal portion of
its Loans which at the time shall be due and payable shall be proportionately
less than the unpaid principal portion of such Loans of any other Lender, it
shall be deemed simultaneously to have purchased from such other Lender at face
value, and shall promptly pay to such other Lender the purchase price for, a
participation in such Loans of such other Lender, so that the aggregate unpaid
principal amount of such Loans held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all such Loans as prior
to such exercise of banker’s lien, setoff or counterclaim or other event;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 2.17 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustments restored without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that any Lender holding a participation in a
Loan deemed to have been so purchased may ex-

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ercise any and all rights of banker’s lien, setoff or counterclaim with respect
to any and all moneys owing by the Borrower to such Lender by reason thereof as
fully as if such Lender were a direct creditor directly to the Borrower in the
amount of such participation.
          SECTION 2.18. Assignment of Commitments Under Certain Circumstances.
In the event that (a) any Lender shall have delivered a notice or certificate
pursuant to Section 2.13, or the Borrower shall be required to make additional
payments to any Lender under Section 2.14 (each, an “Increased Cost Lender”) or
(b) subject to the terms and conditions of Section 9.08(f), in connection with
any proposed amendment, modification, termination, waiver or consent with
respect to any of the provisions hereof described in Section 9.08(f) with
respect to which the consent of the Requisite Lenders is obtained but the
required consent of such Lender is not obtained (such Lender, a “Non-Consenting
Lender”); then, with respect to each such Increased Cost Lender and each such
Non-Consenting Lender (each, a “Terminated Lender”), the Borrower shall have the
right, but not the obligation, at its own expense, upon notice to such
Terminated Lender and the Administrative Agent, to replace such Terminated
Lender with an assignee (in accordance with and subject to the restrictions
contained in Section 9.04) approved by the Administrative Agent (which approval
shall not be unreasonably withheld), and such Terminated Lenders hereby agree to
transfer and assign without recourse (in accordance with and subject to the
restrictions contained in Section 9.04) all its interests, rights and
obligations under this Agreement to such assignee; provided, however, that no
Terminated Lender shall be obligated to make any such assignment unless (i) such
assignment shall not conflict with any law or any rule, regulation or order of
any Governmental Authority and (ii) such assignee or the Borrower shall pay to
each affected Terminated Lender in immediately available funds on the date of
such assignment the principal of and interest accrued to the date of payment on
the Loans made by such Terminated Lender and all other amounts accrued for such
Terminated Lender’s account or owed to it hereunder. Each Lender agrees that, if
it becomes a Terminated Lender, it shall execute and deliver to the
Administrative Agent an Assignment and Assumption to evidence such sale and
purchase and shall deliver to the Administrative Agent any Note (if the
assigning Lender’s Loans are evidenced by Notes) subject to such Assignment and
Assumption; provided, however, that the failure of any Terminated Lender to
execute an Assignment and Assumption shall not render such sale and purchase
(and the corresponding assignment) invalid and such assignment shall be recorded
in the Register.
          SECTION 2.19. Notice of Certain Costs. Notwithstanding anything to the
contrary contained in Section 2.13 of this Agreement, to the extent any notice
required by Section 2.13 is given by any Lender more than 180 days after such
Lender has actual knowledge of the occurrence of the event giving rise to the
additional cost, reduction in amounts, loss or other additional amounts
described in such Sections, such Lender shall not be entitled to compensation
under Section 2.13 for any such amounts incurred or accruing prior to the 181st
day prior to the giving of such notice to the Borrower.
          SECTION 2.20. Exchange Notes
          (a) Subject to satisfaction of the provisions of this Section 2.20 and
in reliance upon the representations and warranties of the Borrower herein set
forth, on and after the 20th Business Day prior to the Initial Maturity Date,
each Lender will have the option to notify (an “Exchange Notice”) the
Administrative Agent in writing of its request for senior unsecured exchange
notes (individually, an “Exchange Note” and collectively, the “Exchange Notes”)
in exchange for a like principal amount of all or a portion of its Loans
hereunder. Each Lender’s Exchange Notice shall be irrevocable and shall specify
the aggregate principal amount of Loans that such Lender desires to exchange for
Exchange Notes pursuant to this Section 2.20, which shall be in a minimum amount
of $1.0 million (and integral multiples of $1,000 in excess thereof). Loans
subject to an Exchange Notice shall be deemed to have been repaid for

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all purposes of this Agreement upon issuance of a like principal amount of
Exchange Notes to such Lender in accordance with clause (c) below.
          (b) Notwithstanding the foregoing, such Lender’s Loans shall only be
exchanged for Exchange Notes hereunder upon the occurrence of an Exchange
Trigger Event, notice of which shall be provided to the Borrower and all such
Lenders by the Administrative Agent. Upon receipt of notice of an Exchange
Trigger Event, the Borrower shall set a date (each an “Exchange Date”) for the
exchange of Loans for Exchange Notes, which date shall be no less than three
Business Days and no more than ten Business Days (or, in the case of the initial
issuance of Exchange Notes, 20 Business Days) after its receipt of notice of an
Exchange Trigger Event.
          (c) On each Exchange Date, the Borrower shall execute and deliver, and
cause the Exchange Note Trustee to authenticate and deliver, to each Lender or
as directed by such Lender that exchanges Loans, an Exchange Note in the
principal amount equal to 100% of the aggregate principal amount (including any
accrued and unpaid interest) of such Loan (or portion thereof) for which each
such Exchange Note is being exchanged. The Exchange Notes shall be governed by
the Exchange Notes Indenture. Upon issuance of the Exchange Notes to a Lender in
accordance with this Section 2.20, a corresponding amount of the Loans of such
Lender shall be deemed to have been repaid.
          (d) The Borrower shall, as promptly as practicable after December 31,
2008 and in any event prior to the Initial Maturity Date, (i) select a bank or
trust company reasonably acceptable to the Administrative Agent to act as
Exchange Note Trustee, (ii) enter into the Exchange Notes Registration Rights
Agreement and the Exchange Notes Indenture, and (iii) cause counsel to the
Borrower to deliver to the Administrative Agent an executed legal opinion in
form and substance customary for a transaction of that type to be mutually
agreed upon by the Borrower and the Administrative Agent (including, without
limitation, with respect to due authorization, execution and delivery; validity;
and enforceability of the Exchange Notes Indenture and the Exchange Notes
Registration Rights Agreement referred to in clause (ii) above). The Exchange
Note Trustee shall at all times be a corporation organized and doing business
under the laws of the United States or the State of New York, in good standing
and having its principal offices in the Borough of Manhattan, in The City of New
York, which is authorized under such laws to exercise corporate trust powers and
is subject to supervision or examination by federal or state authority and which
has a combined capital and surplus of not less than $500.0 million.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
          In order to induce the Lenders and the Administrative Agent to enter
into this Agreement and to extend credit hereunder and under the other Loan
Documents, the Borrower hereby makes the representations and warranties set
forth in this Article III on and as of the Effective Date (after giving effect
to the Transactions) and on and as of each other date required by Section 5.19
or Schedule 5.19:
          SECTION 3.01. Organization, etc.(a) Each Loan Party and each of its
Restricted Subsidiaries is a corporation or other form of legal entity, duly
organized or incorporated, as the case may be, and validly existing and in good
standing (to the extent such concept is applicable in the applicable
jurisdiction) under the laws of the jurisdiction of its organization or
incorporation, as the case may be, except, in the case of a Non-Guarantor
Restricted Subsidiary, to the extent the failure to be so organized or
incorporated, existing and in good standing could not reasonably be expected to
have a Material Adverse Effect; (b) each Loan Party and each of its Restricted
Subsidiaries, except in the case of any Immaterial Re-

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stricted Subsidiary, has all requisite corporate or other organizational power
and authority to carry on its business as now conducted and to own and operate
its Property or hold under lease its Property operated under lease; (c) each
Loan Party and each of its Restricted Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation, foreign limited
liability company, foreign partnership (or comparable foreign qualification, if
applicable, in the case of any other form of legal entity), as the case may be,
in each jurisdiction where the nature of its business requires such
qualification, except where the failure to so qualify or be in good standing,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; (d) each Loan Party has full corporate or other
organizational power and authority to, and holds all requisite material
licenses, permits and other approvals of Governmental Authorities to, enter into
and perform its obligations under each Loan Document to which it is a party; and
(e) each Loan Party and each of its Restricted Subsidiaries has full corporate
or other organizational power and authority to, and holds all requisite material
licenses, permits and other approvals of Governmental Authorities to, own or
hold under lease its Property and to conduct its business as currently conducted
by it, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
          SECTION 3.02. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by each Loan Party of each Loan Document to
which it is a party (including the execution, delivery and performance by the
Borrower of this Agreement), the borrowing of the Loans and the use of the
proceeds thereof and the consummation of each of the other Transactions are
within each Loan Party’s corporate, partnership or comparable powers, as the
case may be, have been duly authorized by all necessary corporate, limited
liability company, partnership or comparable and, if required, stockholder,
action, as the case may be, and do not and will not:
     (a) contravene the Organizational Documents of any Loan Party or any of its
respective Restricted Subsidiaries;
     (b) contravene any material Requirement of Law;
     (c) result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default or event of default or an acceleration of
any rights or benefits under, any Material Indebtedness or any other indenture,
agreement or other instrument binding upon any Loan Party or any of its
respective Restricted Subsidiaries which could reasonably be expected to result
in a Material Adverse Effect; or
     (d) result in, or require the creation or imposition of, any Lien on any
assets of any Loan Party, except (i) Liens securing the intercompany note
pledged to the Collateral Agent and issued by Solutia Europe SA/NV in connection
with the Permitted Restructuring, in each case as described on Schedule 5.19,
and (ii) Liens created under the Term Loan Documents and the Revolving Credit
Loan Documents.
          SECTION 3.03. Government Approval, Regulation, etc. No consent,
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority or any other Person is required for the due
execution, delivery or performance by any Loan Party of any Loan Document
(including the due execution, delivery and performance by the Borrower of this
Agreement), the borrowing of the Loans and the use of the proceeds thereof and
the consummation of each of the other Transactions except such as have been
obtained or made and are in full force and effect and except the filings
necessary to perfect Liens under the Term Loan Documents and the Revolving
Credit Loan Documents. No Loan Party or any of its respective Restricted
Subsidiaries is an “investment company” or a company

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“controlled” by an “investment company,” within the meaning of, or subject to
regulation under, the Investment Company Act of 1940.
          SECTION 3.04. Validity, etc. Each Loan Document delivered on the
Effective Date has been duly executed and delivered by each Loan Party party
thereto and constitutes, and each other Loan Document to which any Loan Party is
to be a party will, on the due execution and delivery thereof by such Loan
Party, constitute, the legal, valid and binding obligation of each such Loan
Party enforceable in accordance with its respective terms, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforceability of creditors’ rights generally and to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
          SECTION 3.05. Financial Information. (a) The consolidated balance
sheets of the Borrower and its Subsidiaries and the related consolidated
statements of income, stockholders’ equity and cash flow, as of and for the
2004, 2005 and 2006 Fiscal Years, audited by and accompanied by the opinion of
Deloitte & Touche LLP, independent public accountants, copies of which have been
furnished to the Administrative Agent, have been prepared in accordance with
GAAP except to the extent provided in the notes to said financial statements,
and present fairly in all material respects the consolidated financial condition
of the Borrower and its Subsidiaries as of the dates thereof and the results of
their operations and cash flows for the periods then ended.
          (b) The unaudited interim consolidated balance sheets of the Borrower
and its Subsidiaries and the related unaudited interim consolidated statements
of income, stockholders’ equity and cash flow, as of and for the Fiscal Quarters
ended March 31, 2007, June 30, 2007 and September 30, 2007, copies of which have
been furnished to the Administrative Agent, have been prepared in accordance
with GAAP consistently applied except to the extent provided in the notes to
said financial statements, and on a basis consistent with audited financial
statements referred to in Section 3.05(a), and present fairly in all material
respects the consolidated financial condition of the Borrower and its
Subsidiaries as of the dates thereof and the results of their operations and
cash flows for the periods then ended (subject to normal year-end audit
adjustments and the absence of notes).
          (c) As of the Effective Date, except as disclosed in the financial
statements referred to above or the notes thereto or on Schedule 3.05, none of
the Borrower or its Restricted Subsidiaries has any material Indebtedness,
accrued, contingent, absolute, determined, determinable or other liabilities or
unrealized losses.
          SECTION 3.06. No Material Adverse Effect. Since December 31, 2006, no
event or circumstance has occurred that has had, or could reasonably be expected
to have, a Material Adverse Effect.
          SECTION 3.07. Litigation. There is no pending or, to the knowledge of
the Loan Parties, threatened, litigation, action or proceeding affecting the
Borrower or any of its Restricted Subsidiaries, or any of their respective
operations, properties, businesses or assets, or any of the Transaction
Documents or the ability of the parties to consummate the Transactions and the
other transactions contemplated hereby, (i) which has a reasonable likelihood of
adverse determination and, if determined adversely, in the case of the Borrower
and its Restricted Subsidiaries, could reasonably be expected to have a Material
Adverse Effect or (ii) which purports to affect the legality, validity or
enforceability of this Agreement or any other Loan Document or the Transactions
or any of the other transactions contemplated hereby or thereby.

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          SECTION 3.08. Compliance with Laws and Agreements. None of the Loan
Parties or any of their respective Restricted Subsidiaries has violated, is in
violation of or has been given written notice of any violation of any
Requirement of Law (other than Environmental Laws, which are the subject of
Section 3.14) or has violated, is in violation of or default under, or has been
given written notice of any violation of or default under, any and all
indentures, agreements and other instruments binding upon it or its property,
except, in each case, for any such violations or defaults which, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
          SECTION 3.09. Ownership of Subsidiaries. (a) As of the Effective Date,
Schedule 3.09(a) sets forth the legal name and jurisdiction of organization of,
the number of each class of authorized Equity Interests of, the number of each
class of outstanding Equity Interests of, and the number of Equity Interests
covered by outstanding options, warrants, rights of conversion or purchase and
similar rights in respect of such Equity Interests of each Subsidiary of the
Borrower and identifies each Subsidiary that is a Loan Party and each Subsidiary
that is an Excluded Subsidiary, in each case as of the Effective Date. All
Equity Interests of each Loan Party are duly and validly issued and are fully
paid and non-assessable (to the extent applicable), and, except as set forth on
Schedule 3.09(a), other than the Equity Interests of the Borrower, are owned by
the Borrower, directly or indirectly through Wholly Owned Restricted
Subsidiaries.
          (b) As of the Effective Date, except as set forth on Schedule 3.09(b),
all Equity Interests of each Restricted Subsidiary (other than Loan Parties) are
duly and validly issued and are fully paid and non-assessable (to the extent
applicable) and are owned by the Borrower or directly or indirectly through
Wholly Owned Restricted Subsidiaries. The Equity Interests of each Restricted
Subsidiary held, directly or indirectly, by the Borrower are owned, directly or
indirectly, by the Borrower free and clear of all Liens other than Liens
permitted by Sections 6.02(i), (v), (ix) or (xviii). There are not, as of the
Effective Date, any existing options, warrants, calls, subscriptions,
convertible or exchangeable securities, rights, agreements, commitments or
arrangements for any Person to acquire any Equity Interests of the Borrower or
its Restricted Subsidiaries or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any such Equity
Interests, or that require the issuance or sale of any such Equity Interests,
except as set forth on Schedule 3.09(b).
          SECTION 3.10. Ownership of Properties. (a) Each of the Borrower and
its Restricted Subsidiaries has good and marketable title to (or other similar
title in jurisdictions outside the United States of America), or valid leasehold
interests in, or easements or other limited property interests in, or is
licensed to use, all its material Properties except for minor defects in title
that, individually or in the aggregate, do not interfere with its ability to
conduct its business as currently conducted at such Property or to utilize each
Property for its intended purpose. All such Properties are free and clear of
Liens, other than Permitted Liens. The property of the Borrower and its
Restricted Subsidiaries, taken as a whole, (i) is in good operating order,
condition and repair (ordinary wear and tear and casualty and condemnation
excepted) in all material respects and (ii) except as could not reasonably be
expected to have a Material Adverse Effect, constitutes all the property which
is required for the business and operations of the Borrower and its Restricted
Subsidiaries as presently conducted. The use by each of the Borrower and its
Restricted Subsidiaries of their material Properties and all their respective
rights with respect to the foregoing do not infringe on the rights of any
Person, except such infringements that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect. No claim has been
made and remains outstanding that any of the Borrower’s or any of its Restricted
Subsidiaries’ use of any of their respective Properties violates the rights of
any third party which could reasonably be expected to have a Material Adverse
Effect. As of the Effective Date, except as set forth on Schedule 3.10(a), no

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Loan Party is obligated under, or a party to, any option, right of first refusal
or other contractual right to purchase, acquire, sell, assign or dispose of any
material Properties. The representations and warranties set forth in this
Section 3.10(a) shall not apply to Intellectual Property, the representations
and warranties of which are addressed separately in Section 3.11.
          (b) As of the Effective Date, Schedule 3.10(b) contains a true and
complete list of each parcel of Real Property (i) owned by any Loan Party with a
fair market value in excess of $500,000 as of the date hereof and describes the
type of interest therein held by such Loan Party and (ii) leased, subleased or
otherwise occupied or utilized by any Loan Party, as lessee, where the aggregate
annual rent, as of the Effective Date, with respect to such Property is in
excess of $100,000 (the “Leased Real Property”), as of the date hereof and
describes the type of interest therein held by such Loan Party.
          (c) As of the Effective Date, each of the Borrower and its Restricted
Subsidiaries has complied with all obligations under all leases with respect to
the Leased Real Property to which it is a party, and all such leases are in full
force and effect, and no default by any Loan Party party to such leases (and to
the knowledge of the applicable Loan Party, by any other party thereto) exists,
except such noncompliance, failure to be in full force and effect and defaults
which could not reasonably be expected to have a Material Adverse Effect. As of
the Effective Date, each of the Borrower and its Restricted Subsidiaries enjoys
in all material respects peaceful and undisturbed possession under all such
leases.
          (d) As of the Effective Date, no Loan Party or any of its respective
Restricted Subsidiaries has received any written notice of, or has any actual
knowledge of, any pending or contemplated Taking affecting all or any portion of
its Property or any sale or disposition thereof in lieu of a Taking that remains
unresolved as of the Effective Date.
          SECTION 3.11. Intellectual Property. Each of the Borrower and its
Restricted Subsidiaries owns, is licensed or otherwise has the right to use, all
patents, patent applications, trademarks, trade names, service marks,
copyrights, technology, trade secrets, proprietary information, domain names,
know-how and processes necessary for the conduct of its business as currently
conducted (the “Intellectual Property”) necessary for the present conduct of its
business, except for those the failure to own or license or otherwise have the
right to use, could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. No claim has been asserted and is
pending by any Person challenging or questioning the Borrower’s or any of its
Restricted Subsidiaries’ use of any Intellectual Property, or the validity or
effectiveness of any Intellectual Property owned by the Borrower or its
Restricted Subsidiaries, nor does the Borrower or any Restricted Subsidiary know
of any valid basis for any such claim, except for such claims that, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. The use of such Intellectual Property by each of the Borrower and its
Restricted Subsidiaries does not infringe the rights of any Person, except for
such claims and infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
          SECTION 3.12. Taxes. Except as could not reasonably be expected to
result in a Material Adverse Effect, each of the Borrower and its Restricted
Subsidiaries has (a) timely filed (subject to any applicable extensions) all
federal, state, local and foreign income and franchise Tax Returns and all other
Tax Returns required to have been filed by it and all such Tax Returns are true
and correct and (b) duly and timely paid, collected or remitted or caused to be
duly and timely paid, collected or remitted all Taxes (whether or not shown on
any such Tax Return) due and payable, collectible or remittable by it and all
assessments received by it, except any such Taxes which are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves have been established on the books of the

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Borrower or its Restricted Subsidiary in accordance with GAAP. Except as could
not reasonably be expected to result in a Material Adverse Effect, each of the
Borrower and its Restricted Subsidiaries has made adequate provision in
accordance with GAAP for all Taxes not yet due and payable. None of the Borrower
or any of its Restricted Subsidiaries is aware of any proposed or pending Tax
assessments, deficiencies or audits that, individually or in the aggregate,
could be reasonably expected to have a Material Adverse Effect. Except as could
not reasonably be expected to result in a Material Adverse Effect, the Borrower
and its Restricted Subsidiaries have complied with the payroll tax, wage
withholding, social security and unemployment withholding provisions of
applicable Requirements of Law and has timely paid (subject to applicable
extensions) the amounts withheld over to the respective Governmental
Authorities.
          SECTION 3.13. Pension and Welfare Plans. (a) No ERISA Event has
occurred or is reasonably expected to occur which could reasonably be expected
to have a Material Adverse Effect or give rise to a Lien on the assets of the
Borrower or any of its Restricted Subsidiaries. The Borrower and its Restricted
Subsidiaries and their ERISA Affiliates are in compliance in all respects with
the presently applicable provisions of ERISA and the Code with respect to each
Plan except for failures to so comply which could not reasonably be expected to
have a Material Adverse Effect. No condition exists or event or transaction has
occurred with respect to any Plan which reasonably might result in the
incurrence by the Borrower or any of its Restricted Subsidiaries or ERISA
Affiliates of any liability, fine or penalty which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Neither the Borrower nor any of its Restricted Subsidiaries has any direct,
indirect, actual or contingent liability with respect to post-retirement
benefits under a Welfare Plan, other than (i) liability for continuation
coverage described in Part 6 of Subtitle B of Title I of ERISA and
(ii) liabilities that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
          (b) Except as could not reasonably be expected to have a Material
Adverse Effect, (i) each Foreign Plan has been maintained in compliance with its
terms and with the requirements of any and all applicable laws, statutes, rules,
regulations and orders and has been maintained, where required, in good standing
with applicable regulatory authorities, and (ii) neither the Borrower nor any of
its Restricted Subsidiaries has incurred or is reasonably expected to incur any
obligation (whether direct, indirect, actual or contingent) in connection with
the termination of or withdrawal from any Foreign Plan.
          SECTION 3.14. Environmental. (a) Except as, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
all facilities and property owned, leased or operated by the Borrower or any of
its Restricted Subsidiaries, and all operations conducted thereon, are in
compliance with all Environmental Laws.
          (b) There are no pending or threatened (in writing):
     (i) Environmental Claims received by the Borrower or any of its Restricted
Subsidiaries, or
     (ii) written claims, complaints, notices or inquiries received by the
Borrower or any of its Restricted Subsidiaries regarding Environmental
Liability,
in each case which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

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          (c) There have been no Releases of Hazardous Materials at, on, under
or from any property or facility now or, to any Loan Party’s knowledge,
previously owned, leased or operated by the Borrower or any of its Restricted
Subsidiaries that, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.
          (d) The Borrower and its Restricted Subsidiaries have obtained and are
in compliance with all Environmental Permits necessary for their operations,
facilities and businesses and each is in full force and effect, except for such
Environmental Permits and except for any such failure to obtain, comply, or
maintain in effect which, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
          (e) No property now or, to any Loan Party’s knowledge previously,
owned, leased or operated by the Borrower or any of its Restricted Subsidiaries
is listed or, to any Loan Party’s knowledge, proposed (with respect to owned
property only) for listing (i) on the National Priorities List pursuant to
CERCLA or (ii) on the CERCLIS or on any similar list of sites requiring
investigation or clean-up, which, in each of the foregoing cases, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
          (f) There are no underground storage tanks, active or abandoned,
including petroleum storage tanks, surface impoundments or disposal areas, on or
under any property now or, to any Loan Party’s knowledge previously, owned or
leased by the Borrower or any of its Restricted Subsidiaries that could result
in liabilities under Environmental Law which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
          (g) Neither the Borrower nor any of its Restricted Subsidiaries has
transported or arranged for the transportation of any Hazardous Material to any
location which is listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar list or which
transportation could reasonably be expected to lead to any Environmental Claim
against the Borrower or such Restricted Subsidiary which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
          (h) Except for Permitted Liens, no Liens have been recorded pursuant
to any Environmental Law with respect to any property or other assets currently
owned or leased by the Borrower or its Restricted Subsidiaries.
          (i) Neither the Borrower nor any of its Restricted Subsidiaries is
currently conducting any Remedial Action pursuant to any Environmental Law, nor
has any of the Loan Parties or any of their respective Restricted Subsidiaries
assumed by contract, agreement or operation of law, any Remedial Action or other
obligation under Environmental Law, the cost of which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
          (j) There are no polychlorinated biphenyls or friable asbestos present
at any property or facility owned, leased or operated by the Borrower or any of
its Restricted Subsidiaries, which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
          (k) No Person with an indemnity or contribution obligation to the
Borrower and its Restricted Subsidiaries relating to compliance with or
liability under Environmental Laws is in default with respect to such
obligation, except such defaults that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

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          (l) To the knowledge of any Loan Party, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including
the release, emission, discharge, presence or disposal of any Hazardous
Substance, that could form the basis of any Environmental Claim against the
Borrower or any of its Restricted Subsidiaries or against any Person whose
liability for any Environmental Claim the Borrower or any of its Restricted
Subsidiaries has retained or assumed either contractually or by operation of
law, or otherwise result in any costs or liabilities under Environmental Law,
which Environmental Claim, costs or liabilities could reasonably be expected to
have a Material Adverse Effect.
          (m) The Borrower and its Restricted Subsidiaries have made available
to the Lenders information and documents concerning compliance with or potential
liability under Environmental Laws, including those concerning the actual or
suspected existence of Hazardous Material at Real Property or facilities
currently or formerly owned, operated, leased or used by the Borrower and its
Restricted Subsidiaries sufficient to enable a fair and accurate review and
assessment of such matters which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
          SECTION 3.15. Federal Reserve Regulations. Neither the Borrower nor
any of its Restricted Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock (as defined in Regulation U). The Loans, the use
of the proceeds thereof, this Agreement, the Transactions and the other
transactions contemplated hereby will not result in a violation of any provision
of the regulations of the Board of Governors, including Regulation U and
Regulation X.
          SECTION 3.16. Disclosure; Accuracy of Information; Pro Forma Balance
Sheets and Projected Financial Statements. (a) There is no fact known to any
Loan Party that could reasonably be expected to have a Material Adverse Effect
that has not been disclosed herein, in the other Loan Documents, in the
Information Memorandum, in the Disclosure Statement under the Reorganization
Plan, in public filings with the SEC or in any other documents or certificates
furnished to the Administrative Agent and the Lenders for use in connection with
the transactions contemplated hereby and by the other Loan Documents. Neither
this Agreement nor any other material document, certificate or written data
furnished (taken as a whole and when furnished) to the Administrative Agent or
any Lender by or on behalf of any Loan Party in connection herewith (including
the Information Memorandum and the Projected Financial Statements) contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained herein and therein not
(taken as a whole and when furnished) materially misleading, in light of the
circumstances under which they were made; provided that to the extent this or
any such document, certificate or data (including the Information Memorandum and
the Projected Financial Statements) was based upon or constitutes a forecast,
forward-looking statement or projection, the Loan Parties represent only that
they acted in good faith and utilized assumptions believed by management of the
Loan Parties to be reasonable at the time made. The Administrative Agent and the
Lenders understand, however, that forecasts, forward-looking statements and
projections as to future events are subject to significant uncertainties and
contingencies which may be beyond the Borrower’s and/or its Subsidiaries’
control and are not to be viewed as representations with respect to future
performance and no assurance is given by any of the Borrower or its Subsidiaries
that the results forecast in any such projections will be realized and that the
actual results during the period or periods covered by the forecasts,
forward-looking statements or projections may differ from the projected results
and that such difference may be material.
          (b) The Borrower has heretofore furnished to the Administrative Agent
the Borrower’s pro forma consolidated balance sheet as of the Effective Date,
prepared giving effect to the

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Transactions as if the Transactions had occurred on such date. Such pro forma
consolidated balance sheet (i) was prepared in good faith by the Loan Parties on
a Pro Forma Basis based on the assumptions stated therein (which assumptions are
believed by the Loan Parties on the date hereof and on the Effective Date to be
reasonable) and is based on the best information reasonably available to the
Loan Parties as of the date of delivery thereof, (ii) accurately reflects in all
material respects all adjustments necessary to give effect to the Transactions
as if they had occurred on such date and (iii) presents fairly in all material
respects the pro forma financial position of the Borrower and its consolidated
Subsidiaries at such date, assuming the Transactions had occurred on such date.
          (c) The Borrower has heretofore furnished to the Administrative Agent
pro forma consolidated income statement projections for the Borrower and its
Restricted Subsidiaries, pro forma consolidated balance sheet projections for
the Borrower and its Restricted Subsidiaries, and pro forma consolidated cash
flow projections for the Borrower and its Restricted Subsidiaries through the
2014 Fiscal Year, which shall be prepared on a quarterly basis through the 2008
Fiscal Year and annually thereafter (the “Projected Financial Statements”),
which give effect to the Transactions and all Indebtedness and Liens incurred or
created in connection with the Transactions, and have been prepared in good
faith by the Borrower and based on assumptions believed by the Borrower on the
date hereof and on the Effective Date to be reasonable. Notwithstanding anything
contained herein to the contrary, it is hereby understood by the Administrative
Agent and each Lender that (i) any financial or business projections furnished
to the Administrative Agent or any Lender by the Borrower or any of its
Subsidiaries under any Loan Document are subject to significant uncertainties
and contingencies, which may be beyond the Borrower’s and/or its Subsidiaries’
control, (ii) no assurance is given by any of the Borrower or its Subsidiaries
that the results forecast in any such projections will be realized and (iii) the
actual results may differ from the forecast results set forth in such
projections and such differences may be material.
          SECTION 3.17. Insurance. Set forth on Schedule 3.17 is a summary of
all material insurance policies maintained by the Borrower and each of its
Restricted Subsidiaries as of the Effective Date. The material insurance
policies maintained by the Borrower and its Restricted Subsidiaries (a) are in
full force and effect, and all premiums thereon have been duly paid to the
extent due and neither the Borrower nor any of its Restricted Subsidiaries has
received any notice of cancellation or material violation thereof or if
otherwise in default thereunder, and the use, occupancy and operation of the
property covered thereby comply in all material respects with all applicable
provisions thereof, in each case, as of the Effective Date, (b) are maintained
with financially sound and responsible insurance companies, and (c) cover all
properties material to the business of the Borrower and its Restricted
Subsidiaries against such casualties and contingencies and of such types, and in
such amounts, as are customary in the case of similar businesses of similar size
operating in the same or similar locations.
          SECTION 3.18. Labor Matters. Except as, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
(a) there are no strikes, lockouts or slowdowns against the Borrower or any
Restricted Subsidiary pending or, to the knowledge of any Loan Party,
threatened; (b) the hours worked by and payments made to employees of the
Borrower and its Restricted Subsidiaries have not been in violation of the Fair
Labor Standards Act of 1938 or any other applicable Federal, state, local or
foreign law dealing with such matters; and (c) all payments due from the
Borrower or any Restricted Subsidiary, or for which any claim may be made
against the Borrower or any Restricted Subsidiary, on account of wages, have
been paid or accrued as a liability on the books of the Borrower or such
Restricted Subsidiary. The consummation of the Transactions will not give rise
to any right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which the Borrower or any of its
Restricted Subsidiaries is bound.
          

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          SECTION 3.19. Solvency. Immediately following the making of each Loan
and after giving effect to the application of the proceeds of such Loans, and
immediately after the consummation of the other Transactions, (a) the fair value
of the properties of the Borrower, individually, and the Borrower on a
consolidated basis with its Restricted Subsidiaries, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of the Borrower, individually, and the Borrower
on a consolidated basis with its Restricted Subsidiaries, will be greater than
the amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) the Borrower, individually,
and the Borrower on a consolidated basis with its Restricted Subsidiaries, does
not intend to, and does not believe that it or its Restricted Subsidiaries (on a
consolidated basis with the Borrower) will, incur debts or liabilities beyond
the ability of the Borrower (individually) and its Restricted Subsidiaries (on a
consolidated basis with the Borrower) to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) the Borrower, individually, and the Borrower on a
consolidated basis with its Restricted Subsidiaries, will not have unreasonably
small capital with which to conduct its business in which it is engaged as such
business is now conducted and is proposed to be conducted following the
Effective Date.
          SECTION 3.20. Consummation of the Reorganization Plan and Related
Agreements. The Refinancing and the other transactions contemplated by the
Reorganization Plan will be “substantially consummated” (within the meaning of
Section 1101 of the Bankruptcy Code) on the Effective Date in accordance with
the terms of the Reorganization Plan.
          SECTION 3.21. [Reserved]
          SECTION 3.22. Use of Proceeds. The Borrower will use the proceeds of
the Loans to finance the Transactions, for working capital needs and for general
corporate purposes.
          SECTION 3.23. Anti-Terrorism Laws. (a) None of the Loan Parties or
their respective Subsidiaries and, to the knowledge of any Loan Party, none of
their respective Affiliates is in violation of Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001 (the “Executive Order”), or
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (collectively,
“Anti-Terrorism Laws”).
          (b) None of the Loan Parties or their respective Subsidiaries and, to
the knowledge of any Loan Party, none of their respective Affiliates or their
respective brokers or other agents acting or benefiting in any capacity in
connection with the Loans is any of the following:
     (i) a Person or entity that is listed in the annex to, or is otherwise
subject to the provisions of, the Executive Order;
     (ii) a Person or entity owned or controlled by, or acting for or on behalf
of, any Person or entity that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order;
     (iii) a Person or entity with which any Lender is prohibited from dealing
or otherwise engaging in any transaction by any Anti-Terrorism Law;
     (iv) a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order; or

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     (v) a Person or entity that is named as a “specially designated national
and blocked person” on the most current list published by the U.S. Treasury
Department Office of Foreign Assets Control at its official website or any
replacement website or other replacement official publication of such list.
          (c) No Loan Party or, to the knowledge of any Loan Party, any of its
brokers or other agents acting in any capacity in connection with the Loans
(i) conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Person described in clause
(b) above, (ii) deals in, or otherwise engages in any transaction relating to,
any property or interests in property blocked pursuant to the Executive Order,
or (iii) engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or the purpose of attempting
to violate, any of the prohibitions set forth in any Anti-Terrorism Law.
          SECTION 3.24. Status as Senior Debt. The Obligations constitute
“Senior Debt” or “Designated Senior Indebtedness” (or any other defined term
having a similar purpose) within the meaning of all outstanding Subordinated
Debt Documents. The Commitments and the Loans and other extensions of credit
under the Loan Documents constitute “Credit Facilities” (or any other defined
term having a similar purpose) or liabilities payable under the documentation
related to “Credit Facilities” (or any other defined term having a similar
purpose), in each case, within the meaning of all outstanding Subordinated Debt
Documents.
ARTICLE IV
CONDITIONS
          SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans on the Effective Date are subject, at the time of the making of such
Loans, to satisfaction or waiver of the following conditions on or prior to the
Effective Date:
     (a) The Administrative Agent shall have received from each party hereto a
counterpart of this Agreement signed on behalf of such party.
     (b) The Administrative Agent shall have received (i) counterparts of the
Guarantee Agreement signed on behalf of each Loan Party party thereto, and
(ii) counterparts of the Indemnity, Subrogation and Contribution Agreement
signed on behalf of each Loan Party.
     (c) The Administrative Agent shall have received from the Borrower a
Closing Certificate, dated the Effective Date and signed on behalf of the
Borrower by a Financial Officer of the Borrower.
     (d) The Administrative Agent shall have received:
     (A) a certificate of the secretary, assistant secretary or managing
director (where applicable) or other authorized officer of each Loan Party dated
the Effective Date, certifying (i) that attached thereto is a true and complete
copy of each Organizational Document of such Loan Party certified (to the extent
customary in the applicable state) as of a recent date by the Secretary of State
(or equivalent Governmental Authority) of the jurisdiction of its organization,
(ii) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors and/or shareholders, as applicable,

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of such Loan Party authorizing the execution, delivery and performance of the
Loan Documents to which such person is a party and, in the case of the Borrower,
the borrowings hereunder, and that such resolutions, or any other document
attached thereto, have not been modified, rescinded, amended or superseded and
are in full force and effect and (iii) as to the incumbency and specimen
signature of each officer executing any Loan Document on behalf of such Loan
Party (together with a certificate of another officer as to the incumbency and
specimen signature of the secretary, assistant secretary, managing director or
other authorized officer executing the certificate in this clause (A), and other
customary evidence of incumbency); and
     (B) a certificate as to the good standing (where applicable, or such other
customary functionally equivalent certificates or abstracts, to the extent
available in the applicable jurisdiction) of each Loan Party (in so-called
“long-form” if available) as of a recent date, from the Secretary of State (or
other applicable Governmental Authority) of such Loan Party’s jurisdiction of
organization.
     (e) The Administrative Agent shall have received from Kirkland & Ellis LLP,
special counsel to the Loan Parties, a customary written opinion addressed to
the Administrative Agent and the Lenders and dated the Effective Date, customary
in form, scope and substance.
     (f) The Administrative Agent shall have received customary written opinions
of local counsel to the Loan Parties in each of the jurisdictions specified in
Schedule 4.01(f), in each case reasonably satisfactory to the Administrative
Agent, which opinions shall (x) be addressed to the Administrative Agent and the
Lenders and be dated the Effective Date, and (y) be customary in form, scope and
substance.
     (g) The Joint Lead Arrangers and Bookrunners shall have received,
sufficiently in advance of the Effective Date, all documentation and other
information requested by the Lenders at least two Business Days prior to the
Effective Date in order to enable compliance with applicable “know your
customer” and anti-money laundering rules and regulations (including the PATRIOT
Act), including the information described in Section 9.19.
     (h) The Administrative Agent shall have received the audited and unaudited
consolidated balance sheets and related statements of income, stockholders’
equity and cash flows of the Borrower described in Section 3.05.
     (i) The Administrative Agent shall have received evidence and be reasonably
satisfied that the insurance required by Section 5.04 is in effect in form and
substance reasonably satisfactory to the Administrative Agent.
     (j) The Administrative Agent shall have received Notes signed on behalf of
the Borrower in favor of each Lender that has requested a Note at least four
Business Days prior to the Effective Date.
     (k) The Administrative Agent shall have received certificates of the chief
financial officer of the Borrower (i) substantially in the form of Exhibit J,
confirming the solvency of the Borrower (individually and on a consolidated
basis with its Restricted Subsidiaries) after giving effect to the Transactions
and (ii) confirming that, after giving effect to the Transactions on a Pro Forma
Basis, the Total Leverage Ratio as of the last day of the most recent Test
Period was not

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greater than 4.75:1.00, in each case, together with such other supporting
schedules and other evidence as may be reasonably requested by the
Administrative Agent.
     (l) The Administrative Agent shall have received (i) the pro forma
consolidated balance sheet referred to in Section 3.16(b), together with the
certificate of the chief financial officer of the Borrower certifying as to
clauses (i)-(iii) of Section 3.16(b) and (ii) the Projected Financial
Statements.
     (m) The Reorganization Plan shall have been confirmed pursuant to the
Confirmation Order and not less than five Business Days shall have elapsed since
the date that the Confirmation Order became final and non-appealable. The
Refinancing shall be consummated contemporaneously with the transactions
contemplated hereby in full to the reasonable satisfaction of the Administrative
Agent with all Liens in favor of the holders of the Allowed Claims and
Indebtedness being paid or repaid in connection with the Refinancing being
unconditionally released and de-registered, except for the de-registration of
the security for the €200.0 million, 10% Euro Notes issued by Solutia Europe
SA/NV; the Administrative Agent shall have received from any Person holding any
Lien securing any such Allowed Claims or Indebtedness, such UCC termination
statements, mortgage releases, releases of assignments of leases and rents,
releases of security interests in Intellectual Property, de-registrations and
other instruments, in each case in proper form for recording, as the
Administrative Agent shall have reasonably requested to release and terminate of
record the Liens securing such Allowed Claims and Indebtedness; and the
Administrative Agent shall have received a “pay-off” letter in form and
substance reasonably satisfactory to the Administrative Agent with respect to
such Allowed Claims and Indebtedness as may be reasonably specified by the
Administrative Agent. The Administrative Agent shall have received a certificate
of an authorized officer of the Borrower, certifying that attached thereto is a
true and complete copy of the Monsanto Settlement Agreement.
     (n) After giving effect to the Transactions, the Borrower and its
Subsidiaries shall have no outstanding indebtedness other than (i) the Loans and
other extensions of credit under this Agreement, (ii) the loans and other
extensions of credit under the Revolving Credit Agreement, (iii) the loans under
the Term Loan Credit Agreement, and (iv) Indebtedness permitted to remain
outstanding under the Reorganization Plan as confirmed pursuant to the
Confirmation Order or otherwise as permitted under this Agreement.
     (o) All approvals of Governmental Authorities and third parties necessary
to consummate the Transactions shall have been obtained and shall be in full
force and effect and there shall be no judicial or regulatory action by a
Governmental Authority, actual or threatened, that could reasonably be expected
to restrain, prevent or impose materially burdensome conditions on the
Transactions or the other transactions contemplated hereby. The Administrative
Agent shall be reasonably satisfied that the Borrower, its Subsidiaries and the
Transactions shall be in full compliance with all material Requirements of Law,
including Regulation U and Regulation X, and shall have received reasonably
satisfactory evidence of such compliance reasonably requested by the
Administrative Agent.
     (p) On or prior to the Effective Date, (i) the Revolving Credit Agreement
shall have become effective and (ii) the Borrower shall have received an
aggregate amount equal to $1,200.0 million in gross proceeds from the making of
the loans under the Term Loan Credit Agreement.

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     (q) The Administrative Agent shall have received all fees payable to the
Administrative Agent, any of the Joint Lead Arrangers and Bookrunners or any of
the Lenders on or prior to the Effective Date under the Fee Letter and all other
amounts due and payable pursuant to the Loan Documents on or prior to the
Effective Date, including reimbursement or payment of all reasonable and
invoiced out-of-pocket expenses (including reasonable fees, charges and
disbursements of Skadden, Arps, Slate, Meagher & Flom LLP) required to be
reimbursed or paid by any Loan Party hereunder or under any other Loan Document.
     (r) The Administrative Agent shall have received subordination agreements
in form and substance reasonably satisfactory to it covering all intercompany
notes or other obligations owed by a Loan Party to a Subsidiary of the Borrower
that is not a Loan Party.
     (s) The Administrative Agent shall have received a Borrowing Request as
required by Section 2.02.
     (t) The representations and warranties set forth in Article III hereof and
in the other Loan Documents shall be true and correct (or true and correct in
all material respects if not otherwise qualified by materiality or by a Material
Adverse Effect) with the same effect as if then made (unless expressly stated to
relate to an earlier date, in which case such representations and warranties
shall be true and correct (or true and correct in all material respects if not
otherwise qualified by materiality or by a Material Adverse Effect) as of such
earlier date).
     (u) At the time of and immediately after the making of the Loans on the
Effective Date, no Default shall have occurred and be continuing.
ARTICLE V
AFFIRMATIVE COVENANTS
          The Borrower hereby covenants and agrees that on and after the
Effective Date and until the principal of and interest on each Loan and all fees
and other amounts due and payable hereunder or under any other Loan Document
have been paid in full (other than unasserted contingent indemnification
obligations not due and payable):
          SECTION 5.01. Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished, to the Administrative
Agent (for distribution to each Lender) copies of the following financial
statements, reports, notices and information:
     (a) within 45 days (or such shorter period for the filing of the Borrower’s
Form 10-Q as may be required by the SEC) after the end of each of the first
three Fiscal Quarters of each Fiscal Year, a consolidated balance sheet of the
Borrower and its Restricted Subsidiaries as of the end of such Fiscal Quarter
and consolidated statements of earnings, stockholders’ equity and cash flows of
the Borrower and its Restricted Subsidiaries for such Fiscal Quarter and for the
same period in the prior Fiscal Year and for the period commencing at the end of
the previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by a Financial Officer of the Borrower as fairly presenting, in all
material respects, the financial position, results of operations and cash flows
of the Borrower and its Restricted Subsidiaries as of the dates and for the
periods specified on a consolidated basis in accordance with GAAP consistently
applied, and on a basis consistent with audited financial statements referred to
in Section 5.01(b) (subject to normal year-end audit

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adjustments and the absence of notes), it being understood and agreed that the
delivery of the Borrower’s Form 10-Q (as filed with the SEC), if certified as
required in this Section 5.01(a), shall satisfy the requirements set forth in
this clause to the extent such Form 10-Q includes the information specified in
this clause, together with a certificate from a Financial Officer of the
Borrower on behalf of the Borrower (a “Compliance Certificate”), certifying that
such Financial Officer has not become aware of any Default or Event of Default
that has occurred and is continuing, or, if such Financial Officer has become
aware of such Default or Event of Default, describing such Default or Event of
Default and the steps, if any, being taken to cure it;
     (b) within 90 days (or such shorter period as may be required for the
filing of the Borrower’s Form 10-K by the SEC) after the end of each Fiscal Year
of the Borrower, a copy of the annual audit report for such Fiscal Year for the
Borrower, including therein a consolidated balance sheet of the Borrower and its
Restricted Subsidiaries as of the end of such Fiscal Year and consolidated
statements of earnings, stockholders’ equity and cash flows of the Borrower and
its Restricted Subsidiaries for such Fiscal Year, in each case accompanied by an
opinion (without any Impermissible Qualification) of Deloitte & Touche LLP or
other independent public accountants of recognized national standing selected by
the Borrower and reasonably acceptable to the Administrative Agent, stating that
such financial statements fairly present, in all material respects, the
consolidated financial condition, results of operations and cash flows of the
Borrower and its Restricted Subsidiaries as of the dates and for the periods
specified on a consolidated basis in accordance with GAAP (it being understood
and agreed that the delivery of the Borrower’s Form 10-K (as filed with the SEC)
shall satisfy such delivery requirement in this clause to the extent such Form
10-K includes the information and opinion specified in this clause), together
with a Compliance Certificate;
     (c) no later than February 28 of each Fiscal Year of the Borrower, a
detailed consolidated budget by Fiscal Quarter for such Fiscal Year (including a
projected consolidated balance sheet and related statements of projected
operations and cash flows as of the end of and for each Fiscal Quarter during
such Fiscal Year) and the next two succeeding Fiscal Years and, promptly when
available, any significant revisions of such budgets;
     (d) promptly upon receipt thereof, copies of all final material reports
submitted to the Borrower by independent public accountants (except to the
extent that would violate any confidentiality provision not waiveable by the
Borrower) in connection with each annual, interim or special audit of the books
of the Borrower or any of its Restricted Subsidiaries made by such accountants,
including any final management letters submitted by such accountants to
management in connection with their annual audit;
     (e) as soon as possible and in any event within five Business Days after
becoming aware of the occurrence of any Default, a statement of a Financial
Officer of the Borrower on behalf of the Borrower setting forth details of such
Default and the action (if any) which the Borrower and it Subsidiaries have
taken or propose to take with respect thereto;
     (f) promptly and in any event within five Business Days after obtaining
knowledge of (i) the occurrence of any adverse development with respect to any
litigation, action or proceeding that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or (ii) the
commencement of any litigation, action or proceeding that could reasonably be
expected to have a Material Adverse Effect or that purports to affect the
legality, validity or enforceability of this Agreement or any other Loan
Document or the transactions contemplated

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hereby or thereby, notice thereof and, upon the request of the Administrative
Agent, copies of all material documentation relating thereto;
     (g) promptly after the sending or filing thereof, copies of all reports
which the Borrower sends to any of its security holders (in their capacity as
such) or any trustee, agent or other representative therefor, and all reports,
registration statements (other than on Form S-8 or any successor form) or other
materials (including affidavits with respect to reports) which the Borrower or
any of its Subsidiaries files with the SEC or any national securities exchange;
     (h) promptly upon becoming aware of the taking of any specific actions by
the Borrower or any other Person to terminate any Pension Plan (other than a
termination pursuant to Section 4041(b) of ERISA which can be completed without
the Borrower or any Subsidiary having to provide more than $5.0 million in
addition to the normal contribution required for the plan year in which
termination occurs to make such Pension Plan sufficient), or the occurrence of
an ERISA Event which could result in a Lien on the assets of the Borrower or any
Restricted Subsidiary or in the incurrence by the Borrower or any Restricted
Subsidiary of any liability, fine or penalty which could reasonably be expected
to have a Material Adverse Effect, or any increase in the contingent liability
of the Borrower or any Restricted Subsidiary with respect to any post-retirement
Welfare Plan benefit if the increase in such contingent liability which could
reasonably be expected to have a Material Adverse Effect, notice thereof and
copies of all documentation relating thereto;
     (i) upon request by the Administrative Agent, copies of: (i) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed
by the Borrower or any Restricted Subsidiary or ERISA Affiliate with the
Internal Revenue Service with respect to each Pension Plan; (ii) the most recent
actuarial valuation report for each Pension Plan and each Foreign Plan for which
a report is prepared; (iii) all notices received by the Borrower or any
Restricted Subsidiary or ERISA Affiliate from a Multiemployer Plan sponsor or
any Governmental Authority concerning an ERISA Event; and (iv) such other
documents or governmental reports or filings relating to any Plan or Foreign
Plan as the Administrative Agent shall reasonably request;
     (j) promptly and in any event within five Business Days after obtaining
knowledge thereof, notice of any other development that has resulted in or could
reasonably be expected to have a Material Adverse Effect;
     (k) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as any Lender
through the Administrative Agent may from time to time reasonably request; and
     (l) upon becoming aware of any newly arising environmental matters, facts
or conditions affecting any property or facilities owned or operated by the
Borrower or any of its Restricted Subsidiaries, or which relate to any
Environmental Liabilities of the Borrower or any of its Restricted Subsidiaries,
to the extent reflecting any matters which, in any such case, could reasonably
be expected to result in a new Environmental Liability or an increase in an
existing Environmental Liability in excess of $5.0 million, promptly notify the
Administrative Agent of such matters and any Remedial Actions or other
corrective actions of the Borrower or any of its Restricted Subsidiaries in
respect thereof.

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     Documents required to be delivered pursuant to Sections 5.01(a) and (b) may
be delivered electronically and, if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the website on the Internet at the Borrower’s website
address listed in Section 9.01(a); (ii) on which such documents are posted on
the Borrower’s behalf on IntraLinks™ or a substantially similar electronic
platform chosen by the Administrative Agent to be its electronic transmission
system to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent); or (iii) on which such documents are available via the EDGAR system of
the SEC on the internet; provided that the Borrower shall notify (which may be
by facsimile or electronic mail) the Administrative Agent of the posting of any
such documents and, if requested by the Administrative Agent, provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents.
          SECTION 5.02. Compliance with Laws, etc. The Borrower will, and will
cause each of its Restricted Subsidiaries to, comply in all respects with all
Requirements of Law, except where such noncompliance, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
such compliance to include, subject to the foregoing and except as permitted by
Section 6.03, the maintenance and preservation of their and their respective
Restricted Subsidiaries’ existence and their qualification as a foreign
corporation, limited liability company or partnership (or comparable foreign
qualification, if applicable, in the case of any other form of legal entity).
          SECTION 5.03. Maintenance of Properties. The Borrower will, and will
cause each of its Restricted Subsidiaries to, maintain, preserve, protect and
keep its material properties and assets in good repair, working order and
condition (ordinary wear and tear and loss from casualty or condemnation
excepted), and make necessary repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times; provided that nothing in this Section 5.03 shall prevent the Borrower
from discontinuing the operation and maintenance of any of its properties or any
portion thereof or any of those of its Restricted Subsidiaries if such
discontinuance is, in the reasonable commercial judgment of the Borrower,
desirable in the conduct of its or their business and could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
          SECTION 5.04. Insurance. The Borrower will, and will cause each of its
Restricted Subsidiaries to, maintain or cause to be maintained with financially
sound and reputable insurance companies insurance with respect to their
properties material to the business of the Borrower and its respective
Restricted Subsidiaries against such casualties and contingencies and of such
types and in such amounts with such deductibles as is customary in the case of
similar businesses of similar size operating in the same or similar locations
(and, in any event, shall maintain (i) physical hazard insurance on an “all
risk” basis, (ii) commercial general liability against claims for bodily injury,
death or property damage, (iii) business interruption insurance, (iv) worker’s
compensation insurance as may be required by any Requirement of Law, and
(v) such other insurance as is customary in the case of similar businesses of
similar size and nature operating in the same or similar locations), and will,
upon reasonable request of the Administrative Agent (excluding any such requests
during the continuation of an Event of Default, not more than once per year),
furnish to the Administrative Agent (x) at reasonable intervals a certificate of
an Authorized Officer of the Borrower setting forth the nature and extent of all
insurance maintained by the Borrower and its respective Restricted Subsidiaries
in accordance with this Section and (y) a report of a reputable insurance broker
with respect to the insurance maintained by the Borrower and its respective
Restricted Subsidiaries and such supplemental reports with respect thereto as
the Administrative Agent may from time to time reasonably request.

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          SECTION 5.05. Books and Records; Visitation Rights; Lender Meetings.
The Borrower will, and will cause each of its Restricted Subsidiaries to, keep
books and records which accurately reflect its business affairs in all material
respects and material transactions and permit the Administrative Agent or its
representatives, at reasonable times and intervals and upon reasonable notice,
to visit all of its offices, to discuss its financial matters with its officers,
employees and independent public accountants and, upon the reasonable request of
the Administrative Agent, to examine (and, at the expense of the Borrower,
photocopy extracts from) any of its books or other organizational records. Upon
written request by the Administrative Agent or the Requisite Lenders, the
Borrower shall give a presentation in each Fiscal Year to the Lenders (within
30 days after the Borrower has delivered, or should have delivered, its
financial statements pursuant to Section 5.01(b)) about the business, financial
performance and prospects of the Borrower and its Subsidiaries, and such other
matters as any Lender may (through the Administrative Agent) reasonably request.
          SECTION 5.06. Environmental Covenant. The Borrower will, and will
cause each of its Restricted Subsidiaries to:
     (a) use and operate all of its facilities and properties in compliance with
all applicable Environmental Laws except for such noncompliance which could not
reasonably be expected to have a Material Adverse Effect and handle all
Hazardous Materials in compliance with all applicable Environmental Laws, except
for any noncompliance that could not reasonably be expected to have a Material
Adverse Effect;
     (b) promptly notify the Administrative Agent and provide copies of all
written inquiries, claims, complaints or notices from any Person relating to the
environmental condition of its facilities and properties or compliance with or
liability under any Environmental Law which could reasonably be expected to have
a Material Adverse Effect; and
     (c) provide such information which the Administrative Agent may reasonably
request from time to time to evidence compliance with this Section 5.06.
          SECTION 5.07. [Reserved]
          SECTION 5.08. Existence; Conduct of Business. The Borrower will, and
will cause each of its Restricted Subsidiaries to, do or cause to be done all
things reasonably necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names except to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03, or any
Asset Sale permitted under Section 6.05 or 6.06.
          SECTION 5.09. Performance of Obligations. The Borrower will, and will
cause each of its Restricted Subsidiaries to, perform all of its obligations
under the terms of each mortgage, indenture, security agreement, other debt
instrument (including under all Material Indebtedness) and material contract by
which it is bound or to which it is a party except for such noncompliance as in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
          SECTION 5.10. Casualty and Condemnation. The Borrower will, and will
cause each of its Restricted Subsidiaries to, ensure that the Net Proceeds of
any casualty or other insured damage or any action or proceeding for the Taking
of any of its Property or any part thereof or interest therein under
          

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power of eminent domain or by condemnation or similar proceeding (whether in the
form of insurance proceeds, condemnation awards or otherwise) are applied in
accordance with the applicable provisions of this Agreement.
          SECTION 5.11. [Reserved]
          SECTION 5.12. Further Assurances. The Borrower will, and will cause
each of its Restricted Subsidiaries to, execute any and all further documents,
agreements and instruments, and take all such further actions (including, to the
extent reasonably requested by the Administrative Agent, the delivery of
appropriate opinions of counsel), which may be required under any applicable
law, or which the Administrative Agent or the Requisite Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents, all
at the reasonable expense of the Loan Parties. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy
pursuant to any Loan Document that requires any consent, approval, registration,
qualification or authorization of any Governmental Authority, the Borrower will,
and will cause each of its Restricted Subsidiaries to, execute and deliver all
applications, certifications, instruments and other documents and papers that
the Administrative Agent or such Lender may reasonably require in connection
therewith.
          SECTION 5.13. Use of Proceeds. The Borrower covenants and agrees that
the proceeds of the Loans will be used to finance the Transactions and for
working capital and other general corporate purposes.
          SECTION 5.14. Payment of Taxes and Claims. The Borrower will, and will
cause each of its Restricted Subsidiaries to, (a) pay and discharge all material
Taxes imposed upon it or upon its income or profits, or upon any Properties
belonging to it, prior to the date on which penalties attach thereto, and all
lawful claims for labor, services, materials and supplies or otherwise that, if
unpaid, might become a Lien (other than a Permitted Lien) or charge upon any
Properties of the Borrower or any of its Restricted Subsidiaries or cause a
failure or forfeiture of title thereto; provided that neither the Borrower nor
any of its Restricted Subsidiaries shall be required to pay any such Tax or
claim that is being contested in good faith and by proper proceedings diligently
conducted, which proceedings have the effect of preventing the forfeiture or
sale of the Property or asset that may become subject to such Lien (other than a
Permitted Lien), if it has maintained adequate reserves with respect thereto in
accordance with and to the extent required under GAAP and such failure to pay
could not reasonably be expected to have a Material Adverse Effect; and
(b) timely and correctly file all material Tax Returns required to be filed by
it, and withhold, collect and remit all Taxes that it is required to collect,
withhold or remit.
          SECTION 5.15. Additional Guarantors. In the event that any Subsidiary
(other than any Excluded Subsidiary) of the Borrower existing on the Effective
Date has not previously executed the Guarantee Agreement or in the event that
any Person becomes a Subsidiary (other than any Excluded Subsidiary) of the
Borrower after the Effective Date, the Borrower will promptly notify the
Administrative Agent of that fact and cause such Subsidiary to, (i) within
30 days of becoming a Subsidiary (or ceasing to be an Excluded Subsidiary, as
applicable), execute and deliver to the Administrative Agent a counterpart of
the Guarantee Agreement (or a Non-U.S. Guarantee Agreement, as applicable), and
(ii) in the case of a Non-U.S. Restricted Subsidiary which is a Subsidiary
Guarantor, provide the Administrative Agent with evidence of the acceptance by a
process agent as shall be reasonably approved by the Administrative Agent of its
appointment as process agent by such Subsidiary.
          SECTION 5.16. Interest Rate Protection. No later than the 30th day
after the Effective Date, the Borrower shall enter into (or otherwise be a party
to), and for a minimum of two years thereafter

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maintain, Hedging Agreements with terms and conditions reasonably acceptable to
the Administrative Agent to the extent necessary to cause at least 50% of the
aggregate principal amount of the Borrower’s and its Restricted Subsidiaries’
term Indebtedness being effectively (or actually) subject to a fixed or maximum
interest rate reasonably acceptable to the Administrative Agent.
          SECTION 5.17. [Reserved]
          SECTION 5.18. Designation of Subsidiaries. The Borrower may designate
any Restricted Subsidiary as an Unrestricted Subsidiary or any Unrestricted
Subsidiary as a Restricted Subsidiary upon prior written notice to the
Administrative Agent; provided that (i) immediately before and after such
designation, no Default shall have occurred and be continuing, (ii) no
Subsidiary may be designated as an Unrestricted Subsidiary if it is a
“Restricted Subsidiary” (or any other defined term having a similar purpose) for
the purpose of the Revolving Credit Loan Documents, the Term Loan Documents or
any Subordinated Debt Documents (unless concurrently designated as an
Unrestricted Subsidiary under such documents as well), (iii) no Restricted
Subsidiary may be designated an Unrestricted Subsidiary if it was previously
designated an Unrestricted Subsidiary, (iv) no Restricted Subsidiary may be
designated an Unrestricted Subsidiary if it owns any Equity Interests of, or
holds any Indebtedness of, any other Restricted Subsidiary, (v) if a Restricted
Subsidiary is being designated as an Unrestricted Subsidiary hereunder, the sum
of (A) the net tangible assets of such Subsidiary as of such date of designation
(the “Designation Date”), as set forth on such Subsidiary’s most recent balance
sheet, plus (B) the aggregate amount of net tangible assets of all Unrestricted
Subsidiaries designated as Unrestricted Subsidiaries pursuant to this
Section 5.18 prior to the Designation Date (in each case measured as of the date
of each such Unrestricted Subsidiary’s designation as an Unrestricted
Subsidiary) shall not exceed (i) 2.5% of Consolidated Net Tangible Assets at
such date or (ii) 2.5% of Consolidated EBITDA for the period of four Fiscal
Quarters most recently ended for which financial statements have been or are
required to have been delivered pursuant to Sections 4.01(h), 5.01(a) or
5.01(b), as applicable, as of such Designation Date, in each case, pro forma for
such designation, and (vi) the Borrower shall have delivered to the
Administrative Agent a certificate of a Financial Officer of the Borrower on
behalf of the Borrower certifying compliance with the provisions of this
Section 5.18 setting forth in reasonable detail the computations necessary to
determine such compliance. The designation of any Subsidiary as an Unrestricted
Subsidiary after the Effective Date shall constitute an Investment by the
Borrower and its Restricted Subsidiaries, as applicable, therein at the
Designation Date in an amount equal to the net book value of the applicable
parties’ investment therein. The designation of any Unrestricted Subsidiary as a
Restricted Subsidiary shall constitute (i) the incurrence at the time of
designation of all Investments, Indebtedness and Liens of such Subsidiary
existing at such time and (ii) a return on any Investment by the Borrower or any
Restricted Subsidiary in Unrestricted Subsidiaries pursuant to the preceding
sentence in an amount equal to the fair market value at the date of such
designation of the Borrower’s and its Restricted Subsidiaries’ (as applicable)
Investment in such Subsidiary. On or promptly after the date of its formation,
acquisition, designation or re-designation, as applicable, each Unrestricted
Subsidiary (other than an Unrestricted Subsidiary that is a Non-U.S. Subsidiary)
shall have entered into a tax sharing agreement containing terms that, in the
reasonable judgment of the Administrative Agent, provide for an appropriate
allocation of tax liabilities and benefits.
          SECTION 5.19. Permitted Restructuring. No later than the 90th day
after the Effective Date, the Borrower will, and will cause its Restricted
Subsidiaries to, (a) consummate the Permitted Restructuring, (b) deliver to the
Administrative Agent a written opinion of (i) Kirkland & Ellis LLP, special
counsel to the Loan Parties, addressed to the Administrative Agent and the
Lenders and in a form substantially similar to (as applicable) the opinion
delivered by Kirkland & Ellis LLP hereunder on the Effective Date, and
(ii) Allen & Overy LLP, special counsel to the Loan Parties, addressed to the
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istrative Agent and the Lenders and in a form substantially similar to (as
applicable) the opinions delivered by Allen & Overy LLP under the Revolving
Credit Loan Documents on the Effective Date, and (c) execute and deliver to the
Administrative Agent all other documents, agreements and certificates described
on Schedule 5.19 and satisfy all other conditions described on Schedule 5.19, in
each case as denoted on such Schedule 5.19 as being required to be completed
within 90 days after the Effective Date.
          SECTION 5.20. Securities Demand; Cooperation in Financing. The
Borrower agrees that, upon notice by the Joint Lead Arrangers and Bookrunners
delivered not more than two occasions during the period commencing September 30,
2008 and through and including September 30, 2009 (each, a “Debt Securities
Notice”), the Borrower will take such actions as are reasonably necessary so
that the Joint Lead Arrangers and Bookrunners can, as soon as commercially
practicable after the date on which a Debt Securities Notice is given, privately
place, in one or more offerings or placements, an aggregate principal amount of
senior debt securities, senior subordinated debt securities, subordinated debt
securities, discount securities or any combination of any of the foregoing of
the Borrower (the “Securities”) as will generate gross proceeds in an aggregate
amount sufficient to repay all or any portion of principal, interest and other
amounts then outstanding under the Loan Documents, in each case upon such terms
and conditions as may be specified by the Joint Lead Arrangers and Bookrunners
in the applicable Debt Securities Notice; provided, however, that (i) the
interest rate (whether floating or fixed) shall be determined by the Joint Lead
Arrangers and Bookrunners in light of the then prevailing market conditions for
comparable securities, but in no event shall (A) the total effective yield of
all tranches of Securities issued to refinance portion of the Loans taken as a
whole at the time of any Debt Securities Notice exceed 15.50% per annum, after
giving effect to payment-in-kind interest (provided any payment-in-kind interest
may, at the option of the Borrower, be paid in cash, which payment-in-kind
interest would not be included in calculating interest subject to the limitation
in clause (B) below) and original issue discount (but in the case of each Debt
Securities Notice based upon the price paid by the initial purchasers to the
Borrower in exchange for such Securities); and (B) the cash interest rate
applicable to any tranche of Securities issued to refinance any portion of the
Loans at any time exceed 14.00% per annum of the principal amount of such
tranche of Securities; (ii) the Securities shall be issued through a Rule 144A
or other private placement; (iii) the maturity of any Securities shall not be
earlier than seven years after the Effective Date; (iv) the Securities shall be
issued pursuant to one or more indentures which shall contain such terms and
conditions and covenants as are customary for high yield issuances by issuers
comparable to the Borrower to the extent such terms are available in light of
then current market conditions; and (v) all other arrangements with respect to
the Securities shall be reasonably satisfactory in all respects to the Joint
Lead Arrangers and Bookrunners and the Borrower in light of the then prevailing
market conditions. Subject to the other provisions and limitations of this
Section 5.20, the Joint Lead Arrangers and Bookrunners, in their reasonable
discretion after consultation with the Borrower, shall determine in what amounts
the Securities shall be issued by the Borrower and the amount of each series of
Securities to be issued if the Securities are to be issued in a series of
offerings and/or placements and what type of Securities or combination of
Securities are to be issued.
ARTICLE VI
NEGATIVE COVENANTS
          The Borrower hereby covenants and agrees that on and after the
Effective Date and until the principal of and interest on each Loan and all fees
and other amounts due and payable hereunder or under any other Loan Document
have been paid in full (other than unasserted contingent indemnification
obligations not due and payable):

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          SECTION 6.01. Indebtedness. The Borrower will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, issue,
incur, assume or permit to exist (including by way of Guarantee) any
Indebtedness, except:
     (i) Indebtedness incurred and outstanding under this Agreement and the
other Loan Documents;
     (ii) Indebtedness (A) (1) outstanding on the Effective Date and set forth
on Schedule 6.01(ii)(A) and (2) any Permitted Refinancing thereof and (B)
outstanding on the Effective Date and set forth on Schedule 6.01(ii)(B);
     (iii) Indebtedness of the Loan Parties under Securities issued pursuant to
Section 5.20 and any Permitted Refinancings thereof;
     (iv) Indebtedness permitted by Section 6.04(iii);
     (v) Guarantees in respect of Indebtedness of the Borrower or any Restricted
Subsidiary otherwise permitted hereunder to the extent permitted as an
Investment under Section 6.04 (other than Section 6.04(iv)); provided that
(A) if such Guaranteed Indebtedness is subordinated to the Obligations under the
Loan Documents, such Guarantee is as subordinated to the Obligations and (B) no
Restricted Subsidiary shall Guarantee any Subordinated Debt unless such
Restricted Subsidiary is a Subsidiary Guarantor;
     (vi) Indebtedness of the Borrower or any Restricted Subsidiary incurred to
finance the acquisition, installation, construction or improvement of any fixed
or capital assets, including Capital Lease Obligations and purchase money
Indebtedness, any Indebtedness assumed or incurred in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof or
result in an earlier maturity date or decreased Weighted Average Life to
Maturity thereof; provided that (A) such Indebtedness is incurred or assumed
prior to or within 270 days after such acquisition or the completion of such
construction, installation or improvement, (B) the aggregate amount of such
Indebtedness does not exceed 100% of the cost of such acquisition, installation,
construction or improvement, as the case may be, and (C) the aggregate principal
amount of all Indebtedness permitted by this Section 6.01(vi) shall not exceed
$50.0 million at any one time outstanding;
     (vii) Indebtedness under Hedging Obligations entered into in the ordinary
course of business of the Borrower and its Restricted Subsidiaries and not for
speculative purposes;
     (viii) Indebtedness of the Borrower and its Restricted Subsidiaries in
respect of performance bonds, bid bonds, appeal bonds, surety bonds, performance
and completion guarantees and similar obligations and trade-related letters of
credit, in each case issued for the account of the Borrower and its Restricted
Subsidiaries in the ordinary course of business of the Borrower and its
Restricted Subsidiaries, including those incurred to secure health, safety and
environmental obligations in the ordinary course of business of the Borrower and
its Restricted Subsidiaries (and in each case other than for an obligation for
borrowed money);

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     (ix) Indebtedness arising from agreements of the Borrower or any Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with the
disposition otherwise permitted under this Agreement of any business, assets or
a Subsidiary, other than Guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or a Subsidiary for the
purpose of financing such acquisition;
     (x) Indebtedness of the Borrower and its Restricted Subsidiaries in respect
of Treasury Services Agreements (including Indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or similar
instrument inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds) in the ordinary course of business of the Borrower
and its Restricted Subsidiaries so long as, in the case of any cash pooling or
similar arrangements, any intercompany Investments relating thereto are
otherwise permitted under Section 6.04(iii);
     (xi) Indebtedness of such a Person existing at the time such Person becomes
a Subsidiary in connection with a Permitted Acquisition, but only if such
Indebtedness was not created or incurred in contemplation of such Person
becoming a Subsidiary; provided that the aggregate principal amount of all such
Indebtedness does not exceed an aggregate of $25.0 million at any one time
outstanding;
     (xii) Indebtedness of any Non-U.S. Restricted Subsidiary that is a
Non-Guarantor Restricted Subsidiary consisting of working capital facilities,
lines of credit or cash management arrangements for such Subsidiary, and
Guarantees by any Non-U.S. Restricted Subsidiary that is a Non-Guarantor
Restricted Subsidiary in respect of such Indebtedness; provided that (A) no
Default shall have occurred and be continuing or would immediately result
therefrom and (B) the aggregate principal amount of all such Indebtedness shall
not exceed an aggregate of $50.0 million at any one time outstanding;
     (xiii) solely to the extent otherwise constituting Indebtedness, Permitted
Guarantor Factoring Transactions and Permitted Non-Guarantor Factoring
Transactions;
     (xiv) unsecured Indebtedness of the Borrower and the Subsidiary Guarantors
in an aggregate principal amount not to exceed $300.0 million at any one time
outstanding; provided that (A) such Indebtedness will not mature prior to the
date that is one year following the Final Maturity Date, (B) such Indebtedness
has no scheduled amortization of principal (or sinking fund payments or other
similar payments) prior to the date that is one year following the Final
Maturity Date, (C) after giving effect to the incurrence of such Indebtedness on
a Pro Forma Basis, the Net Interest Expense Coverage Ratio shall be not less
than 2.0:1.0 as of the most recent Test Period (assuming that such incurrence of
Indebtedness, and each other incurrence of Indebtedness under this Section 6.01
consummated since the first day of such Test Period had occurred on the first
day of such Test Period) and the Borrower shall have delivered to the
Administrative Agent a certificate of a Financial Officer of the Borrower to
such effect setting forth in reasonable detail the computations necessary to
determine such compliance (together with a reasonably detailed description of
the material terms and conditions of such Indebtedness or drafts of the
documentation relating thereto), (D) no Default shall have occurred and be
continuing or would immediately result therefrom, (E) immediately after giving
effect thereto, on a Pro Forma Basis after giving effect to the incurrence of
such Indebtedness (and any other Indebtedness incurred since the last day of the

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immediately preceding Test Period), the Total Leverage Ratio as of the last day
of the most recently ended Test Period is less than the Applicable Ratio, as if
all such Indebtedness was incurred on the first day of the immediately preceding
Test Period, and (F) except in the case of Guarantees by Excluded Non-U.S.
Restricted Subsidiaries of such Indebtedness of Non-U.S. Restricted
Subsidiaries, no Restricted Subsidiary shall Guarantee any such Indebtedness
unless such Restricted Subsidiary is also a Subsidiary Guarantor under this
Agreement and the other Loan Documents;
     (xv) Indebtedness under the Revolving Credit Loan Documents in an aggregate
principal amount at any one time outstanding not to exceed the Maximum Revolving
Credit Facility Amount; provided that except in the case of Guarantees by
Excluded Non-U.S. Restricted Subsidiaries of Indebtedness of Non-U.S. Restricted
Subsidiaries under the Revolving Credit Loan Documents, no Restricted Subsidiary
shall Guarantee any such Indebtedness under the Revolving Credit Loan Documents
unless such Restricted Subsidiary is a Subsidiary Guarantor under this Agreement
and the other Loan Documents;
     (xvi) Indebtedness consisting of obligations of the Borrower or its
Restricted Subsidiaries under deferred compensation or other similar
arrangements incurred by such Person in connection with Permitted Acquisitions
or any other Investment expressly permitted hereunder;
     (xvii) Indebtedness of any Non-Guarantor Restricted Subsidiary owing to any
other Non-Guarantor Restricted Subsidiary;
     (xviii) Indebtedness consisting of the financing of insurance premiums;
     (xix) unsecured Indebtedness of Borrower and its Restricted Subsidiaries
representing the obligation of such Person to make payments with respect to the
cancellation or repurchase of Equity Interests and Equity Rights of officers,
employees or directors (or their estates) of the Borrower or its Subsidiaries
permitted by Section 6.07;
     (xx) Indebtedness consisting of take-or-pay obligations arising under
supply agreements entered into in the ordinary course of business and not in
connection with the borrowing of money;
     (xxi) intercompany notes described on Schedule 6.01(xxi); provided that
(A) the obligations evidenced by such intercompany notes relate to the Permitted
Restructuring (with respect to which no cash was loaned or advanced), and
(B) the obligations of any Loan Party evidenced by such intercompany notes shall
be subordinated to the Obligations on terms reasonably satisfactory to the
Administrative Agent;
     (xxii) Indebtedness of the Borrower and its Restricted Subsidiaries arising
under Capital Leases entered into in connection with Sale and Leaseback
Transactions permitted by Section 6.06;
     (xxiii) Indebtedness under the Term Loan Documents in an aggregate
principal amount at any one time outstanding not to exceed the Maximum Term Loan
Facility Amount; provided that no Restricted Subsidiary shall Guarantee any such
Indebtedness under the Term

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Loan Documents unless such Restricted Subsidiary is a Subsidiary Guarantor under
this Agreement and the other Loan Documents; and
     (xxiv) other Indebtedness of the Borrower and its Restricted Subsidiaries
in an aggregate principal amount not to exceed $50.0 million at any one time
outstanding.
          SECTION 6.02. Liens. The Borrower will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on any Property or asset now owned or hereafter
acquired by them, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except the following (herein
collectively referred to as “Permitted Liens”):
     (i) Liens securing the “Obligations” (as defined in the Term Loan Credit
Agreement) under the Term Loan Documents;
     (ii) Liens securing Indebtedness permitted by Section 6.01(xi); provided
that such Liens (A) were not incurred in connection with, or in contemplation
of, such acquisition or merger and (B) do not extend to Property not subject to
such Liens at the time of such acquisition or merger (other than improvements
thereon, accessions thereto and proceeds thereof) and are no more favorable to
the lienholders than such existing Lien;
     (iii) Liens to secure the performance of statutory obligations, surety or
appeal bonds or performance bonds, self-insurance obligations and financing of
insurance premiums, and landlords’, carriers’, warehousemen’s, mechanics’,
suppliers’, materialmen’s, attorney’s or other like liens (other than any Lien
imposed by ERISA), and customary Liens in favor of customs and revenue
authorities to secure payment of customs duties in connection with the
importation of goods, in any case incurred in the ordinary course of business of
the Borrower and its Restricted Subsidiaries and with respect to amounts not
delinquent for more than 30 days or being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; provided that (A) in
the case of contested amounts, a reserve or other appropriate provision, if any,
as is required by GAAP shall have been made therefor, (B) such Liens could not
reasonably be expected to have a Material Adverse Effect, and (C) such Liens
relating to surety or appeal bonds or performance bonds shall only extend to or
cover cash and Cash Equivalents;
     (iv) (A) Liens existing on the Effective Date and identified on Schedule
6.02(iv)(A), and any Lien granted as a replacement or substitute therefor;
provided that any such replacement or substitute Lien (1) except as permitted by
Section 6.01(ii)(A)(2), does not secure an aggregate amount of Indebtedness, if
any, greater than that secured on the Effective Date and (2) does not encumber
any Property other than the Property subject thereto on the Effective Date
(other than improvements thereon, accessions thereto and proceeds) and (B) Liens
existing on the Effective Date and identified on Schedule 6.02(iv)(B);
     (v) Liens for Taxes or governmental charges or claims or other like
statutory Liens (other than any Lien imposed by ERISA), in any case incurred in
the ordinary course of business of the Borrower and its Restricted Subsidiaries,
that do not secure Indebtedness for borrowed money and (A) that are not
delinquent more than 30 days or thereafter payable without premium or penalty or
(B) are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted; provided that, if being contested, any re-

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     serve or other appropriate provision as shall be required in conformity
with GAAP shall have been made therefor;
     (vi) Liens to secure Indebtedness (including Capital Lease Obligations and
purchase money Indebtedness) permitted by Section 6.01(vi) encumbering only the
Property acquired, installed, constructed or improved (and the procedural
products thereof and accessions thereto) with the proceeds of such Indebtedness;
     (vii) (A) Liens in the form of zoning restrictions, easements, building,
environmental and other land use rules, laws and regulations which are
applicable to the Real Property, licenses, entitlements, servitudes,
rights-of-way, restrictions, reservations, covenants, conditions, utility
agreements, minor imperfections of title, minor survey defects or other similar
restrictions on the use of Real Property that do not (1) secure Indebtedness
(other than Indebtedness permitted under Section 6.01) or (2) individually or in
the aggregate materially impair the value of the Real Property affected thereby
or materially interfere with the Borrower or any Restricted Subsidiary from
conducting its business as currently conducted at such Real Property or to
utilize each Real Property for its intended purpose and (B) with respect to
leasehold interests in Real Property, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and arising by,
through or under a landlord or owner (other than the Borrower or any Subsidiary)
of such leased property encumbering such landlord’s or owner’s interest in such
leased property;
     (viii) Liens (including in the form of pledges or deposits) securing (A)
obligations incurred in respect of workers’ compensation, unemployment insurance
or other forms of governmental insurance or benefits and other obligations of a
like nature, (B) bids, tenders, contracts (other than contracts for borrowed
money) or leases to which the Borrower or any Restricted Subsidiary is a party
and (C) obligations to any utility company or other Person in a similar line of
business to that of a utility company or Governmental Authority that is a
utility company, in each case, made in the ordinary course of business of the
Borrower and its Restricted Subsidiaries for amounts (x) not yet due and payable
or (y) being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted; provided that, in the case of contested
amounts, a reserve or other appropriate provision, if any, as is required by
GAAP shall have been made therefor;
     (ix) Liens securing any judgments, awards, decrees or orders in
circumstances not constituting an Event of Default under Section 7.01(f);
     (x) Liens in the form of licenses, leases or subleases in respect of Real
Property granted or created by the Borrower or any Restricted Subsidiary, which
licenses, leases or subleases do not interfere, individually or in the
aggregate, in any material respect with the business of the Borrower or such
Subsidiary or individually or in the aggregate materially impair the use (for
its intended purpose) or the value of the property subject thereto, provided
that any such Lien shall not extend to or cover any assets of the Borrower or
any Restricted Subsidiary that is not the subject of any such license, lease or
sublease;
     (xi) Liens securing the refinancing of any Indebtedness secured by any Lien
permitted by Section 6.02(ii) or this Section 6.02(xi), in each case, without
any change in the Property subject to such Liens and to the extent such
refinanced Indebtedness is permitted by Section 6.01;

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     (xii) Liens on assets of any Non-U.S. Restricted Subsidiary that is a
Non-Guarantor Restricted Subsidiary securing Indebtedness of such Non-Guarantor
Restricted Subsidiary permitted by Section 6.01(xii);
     (xiii) Liens on receivables subject to Permitted Non-Guarantor Factoring
Transactions securing Indebtedness in respect of such Permitted Non-Guarantor
Factoring Transactions permitted by Section 6.01(xiii);
     (xiv) Liens arising from the filing of UCC financing statements (or similar
filings) solely as a precautionary measure in connection with operating leases
or consignment of goods;
     (xv) (A) bankers’ Liens, rights of setoff and other similar Liens incurred
in the ordinary course of business and existing solely with respect to cash and
Cash Equivalents on deposit in one or more accounts maintained by the Borrower
and its Restricted Subsidiaries; provided that, unless such Liens are
non-consensual and arise by operation of law, in no case shall any such Liens
secure (either directly or indirectly) the repayment of Indebtedness (other than
Indebtedness under the Loan Documents and the Revolving Credit Loan Documents);
and (B) customary Liens attaching to commodity trading accounts, commodities
brokerage accounts, securities accounts and securities intermediary accounts in
the ordinary course of business;
     (xvi) Liens incurred in the ordinary course of business of the Borrower and
its Restricted Subsidiaries with respect to obligations that do not in the
aggregate exceed $25.0 million at any one time outstanding;
     (xvii) to the extent constituting a Lien, the existence of the “equal and
ratable” clause in the definitive documentation governing any Securities issued
pursuant to Section 5.20 (and any Permitted Refinancings thereof) (but not any
security interests granted pursuant thereto);
     (xviii) Liens securing the “Obligations” (as defined in the Revolving
Credit Agreement) under the Revolving Credit Loan Documents;
     (xix) Liens on the Headquarters Building pursuant to the financing
agreement among Borrower and AIG Annuity Insurance Company, American General
Life Insurance Company, Credit Suisse Securities (USA) LLC and Latigo Master
Fund, Ltd. (and Permitted Refinancings thereof permitted under Section 6.01);
     (xx) Liens on goods or inventory the purchase, shipment or storage price of
which is financed by a documentary letter of credit or banker’s acceptance
issued or created for the account of the Borrower or any Restricted Subsidiary;
provided that such Lien secures only the obligations of the Borrower or such
Restricted Subsidiary in respect of such letter of credit or banker’s acceptance
to the extent permitted under Section 6.01;
     (xxi) Liens arising out of conditional sale, title retention, consignment
or similar arrangements for sale of goods (including under Article 2 of the UCC)
and Liens that are contractual rights of set-off relating to purchase orders and
other similar agreements entered into by the Borrower or any of its Restricted
Subsidiaries;

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     (xxii) Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto incurred in the ordinary course
of business;
     (xxiii) ground leases in respect of real property on which facilities owned
or leased by the Borrower or any of its Restricted Subsidiaries are located;
     (xxiv) Liens on property subject to Capital Leases entered into in
connection with Sale and Leaseback Transactions permitted by Section 6.01(xxii);
     (xxv) Liens consisting of an agreement to sell or otherwise dispose of any
property in an Asset Sale permitted under Section 6.05, in each case solely to
the extent such Asset Sale would have been permitted on the date of the creation
of such Lien;
     (xxvi) Liens constituting (A) licenses, sublicenses, leases or subleases
(on a non-exclusive basis with respect to any intellectual property) granted in
the ordinary course of business not interfering in any material respect with the
business of the Borrower or any of its Restricted Subsidiaries, (B) other
agreements entered into in the ordinary course of business in connection with an
asset sale permitted under the Loan Documents or (C) customary rights reserved
or vested in any Person in the ordinary course of business by the terms of any
lease, sublease, license, sublicense, franchise, grant or permit held by
Borrower or any of its Restricted Subsidiaries or by a statutory provision, to
terminate any such lease, sublease, license, sublicense, franchise, grant or
permit, or to require annual or periodic payments as a condition to the
continuance thereof;
     (xxvii) netting or set-off arrangements entered into under Indebtedness
permitted by Section 6.01(vii) where the obligations of the parties are
calculated by reference to the net exposure under such Indebtedness;
     (xxviii) Liens securing the intercompany note issued by Solutia Europe
SA/NV in connection with the Permitted Restructuring, in each case as described
on Schedule 5.19; and
     (xxix) with respect to any Restricted Subsidiary organized under the laws
of Germany, Liens created or subsisting to the extent mandatorily required under
Section 8a of the German Partial Retirement Act (Altersteilzeitgesetz) and/or
Section 7d of the German Sozialgesetzbuch IV.
          SECTION 6.03. Fundamental Changes; Line of Business. (a) The Borrower
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, merge into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with them, or liquidate or dissolve, except
that, if at the time thereof and immediately after giving effect thereto no
Default shall have occurred and be continuing, (i) any Wholly Owned Subsidiary
may merge into the Borrower in a transaction in which the Borrower is the
surviving corporation, (ii) any Subsidiary of the Borrower may merge with or
into or consolidate with any Restricted Subsidiary in a transaction in which the
surviving or resulting entity is a Restricted Subsidiary (provided that if any
party to such merger or consolidation is a Subsidiary Guarantor, the surviving
or resulting entity shall be a Subsidiary Guarantor that is a Wholly Owned
Subsidiary of the Borrower), and (iii) Permitted Acquisitions as permitted by
Section 6.04(vii) may be consummated.

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          (b) Notwithstanding the foregoing, (i) any Restricted Subsidiary may
dispose of any or all of its assets (upon voluntary liquidation, dissolution or
otherwise) to the Borrower or any Subsidiary Guarantor that is a Wholly Owned
Subsidiary of the Borrower, (ii) any Non-Guarantor Restricted Subsidiary may
dispose of any or all of its assets (upon voluntary liquidation, dissolution or
otherwise) to the Borrower or any other Restricted Subsidiary that is a Wholly
Owned Subsidiary of the Borrower and (iii) any Immaterial Restricted Subsidiary
may liquidate or dissolve.
          (c) The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, engage in any business other than
businesses of the type conducted by the Borrower and its Restricted Subsidiaries
on the Effective Date and businesses substantially similar, ancillary or
reasonably related thereto.
          SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, purchase, hold or acquire (including
pursuant to any merger with any Person that was not a Wholly Owned Restricted
Subsidiary prior to such merger) any Equity Interests in or evidences of
Indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, or otherwise lend money to, Guarantee any Indebtedness of, or make
or permit to exist any investment in, any other Person, or provide other credit
support (including the provision of letters of credit for the account of such
Person) for any Person or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, line of business or division (each of the foregoing, an “Investment” and
collectively, “Investments”), except:
     (i) cash and Permitted Investments;
     (ii) Investments existing on the Effective Date and set forth on Schedule
6.04;
     (iii) Investments (A) by the Borrower or any Restricted Subsidiary in any
Loan Party, (B) by any Non-Guarantor Restricted Subsidiary in any other
Non-Guarantor Restricted Subsidiary and (C) after the Effective Date by any Loan
Party in any Non-Guarantor Restricted Subsidiary; provided that the aggregate
amount of such Investments pursuant to this clause (C) shall not exceed
$50.0 million at any one time outstanding; and provided, further, that any such
Investment in the form of a loan or advance to any Loan Party shall be
subordinated to the Obligations on terms reasonably satisfactory to the
Administrative Agent;
     (iv) (A) Guarantees by any Non-U.S. Restricted Subsidiary that is a
Non-Guarantor Restricted Subsidiary of Indebtedness permitted by
Sections 6.01(xii); (B) Guarantees of Indebtedness permitted by 6.01(xv);
provided that except in the case of Guarantees by Excluded Non-U.S. Restricted
Subsidiaries of Indebtedness of Non-U.S. Restricted Subsidiaries under the
Revolving Credit Loan Documents, no Restricted Subsidiary shall Guarantee any
such Indebtedness under the Revolving Credit Loan Documents unless such
Restricted Subsidiary is a Subsidiary Guarantor under this Agreement and the
other Loan Documents; and (C) Guarantees of Indebtedness permitted by
6.01(xxiii); provided that no Restricted Subsidiary shall Guarantee any such
Indebtedness under the Term Loan Documents unless such Restricted Subsidiary is
a Subsidiary Guarantor under this Agreement and the other Loan Documents;

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     (v) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and trade creditors, in each case in the ordinary course of business
of the Borrower and its Restricted Subsidiaries;
     (vi) loans and advances to directors and employees of the Borrower or its
Restricted Subsidiaries in the ordinary course of business of the Borrower and
its Restricted Subsidiaries (including for travel, entertainment and relocation
expenses) (other than any loans or advances to any director or executive officer
(or equivalent thereof) that would violate any Requirement of Law in any
material respect) in an aggregate principal amount (determined without regard to
any write-downs or write-offs of such loans and advances) not to exceed
$5.0 million at any one time outstanding;
     (vii) Permitted Acquisitions; provided that the aggregate Acquisition
Consideration used to consummate Permitted Acquisitions following the Effective
Date of (a) Persons that will not, immediately after giving effect to the
relevant Permitted Acquisition, either become Subsidiary Guarantors or be merged
into Loan Parties (with such Loan Parties being the surviving entities) and
(b) assets or divisions, lines of business or other business units that will not
be conveyed to Loan Parties immediately after giving effect to the relevant
Permitted Acquisition, may not exceed an aggregate of $100.0 million;
     (viii) Investments in Joint Ventures in an aggregate amount not to exceed
$50.0 million at any one time outstanding;
     (ix) mergers and consolidations and dissolutions and other transactions
permitted under Section 6.03;
     (x) Hedging Agreements permitted under Section 6.15;
     (xi) Investments in deposit accounts in the ordinary course of business of
the Borrower and its Restricted Subsidiaries;
     (xii) security deposits required by utility companies and other Persons in
a similar line of business to that of utility companies and Governmental
Authorities that are utility companies, in each case, made in the ordinary
course of business of the Borrower and its Restricted Subsidiaries;
     (xiii) Investments described on Schedule 1.01(b) in connection with the
Permitted Restructuring;
     (xiv) other Investments in an aggregate amount at any time outstanding not
to exceed $50.0 million; provided that any such Investment in the form of a loan
or advance to any Loan Party shall be subordinated to the Obligations on terms
reasonably satisfactory to the Administrative Agent;
     (xv) Investments consisting of any deferred portion (including promissory
notes and non-cash consideration) of the sales price received by the Borrower or
any Restricted Subsidiary in connection with any Asset Sale permitted under
Section 6.05;

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     (xvi) advances of payroll payments to employees in the ordinary course of
business;
     (xvii) Investments constituting or resulting from (i) accounts receivable
arising or acquired or (ii) trade debt granted, in each case in the ordinary
course of business;
     (xviii) Investments in respect of Treasury Services Agreements permitted
under Section 6.01(x);
     (xix) Investments constituting (A) Sale and Leaseback Transactions
permitted under Section 6.06 or (B) Restricted Payments permitted under
Section 6.07; and
     (xx) the endorsement of negotiable instruments for deposit or collection in
the ordinary course of business;
provided, however, that any intercompany Investments in the form of a loan or
advance held by a Loan Party shall be evidenced by a promissory note in form and
substance reasonably satisfactory to the Administrative Agent.
          The aggregate amount of an Investment at any one time outstanding for
purposes of this Section 6.04 shall be deemed to be equal to (A) the aggregate
amount of cash, together with the aggregate fair market value of Property,
loaned, advanced, contributed, transferred or otherwise invested that gives rise
to such Investment (without adjustment for subsequent increases or decreases in
the value of such Investment) minus (B) the aggregate amount of dividends,
distributions or other payments received in cash in respect of such Investment
(including by way of a sale or other disposition of such Investment). The amount
of an Investment shall not in any event be reduced by reason of any write-off of
such Investment.
          SECTION 6.05 Asset Sales. The Borrower will not, and will not permit
any of its Restricted Subsidiaries to, effect any Asset Sale, except:
     (i) sales of inventory or the disposition (including the abandonment of
immaterial intellectual property) of surplus, obsolete or worn out equipment and
other property or property which is no longer used, in each case in the ordinary
course of business of the Borrower and its Restricted Subsidiaries;
     (ii) sales, transfers and other dispositions of Property (A) by the
Borrower or any Restricted Subsidiary to the Borrower or any Subsidiary
Guarantor that is a Wholly Owned Subsidiary of the Borrower or (B) by any
Non-Guarantor Restricted Subsidiary to any Wholly Owned Restricted Subsidiary;
     (iii) the lease or sublease of Real Property in the ordinary course of
business of the Borrower and its Restricted Subsidiaries and not constituting a
Sale and Leaseback Transaction;
     (iv) sales and dispositions of Permitted Investments on ordinary business
terms;
     (v) Liens permitted by Section 6.02, mergers, consolidations, liquidations
and dissolutions permitted by Section 6.03 and Investments permitted by
Section 6.04;

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     (vi) Small Asset Sales;
     (vii) Asset Sales described on Schedule 1.01(b) in connection with the
Permitted Restructuring;
     (viii) sales, transfers and dispositions of assets not otherwise permitted
under this Section (including Sale and Leaseback Transactions permitted under
Section 6.06); provided that (A) immediately after giving effect to any such
sale, transfer or disposition, no Default or Event of Default shall have
occurred and be continuing, (B) the aggregate fair market value of all assets
sold, transferred or otherwise disposed of in reliance upon this
Section 6.05(viii) from the Effective Date through the date of such sale,
transfer or other disposition do not exceed the Asset Sale Cap (for the
avoidance of doubt, any subsequent decrease in the Asset Sale Cap shall not
constitute a Default or an Event of Default with respect to sales, transfers and
dispositions previously made as permitted by this Section 6.05(viii)) and
(C) the Net Proceeds thereof are applied as and to the extent required by
Section 2.04(b)(ii);
     (ix) the issuance of qualifying shares of Restricted Subsidiaries to
officers and directors of such Restricted Subsidiaries to the extent required by
applicable Requirements of Law;
     (x) Permitted Guarantor Factoring Transactions and Permitted Non-Guarantor
Factoring Transactions;
     (xi) dispositions of accounts receivable in connection with compromise,
write down or collection thereof in the ordinary course of business;
     (xii) Specified Asset Sales; provided that the Net Proceeds thereof are
applied as required by Section 2.04(b)(ii);
     (xiii) transfers of property subject to a Taking or in connection with any
condemnation proceeding upon receipt of the Net Proceeds of such Taking or
condemnation proceeding;
     (xiv) any Sale and Leaseback Transaction in respect of the Headquarters
Building;
     (xv) dispositions of the Equity Interests of or other Investments in any
Joint Venture to the extent required by the terms of customary buy/sell type
arrangements entered into in connection with the formation of such Joint
Venture; and
     (xvi) dispositions of property to the extent that such property is
exchanged for credit against the purchase price of similar replacement property
which is concurrently purchased pursuant to a transaction otherwise permitted
hereunder, in each case under Section 1031 of the Code;
provided that all sales, transfers, leases and other dispositions permitted
hereby shall be made for fair value and (other than in the case of sales,
transfers, leases and other dispositions permitted by Sections 6.05(v),
6.05(vii), 6.05(ix), 6.05(xv) and 6.05(xvi)), for consideration consisting of at
least 75% cash and Cash Equivalents.

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          SECTION 6.06. Sale and Leaseback Transactions. The Borrower will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into any arrangement, directly or indirectly, whereby it shall
sell or transfer any Property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter lease such Property or
other Property that it intends to use for substantially the same purpose or
purposes as the Property sold or transferred (a “Sale and Leaseback
Transaction”) unless (a) such Sale and Leaseback Transaction is consummated for
fair value as determined at the time of consummation in good faith by (i) the
Borrower or such Restricted Subsidiary and (ii) in the case of any Sale and
Leaseback Transaction (or series of related Sale and Leaseback Transactions) the
aggregate proceeds of which exceed $25.0 million, the board of directors of the
Borrower or such Restricted Subsidiary (which such determination may take into
account any retained interest or other Investment of the Borrower or such
Restricted Subsidiary in connection with, and any other material economic terms
of, such Sale and Leaseback Transaction); (b) except in the case of any Sale and
Leaseback Transaction in respect of the Headquarters Building, the sale of such
Property is permitted by Section 6.05(viii); and (c) except in the case of any
Sale and Leaseback Transaction in respect of the Headquarters Building, the Net
Proceeds of the sale of such Property are applied as and to the extent required
by Section 2.04(b)(ii); provided, this Section 6.06 shall not apply to Sale and
Leaseback Transactions (i) between Loan Parties or (ii) between Non-Guarantor
Restricted Subsidiaries.
          SECTION 6.07. Restricted Payments. The Borrower will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, declare or
make, any Restricted Payment or incur any obligation (contingent or otherwise)
to do so, except:
     (i) any Restricted Subsidiary may declare and pay dividends to the
Borrower, any other Restricted Subsidiary or any other holder of its Equity
Interests ratably with respect to its Equity Interests or additional Equity
Interests (other than Disqualified Equity Interests) of the same class of Equity
Interests as the dividend being paid; provided that no such dividend or
distribution shall be made by any such Restricted Subsidiary to any Person other
than the Borrower or another Restricted Subsidiary unless ratable dividends or
distributions are concurrently made to all holders of the applicable Equity
Interests;
     (ii) the Borrower may pay dividends consisting solely of shares of its
common stock or additional shares of the same class of shares as the dividend
being paid or other Equity Interests (other than Disqualified Equity Interests);
and
     (iii) the Borrower and its Restricted Subsidiaries may make Restricted
Payments not to exceed $25.0 million in the aggregate since the Effective Date;
provided that no Default shall have occurred and is continuing or would result
therefrom.
          SECTION 6.08. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
sell, lease or otherwise transfer any property or assets to, or purchase, lease
or otherwise acquire any property or assets from, or otherwise engage in any
other transactions with, any of its Affiliates, unless such transactions are in
the ordinary course of business of the Borrower and its Restricted Subsidiaries
and are on terms and conditions not less favorable to the Borrower or such
Restricted Subsidiary than could be obtained on an arm’s-length basis from
unrelated third parties, except:
     (i) loans, advances and other transactions between or among the Borrower,
any Restricted Subsidiary or any Joint Venture (regardless of the form of legal
entity) in which the Borrower or any Restricted Subsidiary has invested (and
which Restricted Subsidiary or

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Joint Venture would not be an Affiliate of the Borrower but for the Borrower’s
or a Subsidiary’s ownership of Equity Interests in such Joint Venture or
Subsidiary) to the extent permitted under Article VI;
     (ii) reasonable and customary fees and compensation, benefits and incentive
arrangements paid or provided to, and any reasonable and customary indemnity
provided on behalf of, officers, directors or employees of the Borrower or any
Restricted Subsidiary, as determined in good faith by the Borrower or such
Restricted Subsidiary;
     (iii) loans and advances to employees of the Borrower or any Subsidiary
Guarantor permitted by Section 6.04(vi); and
     (iv) transactions permitted by Section 6.07.
          SECTION 6.09. Restrictive Agreements. The Borrower will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of any Loan
Party to create, incur or permit to exist any Lien upon any of its Property, or
(b) the ability of any Restricted Subsidiary to pay dividends or other
distributions with respect to any of its Equity Interests or to make or repay
loans or advances to the Borrower or any other Subsidiary or to Guarantee
Indebtedness of the Borrower or any other Restricted Subsidiary or to transfer
property to the Borrower or any of its Restricted Subsidiaries; provided that
the foregoing shall not apply to:
     (i) (A) conditions or restrictions imposed by law or by any Loan Document,
Term Loan Document or Revolving Credit Loan Document or (B) customary conditions
or restrictions imposed by the definitive documentation governing Securities
issued pursuant to Section 5.20 (or Permitted Refinancings of such Securities);
     (ii) clause (a) shall not apply to assets encumbered by Permitted Liens as
long as such restriction applies only to the asset encumbered by such Permitted
Lien;
     (iii) restrictions and conditions existing on the Effective Date not
otherwise excepted from this Section 6.09 identified on Schedule 6.09 (but shall
not apply to any amendment or modification expanding the scope of any such
restriction or condition);
     (iv) in the case of clause (a) only, any agreement in effect at the time
any Person becomes a Subsidiary of the Borrower; provided that such agreement
was not entered into in contemplation of such Person becoming a Subsidiary;
     (v) customary restrictions and conditions contained in agreements relating
to the sale of a Restricted Subsidiary (or the assets of a Restricted Subsidiary
or the Borrower) pending such sale, provided such restrictions and conditions
apply only to the Restricted Subsidiary that is to be sold (or whose assets are
to be sold) and such sale is permitted hereunder;
     (vi) clause (a) shall not apply to customary provisions in leases,
subleases, licenses, sublicenses and service contracts in the ordinary course of
business of the Borrower and its Restricted Subsidiaries between the Borrower or
any Restricted Subsidiary and its customers and other contracts restricting the
assignment thereof;

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     (vii) without affecting the Borrower’s obligations under Sections 5.12 and
5.15, customary provisions in joint venture agreements entered into in
connection with the formation of such joint venture in the ordinary course of
business that (x) restrict the transfer of Equity Interests in such joint
venture or (y) the case of any joint venture that is not a Loan Party, provide
for other restrictions of the type described in clauses (a) and (b) above,
solely with respect to the Equity Interests in, or property held in, such joint
venture; and
     (viii) any agreement with respect to Indebtedness of a Non-U.S. Restricted
Subsidiary permitted pursuant to this Agreement so long as such prohibitions or
limitations are only with respect to the properties and revenues of such
Subsidiary or any Subsidiary of such Non-U.S. Restricted Subsidiary.
          SECTION 6.10. Amendments or Waivers of Certain Documents; Prepayments
of Certain Indebtedness. (a) The Borrower will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, amend or otherwise
change (or waive) the terms of any Organizational Document in a manner that,
taken, as a whole, could reasonably be expected to materially and adversely
affect the interests of the Lenders.
          (b) The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, (i) make (or give any notice or offer in respect of) any
voluntary or optional payment or mandatory prepayment or redemption, or
defeasance or acquisition for value of (including by way of depositing with any
trustee with respect thereto money or securities before such Indebtedness is due
for the purpose of paying such Indebtedness when due) or exchange of principal
of, any Subordinated Debt, other than (A) pursuant to any customary registered
exchange offer therefor after a private placement thereof, (B) any Permitted
Refinancings thereof or (C) so long as no Default then exists, any exchange of
Equity Interests of the Borrower for any such Indebtedness or (ii) make any
payment on or with respect to any Subordinated Debt wholly among the Loan
Parties in violation of the subordination provisions thereof.
          (c) The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, amend or modify, or permit the amendment or modification of,
any provision of any document governing any Material Indebtedness (other than
Indebtedness under the Loan Documents or the Exchange Notes) in any manner that,
taken as a whole, could reasonably be expected to materially and adversely
affect the interests of the Lenders.
          SECTION 6.11. Accounting Treatment; Fiscal Year. The Borrower will
not, and will not permit any of its Restricted Subsidiaries to:
          (a) make or permit any material change in accounting policies or
reporting practices or tax reporting treatment which is adverse to the Lenders,
except changes that are permitted by GAAP or required by any Requirement of Law
and disclosed in writing to the Administrative Agent; or
          (b) change its fiscal year-end to a date other than December 31.
          SECTION 6.12. Hedging Agreements. The Borrower will not, and will not
permit any of its Restricted Subsidiaries to, enter into any Hedging Agreement,
other than (a) Hedging Agreements required by Section 5.16, (b) Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower and its Restricted Subsidiaries may be exposed in
the conduct of their business or the management of their liabilities, and
(c) Hedging Agreements entered into in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating

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          rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of the Borrower and its Restricted
Subsidiaries.
          SECTION 6.13. Assets, Liabilities and Actions of SFC. The Borrower
will not permit SFC to own any assets (other than the Funding Co. Accounts (as
such term is defined in the Monsanto Settlement Agreement) and the funds on
deposit therein), incur any obligations (other than obligations under the
Monsanto Settlement Agreement, obligations that are necessary to fulfill such
obligations and obligations in connection with the maintenance of its existence)
or take any actions in violation of the SFC Limited Liability Company Agreement.
ARTICLE VII
EVENTS OF DEFAULT
     SECTION 7.01. Listing of Events of Default. Each of the following events or
occurrences described in this Section 7.01 shall constitute an “Event of
Default”:
     (a) The Borrower or any other Loan Party shall default (i) in the payment
when due of any principal of any Loan, (ii) in the payment when due of any
interest on any Loan (and such default shall continue unremedied for a period of
five Business Days), or (iii) in the payment when due of any fee described in
Section 2.08 or of any other previously invoiced amount (other than an amount
described in clauses (i) and (ii)) payable under this Agreement or any other
Loan Document (and such default in the payment of any such fee or other amount
shall continue unremedied for a period of 20 Business Days).
     (b) Any representation or warranty of the Borrower or any other Loan Party
made or deemed to be made hereunder or in any other Loan Document or any other
writing or certificate furnished by or on behalf of the Borrower or any other
Loan Party to the Administrative Agent or any Lender for the purposes of or in
connection with this Agreement or any such other Loan Document is or shall be
incorrect in any material respect when made or deemed made.
     (c) The Borrower or any other Loan Party shall default in the due
performance and observance of any of its obligations under Sections 5.01(e),
5.01(f) or 5.01(j), Section 5.02(a) (with respect to the maintenance and
preservation of the Borrower’s corporate existence), Section 5.19, Section 5.20
or Article VI.
     (d) The Borrower or any other Loan Party shall default in the due
performance and observance of any agreement (other than those specified in
paragraphs (a) through (c) above) contained herein or in any other Loan
Document, and such default shall continue unremedied for a period of 30 days
after the earlier to occur of (i) knowledge of such default by an executive
officer or Financial Officer (or any other officer or similar official with
responsibility for the administration of the obligations of the Borrower in
respect of this Agreement) of the Borrower and (ii) written notice of such
default from the Administrative Agent or any Lender to the Borrower.
     (e) A default shall occur with respect to any Material Indebtedness if the
effect of such default is to accelerate the maturity of any such Material
Indebtedness, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity.

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     (f) Any judgment or order (or combination of judgments and orders) for the
payment of money equal to or in excess of $25.0 million (to the extent not
(i) paid, (ii) covered by insurance as to which such insurer has been notified
of such judgment or order and has not denied coverage or (iii) covered by an
indemnity by a third party as to which such Person has been notified of such
judgment or order and has accepted liability for payment of such judgment or
order) individually or in the aggregate shall be rendered against the Borrower
or any of its Restricted Subsidiaries (or any combination thereof) and
     (i) enforcement proceedings shall have been commenced by any creditor upon
such judgment or order and not stayed;
     (ii) such judgment has not been bonded pending appeal, stayed, vacated or
discharged within 60 days of entry; or
     (iii) there shall be any period (after any applicable statutory grace
period) of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect.
     (g) Any of the following events shall occur:
     (i) the taking of, or failure to take, any specific actions by the Borrower
or any Restricted Subsidiary or ERISA Affiliate or any other Person if, as a
result of such act or omission, the Borrower or any Restricted Subsidiary or
ERISA Affiliate could reasonably expect to incur a liability or obligation to
such Pension Plan which could reasonably be expected to result in a Material
Adverse Effect or in the imposition of a Lien on any properties of the Borrower
or any Restricted Subsidiary; or
     (ii) an ERISA Event, or termination, withdrawal or event of noncompliance
with applicable law or plan terms with respect to Foreign Plans, shall have
occurred that when taken together with all other ERISA Events and terminations,
withdrawals and events of noncompliance with respect to Foreign Plans that have
occurred, could reasonably be expected to have a Material Adverse Effect.
     (h) Any Change of Control shall occur.
     (i) The Borrower or any Restricted Subsidiary (other than an Immaterial
Restricted Subsidiary) shall
     (i) become insolvent or generally (and with respect to the European Loan
Parties (as defined in the Revolving Credit Agreement), on a persistent basis)
fail to pay debts as they become due;
     (ii) apply for, consent to or acquiesce in the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or such Restricted
Subsidiary or substantially all of its property, or make a general assignment
for the benefit of creditors;
     (iii) in the absence of such application, consent or acquiescence, permit
or suffer to exist the appointment of a trustee, receiver, sequestrator or other
custodian for the Borrower or any Restricted Subsidiary or for a substantial
part of its property, and such trus-

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tee, receiver, sequestrator or other custodian shall not be discharged or stayed
within 60 days, provided that the Borrower hereby expressly authorizes the
Administrative Agent and each Lender to appear in any court conducting any
relevant proceeding during such 60-day period to preserve, protect and defend
their rights under the Loan Documents;
     (iv) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Borrower or any Restricted Subsidiary (other than
any dissolution or liquidation permitted under Section 6.03) and, if any such
case or proceeding is not commenced by the Borrower or any Restricted
Subsidiary, such case or proceeding shall be consented to or acquiesced in by
the Borrower or any Restricted Subsidiary or shall result in the entry of an
order for relief or shall remain for 60 days undismissed and unstayed; provided
that the Borrower hereby expressly authorizes the Administrative Agent and each
Lender to appear in any court conducting any such case or proceeding during such
60-day period to preserve, protect and defend their rights under the Loan
Documents; or
     (v) take any corporate or partnership action (or comparable action, in the
case of any other form of legal entity) indicating its consent to, approval of,
or acquiescence in, any of the foregoing.
     (j) The obligations of any Loan Party under the Guarantee Agreement or any
Non-U.S. Guarantee Agreement shall cease to be in full force and effect (except
in accordance with the terms thereof) or any such Loan Party shall repudiate its
obligations thereunder.
     (k) Any Loan Document shall cease to be in full force and effect (except in
accordance with its terms).
          SECTION 7.02. Action if Bankruptcy. If any Event of Default described
in Section 7.01(i) shall occur, the Commitments (if not theretofore terminated)
shall automatically terminate and the outstanding principal amount of all
outstanding Loans and all other Obligations shall automatically be and become
immediately due and payable, without notice or demand, all of which are hereby
waived by the Borrower.
          SECTION 7.03. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in Section 7.01(i)) shall
occur for any reason, whether voluntary or involuntary, and be continuing, the
Administrative Agent, upon the direction of the Requisite Lenders, shall by
written notice to the Borrower and each Lender declare all or any portion of the
outstanding principal amount of the Loans and other Obligations to be due and
payable and/or the Commitments (if not theretofore terminated) to be terminated,
whereupon the full unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become immediately due and payable,
without further notice, demand or presentment and/or, as the case may be, the
Commitments shall terminate.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
          SECTION 8.01. Appointment and Authority. Each Lender hereby
irrevocably appoints Citibank, N.A. to act on its behalf as the Administrative
Agent hereunder and under the other Loan

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Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto. The provisions of this Article are solely for the
benefit of the Administrative Agent and the Lenders, and neither the Borrower
nor any other Loan Party shall have rights as a third party beneficiary of any
of such provisions.
          SECTION 8.02. Administrative Agent Individually. (a) Each Person
serving as Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as
though it were not the Administrative Agent and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated or unless the context otherwise
requires, include the Person serving as the Administrative Agent hereunder in
its individual capacity. Such Person and its Affiliates may accept deposits
from, lend money to, act as the financial advisor or in any other advisory
capacity for and generally engage in any kind of business with the Borrower or
any Subsidiary or other Affiliate thereof as if such Person were not the
Administrative Agent hereunder and without any duty to account therefor to the
Lenders.
          (b) Each Lender understands that the respective Persons serving as the
Administrative Agent, Syndication Agent, Documentation Agent and Joint Lead
Arrangers and Bookrunners, acting in their individual capacities, and their
respective Affiliates (collectively, the “Agents’ Groups”) are engaged in a wide
range of financial services and businesses (including investment management,
financing, securities trading, corporate and investment banking and research)
(such services and businesses are collectively referred to in this Section 8.02
as “Activities”) and may engage in the Activities with or on behalf of one or
more of the Loan Parties or their respective Affiliates. Furthermore, the
Agents’ Groups may, in undertaking the Activities, engage in trading in
financial products or undertake other investment businesses for their respective
own accounts or on behalf of others (including the Loan Parties and their
Affiliates and including holding, for their respective own accounts or on behalf
of others, equity, debt and similar positions in the Borrower, another Loan
Party or their respective Affiliates), including trading in or holding long,
short or derivative positions in securities, loans or other financial products
of one or more of the Loan Parties or their Affiliates. Each Lender understands
and agrees that in engaging in the Activities, the Agents’ Groups may receive or
otherwise obtain information concerning the Loan Parties or their Affiliates
(including information concerning the ability of the Loan Parties to perform
their respective Obligations hereunder and under the other Loan Documents) which
information may not be available to any of the Lenders that are not members of
the Agents’ Groups. None of the members of the Agents’ Groups shall have any
duty to disclose to any Lender or use on behalf of the Lenders, and none of the
members of the Agents’ Group shall be liable for the failure to so disclose or
use, any information whatsoever about or derived from the Activities or
otherwise (including any information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of any
Loan Party or any Affiliate of any Loan Party) or required to account for any
revenue or profits obtained in connection with the Activities, except that the
Administrative Agent shall deliver or otherwise make available to each Lender
such documents as are expressly required by any Loan Document to be transmitted
by the Administrative Agent to the Lenders.
          (c) Each Lender further understands that there may be situations where
members of the Agents’ Groups or their respective customers (including the Loan
Parties and their Affiliates) either now have or may in the future have
interests or take actions that may conflict with the interests of any one or
more of the Lenders (including the interests of the Lenders hereunder and under
the other Loan Documents). Each Lender agrees that no member of the Agents’
Groups is or shall be required to restrict its activities as a result of the
Person serving as the Administrative Agent, Syndication Agent, Documentation
Agent or Joint Lead Arranger and Bookrunner being a member of the Agents’
Groups,

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and that each member of the Agents’ Groups may undertake any Activities without
further consultation with or notification to any Lender. None of (i) this
Agreement nor any other Loan Document, (ii) the receipt by the Agents’ Groups of
information (including Information) concerning the Loan Parties or their
Affiliates (including information concerning the ability of the Loan Parties to
perform their respective Obligations hereunder and under the other Loan
Documents) nor (iii) any other matter shall give rise to any fiduciary,
equitable or contractual duties (including any duty of trust or confidence)
owing by any member of the Agents’ Groups to any Lender including any such duty
that would prevent or restrict the Agents’ Groups from acting on behalf of
customers (including the Loan Parties or their Affiliates) or for their
respective own accounts.
          SECTION 8.03. Duties of Administrative Agent; Exculpatory Provisions.
(a) The Administrative Agent’s duties hereunder and under the other Loan
Documents are solely ministerial and administrative in nature and the
Administrative Agent shall have no duties or obligations except those expressly
set forth herein and in the other Loan Documents. Without limiting the
generality of the foregoing, the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, but shall be
required to act or refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the written direction of the Requisite
Lenders (or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents), provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent or
any of its Affiliates to liability or that is contrary to any Loan Document or
applicable law.
          (b) No member of the Agents’ Groups shall be liable to the Lenders for
any action taken or not taken by it (i) with the consent or at the request of
the Requisite Lenders (or such other number or percentage of the Lenders as
shall be necessary, or as such member of the Agents’ Groups shall believe in
good faith shall be necessary, under the circumstances as provided in
Sections 7.03 or 9.08) or (ii) in the absence of its own gross negligence or
willful misconduct, as determined by a final judgment of a court of competent
jurisdiction. The Administrative Agent shall not be deemed to have knowledge of
any Default or the event or events that give or may give rise to any Default
unless and until the Borrower or any Lender shall have given notice to the
Administrative Agent describing such Default and such event or events.
          (c) None of the Administrative Agent nor any member of the Agents’
Group shall be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty, representation or other information made or
supplied in or in connection with this Agreement, any other Loan Document or the
Information Memorandum, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith or the adequacy, accuracy and/or completeness of the information
contained therein, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document or (v) the satisfaction of any condition set forth in
Article IV or elsewhere herein, other than (but subject to the foregoing clause
(ii)) to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
          (d) Nothing in this Agreement or any other Loan Document shall require
the Administrative Agent or any of its Related Parties to carry out any “know
your customer” or other checks in relation to any person on behalf of any Lender
and each Lender confirms to the Administrative Agent that it is solely
responsible for any such checks it is required to carry out and that it may not
rely on any statement in relation to such checks made by the Administrative
Agent or any of its Related Parties.

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          SECTION 8.04. Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including any electronic message, Internet or
intranet website posting or other distribution) believed by it to be genuine and
to have been signed, sent or otherwise authenticated by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the proper Person, and shall
not incur any liability for relying thereon. In determining compliance with any
condition hereunder to the making of a Loan that by its terms must be fulfilled
to the satisfaction of a Lender, the Administrative Agent may presume that such
condition is satisfactory to such Lender unless an officer of the Administrative
Agent responsible for the transactions contemplated hereby shall have received
notice to the contrary from such Lender prior to the making of such Loan, and
such Lender shall not have made available to the Administrative Agent such
Lender’s ratable portion of such Loan. The Administrative Agent may consult with
legal counsel (who may be counsel for the Borrower or any other Loan Party),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.
          SECTION 8.05. Delegation of Duties. The Administrative Agent may
perform any and all of its duties and exercise its rights and powers hereunder
or under any other Loan Document by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties. Each such sub-agent and
the Related Parties of the Administrative Agent and each such sub-agent shall be
entitled to the benefits of all provisions of this Article and Section 9.05 (as
though such sub-agents were the “Administrative Agent” under the Loan Documents)
as if set forth in full herein with respect thereto.
          SECTION 8.06. Resignation of Administrative Agent. The Administrative
Agent may at any time give notice of its resignation to the Lenders and the
Borrower. Upon receipt of any such notice of resignation, the Requisite Lenders
shall have the right, subject to the reasonable consent of the Borrower (such
consent (i) not to be unreasonably withheld or delayed and (ii) not to be
required after the occurrence and during the continuance of an Event of Default
under Section 7.01(a) or Section 7.01(i)), to appoint a successor, which shall
be a bank with an office in New York, New York, or an Affiliate of any such bank
with an office in New York, New York. If no such successor shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation (such 30-day period, the “Lender Appointment Period”), then the
retiring Administrative Agent may on behalf of the Lenders, appoint a successor
Administrative Agent meeting the qualifications set forth above. In addition and
without any obligation on the part of the retiring Administrative Agent to
appoint, on behalf of the Lenders, a successor Administrative Agent, the
retiring Administrative Agent may at any time upon or after the end of the
Lender Appointment Period notify the Borrower and the Lenders that no qualifying
Person has accepted appointment as successor Administrative Agent and the
effective date of such retiring Administrative Agent’s resignation. Upon the
resignation effective date established in such notice and regardless of whether
a successor Agent has been appointed and accepted such appointment, the retiring
Administrative Agent’s resignation shall nonetheless become effective and
(i) the retiring Administrative Agent shall be discharged from its duties and
obligations as Administrative Agent hereunder and under the other Loan Documents
and (ii) all payments, communications and determinations provided to be made by,
to or through the Administrative Agent shall instead be made by or to each
Lender directly, until such time as the Requisite Lenders appoint a successor
Administrative Agent as provided for above in this paragraph. Upon the
acceptance of a successor’s appointment as the Administrative Agent hereunder,
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring (or retired) Administrative

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          Agent, and the retiring Administrative Agent shall be discharged from
all of its duties and obligations as the Administrative Agent hereunder or under
the other Loan Documents (if not already discharged therefrom as provided above
in this paragraph). The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
retiring Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 9.05 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.
          SECTION 8.07. Non-Reliance on Administrative Agent and Other Lenders.
(a) Each Lender confirms to the Administrative Agent, each other Lender and each
of their respective Related Parties that it (i) possesses (individually or
through its Related Parties) such knowledge and experience in financial and
business matters that it is capable, without reliance on the Administrative
Agent, any other Lender or any of their respective Related Parties, of
evaluating the merits and risks (including tax, legal, regulatory, credit,
accounting and other financial matters) of (x) entering into this Agreement,
(y) making Loans and other extensions of credit hereunder and under the other
Loan Documents and (z) in taking or not taking actions hereunder and thereunder,
(ii) is financially able to bear such risks and (iii) has determined that
entering into this Agreement and making Loans and other extensions of credit
hereunder and under the other Loan Documents is suitable and appropriate for it.
          (b) Each Lender acknowledges that (i) it is solely responsible for
making its own independent appraisal and investigation of all risks arising
under or in connection with this Agreement and the other Loan Documents,
(ii) that it has, independently and without reliance upon the Administrative
Agent, any other Lender or any of their respective Related Parties, made its own
appraisal and investigation of all risks associated with, and its own credit
analysis and decision to enter into, this Agreement based on such documents and
information, as it has deemed appropriate and (iii) it will, independently and
without reliance upon the Administrative Agent, any other Lender or any of their
respective Related Parties, continue to be solely responsible for making its own
appraisal and investigation of all risks arising under or in connection with,
and its own credit analysis and decision to take or not take action under, this
Agreement and the other Loan Documents based on such documents and information
as it shall from time to time deem appropriate, which may include, in each case:
     (i) the financial condition, status and capitalization of the Borrower and
each other Loan Party;
     (ii) the legality, validity, effectiveness, adequacy or enforceability of
this Agreement and each other Loan Document and any other agreement, arrangement
or document entered into, made or executed in anticipation of, under or in
connection with any Loan Document;
     (iii) determining compliance or non-compliance with any condition hereunder
to the making of a Loan and the form and substance of all evidence delivered in
connection with establishing the satisfaction of each such condition; and
     (iv) the adequacy, accuracy and/or completeness of the Information
Memorandum and any other information delivered by the Administrative Agent, any
other Lender or by any of their respective Related Parties under or in
connection with this Agreement or any other Loan Document, the transactions
contemplated hereby and thereby or any other agree-

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     ment, arrangement or document entered into, made or executed in
anticipation of, under or in connection with any Loan Document.
          SECTION 8.08. No Other Duties, etc. Anything herein to the contrary
notwithstanding, none of the Persons acting as Joint Lead Arrangers and
Bookrunners, Syndication Agent or Documentation Agent listed on the cover page
hereof shall have any powers, duties or responsibilities under this Agreement or
any of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent or as a Lender hereunder.
ARTICLE IX
MISCELLANEOUS
     SECTION 9.01. Notices. (a) All notices, demands, requests, consents and
other communications provided for in this Agreement shall be given in writing,
or by any telecommunication device capable of creating a written record
(including electronic mail), and addressed to the party to be notified as
follows:
          (i) if to the Borrower or any other Loan Party,
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 of: James Tichenor and Rosemary Klein
Telecopier No.: 314-674-2721
E-Mail Address:
Website Address: www.solutia.com
          (ii) if to the Administrative Agent,
Citibank, N.A.
2 Penn’s Way
New Castle, DE 19720
Attention of: Brenna Makin
Telecopier No.: 212-994-0849
E-Mail Address: Brenna.Makin@citi.com
          (iii) if to any other Lender, to it at its address (or telecopier
number) set forth in its Administrative Questionnaire,
or at such other address as shall be notified in writing (x) in the case of the
Borrower and the Administrative Agent, to the other parties and (y) in the case
of all other parties, to the Borrower and the Administrative Agent.
          (b) All notices, demands, requests, consents and other communications
described in Section 9.01(a) shall be effective (i) if delivered by hand,
including any overnight courier service, upon personal delivery, (ii) if
delivered by mail, when deposited in the mails, (iii) if delivered by posting to
an

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Approved Electronic Platform, an Internet website or a similar telecommunication
device requiring that a user have prior access to such Approved Electronic
Platform, website or other device (to the extent permitted by Section 9.17 to be
delivered thereunder), when such notice, demand, request, consent and other
communication shall have been made generally available on such Approved
Electronic Platform, Internet website or similar device to the class of Person
being notified (regardless of whether any such Person must accomplish, and
whether or not any such Person shall have accomplished, any action prior to
obtaining access to such items, including registration, disclosure of contact
information, compliance with a standard user agreement or undertaking a duty of
confidentiality) and such Person has been notified in respect of such posting
that a communication has been posted to the Approved Electronic Platform and
(iv) if delivered by electronic mail or any other telecommunications device,
when transmitted to an electronic mail address (or by another means of
electronic delivery) as provided in Section 9.01(a); provided, however, that
notices and communications to the Administrative Agent pursuant to Article II or
Article VIII) shall not be effective until received by the Administrative Agent.
          (c) Notwithstanding Sections 9.01(a) and 9.01(b) (unless the
Administrative Agent requests that the provisions of Sections 9.01(a) and
9.01(b) be followed) and any other provision in this Agreement or any other Loan
Document providing for the delivery of any Approved Electronic Communication by
any other means, the Loan Parties shall deliver all Approved Electronic
Communications to the Administrative Agent by properly transmitting such
Approved Electronic Communications in an electronic/soft medium in a format
reasonably acceptable to the Administrative Agent to
oploanswebadmin@citigroup.com or such other electronic mail address (or similar
means of electronic delivery) as the Administrative Agent may notify to the
Borrower. Nothing in this Section 9.01(c) shall prejudice the right of the
Administrative Agent or any Lender to deliver any Approved Electronic
Communication to any Loan Party in any manner authorized in this Agreement or to
request that the Borrower effect delivery in such manner.
          SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Loan Parties herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by Lenders hereto and shall survive the making by the
Lenders of the Loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default or Event of Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement or any other Loan Document is outstanding and so long as
the Commitments have not been terminated. The provisions of Sections 2.13, 2.14,
9.05 and 9.16 and Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the termination of the Commitments or the termination of
this Agreement or any provision hereof.
          SECTION 9.03. Binding Effect. Subject to Section 4.01, this Agreement
shall become effective when it shall have been executed by the Borrower and the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof (which may be by facsimile transmission or other electronic
image scan transmission (e.g., “PDF” or “tif” via e-mail)) which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted successors and assigns.
          SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and as-

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signs of such party. All covenants, promises and agreements by or on behalf of
the Borrower, the Administrative Agent or the Lenders that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns. Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in
Section 9.04(f) below and, solely to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
          (b) Each Lender may assign to one or more assignees (other than a
natural person, the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) all or a portion of its interests, rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided, however, that (i) except in the case of an
assignment to a Lender or a Lender Affiliate, the Administrative Agent must give
its prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed), (ii) unless an Event of Default has occurred
and is continuing, the consent of the Borrower shall be required for any
assignment prior to the Initial Maturity Date by an Initial Lender (other than
an assignment to an Initial Lender or an Affiliate of an Initial Lender) to the
extent that after giving effect to such assignment the Initial Lenders and their
respective Affiliates, in the aggregate, would hold less than a majority of the
outstanding principal amount of Loans at such time, (iii) except in the case of
an assignment to a Lender, a Lender Affiliate or a Federal Reserve Bank or in
connection with the initial syndication of the Commitments and Loans, the amount
of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $5.0 million and increments of $1.0 million in excess thereof (or (A) if
the aggregate amount of the Commitment or Loans of the assigning Lender is a
lesser amount, the entire amount of such Commitment or Loans, or (B) in any
other case, such lesser amount as the Borrower and the Administrative Agent
otherwise agree), (iv) except in the case of the assignment to an Affiliate of
such Lender or an assignment required to be made pursuant to Section 2.18, the
parties to each such assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500 (provided that only one such fee shall be payable in the event of
contemporaneous assignments to two or more Lender Affiliates by a Lender or by
two or more Lender Affiliates to a Lender and such fee shall not be payable by
the Borrower), and (v) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire; provided, further,
that any consent of the Borrower otherwise required under this paragraph shall
not be required if an Event of Default has occurred and is continuing. Subject
to acceptance and recording pursuant to paragraph (e) of this Section 9.04, from
and after the effective date specified in each Assignment and Assumption, which
effective date shall be at least five Business Days after the execution thereof
(unless otherwise determined by the Administrative Agent), (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Assumption 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 but shall continue to be entitled to the benefits of Sections 2.13, 2.14
and 9.05 with respect to facts and circumstances occurring prior to the
effective date of such assignment). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (f) of this Section.

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          (c) By executing and delivering an Assignment and Assumption, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitment, and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Assumption; (ii) except as set forth in (i) above,
such 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 the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Assumption; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements, if any,
delivered pursuant to Section 5.01 and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Assumption; (v) such assignee will independently and
without reliance upon the Administrative Agent, such assigning Lender or any
other 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; (vi) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
          (d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of (and interest on) the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). Except to the
extent inconsistent with Section 2.05(d), the entries in the Register shall be
conclusive and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender (with respect to its own interest only), at any reasonable time
and from time to time upon reasonable prior notice.
          (e) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower and the
Administrative Agent to such assignment, the Administrative Agent shall
(i) accept such Assignment and Assumption, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower. No
assignment shall be effective unless it has been recorded in the Register as
provided in this paragraph (e).
          (f) Each Lender may without the consent of the Borrower or the
Administrative Agent, sell participations to any Person (other than a natural
person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of its rights and obligations

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under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided, however, that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) each Participant shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.13 and 2.14 and the provisions of
Section 5.01 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section 9.04 (provided
that no participant shall be entitled to receive any greater amount pursuant to
such Sections than the Lender would have been entitled to receive in respect of
the interest transferred unless either (x) such transfer to such Participant is
made with the Borrower’s prior written consent (not to be unreasonably withheld)
or (y) a Default or an Event of Default has occurred and is continuing at the
time of such participation), and (iv) the Borrower, the Administrative Agent and
the Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement, and
such Lender shall retain the sole right (which each Lender agrees will not be
limited by the terms of any participation agreement or other agreement with a
participant) to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents (other than,
without the consent of the Participant, amendments, modifications or waivers
described in clauses (i), (ii), (iii) and (iv) of Section 9.08(c) that affect
such Participant). To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 9.06 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.17 as though it were a
Lender.
          (g) Any Lender, without the consent of or notice to the Borrower or
the Administrative Agent, may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank and this Section 9.04 shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto. In
order to facilitate such a pledge or assignment, the Borrower shall, at the
request of the assigning Lender, duly execute and deliver to the assigning
Lender a promissory note or notes evidencing the Loans made to the Borrower by
the assigning Lender hereunder.
          (h) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative Agent
and each Lender, and any attempted assignment without such consent shall be null
and void.
          SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay
(i) all reasonable and documented out-of-pocket expenses incurred by the
Administrative Agent, each of the Joint Lead Arrangers and Bookrunners and their
respective Affiliates, including the reasonable fees, charges and disbursements
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Administrative
Agent and the Joint Lead Arrangers and Bookrunners (and appropriate foreign and
local counsel in applicable foreign and local jurisdictions, but limited to one
local counsel in each such jurisdiction), in connection with the syndication of
the Loans and Commitments provided for herein, the preparation and
administration of this Agreement and the other Loan Documents or in connection
with any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions hereby contemplated shall be
consummated), and (ii) all reasonable and documented out-of-pocket expenses
incurred by any of the Joint Lead Arrangers and Bookrunners, the Administrative
Agent or any Lender in connection with the enforcement or protection of its
rights in connection with this Agreement (including its rights under this
Section), the other Loan Documents or the Loans made, including all such
reasonable and documented out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans, and, in connection with
any such enforcement or protection, the reasonable and documented

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fees, charges and disbursements of any other counsel for the Administrative
Agent, any of the Joint Lead Arrangers and Bookrunners or any Lender; provided
that in the absence of conflicts, reimbursement of legal fees and expenses shall
be limited to reasonable fees, charges and disbursements of one counsel for the
Administrative Agent, the Joint Lead Arrangers and Bookrunners and the Lenders
(which counsel shall be designated by the Administrative Agent) (and any
appropriate foreign and local counsel in applicable foreign and local
jurisdictions).
          (b) The Borrower agrees to indemnify the Administrative Agent, the
Syndication Agent, the Documentation Agent, each of the Joint Lead Arrangers and
Bookrunners, each Lender, each Affiliate of any of the foregoing Persons and
each of their respective Related Parties (each such Person being called an
“Indemnitee”) against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and out-of-pocket expenses, including
reasonable counsel fees, charges and disbursements, incurred by or asserted
against any Indemnitee arising out of, in any way connected with, or as a result
of (i) the execution, delivery and enforcement of this Agreement or any other
Loan Document or the Commitment Letter, Engagement Letter or Fee Letter or any
agreement or instrument contemplated thereby, the performance by the parties
hereto or thereto of their respective obligations thereunder, the Transactions
or the other transactions contemplated thereby, (ii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto, or (iii) any actual or alleged presence or
Release of Hazardous Materials at, on, under or from any property owned or
operated by the Borrower or any of the Subsidiaries, or any Environmental
Liability or Environmental Claim related in any way to the Borrower or the
Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be
available solely to the extent of counsel fees, charges and disbursements
incurred by counsel to such Indemnitee in defending such Indemnitee against the
action described in the Complaint filed in the United States Bankruptcy Court
for the Southern District of New York In re: Solutia Inc., et al. Debtors.
Solutia Inc., Plaintiff and CGMI, GSCP, DBSI and Deutsche Bank Trust Company
Americas, Defendants and any settlement related thereto and all such fees,
charges and disbursements shall be excluded in their entirety from this
indemnity; provided further that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or
expenses (A) are determined by a final judgment of a court of competent
jurisdiction to have arisen by reason of the Indemnitee’s gross negligence, bad
faith or willful misconduct or (B) arise from any action solely among
Indemnitees, other than any such actions that arise from an act or an omission
of the Borrower or any Subsidiary (and provided that withstanding the foregoing
provisions of this clause (B), the Administrative Agent, acting in such
capacity, shall in any event be indemnified subject to the other limitations set
forth in this Section); and provided, further, that in the absence of conflicts,
reimbursement of reasonable legal fees, charges and disbursements in respect of
any matter for which indemnification is sought shall be limited to reasonable
fees, charges and disbursements of one counsel for all such Indemnitees (which
counsel shall be designated by the Administrative Agent) (and any appropriate
foreign and local counsel in applicable foreign and local jurisdictions).
          (c) To the extent that the Borrower fails to promptly pay any amount
to be paid by it to the Administrative Agent, the Syndication Agent, the
Documentation Agent or any of the Joint Lead Arrangers and Bookrunners under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent, the Syndication Agent, the Documentation Agent or such
Joint Lead Arrangers and Bookrunners, as the case may be, such Lender’s pro rata
share (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount (other than syndication
expenses); provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent, the Syndication Agent, the
Documentation Agent or the applicable Joint Lead Arranger and

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Bookrunner in its capacity as such. For purposes hereof, a Lender’s “pro rata
share” shall be determined based upon its share of the sum of the total
outstanding Loans and unused Commitments at the time.
          (d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, and no Indemnitee shall assert, and each Indemnitee
hereby waives, any claim against the Borrower or any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any other agreement or
instrument contemplated hereby, the Transactions or any Loan or the use of the
proceeds thereof; provided that notwithstanding the foregoing, to the extent
required by Section 9.05(b), the Borrower shall be required to indemnify each
Indemnitee for any special, indirect, consequential or punitive damages of
Persons other than any Indemnitee.
          (e) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the invalidity
or unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Administrative Agent
or any Lender. All amounts due under this Section 9.05 shall be payable on
written demand (together with customary backup documentation supporting such
reimbursement request) therefor.
          SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
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 Lender or its Affiliates, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, to or for the credit or the
account of any Loan Party upon any amount becoming due and payable by any Loan
Party hereunder or under any other Loan Document (whether at stated maturity, by
acceleration or otherwise) against any amount held by such Lender or its
Affiliates, irrespective of whether or not such Lender or its Affiliates shall
have made any demand under this Agreement or such other Loan Document. In
connection with exercising its rights pursuant to the previous sentence, a
Lender or its Affiliates may at any time use any Loan Party’s credit balances
with the Lender or its Affiliates to purchase at the Lender’s or its Affiliates’
applicable spot rate of exchange any other currency or currencies which the
Lender or its Affiliates considers necessary to reduce or discharge any amount
due by such Loan Party to the Lender or its Affiliates, and may apply that
currency or those currencies in or towards payment of those amounts. The rights
of each Lender or its Affiliates under this Section are in addition to other
rights and remedies (including other rights of setoff) which such Lender or its
Affiliates may have. Each Lender or its Affiliates agrees promptly to notify the
Borrower and the Administrative Agent after making any such setoff; provided
that the failure to give such notice shall not affect the validity of such
setoff.
          SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
          SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent or any Lender in exercising any power or right hereunder or
under any Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative

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Agent and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default or Event of Default regardless of whether the Administrative Agent, any
Lender may have had notice or knowledge of such Default or Event of Default at
the time. No notice or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
          (b) Subject to Sections 9.08(c), 9.08(d), 9.08(e) and 9.08(f), no
amendment, modification, termination or waiver of any provision of any Loan
Document, or consent to any departure by any Loan Party therefrom, shall in any
event be effective without the written concurrence of the Requisite Lenders (or
the Administrative Agent with the written consent of the Requisite Lenders).
          (c) Without the written consent of each Lender that would be directly
adversely affected thereby (whose consent shall be sufficient therefor without
the consent of the Requisite Lenders), no amendment, modification, termination,
waiver or consent shall be effective if the effect thereof would:
     (i) extend the scheduled maturity of any Loan or Note;
     (ii) reduce or forgive the rate of interest on any Loan (other than any
waiver of any increase in the interest rate applicable to any Loan pursuant to
Section 2.06(b));
     (iii) extend the time for payment of any such interest;
     (iv) reduce or forgive the principal amount of any Loan or waive, reduce or
postpone any scheduled repayment pursuant to Section 2.05(a);
     (v) amend, modify, terminate or waive any provision of Section 9.08;
     (vi) except as expressly provided in the Loan Documents, release all or
substantially all of the Subsidiary Guarantors from the Guarantee Agreement or
the Non-U.S. Guarantee Agreements, as applicable;
     (vii) consent to the assignment or transfer by any Loan Party of any of its
rights and obligations under any Loan Document; or
     (viii) amend the indemnification obligations of the Lenders set forth in
Section 9.05(c) or amend Sections 2.02(b), 2.11(a) or 2.17 (only to the extent
relating to pro rata treatment of Lenders).
          (d) No amendment, modification, termination, waiver or consent with
respect to any provision of the Loan Documents, or consent to any departure by
any Loan Party therefrom, shall:
     (i) increase any Commitment of any Lender over the amount thereof then in
effect without the consent of such Lender;

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     (ii) amend, modify, terminate or waive any provision of Article VIII as the
same applies to the Administrative Agent, or any other provision hereof as the
same applies to the rights or obligations of, or fees payable to, the
Administrative Agent, in each case without the consent of the Administrative
Agent;
     (iii) amend, modify, terminate or waive any provision of any Loan Document
specifying the percentage of Lenders required to waive, amend or modify any
rights thereunder or make any determination to grant any consent thereunder
without the written consent of each Lender; or
     (iv) amend or supplement the Exchange Notes Indenture or the Exchange Notes
in any manner that would require the consent of each affected holder of Exchange
Notes under the Exchange Notes Indenture without the consent of each Lender
unless such amendment would not be adverse to such Lender in any material
respect.
          (e) Without notice to or the consent of any Lender, the Borrower or
the Administrative Agent, on the Initial Maturity Date and without any action by
the Administrative Agent, any Loan Party or any Lender, this Agreement and the
Guarantee Agreement shall automatically be amended as follows in order to make
the restrictions, requirements, rights and remedies described below that are
contained in this Agreement and the Guarantee Agreement substantially identical
with respect to restrictions, requirements, rights and remedies set forth in
Exhibit K (with mechanical and conforming changes to cross-references to
provisions of this Agreement and to refer where the context requires to, among
other things, “the Borrower,” this “Agreement,” the “Guarantee Agreement,” the
“Loans,” the “Lenders,” the “Administrative Agent” and “prepayments” rather than
the “Issuer,” the “Indenture,” the “Notes,” the “Holders,” the “Trustee” and
“purchases”):
     (i) the provisions of Section 2.04(b) shall be amended to conform to the
provisions described under “Description of exchange notes—Change of control” in
Exhibit K;
     (ii) the affirmative covenants set forth in Sections 5.01 (other than
clause (e) thereof), 5.05, 5.10, 5.12, 5.13, 5.15, 5.16, 5.18, 5.19 and 5.20 of
this Agreement will be deleted and the covenants set forth under “Description of
exchange notes—Certain covenants—SEC reports” and “Description of exchange
notes—Certain covenants—Additional guarantees” in Exhibit K shall be added to
Article V;
     (iii) the negative covenants set forth in Article VI of this Agreement will
be amended to conform to the negative covenants set forth under “Description of
exchange notes—Certain covenants” in Exhibit K;
     (iv) the Events of Default and remedies set forth in Article VII of this
Agreement will be amended to conform to those described under “Description of
exchange notes—Events of default” in Exhibit K (it being understood that any
event in existence prior to the Initial Maturity Date and is continuing shall be
taken into account in determining whether any Default or Event of Default exists
from and after the Initial Maturity Date);
     (v) defined terms used in sections amended pursuant to the foregoing
provisions shall be deleted (to the extent no longer used in this Agreement or
any other Loan Document) and new defined terms shall be added from or conformed
to, as applicable, the definitions contained under “Description of exchange
notes—Certain definitions” in Exhibit K; and

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     (vi) this Section will be amended, to the extent applicable, to (A) require
the consent of each Lender for amendments and waivers that would require the
consent of each affected holder of Exchange Notes and (B) permit the
Administrative Agent and the Borrower to amend or supplement this Agreement and
the other Loan Documents without the consent of any Lender to the extent a
corresponding amendment or supplement would not require the consent of any
holder of Exchange Notes under the Exchange Notes Indenture.
In furtherance of the foregoing, the Administrative Agent and the Borrower will
use commercially reasonable efforts to codify and document the amendments to
this Agreement and the Guarantee Agreement set forth in this Section 9.08(e) in
order to give effect to the intent of this clause (e) no later than the Initial
Maturity Date and unless the Requisite Lenders shall have objected to such
amended and restated agreement within five Business Days following the date a
final draft of such agreement is provided to the Requisite Lenders, the Borrower
and the Administrative Agent, on behalf of the Lenders, shall enter into such
amended agreements and such amended agreements shall be deemed to be this
“Agreement” and the Guarantee Agreement for all purposes of the Loan Documents.
          (f) If, in connection with any proposed change, waiver, discharge or
termination of or to any of the provisions of this Agreement, the consent of the
Requisite Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained, then the Borrower shall have
the right to either (i) replace such Non-Consenting Lender or Lenders (or, at
the option of the Borrower if the respective Lender’s consent is required with
respect to less than all Loans (or related Commitments), to replace only the
Commitments and/or Loans of the respective Non-Consenting Lender that gave rise
to the need to obtain such Lender’s individual consent) with one or more
assignees pursuant to, and with the effect of an assignment under, Section 2.18
so long as at the time of such replacement, each such assignee consents to the
proposed change, waiver, discharge or termination or (ii) terminate such
Non-Consenting Lender’s Commitment (if such Lender’s consent is required as a
result of its Commitment) and/or repay each of the outstanding Loans of such
Lender that gave rise to the need to obtain such Lender’s consent; provided
that, unless the Commitments that are terminated and Loans that are repaid
pursuant to the preceding clause (ii) are immediately replaced in full at such
time through the addition of new Lenders or the increase of the Commitments
and/or outstanding Loans of existing Lenders (who in each case must specifically
consent thereto), then in the case of any action pursuant to the preceding
clause (ii), the Requisite Lenders (determined after giving effect to the
proposed action) shall specifically consent thereto.
          (g) Further, notwithstanding anything to the contrary contained in
Section 9.08, if the Administrative Agent and the Borrower shall have jointly
identified an obvious error or any error or omission of a technical nature, in
each case that is immaterial (as determined by the Administrative Agent), in any
provision of the Loan Documents, then the Administrative Agent and the Borrower
shall be permitted to amend such provision and such amendment shall become
effective without any further action or consent of any other party to any Loan
Document if the same is not objected to in writing by the Requisite Lenders
within five Business Days following receipt of notice thereof.
          SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively, the “Charges”), shall exceed
the maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan or
participation in accordance with applicable law, the rate of interest payable in
respect of such Loan or participation hereunder, together with all Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to the
extent lawful, the

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interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this Section
shall be cumulated and the interest and Charges payable to such Lender in
respect of other Loans or participations or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Rate to the date of repayment, shall have
been received by such Lender.
          SECTION 9.10. Entire Agreement. This Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect to
the subject matter hereof is superseded by this Agreement and the other Loan
Documents; provided that any letter agreement relating to the subject matter
hereof between or among the Borrower and any of the Administrative Agent, the
Joint Lead Arrangers and Bookrunners and the Lenders shall remain effective in
accordance with its terms. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
          SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
          SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
          SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in
Section 9.03. Delivery of an executed signature page to this Agreement by
facsimile transmission or other electronic image scan transmission (e.g., “PDF”
or “tif” via e-mail) shall be as effective as delivery of a manually signed
counterpart of this Agreement.
          SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
          SECTION9.15. Jurisdiction; Consent to Service of Process. (a) Each of
the parties hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America for the Southern

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District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to this Agreement or the other Loan
Documents against the Borrower or its properties in the courts of any
jurisdiction.
          (b) Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court referred to in paragraph
(a) of this Section. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
          (c) Each party to this Agreement irrevocably consents to service of
process by hand or overnight courier service, or mailed by certified or
registered mail. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
          SECTION 9.16. Confidentiality. Each of the Administrative Agent and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its Related
Parties (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process (it being understood that, to the
extent permitted, the Administrative Agent or such Lender, as the case may be,
shall provide the Borrower with prompt notice thereof to the extent permitted by
law or such legal process), (d) to any other party hereto, (e) in connection
with (i) the exercise of any remedies hereunder or under any other Loan
Document, (ii) any action or proceeding relating to this Agreement or any other
Loan Document, (iii) the enforcement of rights under this Agreement or under any
other Loan Document or (iv) any litigation or proceeding to which the
Administrative Agent or any Lender or any of its respective Affiliates may be a
party; provided, however, in each case in this clause (e), the Administrative
Agent or Lender or their Affiliates, as the case may be, shall take reasonable
steps to preserve the confidential nature of the information, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (ii) any
actual or prospective direct or indirect party (or its managers, administrators,
trustees, partners, directors, officers, employees, agents, advisors and other
representatives), surety, reinsurer, guarantor or credit liquidity enhancer (or
their advisors) to or in connection with any swap, derivative or other similar
transaction under which payments are to be made by reference to the Obligations
or to the Borrower and its obligations or to this Agreement or payments
hereunder, (iii) any rating agency when required by it, (iv) the CUSIP Service
Bureau or any similar organization, (g) in customary fashion to market data
collectors, similar services providers to the lending industry, and service
providers to any of the Joint Lead Arrangers and Bookrunners, the Administrative
Agent, the Syndication Agent, the Documentation Agent and the Lenders in
connection with the

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administration and management of this Agreement and the other Loan Documents,
(h) with the consent of the Borrower or (i) to the extent such Information
(x) becomes publicly available other than as a result of a breach of this
Section or (y) becomes available to the Administrative Agent, any Lender or any
of their respective Affiliates on a nonconfidential basis from a source other
than any Loan Party not in violation of any written confidentiality agreement to
the knowledge of the Administrative Agent, such Lender or such Affiliate. For
purposes of this Section, “Information” means all non-public information
received from any Loan Party or any of its respective Subsidiaries relating to
any Loan Party or any of its respective Subsidiaries or any of their respective
businesses, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any Loan Party or any of its respective Subsidiaries. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has complied with Requirements of Law or exercised commercially
reasonable care.
          SECTION9.17. Posting of Approved Electronic Communications. (a) Each
of the Lenders and each Loan Party agree that the Administrative Agent may, but
shall not be obligated to, make the Approved Electronic Communications available
to the Lenders by posting such Approved Electronic Communications on IntraLinks™
or a substantially similar secured electronic platform chosen by the
Administrative Agent to be its electronic transmission system (the “Approved
Electronic Platform”).
          (b) Although the Approved Electronic Platform and its primary web
portal are secured with generally-applicable security procedures and policies
implemented or modified by the Administrative Agent from time to time
(including, as of the Effective Date, a dual firewall and a User ID/Password
Authorization System) and the Approved Electronic Platform is secured through a
single-user-per-deal authorization method whereby each user may access the
Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders
and each Loan Party acknowledges and agrees that the distribution of material
through an electronic medium is not necessarily the most secure method of
communication and that there are confidentiality and other risks associated with
such distribution. In consideration for the convenience and other benefits
afforded by such distribution and for the other consideration provided
hereunder, the receipt and sufficiency of which is hereby acknowledged, each of
the Lenders and each Loan Party hereby approves distribution of the Approved
Electronic Communications through the Approved Electronic Platform and
understands and assumes the risks of such distribution.
          (c) THE APPROVED ELECTRONIC PLATFORM AND THE APPROVED ELECTRONIC
COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF THE
ADMINISTRATIVE AGENT NOR ANY OTHER MEMBER OF THE AGENT’S GROUP WARRANT THE
ACCURACY, ADEQUACY OR COMPLETENESS OF THE APPROVED ELECTRONIC COMMUNICATIONS OR
THE APPROVED ELECTRONIC PLATFORM AND EACH EXPRESSLY DISCLAIMS ANY LIABILITY FOR
ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC COMMUNICATIONS OR THE APPROVED
ELECTRONIC PLATFORM. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM
VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OTHER
MEMBER OF THE AGENT’S GROUP IN CONNECTION WITH THE APPROVED ELECTRONIC
COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM.
     (d) Each of the Lenders and each Loan Party agree that the Administrative
Agent may, but (except as may be required by applicable law) shall not be
obligated to, store the Approved

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Electronic Communications on the Approved Electronic Platform in accordance with
the Administrative Agent’s generally-applicable document retention procedures
and policies.
     SECTION 9.18. Treatment of Information. (a) Certain of the Lenders may
enter into this Agreement and take or not take action hereunder or under the
other Loan Documents on the basis of information that does not contain material
non-public information with respect to any of the Loan Parties or their
securities (“Restricting Information”). Other Lenders may enter into this
Agreement and take or not take action hereunder or under the other Loan
Documents on the basis of information that may contain Restricting Information.
Each Lender acknowledges that United States federal and state securities laws
prohibit any person from purchasing or selling securities on the basis of
material, non-public information concerning the such issuer of such securities
or, subject to certain limited exceptions, from communicating such information
to any other Person. Neither the Administrative Agent nor any of its Related
Parties shall, by making any Communications (including Restricting Information)
available to a Lender, by participating in any conversations or other
interactions with a Lender or otherwise, make or be deemed to make any statement
with regard to or otherwise warrant that any such information or Communication
does or does not contain Restricting Information nor shall the Administrative
Agent or any of its Related Parties be responsible or liable in any way for any
decision a Lender may make to limit or to not limit its access to Restricting
Information. In particular, none of the Administrative Agent nor any of its
Related Parties (i) shall have, and the Administrative Agent, on behalf of
itself and each of its Related Parties, hereby disclaims, any duty to ascertain
or inquire as to whether or not a Lender has or has not limited its access to
Restricting Information, such Lender’s policies or procedures regarding the
safeguarding of material, nonpublic information or such Lender’s compliance with
applicable laws related thereto or (ii) shall have, or incur, any liability to
any Loan Party or Lender or any of their respective Related Parties arising out
of or relating to the Administrative Agent or any of its Related Parties
providing or not providing Restricting Information to any Lender.
     (b) Each Loan Party agrees that (i) all Communications it provides to the
Administrative Agent intended for delivery to the Lenders whether by posting to
the Approved Electronic Platform or otherwise shall be clearly and conspicuously
marked “PUBLIC” if such Communications do not contain Restricting Information
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof, (ii) by marking Communications “PUBLIC,” each Loan
Party shall be deemed to have authorized the Administrative Agent and the
Lenders to treat such Communications as either publicly available information or
not material information (although, in this latter case, such Communications may
contain sensitive business information and, therefore, remain subject to the
confidentiality undertakings of Section 9.16) with respect to such Loan Party or
its securities for purposes of United States Federal and state securities laws,
(iii) all Communications marked “PUBLIC” may be delivered to all Lenders and may
be made available through a portion of the Approved Electronic Platform
designated “Public Side Information,” and (iv) the Administrative Agent shall be
entitled to treat any Communications that are not marked “PUBLIC” as Restricting
Information and may post such Communications to a portion of the Approved
Electronic Platform not designated “Public Side Information.” Neither the
Administrative Agent nor any of its Affiliates shall be responsible for any
statement or other designation by an Loan Party regarding whether a
Communication contains or does not contain material non-public information with
respect to any of the Loan Parties or their securities nor shall the
Administrative Agent or any of its Affiliates incur any liability to any Loan
Party, any Lender or any other Person for any action taken by the Administrative
Agent or any of its Affiliates based upon such statement or designation,
including any action as a result of which Restricting Information is provided to
a Lender that may decide not to take access to Restricting Information. Nothing
in this Section 9.18 shall modify or limit a Lender’s obligations under
Section 9.16 with regard to Communications and the maintenance of the
confidentiality of or other treatment of Information.

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          (c) Each Lender acknowledges that circumstances may arise that require
it to refer to Communications that might contain Restricting Information.
Accordingly, each Lender agrees that it will nominate at least one designee to
receive Communications (including Restricting Information) on its behalf and
identify such designee (including such designee’s contact information) on such
Lender’s Administrative Questionnaire. Each Lender agrees to notify the
Administrative Agent from time to time of such Lender’s designee’s e-mail
address to which notice of the availability of Restricting Information may be
sent by electronic transmission.
          (d) Each Lender acknowledges that Communications delivered hereunder
and under the other Loan Documents may contain Restricting Information and that
such Communications are available to all Lenders generally. Each Lender that
elects not to take access to Restricting Information does so voluntarily and, by
such election, acknowledges and agrees that the Administrative Agent and other
Lenders may have access to Restricting Information that is not available to such
electing Lender. None of the Administrative Agent nor any Lender with access to
Restricting Information shall have any duty to disclose such Restricting
Information to such electing Lender or to use such Restricting Information on
behalf of such electing Lender, and shall not be liable for the failure to so
disclose or use, such Restricting Information.
          (e) The provisions of the foregoing clauses of this Section 9.18 are
designed to assist the Administrative Agent, the Lenders and the Loan Parties,
in complying with their respective contractual obligations and applicable law in
circumstances where certain Lenders express a desire not to receive Restricting
Information notwithstanding that certain Communications hereunder or under the
other Loan Documents or other information provided to the Lenders hereunder or
thereunder may contain Restricting Information. Neither the Administrative Agent
nor any of its Related Parties warrants or makes any other statement with
respect to the adequacy of such provisions to achieve such purpose nor does the
Administrative Agent or any of its Related Parties warrant or make any other
statement to the effect that an Loan Party’s or Lender’s adherence to such
provisions will be sufficient to ensure compliance by such Loan Party or Lender
with its contractual obligations or its duties under applicable law in respect
of Restricting Information and each of the Lenders and each Loan Party assumes
the risks associated therewith.
          SECTION 9.19. USA PATRIOT Act Notice(a) . Each Lender that is subject
to the PATRIOT Act and the Administrative Agent (for itself and not on behalf of
any Lender) hereby notifies the Borrower and the other Loan Parties that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “PATRIOT Act”), it is required to
obtain, verify and record information that identifies the Borrower and the other
Loan Parties, which information includes the name, address and tax
identification number of the Borrower and the other Loan Parties and other
information regarding the Borrower and the other Loan Parties that will allow
such Lender or the Administrative Agent, as applicable, to identify the Borrower
and the other Loan Parties in accordance with the PATRIOT Act. This notice is
given in accordance with the requirements of the PATRIOT Act and is effective as
to the Lenders and the Administrative Agent.
          SECTION 9.20. No Fiduciary Duty . The Administrative Agent, the
Syndication Agent, the Documentation Agent, each Joint Lead Arranger and
Bookrunner and each Lender and their respective Affiliates (collectively, the
“Lender Parties”), may have economic interests that conflict with those of the
Borrower and its Subsidiaries. The Borrower agrees that nothing in the Loan
Documents or otherwise will be deemed to create an advisory, fiduciary or agency
relationship or fiduciary or other implied duty between the Lender Parties and
the Borrower, its Subsidiaries, its stockholders or its other affiliates. The
Borrower acknowledges and agrees that (i) the transactions contemplated by the
Loan

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Documents are arm’s-length commercial transactions between the Lender Parties,
on the one hand, and the Borrower and its applicable Subsidiaries, on the other,
(ii) in connection therewith and with the process leading to such transaction
each of the Lender Parties is acting solely as a principal and not the agent or
fiduciary of the Borrower or any of its Subsidiaries, or their respective
management, stockholders, creditors or any other Person, (iii) no Lender Party
has assumed an advisory or fiduciary responsibility in favor of the Borrower or
any of its Subsidiaries with respect to the transactions contemplated hereby or
the process leading thereto (irrespective of whether any Lender Party or any of
its affiliates has advised or is currently advising the Borrower or any of its
Subsidiaries on other matters) or any other obligation to the Borrower except
the obligations expressly set forth in the Loan Documents and (iv) each of the
Borrower and its Subsidiaries have consulted their own legal and financial
advisors to the extent they have deemed appropriate. The Borrower further
acknowledges and agrees that it and each of its Subsidiaries is responsible for
making its own independent judgment with respect to such transactions and the
process leading thereto. The Borrower agrees that it will not, and will cause
each of its Subsidiaries not to, claim that any Lender Party has rendered
advisory services of any nature or respect, or owes a fiduciary or similar duty
to the Borrower or any of its Subsidiaries, in connection with such transactions
or the process leading thereto.
[Signature Pages Follow]

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.

            SOLUTIA INC.,
as Borrower
      By:   /s/ James A. Tichenor         Name:   James A Tichenor       
Title:   Authorized Officer   

S-1

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            CITIBANK, N.A.,
as Administrative Agent and as a Lender
      By:   /s/ Aaron Dannenberg         Name:   Aaron Dannenberg       
Title:   Vice President   

S-2

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            CITIGROUP GLOBAL MARKETS INC.,
as a Joint Lead Arranger and Bookrunner
      By:   /S/ Aaron Dannenberg         Name:   Aaron Dannenberg       
Title:   Vice President   

S-3

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            GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Syndication Agent, as a Joint Lead Arranger and
Bookrunner and as a Lender
      By:   /s/ Walter A. Jackson         Name:   Walter A. Jackson       
Title:   Authorized Signatory   

S-4

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            DEUTSCHE BANK AG, NEW YORK BRANCH,
as Documentation Agent
      By:   /s/ Mark B. Cohen         Name:   Mark B. Cohen        Title:  
Managing Director              By:   /s/ Marguerite Sutton         Name:  
Marguerite Sutton        Title:   Director        DEUTSCHE BANK SECURITIES INC.,
as a Joint Lead Arranger and Bookrunner
      By:   /s/ Kevin Sherlock         Name:   Kevin Sherlock        Title:  
Managing Director              By:   /s/Martin Arzac         Name:   Martin
Arzac        Title:   Director     

S-5

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            GERMAN AMERICAN CAPITAL CORPORATION
as Lender
      By:   /s/ Mark B. Cohen         Name:   Mark B. Cohen        Title:  
Managing Director              By:   /s/ Jeffrey Lehocky         Name:   Jeffrey
Lehocky        Title:   Managing Director     

S-6

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EXHIBIT K
DESCRIPTION OF EXCHANGE NOTES
General
     Reference is made to the Credit Agreement (the “Interim Credit Agreement”),
dated as of February 28, 2008 among Solutia, Inc., the lenders from time to time
parties thereto, Citibank, N.A., as Administrative Agent, Goldman Sachs Credit
Partners L.P., as Syndication Agent, Deutsche Bank AG, New York Branch, as
Documentation Agent, and Citigroup Global Markets Inc., Goldman Sachs Credit
Partners L.P. and Deutsche Bank Securities Inc., as Joint Lead Arrangers and as
Joint Bookrunners. This is the Description of exchange notes contemplated
thereby. Certain terms used in this description are defined under the subheading
“Certain Definitions.” In this description, the term “Issuer” refers only to
Solutia Inc. and not any of its Subsidiaries. Terms defined in this section have
the meanings given in this section when used in this section. As used below in
this “Description of Exchange Notes” section, the terms “Solutia, “ Issuer,”
“we,” and “us” refers to Solutia Inc. and not to its subsidiaries.
     The Issuer will issue senior notes due 2015 (the “Notes”) under an
indenture (the “Indenture”) among the Issuer, the Guarantors and a trust company
that meets the eligibility requirements of the Trust Indenture Act, as trustee
(the “Trustee”). Except as set forth herein, the terms of the Notes will be
substantially identical and include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act.
     Principal of the Notes will be payable, and the Notes may be exchanged or
transferred, at the office or agency of Issuer in the Borough of Manhattan, City
of New York, which, unless otherwise provided by Issuer, will be the offices of
the Trustee. Payment of interest will be made by check mailed to the addresses
of the noteholders as such addresses appear in the Note register or, at the
election of any noteholder in the manner prescribed by the Indenture, by wire
transfer of immediately available funds.
Terms of the Notes
     Principal, maturity and interest
     The Issuer will issue Notes in exchange for a like principal amount of
Loans as set forth in the Interim Credit Agreement. The Notes will mature on
February 28, 2015. Except for Notes issued in exchange for Loans and any PIK
Notes (as defined below), the Indenture will not permit the issuance of any
additional Notes (except replacement Notes). The Notes will be issued in
denominations of $2,000 and integral multiples of $1,000 in excess thereof.
     The Issuer may, without the consent of the Holders (and without regard to
any restrictions or limitations set forth under “Certain Covenants—Limitation on
Incurrence of Indebtedness”), increase the outstanding principal amount of the
Notes or issue additional Notes (“PIK Notes”) under the Indenture on the same
terms and conditions as the Notes issued on the Issue Date (in each case, the
“PIK Payment”).
     Interest on the Notes will accrue at a rate per annum equal to 15.5% per
annum and will be payable semi-annually in arrears on March 1 and September 1
commencing on the first such date to occur following the issuance of any Notes
to the Holders of record of Notes on the immediately preceding February 15 and
August 15. Interest on each Note will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from and including the
date of issuance of such Note or the most recent date to which interest has been
paid on the Loans exchanged for such Note, if applicable. Interest on the Notes
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
     The Issuer may, at its option, elect to pay interest on the Notes
(i) entirely in cash (“Cash Interest”), (ii) by paying Cash Interest and by
increasing the principal amount of the outstanding Notes or by issuing PIK Notes
(“PIK Interest”); provided, however, that (A) during any Interest Period during
the first twelve months after the Issue Date, no more than 2.5% of the 15.5%
interest may be paid in the form of PIK Interest, and (B) during any Interest
Period after the first twelve months after the Issue Date, no more than 1.5% of
the 15.5% of interest may be paid in the form of PIK Interest. The Issuer must
elect the form of interest payment with respect to each Interest Period by
delivering a notice to the Trustee prior to the beginning of each Interest
Period. The Trustee shall promptly deliver a corresponding notice to the
holders. In the absence of such an election for any Interest Period, interest on
the Notes will be payable in the form of the interest payment for the prior
Interest Period.
     PIK Interest on the Notes will be payable (x) with respect to the Notes
represented by one or more global notes registered in the

 

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name of, or held by, The Depository Trust Company (“DTC”) or its nominee on the
relevant record date, by increasing the principal amount of the outstanding
Notes represented by such global notes by an amount equal to the amount of PIK
Interest for the applicable period (rounded up to the nearest $1,000) and
(y) with respect to Notes represented by certificated notes, by issuing PIK
Notes in certificated form in an aggregate principal amount equal to the amount
of PIK Interest for the applicable Interest Period (rounded up to the nearest
whole dollar) and the Trustee will, at the request of the Issuer, authenticate
and deliver such PIK Notes in certificated form for original issuance to the
holders on the relevant record date, as shown by the records of the register of
such holders.
     Following an increase in the principal amount of the outstanding Notes
represented by global notes as a result of a PIK Payment, such Notes will bear
interest on such increased principal amount from and after the date of such PIK
Payment. Any PIK Notes issued in certificated form will be dated as of the
applicable interest payment date and will bear interest from and after such
date. All PIK Notes issued pursuant to a PIK Payment will mature on February 28,
2015 and will be governed by, and subject to the terms, provisions and
conditions of, the Indenture and shall have the same rights and benefits as the
Notes issued on the Issue Date. Any certificated PIK Notes will be issued with
the description “PIK” on the face of such PIK Note.
Ranking
     The Notes and the Guarantees will rank equally with existing and future
unsubordinated obligations of Issuer and the Guarantors, respectively. The Notes
and the Guarantees will be structurally subordinated to the obligations of any
Subsidiary of Issuer that is not a Guarantor. If Issuer or a Guarantor incurs
any Indebtedness in the future that provides by its terms that it is
subordinated to the Notes or the Guarantee of such Guarantor, as the case may
be, the Notes or that Guarantee, as applicable, will rank senior to that
Indebtedness.
     The Notes and the Guarantees will be effectively subordinated to all
secured indebtedness of Issuer and each of the Guarantors to the extent of the
assets securing such indebtedness.
Optional Redemption
     At any time prior to February 28 , 2012, Issuer may redeem all or a part of
the Notes, upon not less than 30 nor more than 60 days’ prior notice mailed by
first-class mail to the registered address of each holder of Notes or otherwise
delivered in accordance with the procedures of DTC, at a redemption price equal
to 100% of the principal amount of the Notes redeemed plus the Applicable
Premium as of, and accrued and unpaid interest and Additional Interest, if any,
to the date of redemption (the “Redemption Date”), subject to the rights of the
holders of record on the relevant record date to receive interest due on the
relevant interest payment date.
     Thereafter, the Notes will be redeemable at the option of Issuer, in whole
or in part, at any time after February 28, 2012 at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest thereon, if any, to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the twelve month
period beginning on February of the years indicated below:

              Redemption Year   Price
2012
    107.750 %
2013
    103.875 %
2014 and thereafter
    100.000 %

     Notwithstanding the foregoing, at any time on or prior to February 28, 2011
Issuer may, at its option on any one or more occasions, redeem Notes in an
aggregate principal amount not to exceed 35% of the aggregate principal amount
of Notes issued under the Indenture at a redemption price of 115.5 % of the
principal amount, plus accrued and unpaid interest to the redemption date, with
the Net Cash Proceeds of one or more Equity Offerings; provided that:
     (1) at least 65% of the aggregate principal amount of Notes issued under
the Indenture remains outstanding immediately after the occurrence of such
redemption (calculated after giving effect to any issuance of any PIK Notes, but
excluding Notes held by Issuer and its Subsidiaries); and
     (2) the redemption occurs within 90 days of the date of the closing of such
Equity Offering.
Selection and Notice

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     If less than all the Notes issued under the Indenture are to be redeemed at
any time, selection of Notes for redemption will be made by the Trustee on a pro
rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate; provided that no Notes of $2,000 or less shall be redeemed in part.
Notices of redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each holder of Notes to be
redeemed at its registered address. Notices of redemption may not be
conditional. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
Guarantees
     Issuer and each of the Subsidiaries of Solutia that guarantees the
obligations of Solutia or any Domestic Subsidiary (other than an Unrestricted
Subsidiary) under any of the Credit Facilities will deliver a Guarantee on the
date that is the later of (x) the Issue Date and (y) the date on which such
Subsidiary guarantees the obligations of Solutia or any Domestic Subsidiary
(other than an Unrestricted Subsidiary) under any of the Credit Facilities.
Pursuant to the Guarantees, each of the Guarantors will fully and
unconditionally guarantee all Obligations of Issuer under the Indenture and the
Notes on a senior basis. Newly formed or acquired Subsidiaries that guarantee
the obligations of Solutia or any Domestic Subsidiary (other than an
Unrestricted Subsidiary) under any of the Credit Facilities are required to
become Guarantors, as described under “— Additional Guarantees.”
     Each Guarantee will be limited to an amount not to exceed the maximum
amount that can be guaranteed by the applicable Guarantor without rendering such
Guarantee voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
Each Guarantor that makes a payment or distribution under a Guarantee will be
entitled to a contribution from each other Guarantor in an amount pro rata,
based on the net assets of each Guarantor. See “Risk Factors — The guarantees of
the notes may not be enforceable or may be limited in scope under local law,
including laws governing fraudulent transfers and insolvency.”
     The Guarantee of any Restricted Subsidiary will be automatically and
unconditionally released and discharged upon any of the following:

  •   any sale, exchange or transfer by Issuer or any Restricted Subsidiary to
any Person or Persons, as a result of which the Restricted Subsidiary is no
longer a Subsidiary of the Issuer, of a majority of the Capital Stock of, or all
or substantially all the assets of, such Restricted Subsidiary, which sale,
exchange or transfer is made in accordance with the provisions of the Indenture;
    •   the designation of such Restricted Subsidiary as an Unrestricted
Subsidiary in accordance with the provisions of the Indenture; or     •   the
release of such Restricted Subsidiary’s Guarantee under the Initial Credit
Facilities.

provided, in each such case, that Issuer has delivered to the Trustee an
officers’ certificate and an opinion of counsel, each stating that all
conditions precedent provided for in the Indenture relating to such transactions
have been complied with and that such release is authorized and permitted under
the Indenture.
Change of Control
     If a Change of Control occurs, each noteholder will have the right to
require Issuer to purchase all or a portion (equal to $2,000 or an integral
multiple of $1,000 in excess thereof) of such holder’s Notes at a purchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of purchase (subject to the right of holders of record on
the relevant record date to receive interest due on an interest payment date
that is on or prior to the date fixed for redemption), in accordance with the
provisions of the next paragraph.
     Within 30 days following any Change of Control, Issuer shall mail a notice
to each noteholder, with a copy to the Trustee, stating

  •   that a Change of Control has occurred and that such noteholder has the
right to require Issuer to purchase such holder’s Notes at a purchase price in
cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of

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      purchase (subject to the right of holders of record on the relevant record
date to receive interest on an interest payment date that is on or prior to the
date fixed for purchase);     •   the purchase date (which shall be no earlier
than 30 days nor later than 60 days from the date such notice is mailed); and  
  •   the instructions as determined by Issuer, consistent with the covenant
described hereunder, that a noteholder must follow in order to have its Notes
purchased.

     Issuer shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the purchase of Notes pursuant to the Indenture. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of the Indenture, Issuer shall comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under any covenant of the Indenture by virtue of this compliance.
     The occurrence of a Change of Control would constitute a default under the
Initial Credit Facilities. In addition, Issuer’s ability to purchase the Notes
for cash may be limited by Issuer’s then existing financial resources. There can
be no assurance that sufficient funds will be available when necessary to make
any purchases required in connection with a Change of Control. Issuer’s failure
to purchase the Notes in connection with a Change of Control would result in a
default under the Indenture, which would, in turn, constitute a default under
the Credit Facilities.
     The definition of Change of Control includes a phrase relating to the sale,
assignment, transfer, lease, conveyance or other disposition of “all or
substantially all” of the properties or assets of Solutia and certain of its
subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase “substantially all,” there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
noteholder to require us to repurchase its notes as a result of a sale,
assignment, transfer, lease, conveyance or other disposition of less than all of
the assets of Solutia and certain subsidiaries taken as a whole to another
person or group may be uncertain.
Certain Covenants
The covenants set forth below will apply under the Interim Credit Agreement
(modified as appropriate so as to apply to the Loans and Interim Credit
Agreement rather than the Notes and the Indenture) and the Indenture, beginning
on the Interim Loan Maturity Date. Upon the Interim Loan Maturity Date, all
items that would be treated as Indebtedness, Restricted Payments, Investments or
Liens under this “Description of exchange notes” that were incurred or made
after the Effective Date and prior to the Interim Loan Maturity Date in reliance
upon a provision in the Interim Credit Agreement permitting the incurrence or
making of such Indebtedness, Restricted Payment, Investment, or Lien, but in an
amount that is limited numerically through a “dollar basket” and/or “ratio test”
(any such amount, being referred to as “Limited” Indebtedness or a “Limited”
Restricted Payment, Investment or Lien, as applicable), will be required to be
treated as incurred or made under the covenants set forth below under this
“Description of exchange notes.” For such purposes:
          (A) the Issuer may classify or designate each such item in any manner
that would have satisfied the Indenture had the Indenture been in effect on the
date such item was incurred or made, including, for the avoidance of doubt,
incurring such Indebtedness under the Consolidated Fixed Charge Coverage Ratio
exception set forth in the first paragraph of the covenant described under
“Certain covenants—Limitation on incurrence of indebtedness”, except that
Indebtedness under the Credit Facilities will be deemed to be outstanding in
reliance on the exception provided by clause (1) of the covenant “—Limitation on
incurrence of indebtedness”; and
          (B) to the extent that the Issuer determines to designate such item as
using a basket that provides capacity to incur such amount on a rolling four
quarter (or other time period), such item shall be deemed to have been incurred
on the date it actually was incurred, and to roll off such basket four quarters
(or if applicable such other relevant time period) after it was first made.
Notwithstanding the foregoing, if any Indebtedness, Lien, Restricted Payment or
Investment referred to above was incurred or made prior to the Interim Loan
Maturity Date in violation of the Interim Credit Agreement and is outstanding as
of the Interim Loan Maturity Date, such incurrence shall be deemed a Default
hereunder to the extent and solely to the extent such event would have
constituted a Default had the Indenture been in effect at all times since the
Effective Date.
Set forth below are summaries of certain covenants contained in the Indenture.
     The Indenture will contain certain covenants, including, among others, the
following:

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Limitation on Incurrence of Indebtedness
     Issuer will not, and will not permit any Restricted Subsidiary to, incur,
directly or indirectly, any Indebtedness; provided that Issuer or any Guarantor
may incur Indebtedness if, immediately after giving effect to such incurrence,
the Consolidated Coverage Ratio is at least 2.0 to 1.0 determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, and the application of proceeds
therefrom, had occurred at the beginning of such four-quarter period (this
proviso, the “Coverage Ratio Exception”).
     The foregoing paragraph will not prohibit incurrence of the following
Indebtedness (collectively, “Permitted Indebtedness”):
     (1) the Notes issued on the Issue Date and any related Guarantees;
     (2) Indebtedness of Issuer or any Restricted Subsidiary to the extent
outstanding on the Issue Date (other than Indebtedness under the Initial Credit
Facilities);
     (3) Indebtedness of Issuer or any Restricted Subsidiary under Credit
Facilities in an aggregate amount at any time outstanding pursuant to this
clause (3) (including amounts outstanding on the date of the Indenture) not to
exceed the greater of

  •   $1,600 million; and     •   the sum of (x) $1,200 million (y) 75% of the
net book value of the Inventory of Issuer and the Restricted Subsidiaries and
(z) 85% of the net book value of the accounts receivable of Issuer and the
Restricted Subsidiaries, in each case determined on a consolidated basis in
accordance with GAAP;

     (4) Refinancing Indebtedness in respect of Indebtedness incurred pursuant
to the Coverage Ratio Exception, clause (1) of this paragraph, clause (2) of
this paragraph (other than any Indebtedness owed to Issuer or any of its
Subsidiaries), this clause (4), or clause (16);
     (5) Indebtedness owed by Issuer or any Restricted Subsidiary to Issuer or a
Restricted Subsidiary; provided that

  •   any such Indebtedness owed by Issuer shall be subordinated by its terms to
the prior payment in full in cash of all Obligations with respect to the Notes,
and any such Indebtedness owed by any Guarantor (other than to Issuer or any
other Guarantor) shall be subordinated by its terms to the prior payment in full
in cash of all Obligations with respect to the Guarantee of such Guarantor; and
    •   if such Indebtedness is held by a Person other than Issuer or a
Restricted Subsidiary, Issuer or such Restricted Subsidiary shall be deemed to
have incurred Indebtedness not permitted by this clause (5);

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     (6) (x) the guarantee by Issuer or any Guarantor of Indebtedness of Issuer
or a Guarantor and (y) the guarantee by any Restricted Subsidiary that is not a
Guarantor of Indebtedness of any other Restricted Subsidiary that is not a
Guarantor; provided that, in each case, the Indebtedness being guaranteed is
incurred pursuant to the Coverage Ratio Exception or is Permitted Indebtedness;
     (7) Hedging Obligations;
     (8) Purchase Money Indebtedness and Capital Lease Obligations of Issuer or
any Restricted Subsidiary incurred to finance the acquisition, construction or
improvement of any assets (including capital expenditures of Issuer or any
Restricted Subsidiary), and Refinancings thereof, in an aggregate amount at any
time outstanding pursuant to this clause (8), not to exceed $75.0 million;
     (9) Indebtedness of any Foreign Subsidiary in an aggregate amount not to
exceed $50.0 million at any time outstanding pursuant to this clause (9);
     (10) Indebtedness of the Issuer or any of its Restricted Subsidiaries
represented by worker’s compensation claims and other statutory or regulatory
obligations, self-insurance obligations, tender, bid, performance, government
contract, surety or appeal bonds, standby letters of credit and warranty and
contractual service obligations of like nature, trade letters of credit or
documentary letters of credit, in each case to the extent incurred in the
ordinary course of business of the Issuer or such Restricted Subsidiary;
     (11) customary indemnification, adjustment of purchase price or similar
obligations, in each case, incurred in connection with the acquisition or
disposition of any assets of Issuer or any Restricted Subsidiary (other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such assets for the purpose of financing such acquisition);
     (12) obligations in respect of performance bonds and completion, guarantee,
surety and similar bonds in the ordinary course of business;
     (13) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds; provided that
such Indebtedness is extinguished within five business days of incurrence;
     (14) Indebtedness arising in connection with endorsement of instruments for
deposit in the ordinary course of business;
     (15) Indebtedness consisting of take-or-pay obligations contained in supply
agreements relating to products, services or commodities of a type that Issuer
or any of its Subsidiaries uses or sells in the ordinary course of business;
     (16) Acquired Indebtedness; provided that after giving effect to such
acquisition or merger, either

  •   Issuer would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Coverage Ratio Exception; or     •   the
Consolidated Coverage Ratio of Issuer and the Restricted Subsidiaries is equal
to or greater than immediately prior to such acquisition or merger;

     (17) Indebtedness owing to a Subsidiary that is not a Subsidiary Guarantor,
provided such Indebtedness is subordinate in right of payment to the Notes;
     (18) Indebtedness consisting of the financing of insurance premiums;
     (19) Indebtedness consisting of Guarantees incurred in the ordinary course
of business under repurchase agreements or similar agreements in connection with
the financing of sales of goods in the ordinary course of business;
     (20) additional Indebtedness in an aggregate amount not to exceed
$75.0 million at any time outstanding pursuant to this clause (20); or
     (21) the incurrence of Indebtedness by Unrestricted Subsidiaries.
     For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (1) through (20) above
or is entitled to be incurred pursuant to the Coverage Ratio Exception, Issuer
shall, in its sole discretion, classify such item of Indebtedness and may divide
and classify such Indebtedness in more than one of the types of Indebtedness
described and may later reclassify such item into any one or more of the
categories of Indebtedness described above (provided that at the time of
reclassification it meets the criteria in such category or

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categories). The maximum amount of Indebtedness that Issuer or any Restricted
Subsidiary may incur pursuant to this covenant will not be deemed to be exceeded
solely as the result of fluctuations in the exchange rates of currencies. In
determining the amount of Indebtedness outstanding under one of the clauses
above, the outstanding principal amount of any particular Indebtedness of any
Person shall be counted only once and any obligation of such Person or any other
Person arising under any guarantee, Lien, letter of credit or similar instrument
supporting such Indebtedness shall be disregarded so long as it is permitted to
be incurred by the Person or Persons incurring such obligation.
     Accrual of interest or dividends, the accretion of accreted value, the
accretion or amortization of original issue discount and the payment of interest
or dividends in the form of additional Indebtedness, Disqualified Stock or
Preferred Stock, as the case may be, of the same class will not be deemed to be
an incurrence of Indebtedness, Disqualified Stock or Preferred Stock.
     For purposes of determining compliance with, and the outstanding principal
amount of any particular Indebtedness Incurred pursuant to and in compliance
with, this section any other obligation of the obligor on such Indebtedness (or
of any other Person who could have Incurred such Indebtedness under this
section) arising under any Guarantee, Lien or letter of credit, bankers’
acceptance or other similar instrument or obligation supporting such
Indebtedness shall be disregarded to the extent that such Guarantee, Lien or
letter of credit, bankers’ acceptance or other similar instrument or obligation
secures the principal amount of such Indebtedness.
     Notwithstanding the foregoing, Issuer will not, and will not permit any
other Guarantor to, incur any Indebtedness that purports to be by its terms (or
by the terms of any agreement or instrument governing such Indebtedness)
subordinated in right of payment to any other Indebtedness of Issuer or of such
other Guarantor, as the case may be, unless such Indebtedness is also by its
terms made subordinated in right of payment to the Notes or the Guarantee of
such Guarantor, as applicable, to at least the same extent as such Indebtedness
is subordinated in right of payment to such other Indebtedness of Issuer or such
Guarantor, as the case may be.
Limitation on Restricted Payments
     Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, declare or make a Restricted Payment if:
     (1) a Default has occurred and is continuing or would result therefrom;
     (2) Issuer could not incur at least $1.00 of additional Indebtedness
pursuant to the Coverage Ratio Exception; or
     (3) the aggregate amount of such Restricted Payment together with all other
Restricted Payments (the amount of any Restricted Payments made in assets other
than cash to be valued at its Fair Market Value) declared or made since the
Issue Date (other than any Restricted Payment described in clause (2), (3), (4),
(6) or (9) of the next paragraph) would exceed the sum (the “Basket”) of
     (a) 50% of the Consolidated Net Income accrued during the period (treated
as one accounting period) from January 1, 2008 to the end of the most recent
fiscal quarter prior to the date of such Restricted Payment for which internal
financial statements are available (or, in case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit); plus
     (b) the aggregate Net Cash Proceeds from the issuance and sale (other than
to a Subsidiary of Issuer) of, Qualified Stock received by Issuer subsequent to
the Issue Date) or from the issue or sale of debt securities of the Issuer that
have been converted or exchanged into Qualified Stock, together with the
aggregate cash and Temporary Cash Investments received by the Issuer or any of
its Restricted Subsidiaries at the time of such conversion or exchange; plus
     (c) the amount by which Indebtedness or Disqualified Stock incurred or
issued subsequent to the Issue Date is reduced on Issuer’s consolidated balance
sheet upon the conversion or exchange (other than by a Subsidiary of Issuer)
into Qualified Stock (less the amount of any cash, or the Fair Market Value of
any other asset, distributed by Issuer or any Restricted Subsidiary upon such
conversion or exchange); provided that such amount shall not exceed the
aggregate Net Cash Proceeds received by Issuer or any Restricted Subsidiary
after the Issue Date from the issuance and sale (other than to a Subsidiary of
Issuer) of such Indebtedness or Disqualified Stock; plus
     (d) to the extent not included in the calculation of the Consolidated Net
Income referred to in (a), an amount equal to, without duplication;

  •   100% of the aggregate net proceeds received by Issuer or any Restricted
Subsidiary upon the sale or other disposition of any Investment (other than a
Permitted Investment) made by Issuer or any Restricted Subsidiary since the
Issue Date; plus

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  •   the net reduction in Investments (other than Permitted Investments) in any
Person resulting from dividends, repayments of loans or advances or other
Transfers of assets subsequent to the Issue Date, in each case to Issuer or any
Restricted Subsidiary from such Person; plus     •   if the Basket was reduced
as the result of the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary, the portion (proportionate to Issuer’s equity interest in such
Subsidiary) of the Fair Market Value of the net assets of such Unrestricted
Subsidiary at the time such Unrestricted Subsidiary is redesignated, or
liquidated or merged into, a Restricted Subsidiary provided that the foregoing
shall not exceed, in the aggregate, the amount of all Investments which
previously reduced the Basket.

     The provisions of the foregoing paragraph shall not prohibit the following:
     (1) dividends paid within 90 days after the date of declaration thereof if
at such date of declaration such dividend would have been permitted under the
Indenture;
     (2) any repurchase, redemption, retirement or other acquisition of Capital
Stock or Subordinated Obligations made in exchange for, or out of the proceeds
of the substantially concurrent issuance and sale (other than to a Subsidiary of
Issuer) of, Qualified Stock or, with respect to any such Subordinated
Obligations, in exchange for or out of the proceeds of the substantially
concurrent incurrence and sale (other than to a Subsidiary of Issuer) of
Refinancing Indebtedness thereof; provided that (x) no such exchange or issuance
and sale shall increase the Basket and (y) no Default has occurred and is
continuing or would occur as a consequence thereof;
     (3) payments by Issuer or any Restricted Subsidiary in respect of
Indebtedness of Issuer or any Restricted Subsidiary owed to Issuer or another
Restricted Subsidiary;
     (4) repurchases of Capital Stock deemed to occur upon the exercise of stock
options or warrants if such Capital Stock represents a portion of the exercise
price thereof and repurchases of Capital Stock deemed to occur upon the
withholding of a portion of the Capital Stock granted or awarded to an employee
to pay for the taxes payable by such employee upon such grant or award;
     (5) cash payments in lieu of the issuance of fractional shares in
connection with the exercise of warrants, options or other securities
convertible into or exchangeable for Capital Stock of the Issuer; provided,
however, that any such cash payment shall not be for the purpose of evading the
limitation of the covenant described under this subheading (as determined in
good faith by the Board of Directors);
     (6) Restricted Payments in an aggregate amount since the Issue Date not to
exceed $75.0 million pursuant to this clause (6);
     (7) so long as no Default has occurred and is continuing, the purchase,
redemption or other acquisition of shares of Capital Stock of Issuer or any of
its Subsidiaries from consultants, former consultants, employees, former
employees, directors or former directors of Issuer or any of its Subsidiaries
(or permitted transferees of such employees, former employees, directors or
former directors), pursuant to the terms of the agreements (including employment
agreements) or plans (or amendments thereto) approved by the Board of Directors
under which such individuals purchase or sell or are granted the option to
purchase or sell, shares of such Capital Stock; provided, however, that the
aggregate amount of such Restricted Payments pursuant to this clause (7)
(excluding amounts representing cancellation of Indebtedness) shall not exceed
$5.0 million in any calendar year (with unused amounts in any calendar year
being carried over to the next succeeding calendar year);
     (8) the declaration and payments of dividends on Disqualified Stock issued
pursuant to the covenant described under “— Limitation on Incurrence of
Indebtedness”; so long as at the time of payment of such dividend, no Default
shall have occurred and be continuing (or result therefrom); or
     (9) repurchases of Capital Stock deemed to occur upon exercise of stock
options or warrants if such Capital Stock represents a portion of the exercise
price of such options or warrants.

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Limitation on Liens
     Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, incur any Lien of any kind on any asset of Issuer or any
Restricted Subsidiary (including Capital Stock of a Restricted Subsidiary),
whether owned at the Issue Date or thereafter acquired, or any income or profits
therefrom or assign or convey any right to receive income therefrom, except
Permitted Liens, unless the Notes and the Guarantees are secured on an equal and
ratable basis with the obligations so secured until such time as such
obligations are no longer secured by a Lien; provided that if the obligations so
secured are subordinated in right of payment by their terms to the Notes or a
Guarantee, the Lien securing such obligations will also have subordinated Lien
priority by its terms to the Lien securing the Notes and the Guarantees at least
to a comparable extent.
Limitation on Transactions with Affiliates
     Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, in one transaction or series of related transactions, Transfer
any of its assets to, or purchase any assets from, or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any affiliate of Issuer (an “Affiliate Transaction”), unless the terms
thereof, taken as a whole, are no less favorable to Issuer or such Restricted
Subsidiary than those that could be obtained at the time of such transaction in
arm’s-length dealings with a Person that is not such an affiliate.
     The Board of Directors must approve each Affiliate Transaction that
involves aggregate payments or other assets or services with a Fair Market Value
in excess of $20 million. This approval must be evidenced by a board resolution
that states that such board has determined that the transaction complies with
the foregoing provisions.
     If Issuer or any Restricted Subsidiary enters into an Affiliate Transaction
that involves aggregate payments or other assets or services with a Fair Market
Value in excess of $50.0 million, then prior to the consummation of that
Affiliate Transaction, Issuer must obtain a favorable opinion from an
Independent Financial Advisor that it has determined such Affiliate Transaction
to be fair, from a financial point of view, to the noteholders, and deliver that
opinion to the Trustee.
     The provisions of the three foregoing paragraphs will not prohibit the
following:
     (1) transactions exclusively between, among or solely for the benefit of
(a) Issuer and one or more Restricted Subsidiaries or (b) Restricted
Subsidiaries; provided, in each case, that no affiliate of Issuer (other than
another Restricted Subsidiary) owns more than 10% of the Capital Stock in any
such Restricted Subsidiary;
     (2) customary director, officer and employee compensation (including
bonuses) and other benefits (including retirement, health, stock option and
other benefit plans) and indemnification arrangements, in each case approved by
the Board of Directors;
     (3) Restricted Payments which are made in accordance with the covenant
described under “— Limitation on Restricted Payments” and Investments
constituting Permitted Investments;
     (4) any transaction with an affiliate where the only consideration paid by
Issuer or any Restricted Subsidiary is Qualified Stock;
     (5) transactions between Issuer or any Subsidiary and any Securitization
Entity in connection with a Qualified Securitization Transaction, in each case
provided that such transactions are not otherwise prohibited by the Indenture;
     (6) transactions with a Person that is an affiliate solely because Issuer
or any Restricted Subsidiary owns Capital Stock in such Person; provided that no
affiliate of Issuer (other than a Restricted Subsidiary) owns more than 10% of
the Capital Stock in such Person;
     (7) purchases and sales of raw materials or Inventory in the ordinary
course of business on market terms; or
     (8) transactions or the performance under agreements described under “Plan
of Reorganization.”

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Limitation on Asset Sales
     Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, consummate any Asset Sale unless:
     (i) Issuer or such Restricted Subsidiary receives consideration at the time
of such Asset Sale at least equal to the Fair Market Value of the assets
included in such Asset Sale; and
     (ii) at least 75% of the total consideration received in such Asset Sale
consists of cash, Temporary Cash Investments or assets referred to in clause
(c) below, in each case, valued at the Fair Market Value thereof, or a
combination of the foregoing.
For purposes of clause (ii) above, the following shall be deemed to be cash:

  •   the amount (without duplication) of any liability (other than Subordinated
Obligations) that would be recorded on a balance sheet prepared in accordance
with GAAP of Issuer or such Restricted Subsidiary that is expressly (i) assumed
by a Person other than the Issuer or a Restricted Subsidiary, or (ii) is
expunged by the holder of such liability, and with respect to which, in each
case, Issuer or such Restricted Subsidiary, as the case may be, is
unconditionally released from further liability with respect thereto; and     •
  the amount of any obligations or securities received from such Transferee that
are within 150 days repaid, converted into or sold or otherwise disposed of for
cash or Temporary Cash Investments (to the extent of the cash or Temporary Cash
Investments actually so received).

     If at any time any non-cash consideration received by Issuer or any
Restricted Subsidiary in connection with any Asset Sale is repaid, converted
into or sold or otherwise disposed of for cash or Temporary Cash Investments
(other than interest received with respect to any such non-cash consideration),
then the date of such repayment, conversion, sale or other disposition shall be
deemed to constitute the date of an Asset Sale hereunder and the Net Available
Proceeds thereof shall be applied in accordance with this covenant.
     If Issuer or any Restricted Subsidiary engages in an Asset Sale, Issuer or
a Restricted Subsidiary shall, no later than 365 days following the consummation
thereof, apply an amount equal to all or any of the Net Available Proceeds
therefrom as follows:
     (a) to repay or otherwise retire amounts owing under the Credit Facilities
in accordance with the Credit Facilities;
     (b) to repay or otherwise retire amounts owing under other Indebtedness
(other than Subordinated Obligations) that is secured by a Lien, which Lien is
permitted by the Indenture, and to correspondingly reduce commitments with
respect thereto; and/or
     (c) to make (i) an Investment in or expenditure for assets (including
Capital Stock of any Person) that replace the assets that were the subject of
the Asset Sale or in assets (including Capital Stock of any Person) that will be
used in the Permitted Business and (ii) capital expenditures that will be used
in the Permitted Business (or, in each case of (i) and (ii), enter into a
binding commitment for any such investment or expenditure); provided that such
binding commitment shall be treated as a permitted application of the Net
Available Proceeds from the date of such commitment until and only until the
earlier of (x) the date on which such investment or expenditure is consummated
and (y) the 180th day following the expiration of the aforementioned 365-day
period. If the Investment or expenditure contemplated by such binding commitment
is not consummated on or before the 180th day, such commitment shall be deemed
not to have been a permitted application of Net Available Proceeds.
The amount of Net Available Proceeds not applied or invested as provided in this
paragraph will constitute “Excess Proceeds.”
     When the aggregate amount of Excess Proceeds equals or exceeds
$50.0 million, Issuer will be required to make an offer to purchase from all
noteholders an aggregate principal amount of Notes and, if the Issuer is
required to do so under the terms of any other Indebtedness ranking pari passu
with such Notes, such other Indebtedness on a pro rata basis with the Notes,
equal to the amount of such Excess Proceeds (a “Net Proceeds Offer”) in
accordance with the procedures set forth in the Indenture.
     The offer price for the Notes will be payable in cash and will be equal to
100% of the principal amount of the Notes tendered pursuant to a Net Proceeds
Offer, plus accrued and unpaid interest thereon, if any, to the date such Net
Proceeds Offer is consummated (the “Offered Price”). If the aggregate Offered
Price of Notes validly tendered and not withdrawn by noteholders thereof exceeds
the amount of Excess Proceeds, Notes to be purchased will be selected on a pro
rata basis. Upon completion of such Net Proceeds Offer in accordance with the
foregoing provisions, the amount of Excess Proceeds shall be reduced to zero.

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     To the extent that the aggregate Offered Price of Notes tendered pursuant
to a Net Proceeds Offer (and if applicable, the aggregate amount of pari passu
Indebtedness being repaid, on a pro rata basis with the Notes) is less than the
Excess Proceeds (such shortfall constituting a “Net Proceeds Deficiency”),
Issuer may use the Net Proceeds Deficiency, or a portion thereof, for general
corporate purposes.
     In the event of the Transfer of substantially all (but not all) of the
assets of Issuer and the Restricted Subsidiaries as an entirety to a Person in a
transaction covered by and effected in accordance with the covenant described
under “— Merger, Consolidation and Sale of Assets,” the Transferee shall be
deemed to have sold for cash at Fair Market Value the assets of Issuer and the
Restricted Subsidiaries not so Transferred for purposes of this covenant, and
shall comply with the provisions of this covenant with respect to such deemed
sale as if it were an Asset Sale (with such Fair Market Value being deemed to be
Net Available Proceeds for such purpose).
     Issuer shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with any purchase of Notes pursuant to the Indenture. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of the Indenture, Issuer shall comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Indenture by virtue of this compliance.
Limitation on Dividend and Other Restrictions Affecting Restricted Subsidiaries
     Issuer will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or consensual restriction on the ability of any
Restricted Subsidiary to:
     (a) pay dividends or make any other distributions on its Capital Stock to
Issuer or any other Restricted Subsidiary or pay any Indebtedness owed to Issuer
or any other Restricted Subsidiary;
     (b) make any loans or advances to, or guarantee any Indebtedness of, Issuer
or any other Restricted Subsidiary, or
     (c) Transfer any of its assets to Issuer or any other Restricted
Subsidiary,
except:
     (1) any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the Issue Date (including the Indenture and the Credit
Facilities), as such encumbrance or restriction is in effect on the Issue Date;
     (2) any Lien permitted under the Indenture that restricts the Transfer of
assets which are subject to such Lien;
     (3) restrictions on the Transfer of assets imposed under any agreement to
sell such assets permitted under the Indenture pending the closing of such sale;
     (4) any instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the assets of any Person, other
than the Person or the assets of the Person so acquired;
     (5) customary provisions in partnership agreements, limited liability
company organizational governance documents, joint venture agreements and other
similar agreements entered into in the ordinary course of business that restrict
the Transfer of ownership interests in or the payment of dividends or
distributions from such partnership, limited liability company, joint venture or
similar Person;
     (6) Purchase Money Indebtedness and Capital Lease Obligations incurred
pursuant to clause (8) of the definition of “Permitted Indebtedness” that impose
restrictions of the nature described in clause (c) above on the assets acquired;
     (7) any encumbrances or restrictions imposed by any amendments or
Refinancings of the contracts, instruments or obligations referred to in clause
(1), (4) or (6) above; provided that such amendments or Refinancings are, in the
good faith judgment of the Board of Directors, no more materially restrictive
with respect to such encumbrances and restrictions than those prior to such
amendment or Refinancing;
     (8) covenants to maintain net worth, total assets or liquidity and similar
financial responsibility covenants under contracts with customers or suppliers
in the ordinary course of business;

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     (9) any such encumbrance or restriction consisting of customary provisions
in leases governing leasehold interests to the extent such provisions restrict
the Transfer of the lease or the property leased thereunder;
     (10) customary provisions in leases, subleases, licenses, sublicenses and
service contracts in the ordinary course of business of the Issuer and the
Restricted Subsidiaries between the Issuer or any Restricted Subsidiary and its
customers and other contracts restricting the assignment thereof; and
     (11) any restriction imposed by applicable law, rule, regulation or order.
Additional Guarantees
     Issuer will cause any Subsidiary, whether currently existing, or
subsequently acquired or created, that Guarantees Issuer’s obligations or the
obligations of any Domestic Subsidiary (other than an Unrestricted Subsidiary)
under any of the Credit Facilities to fully and unconditionally guarantee all of
Issuer’s obligations under the Notes and the Indenture on the terms set forth in
the Indenture. Thereafter, such Subsidiary shall be a Guarantor for all purposes
of the Indenture until released in accordance with the terms of the Indenture.
Merger, Consolidation and Sale of Assets
     (A) Issuer will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or Transfer (or
cause or permit any Restricted Subsidiary of Issuer to Transfer) all or
substantially all of Issuer’s assets (determined on a consolidated basis for
Issuer and its Subsidiaries) whether as an entirety or substantially as an
entirety to any Person, unless
     (1) either
     (a) Issuer is the surviving or continuing Person; or
     (b) the Person (if other than Issuer) formed by such consolidation or into
which Issuer is merged or the Transferee of such assets (the “Issuer Surviving
Entity”):

  (x)   is a corporation, partnership or limited liability company organized and
validly existing under the laws of the United States or any State thereof or the
District of Columbia; provided that in the case where the surviving Person is
not a corporation, a co-obligor of the Notes is a corporation; and     (y)  
expressly assumes, by supplemental indenture (in form and substance satisfactory
to the Trustee) executed and delivered to the Trustee, the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes and the performance of every covenant under the Notes, the Indenture and
the Registration Rights Agreement on the part of Issuer to be performed or
observed; and

     (2) each of the conditions specified in paragraph (C) below is satisfied.
     For purposes of the foregoing, the Transfer in a single transaction or
series of related transactions of all or substantially all of the assets of one
or more Restricted Subsidiaries of Issuer, the Capital Stock of which
constitutes all or substantially all of the assets of Issuer (determined on a
consolidated basis for Issuer and its Subsidiaries), shall be deemed to be the
Transfer of all or substantially all of the assets of Issuer.
     The Indenture provides that upon any consolidation or merger in which
Issuer is not the continuing Person, or any Transfer of all or substantially all
of the assets of Issuer in accordance with the foregoing, Issuer Surviving
Entity shall succeed to, and be substituted for, and may exercise every right
and power of, Issuer under the Indenture and the Registration Rights Agreement
with the same effect as if such Issuer Surviving Entity had been named as such.
     (B) No Guarantor will, and Issuer will not cause or permit any such
Guarantor to, consolidate with or merge with or into any Person unless
     (1) either

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     (a) such Guarantor shall be the surviving or continuing Person; or
     (b) the Person (if other than a Guarantor) formed by such consolidation or
into which such Guarantor is merged shall expressly assume, by supplemental
indenture (in form and substance satisfactory to the Trustee) executed and
delivered to the Trustee, all of the obligations of such Guarantor under its
Guarantee and the performance of every covenant under such Guarantor’s
Guarantee, the Indenture and the Registration Rights Agreement on the part of
such Guarantor to be performed or observed; and
     (2) each of the conditions specified in paragraph (C) below (other than
clause (1) thereof) is satisfied.
     The requirements of this paragraph (A) and (B) shall not apply to (x) a
consolidation or merger of any Guarantor with and into Issuer or any other
Guarantor, so long as Issuer or a Guarantor survives such consolidation or
merger, or (y) a Transfer of any Guarantor that complies with the covenant
described under “— Limitation on Asset Sales.”
     (C) The following additional conditions shall apply to each transaction
described in paragraph (A) or (B), except that clause (1) below shall not apply
to a transaction described in paragraph (B):
     (1) immediately after giving effect to such transaction and the assumption
contemplated above (including giving effect to any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of such
transaction), Issuer (or Issuer Surviving Entity, if applicable)
     (x) could incur at least $1.00 of additional Indebtedness pursuant to the
Coverage Ratio Exception; or
     (y) the Consolidated Coverage Ratio of Issuer and the Restricted
Subsidiaries is equal to or greater than immediately prior to such acquisition
or merger; and
     (2) immediately before and immediately after giving effect to such
transaction and the assumption contemplated above (including giving effect to
any Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in respect of the transaction), no Default has occurred and
is continuing; and
     (3) Issuer shall have delivered to the Trustee an officers’ certificate and
an opinion of counsel, each stating that such transaction and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture comply with the applicable provisions of the Indenture, that all
conditions precedent in the Indenture relating to such transaction have been
satisfied and that supplemental indenture is enforceable.
SEC Reports
     From and after the Interim Loan Maturity Date, whether or not Issuer is
then subject to Section 13(a) or 15(d) of the Exchange Act, Issuer will
electronically file with the Commission, so long as the Notes are outstanding,
the annual reports, quarterly reports and other periodic reports that Issuer
would be required to file with the Commission pursuant to Section 13(a) or 15(d)
if Issuer were so subject, and such documents will be filed with the Commission
on or prior to the respective dates (the “Required Filing Dates”) by which
Issuer would be required so to file such documents if Issuer were so subject,
unless, in any case, if such filings are not then permitted by the Commission.
     If such filings with the Commission are not then permitted by the
Commission, or such filings are not generally available on the Internet free of
charge, Issuer will, within 15 days of each Required Filing Date, transmit by
mail to noteholders, as their names and addresses appear in the Note register,
without cost to such noteholders, and file with the Trustee copies of, the
annual reports, quarterly reports and other periodic reports that Issuer would
be required to file with the Commission pursuant to Section 13(a) or 15(d) of
the Exchange Act if Issuer were subject to such Section 13(a) or 15(d), and,
promptly upon written request, supply copies of such documents to any
prospective holder or beneficial owner at Issuer’s cost.
     So long as the rules and regulations of the Commission would allow
(including pursuant to any applicable exemptive relief) Issuer to file periodic
reports or information (if they were required by the Exchange Act to file such
reports or information) on a consolidated or combined basis, Issuer will be
deemed to have satisfied their requirements in the above paragraphs if Issuer
files the reports and other information of the types otherwise so required
within the applicable time periods. Issuer also will comply with the other
provisions of TIA § 314(a).

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Conduct of Business
     Issuer will not, and will not permit any Restricted Subsidiary to, engage
in any business other than the Permitted Business.
Events of Default
     Any of the following shall constitute an Event of Default under the
Indenture:
     (1) default for 30 days in the payment when due of interest on any Note;
     (2) default in the payment when due of principal on any Note, whether upon
maturity, acceleration, optional redemption, required repurchase or otherwise;
     (3) failure to perform or comply with the covenant described under “—
Change of Control”;
     (4) failure to perform or comply with any covenant, agreement or warranty
in the Indenture (other than any specified in clause (1), (2) or (3) above)
which failure continues for 60 days after written notice thereof has been given
to Issuer by the Trustee or to Issuer and the Trustee by the holders of at least
25% in aggregate principal amount of the then outstanding Notes;
     (5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by Issuer or any Restricted Subsidiary, whether such Indebtedness
now exists or is created after the Issue Date, which

  •   is caused by a failure to pay such Indebtedness at Stated Maturity (after
giving effect to any grace period related thereto) (a “Payment Default”); or    
•   results in the acceleration of such Indebtedness prior to its Stated
Maturity;

and in each case, the principal amount of any such Indebtedness as to which a
Payment Default or acceleration shall have occurred, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates
$25.0 million or more;
     (6) one or more final and non-appealable judgments, orders or decrees for
the payment of money of $25.0 million or more, individually or in the aggregate,
shall be entered against Issuer or any Restricted Subsidiary or any of their
respective properties and which final and non-appealable judgments, orders or
decrees are not covered by third party indemnities or insurance as to which
coverage has not been disclaimed and are not paid, discharged, bonded or stayed
within 60 days after their entry;
     (7) a court having jurisdiction in the premises enters (x) a decree or
order for relief in respect of Issuer or any of its Significant Subsidiaries in
an involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or (y) a decree or
order adjudging Issuer or any of its Significant Subsidiaries a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of Issuer or any of its
Significant Subsidiaries under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of Issuer or any of its Significant Subsidiaries or of
any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period 60
consecutive days;
     (8) Issuer or any of its Significant Subsidiaries:

  •   commences a voluntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law or any other
case or proceeding to be adjudicated a bankrupt or insolvent; or     •  
consents to the entry of a decree or order for relief in respect of Issuer or
any of its Significant Subsidiaries in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against Issuer or any of its Significant

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      Subsidiaries; or     •   files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law; or     •  
consents to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of Issuer or any of its Significant Subsidiaries or of any
substantial part of its property; or     •   makes an assignment for the benefit
of creditors; or     •   admits in writing its inability to pay its debts
generally as they become due; or     •   takes corporate action in furtherance
of any such action; or

     (9) the Guarantee of any Guarantor that is a Significant Subsidiary ceases
to be in full force and effect (other than in accordance with the terms of such
Guarantee and the Indenture) or is declared null and void and unenforceable or
is found invalid or any Guarantor denies its liability under its Guarantee
(other than by reason of release of a Guarantor from its Guarantee in accordance
with the terms of the Indenture and the Guarantee).
     If an Event of Default occurs and is continuing (other than an Event of
Default described in clause (7) or (8) above with respect to Issuer), the
Trustee or the holders of at least 25% in principal amount of the outstanding
Notes may declare the principal of and accrued but unpaid interest on all the
Notes to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default described
in clause (7) or (8) above occurs with respect to Issuer, the principal of and
interest on all the Notes will immediately become due and payable without any
declaration or other act on the part of the Trustee or any holders of the Notes.
Under certain circumstances, the holders of a majority in principal amount of
the outstanding Notes may rescind any such acceleration with respect to the
Notes and its consequences.
     Except to enforce the right to receive payment of principal or interest
when due, no noteholder may pursue any remedy with respect to the Indenture or
the Notes unless:

  •   such holder has previously given the Trustee notice that an Event of
Default is continuing;     •   holders of at least 25% in principal amount of
the outstanding Notes have requested the Trustee to pursue the remedy;     •  
such holders have offered the Trustee reasonable security or indemnity against
any loss, liability or expense;     •   the Trustee has not complied with such
request within 60 days after the receipt thereof and the offer of security or
indemnity; and     •   the holders of a majority in principal amount of the
outstanding Notes have not given the Trustee a direction inconsistent with such
request within such 60-day period.

     Subject to certain restrictions, the holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other holder or that would involve the Trustee in personal liability.
     The Indenture will provide that if a Default occurs and is continuing and
is known to the Trustee, the Trustee must mail to each noteholder notice of the
Default within 90 days after it occurs. Notwithstanding the foregoing, except in
the case of a Default in the payment of principal of or interest on any Note,
the Trustee may withhold notice if and so long as a committee of its trust
officers determines that withholding notice is in the interest of the
noteholders. In addition, Issuer is required to deliver to the Trustee, within
120 days after the end of each fiscal year, a certificate indicating whether the
signers thereof know of any Default that occurred during the previous year.
Issuer also is required to deliver to the Trustee, within 30 days after the
occurrence thereof, written notice of any event which would constitute certain
Defaults, their status and what action Issuer is taking or proposes to take in
respect thereof.
Amendments and Waivers
     Except as provided below, the Notes and the Indenture may be amended with
the consent of the holders of a majority of the

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aggregate principal amount of Notes then outstanding (including consents
obtained in connection with a tender offer or exchange for the Notes) and any
past default or compliance with any provisions may also be waived with the
consent of the holders of a majority in principal amount of the Notes then
outstanding.
     Without the consent of each holder of an outstanding Note affected thereby,
no amendment or waiver may:

  •   reduce the principal of or change the fixed maturity of any Note;     •  
alter the provisions with respect to the redemption or purchase provisions of
any Note or the Indenture in a manner adverse to the holders of the Notes (other
than the provisions of the Indenture relating to any offer to purchase required
under the covenants described under “— Change of Control”);     •   waive a
redemption or purchase payment due with respect to any Note;     •   reduce the
rate of or change the time for payment of interest on any Note;     •   waive a
Default in the payment of principal or interest on the Notes (except that
holders of at least a majority in aggregate principal amount of the then
outstanding Notes may (x) rescind an acceleration of the Notes that resulted
from a non-payment default and (y) waive the payment default that resulted from
such acceleration);     •   make the principal of or interest on any Note
payable in money other than United States Dollars;     •   make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of holders of Notes to receive payments of principal of or interest on
the Notes;     •   make the Notes or any Guarantee subordinated by their or its
terms in right of payment to any other Indebtedness;     •   release any
Guarantor that is a Significant Subsidiary from its Guarantee except in
compliance with the Indenture; or     •   make any change in the amendment and
waiver provisions of the Indenture.

     Without the consent of any noteholder, Issuer and the Trustee may amend
Notes and the Indenture:

  •   to cure any ambiguity, defect or inconsistency;     •   to provide for the
assumption by a successor Person of the obligations of Issuer or any Guarantor
under the Indenture in accordance with the covenant described under “— Merger,
Consolidation and Sale of Assets”;     •   to provide for uncertificated Notes
in addition to or in place of certificated Notes (provided that the
uncertificated Notes are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code);     •   to add a Guarantor;    
•   to release a Guarantor from its Guarantee when permitted by the Indenture;  
  •   to add to the covenants of Issuer for the benefit of the noteholders or to
surrender any right or power conferred upon Issuer;     •   to comply with any
requirement of the SEC in connection with the qualification of the Indenture
under the Trust Indenture Act;     •   to make any other change that does not
materially adversely affect the rights of any noteholder; or     •   to conform
the Indenture to this Description of Notes.

     The consent of the noteholders is not necessary under the Indenture to
approve the particular form of any proposed amendment or waiver. It is
sufficient if such consent approves the substance of the proposed amendment or
waiver.

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     After an amendment or waiver under the Indenture becomes effective, Issuer
is required to mail to noteholders a notice briefly describing such amendment or
waiver. However, the failure to give such notice to all noteholders, or any
defect therein, will not impair or affect the validity of the amendment or
waiver.
Transfer
     Notes will be issued in registered form and are transferable only upon the
surrender of the Notes being transferred for registration of transfer. No
service charge will be made for any registration of transfer or exchange of
Notes, but Issuer may require payment of a sum sufficient to cover any transfer
tax or other similar governmental charge payable in connection therewith.
Discharge of Indenture and Defeasance
     The Indenture will, subject to certain surviving provisions, cease to be of
further effect when:
     (1) Issuer delivers to the Trustee all outstanding Notes (other than Notes
replaced because of mutilation, loss, destruction or wrongful taking) for
cancellation; or
     (2) all outstanding Notes have become due and payable, whether at maturity
or as a result of the mailing of a notice of redemption as described above, and
Issuer irrevocably deposits with the Trustee funds sufficient to pay at maturity
or upon redemption all outstanding Notes, including interest thereon,
and if in either case Issuer pays all other sums payable under the Indenture by
Issuer. The Trustee will acknowledge satisfaction and discharge of the Indenture
on demand of Issuer accompanied by an officers’ certificate and an opinion of
counsel and at the cost and expense of Issuer.
     Subject to the conditions to defeasance described below and in the
Indenture and the survival of certain provisions, Issuer at any time may
terminate:
     (1) all its obligations under the Notes and the Indenture (“legal
defeasance option”); or
     (2) its obligations under certain restrictive covenants and the related
Events of Default (“covenant defeasance option”).
     Issuer may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If Issuer exercises its legal
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default. If Issuer exercises its covenant defeasance option, payment of
the Notes may not be accelerated because of an Event of Default referred to in
clause (2) of the immediately preceding paragraph.
     In order to exercise either defeasance option, Issuer must irrevocably
deposit in trust (the “defeasance trust”) with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Notes to redemption or maturity, as the case may be, and must comply with
certain other conditions, including delivery to the Trustee of an opinion of
counsel to the effect that holders of the Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit and
defeasance and will be subject to federal income tax on the same amount and in
the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such opinion of counsel must be based on a ruling of the Internal Revenue
Service or change in applicable federal income tax law).
Concerning the Trustee
     Law Debenture Trust Company of New York is the Trustee under the Indenture.
Deutsche Bank Trust Company Americas has been appointed by Issuer as Registrar
and Paying Agent with regard to the Notes. An affiliate of the Registrar and
Paying Agent is acting as an initial purchaser of the Notes.
     The holders of a majority in principal amount of the outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that if an Event of Default occurs (and is
not cured), the Trustee will be required, in the exercise of its power, to use
the degree of care of a prudent person in the conduct of such person’s own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
noteholder, unless such noteholder shall have offered to

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the Trustee reasonable security or indemnity reasonably acceptable to it against
any cost, expense and liabilities which might be incurred by it in compliance
with such request.
No Personal Liability of Directors, Officers, Employees and Stockholders
     No director, officer, employee, incorporator or stockholder of the Issuer
or any of its subsidiaries will have any liability for any obligations of the
Issuer or the Guarantors under the notes, the indenture, the Guarantees, or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of notes by accepting a note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the notes.
Governing Law
     The Indenture will provide that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
Certain Definitions
     “Acquired Indebtedness” means (1) with respect to any Person that becomes a
Restricted Subsidiary after the Issue Date, Indebtedness of such Person and its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
and (2) with respect to Issuer or any Restricted Subsidiary, any Indebtedness of
a Person (other than Issuer or a Restricted Subsidiary) existing at the time
such Person is merged with or into Issuer or a Restricted Subsidiary, or
Indebtedness expressly assumed or incurred by Issuer or any Restricted
Subsidiary in connection with the acquisition of the stock or any asset or
assets from another Person.
     “affiliate” of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
“control” when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.
     “Applicable Premium” means, with respect to any Note on any
Redemption Date, the greater of:
     (1) 1.0% of the principal amount of such Note; and
     (2) the excess, if any, of (a) the present value at such Redemption Date of
(i) the redemption price of such Note at  February 28, 2012 (such redemption
price being set forth in the table appearing above under the caption “Optional
Redemption”), plus (ii) all required interest payments due on such Note
through February 28, 2012 (excluding accrued but unpaid interest to the
Redemption Date), computed using a discount rate equal to the Treasury Rate as
of such Redemption Date plus 50 basis points; over (b) the then outstanding
principal amount of such Note.
     “Asset Sale” means any Transfer by Issuer or any Restricted Subsidiary
(other than to Issuer or a Restricted Subsidiary) of:

  •   any shares of Capital Stock of a Restricted Subsidiary (other than
directors’ qualifying shares and, to the extent required by local ownership laws
in foreign countries, shares owned by foreign shareholders);     •   all or
substantially all the assets of any division, business segment or comparable
line of business of Issuer or any Restricted Subsidiary; or     •   any other
assets of Issuer or any Restricted Subsidiary outside of the ordinary course of
business of Issuer or such Restricted Subsidiary.

     Notwithstanding the foregoing, the term “Asset Sale” shall not include:
     (1) for purposes of the covenant described under “— Certain Covenants —
Limitation on Asset Sales,” a Transfer that constitutes a Permitted Investment
or a Restricted Payment permitted by the covenant described under “— Certain
Covenants — Limitation on Restricted Payments” or permitted under “— Merger,
Consolidation and Sale of Assets”;

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     (2) sales of accounts receivable of the type specified in the definition of
“Qualified Securitization Transaction” to a Securitization Entity for the Fair
Market Value thereof;
     (3) sales or grants of non-exclusive licenses to use the patents, trade
secrets, know-how and other intellectual property of Issuer or any Restricted
Subsidiary to the extent that such licenses are granted in the ordinary course
of business, and do not prohibit Issuer or any Restricted Subsidiary from using
the technologies licensed and do not require Issuer or any Restricted Subsidiary
to pay any fees for any such use;
     (4) a Transfer pursuant to any foreclosure of assets or other remedy
provided by applicable law by a creditor of Issuer or any Restricted Subsidiary
with a Lien on such assets, if such Lien is permitted under the Indenture;
     (5) a Transfer involving only Temporary Cash Investments or Inventory in
the ordinary course of business;
     (6) any Transfer of damaged, worn-out or obsolete equipment in the ordinary
course of business;
     (7) the lease or sublease of any real or personal property in the ordinary
course of business;
     (8) a Transfer of assets having a Fair Market Value and a sale price of
less than $5.0 million;
     (9) dispositions of accounts receivable in connection with the collection
or compromise thereof;
     (10) dispositions of property to the extent that such property is exchanged
for credit against the purchase price of similar replacement property which is
concurrently purchased pursuant to a transaction otherwise permitted hereunder,
in each case under Section 1031 of the Code;
     (11) any dispositions made pursuant to the plan of reorganization described
under “Plan of Reorganization”; or
     (12) any dispositions by Unrestricted Subsidiaries or Persons that are not
Subsidiaries of Solutia.
     “Bank Collateral Agent” means, collectively, the Persons designated as such
under the Credit Facilities or any Person otherwise performing the duties
typical of a collateral agent under a credit facility like the Credit
Facilities.
     “Basket” has the meaning set forth under “— Certain Covenants — Limitation
on Restricted Payments.”
     “Capital Lease Obligations” means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP. The amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP (except for temporary treatment of construction-related
expenditures paid by any Person other than Issuer or any of its Restricted
Subsidiaries under EITF 97-10, “The Effect of Lessee Involvement in Asset
Construction,” which will ultimately be treated as operating leases upon a
sale-leaseback transaction), and the Stated Maturity thereof shall be the date
of the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be terminated by the lessee without
payment of a penalty.
     “Capital Stock” of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
     “Change of Control” means the occurrence of any of the following events:
     (1) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act,), directly or indirectly, of
Voting Stock representing 50% or more of the voting power of the total
outstanding Voting Stock of Issuer;
     (2) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election to the Board of Directors or whose nomination for
election by the shareholders of Issuer was approved by a vote of the majority of
the directors of Issuer then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office;

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     (3) Issuer consolidates with or merges with or into another Person or
another Person merges with or into Issuer, or all or substantially all the
assets of Issuer and the Restricted Subsidiaries, taken as a whole, are
Transferred to another Person, and, in the case of any such merger or
consolidation, the securities of Issuer that are outstanding immediately prior
to such transaction and which represent 100% of the aggregate voting power of
the Voting Stock of Issuer are changed into or exchanged for cash, securities or
property, unless pursuant to such transaction such securities are changed into
or exchanged for, in addition to any other consideration, securities of the
surviving Person that represent immediately after such transaction, at least a
majority of the aggregate voting power of the Voting Stock of the surviving
Person; or
     (4) Issuer liquidates or dissolves or the stockholders of Issuer adopt a
plan of liquidation or dissolution.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Consolidated Coverage Ratio” as of any date of determination means the
ratio of (a) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters for which internal financial statements are
available to (b) Consolidated Fixed Charges for such four fiscal quarters;
provided that:
     (1) if Issuer or any Restricted Subsidiary has incurred any Indebtedness
since the beginning of such period and prior to the event for which the
Consolidated Coverage Ratio is being calculated that remains outstanding prior
to the event for which the calculation is being made, EBITDA and Consolidated
Fixed Charges for such period shall be calculated after giving effect on a pro
forma basis to such Indebtedness as if such Indebtedness had been incurred on
the first day of such period and the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such period
(except that, in the case of Indebtedness used to finance working capital needs
incurred under a revolving credit or similar arrangement, the amount thereof
shall be deemed to be the average daily balance of such Indebtedness during such
four-fiscal-quarter period);
     (2) if since the beginning of such period Issuer or any Restricted
Subsidiary shall have Transferred any assets in an Asset Sale, the EBITDA for
such period shall be reduced by an amount equal to the EBITDA (whether positive
or negative) directly attributable to the assets which are the subject of such
Transfer for such period, and Consolidated Fixed Charges for such period shall
be reduced by an amount equal to the Consolidated Fixed Charges directly
attributable to any Indebtedness of Issuer or any Restricted Subsidiary repaid,
repurchased, defeased, assumed by a third person (to the extent Issuer and its
Restricted Subsidiaries are no longer liable for such Indebtedness) or otherwise
discharged with respect to Issuer and its continuing Restricted Subsidiaries in
connection with such Transfer for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Fixed Charges for such period
directly attributable to the Indebtedness of such Restricted Subsidiary to the
extent Issuer and its continuing Restricted Subsidiaries are no longer liable
for such Indebtedness after such sale);
     (3) if since the beginning of such period Issuer or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or
an acquisition of assets, which acquisition constitutes all or substantially all
of an operating unit of a business, including any such Investment or acquisition
occurring in connection with a transaction requiring a calculation to be made
hereunder, EBITDA and Consolidated Fixed Charges for such period shall be
calculated after giving pro forma effect thereto (including the incurrence of
any Indebtedness) as if such Investment or acquisition occurred on the first day
of such period;
     (4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into Issuer or any
Restricted Subsidiary since the beginning of such period) shall have made any
Transfer of assets in an Asset Sale, any Investment or acquisition of assets
that would have required an adjustment pursuant to clause (2) or clause (3)
above if made by Issuer or a Restricted Subsidiary during such period, EBITDA
and Consolidated Fixed Charges for such period shall be calculated after giving
pro forma effect thereto as if such Transfer, Investment or acquisition occurred
on the first day of such period; and
     (5) if Issuer or any Restricted Subsidiary has repaid any Indebtedness
since the beginning of such period that no longer remains outstanding on such
date of determination, EBITDA and Consolidated Fixed Charges for such period
shall be calculated after giving effect on a pro forma basis to the repayment of
such Indebtedness as if such Indebtedness had repaid on the first day of such
period as if such discharge had occurred on the first day of such period.
     For purposes of this definition, whenever pro forma effect is to be given
to a transaction, the amount of income, earnings or expense relating thereto and
the amount of Consolidated Fixed Charges associated with any Indebtedness
incurred in connection

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therewith, the pro forma calculations shall be (i) based on the reasonable good
faith judgment of a responsible financial or accounting officer of Issuer and
(ii) set forth in a certificate delivered to the Trustee from such officer (it
may include, for the avoidance of doubt, cost savings and operating expense
reductions resulting from such transaction (which are being given pro forma
effect) that are reasonably expected to be realized in the twelve month period
immediately subsequent to such transaction). If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest of
such Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months).
     “Consolidated Fixed Charges” means, with respect to any period, the sum
(without duplication) of:
     (1) the interest expense of Issuer and the Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP consistently
applied, including, without limitation:

  •   amortization of debt issuance costs and debt discount;     •   the net
payments, if any, under Interest Rate Agreements (including amortization of
discounts);     •   the interest portion of any deferred payment obligation;    
•   accrued interest;     •   commissions, discounts and other fees and charges
incurred in respect of letters of credit or bankers -acceptance financings;

     (2) the interest component of the Capital Lease Obligations paid or accrued
during such period;
     (3) all interest capitalized during such period;
     (4) interest accrued during such period on Indebtedness of the type
described in clause (6) or (7) of the definition of “Indebtedness”;
     (5) the product of

  •   the amount of all dividends on any series of Preferred Stock of Issuer and
the Restricted Subsidiaries (other than dividends paid in Qualified Stock and
other than dividends paid to Issuer or to a Restricted Subsidiary) paid, accrued
or scheduled to be paid or accrued during such period;     •   a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated Federal, state and local tax rate of Issuer,
expressed as a decimal; and

     (6) fees related to a Qualified Securitization Transaction.
     “Consolidated Net Income” means, for any period, the net income (or loss)
of Issuer and the Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP consistently applied; provided that
there shall not be included in such Consolidated Net Income:
     (1) any extraordinary gains or losses or expenses
     (2) any net income or loss of any Person if such Person is not a Restricted
Subsidiary, except Consolidated Net Income shall be increased by the amount of
cash actually distributed by such Person during such period to Issuer or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution paid to a Restricted Subsidiary, to the
limitations contained in clause (3) below);
     (3) the net income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income is not at the time permitted, directly or indirectly, without
prior approval (that has not been obtained), pursuant to the terms of its
charter or any agreement, instrument and governmental regulation applicable to
such Restricted Subsidiary or its stockholders;

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     (4) any gain or loss realized upon the sale or other disposition of (x) any
assets (including pursuant to Sale and Leaseback Transactions) which is not sold
or otherwise disposed of in the ordinary course of business or (y) any Capital
Stock of any Person;
     (5) any net after-tax income or loss from discontinued operations; and
     (6) the cumulative effect of a change in accounting principles.
     “Coverage Ratio Exception” has the meaning set forth in the proviso in the
first paragraph of the covenant described under “— Certain Covenants —
Limitation on Incurrence of Indebtedness.”
     “Credit Facilities” means, collectively, one or more credit agreements or
indentures, including, without limitation, (i) a senior secured asset-based
revolving credit facility in the aggregate principal amount dated on or about
February ___, 2008 among the Issuer and certain of its Subsidiaries, as
borrowers, the lenders named therein, and Citibank, N.A. as administrative agent
and as collateral agent, and (ii) a credit agreement to be dated on or about the
February ___, 2008 among the Issuer, as borrower, the lenders named therein, and
Citibank, N.A. as administrative agent and as collateral agent, and in each case
including any notes, guarantees, collateral and security documents (including
mortgages, pledge agreements and other security arrangements), instruments and
agreements executed in connection therewith, and in each case as amended or
Refinanced from time to time, including, without limitation, any agreement or
agreements extending the maturity of, or Refinancing (including increasing the
amount of borrowings or other Indebtedness outstanding or available to be
borrowed thereunder), all or any portion of the Indebtedness under such
agreement, including, without limitation, any indenture or indentures, and any
successor or replacement agreement or agreements, , including, without
limitation, any indenture or indentures with the same or any other agents,
creditor, lender or group of creditors, lenders, trustee or noteholders.
     “Currency Agreement” means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement to which
such Person is a party or a beneficiary.
     “Default” means any event which is, or after notice or passage of time or
both would be, an Event of Default.
     “Disqualified Stock” means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event:
     (1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise; or
     (2) is redeemable at the option of the holder thereof, in whole or in part,
in each case on or prior to the date that is 91 days after the Stated Maturity
of the Notes and for consideration that is not Qualified Stock;
provided that any class of Capital Stock of such Person that, by its terms,
authorizes such Person to satisfy in full its obligations with respect to the
payment of dividends or upon maturity, redemption (pursuant to a sinking fund or
otherwise) or repurchase thereof or otherwise by the delivery of Qualified
Stock, and that is not convertible, puttable or exchangeable for Disqualified
Stock or Indebtedness, will not be deemed to be Disqualified Stock so long as
such Person satisfies its obligations with respect thereto solely by the
delivery of Qualified Stock; provided further that any Capital Stock that would
not constitute Disqualified Stock but for provisions thereof giving holders
thereof (or the holders of any security into or for which such Capital Stock is
convertible, exchangeable or exercisable) the right to require Issuer or any
Restricted Subsidiary to redeem or purchase such Capital Stock upon the
occurrence of a change in control occurring prior to the final maturity date of
the Notes shall not constitute Disqualified Stock if the change in control
provisions applicable to such Capital Stock are no more favorable to such
holders than the provisions described under the caption “— Change of Control”
and such Capital Stock specifically provides that Issuer or such Restricted
Subsidiary will not redeem or purchase any such Capital Stock pursuant to such
provisions prior to Issuer’s purchase of the Notes as required pursuant to the
provisions described under the caption “— Change of Control.”
     “Domestic Subsidiary” means a Restricted Subsidiary of Issuer that is not a
Foreign Subsidiary.
     “EBITDA” for any period means the sum of Consolidated Net Income for such
period plus, without duplication, the following to the extent deducted in
calculating such Consolidated Net Income:
     (1) Consolidated Fixed Charges;

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     (2) income tax expense determined on a consolidated basis in accordance
with GAAP;
     (3) depreciation expense determined on a consolidated basis in accordance
with GAAP;
     (4) amortization expense determined on a consolidated basis in accordance
with GAAP;
     (5) amounts attributable to minority interest;
     (6) any unusual or non-recurring non-cash charge (including any impairment
charge or asset write-off pursuant to GAAP) (provided that if any such non-cash
charge represents an accrual or reserve for potential cash items in any future
period, the cash payment in respect thereof in such future period shall be
subtracted from EBITDA to such extent, and excluding amortization of a prepaid
cash item that was paid in a prior period);
     (7) all costs and expenses arising from or related to the Notes, the
Initial Credit Facilities, the Equity Rights Offering, the Creditor Rights
Offering or Solutia’s emergence from Chapter 11 protection incurred prior to the
first anniversary of the Issue Date;
     (8) non-cash stock compensation, including any non-cash expenses arising
from stock options, stock grants or other equity-incentive programs, the
granting of stock appreciation rights and similar arrangements;
     (9) to the extent the related loss is not added back in calculating such
Consolidated Net Income, proceeds of business interruption insurance policies to
the extent of such related loss; and
     (10) fees related to a Qualified Securitization Transaction;
provided that EBITDA shall be reduced by the following:
     (a) all non-cash items increasing such Consolidated Net Income (excluding
(x) any non-cash item to the extent that it represents an accrual of cash
receipts to be received in a subsequent period and (y) the amount attributable
to minority interests);
     (b) any non-recurring gains; and
     (c) amounts paid in cash as dividends or other distributions to holders of
minority interests.
     “Effective Date” shall mean February                     , 2008.
     “Equity Offering” means a public or private offering or placement of
Capital Stock of Issuer (other than Disqualified Stock) that generates gross
proceeds to the issuer thereof of at least $25 million.
     “Fair Market Value” means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) that would be
negotiated in an arm’s-length transaction for cash between a willing seller and
a willing and able buyer, neither of which is under any compulsion to complete
the transaction. Fair Market Value (other than of any asset with a public
trading market) in excess of $20 million shall be determined by the Board of
Directors acting reasonably and in good faith and shall be evidenced by a Board
Resolution delivered to the Trustee.
     “Foreign Subsidiary” means (i) a Restricted Subsidiary that is incorporated
in a jurisdiction other than the United States or a State thereof or the
District of Columbia, and (ii) any Restricted Subsidiary that has no material
assets other than Capital Stock, securities or indebtedness of one or more
Foreign Subsidiaries (or Subsidiaries thereof).
     “GAAP” means generally accepted accounting principles in the United States
of America as in effect and adopted by Issuer on the date of the Indenture.
     “guarantee” means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person:

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     (1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise); or
     (2) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided that the term “guarantee” shall not include endorsements for collection
or deposit in the ordinary course of business. The term “guarantee” used as a
verb has a corresponding meaning. The term “guarantor” shall mean any Person
guaranteeing any obligation.
     “Guarantee” means a full and unconditional senior guarantee of the Notes
pursuant to the Indenture.
     “Guarantor” means any Restricted Subsidiary of Issuer that issues a
Guarantee of the Notes, in each case, until such Person is released from its
Guarantee in accordance with the Indenture.
     “Hedging Obligations” of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement entered into in
the ordinary course of business and not for speculative purposes.
     “Holder” means the Person in whose name a Note is registered on the
registrar’s books.
     “incur” means issue, create, assume, guarantee, incur or otherwise become
liable for; provided that any Indebtedness or Capital Stock of a Person existing
at the time such Person becomes a Restricted Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be incurred by such
Subsidiary at the time it becomes a Restricted Subsidiary. Neither the accrual
of interest nor the accretion of original issue discount shall be deemed to be
an incurrence of Indebtedness. The term “incurrence” when used as a noun shall
have a correlative meaning.
     “Indebtedness” means, with respect to any Person, without duplication, and
whether or not contingent:
     (1) all indebtedness of such Person for borrowed money or for the deferred
purchase price of assets or services or which is evidenced by a note, bond,
debenture or similar instrument, to the extent it would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP;
     (2) all Capital Lease Obligations of such Person;
     (3) all obligations of such Person in respect of letters of credit or
bankers’ acceptances issued or created for the account of such Person;
     (4) net obligations of such Person under Interest Rate Agreements or
Currency Agreements;
     (5) all Disqualified Stock issued by such Person and all Preferred Stock
issued by any Restricted Subsidiary of such Person, in each case, valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends thereon;
     (6) to the extent not otherwise included, any guarantee by such Person of
any other Person’s indebtedness or other obligations described in clauses (1)
through (5) above; and
     (7) all Indebtedness of others secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person; provided
that the amount of such Indebtedness shall be the lesser of (x) the Fair Market
Value of such asset at such date of determination and (y) the amount of such
Indebtedness.
     For the avoidance of doubt, “Indebtedness” shall not include:

  •   current trade payables or other accrued liabilities incurred in the
ordinary course of business and payable in accordance with customary practices;
    •   deferred tax obligations;

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  •   minority interest;     •   non-interest bearing installment obligations
and accrued liabilities incurred in the ordinary course of business; and     •  
obligations of Issuer or any Restricted Subsidiary pursuant to contracts for, or
options, puts or similar arrangements relating to, the purchase of raw materials
or the sale of Inventory at a time in the future entered into in the ordinary
course of business

     For purposes hereof, the “maximum fixed repurchase price” of any
Disqualified Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to the Indenture, and if such price is based
upon, or measured by the Fair Market Value of, such Disqualified Stock, such
Fair Market Value is to be determined in good faith by the board of directors of
the issuer of such Disqualified Stock. The amount of Indebtedness of any Person
at any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations as
described above at such date; provided that the amount outstanding at any time
of any Indebtedness issued with original issue discount shall be deemed to be
the face amount of such Indebtedness less the remaining unamortized portion of
the original issue discount of such Indebtedness at such time as determined in
conformity with GAAP. The accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness or Disqualified Stock, the reclassification of
preferred stock as Indebtedness due to a change in accounting principles, and
the payment of dividends on Disqualified Stock in the form of additional shares
of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or
an issuance of Disqualified Stock for purposes of the Indenture.
     “Independent Financial Advisor” means a firm:

  •   which does not, and whose directors, officers or affiliates do not, have a
material financial interest in Issuer or any of its Subsidiaries; and     •  
which, in the judgment of the Board of Directors, is otherwise independent and
qualified to perform the task for which it is to be engaged.

     “Initial Credit Facilities” means the (i) a senior secured asset-based
revolving credit facility in the aggregate principal amount dated as if February
___, 2008 among the Issuer and certain of its Subsidiaries, as borrowers, the
lenders named therein, and Citibank, N.A. as administrative agent and as
collateral agent, and (ii) a credit agreement to be dated on or about the Issue
Date among the Issuer, as borrower, the lenders named therein, and Citibank,
N.A. as administrative agent and as collateral agent, and in each case including
any notes, guarantees, collateral and security documents (including mortgages,
pledge agreements and other security arrangements), instruments and agreements
executed in connection therewith, and in each case as amended or Refinanced from
time to time, including, without limitation, any agreement or agreements
extending the maturity of, or Refinancing (including increasing the amount of
borrowings or other Indebtedness outstanding or available to be borrowed
thereunder), all or any portion of the Indebtedness under such agreement,
including, without limitation, any indenture or indentures, and any successor or
replacement agreement or agreements, including, without limitation, any
indenture or indentures with the same or any other agents, creditor, lender or
group of creditors, lenders, trustee or noteholders.
     “interest” means, with respect to the Notes, the sum of any interest and
any Liquidated Damages on the Notes.
     “Interest Period” means the period commencing on and including an interest
payment date and ending on and including the day immediately preceding the next
succeeding interest payment date.
     “Interest Rate Agreement” means any interest rate swap agreement, interest
rate cap agreement or other similar financial agreement or arrangement.
     “Interim Loan Maturity Date” means February 28, 2009.
     “Inventory” has the meaning provided in the Uniform Commercial Code of the
State of New York, as amended.
     “Investment” in any Person means any direct or indirect advance, loan or
other extension of credit (including by way of guarantee or similar arrangement)
or capital contribution to, or any purchase or acquisition of Capital Stock,
Indebtedness or other similar

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instruments issued by, such Person. “Investment” excludes (a) any Restricted
Payment of the type described in clause (2) of the definition “Restricted
Payment” and (b) any purchase or acquisition of Indebtedness of Issuer or any of
its Subsidiaries.
     For purposes of the definition of “Unrestricted Subsidiary,” the definition
of “Restricted Payment” and the covenant described under “Certain Covenants —
Limitation on Restricted Payments”:
     (1) “Investment” shall include the portion (proportionate to Issuer’s
direct and indirect equity interest in such Subsidiary) of the Fair Market Value
of the net assets of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary;
     (2) any asset Transferred to or from an Unrestricted Subsidiary shall be
valued at its Fair Market Value at the time of such Transfer; and
     (3) if Issuer or any Restricted Subsidiary Transfers any Capital Stock of
any direct or indirect Restricted Subsidiary, or any Restricted Subsidiary
issues Capital Stock, such that, after giving effect to any such Transfer or
issuance, such Person is no longer a Restricted Subsidiary, Issuer shall be
deemed to have made an Investment on the date of any such Transfer or issuance
equal to the Fair Market Value of the Capital Stock of such Person held by
Issuer or such Restricted Subsidiary immediately following any such Transfer or
issuance.
     “Issue Date” means the date on which the Notes are originally issued.
     “Issuer Surviving Entity” has the meaning set forth under “— Merger,
Consolidation and Sale of Assets.”
     “Lien” means, any mortgage, deed of trust, lien, pledge, charge, debenture,
security interest or encumbrance of any kind in respect of an asset with respect
to any asset then held by Issuer or a Restricted Subsidiary, whether or not
filed, recorded or otherwise perfected under applicable law (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
any asset and any filing of, or agreement to give, any financing statement under
the UCC or equivalent statutes) of any jurisdiction other than to evidence a
lease.
     “Moody’s” means Moody’s Investors Service, Inc. and any successor to its
rating agency business.
     “Net Available Proceeds” from an Asset Sale means the aggregate cash
proceeds received by such Person and/or its affiliates in respect of such
transaction, which amount is equal to the excess, if any, of:
     (1) the cash received by such Person and/or its affiliates (including any
cash payments received by way of deferred payment pursuant to, or monetization
of, a note or installment receivable or otherwise, but only as and when
received) in connection with such transaction, over
     (2) the sum of (a) the amount of any Indebtedness that is secured by such
asset and which is required to be repaid by such person in connection with such
transaction, plus (b) all fees, commissions, and other expenses incurred by such
Person in connection with such transaction, plus (c) provision for taxes,
including income taxes, attributable to the transaction or attributable to
required prepayments or repayments of Indebtedness with the proceeds of such
transaction, plus (d) a reasonable reserve for the after-tax cost of any
indemnification payments (fixed or contingent) attributable to seller’s
indemnities to purchaser in respect of such transaction undertaken by Issuer or
any of its Restricted Subsidiaries in connection with such transaction, plus
(e) if such Person is a Restricted Subsidiary, any dividends or distributions
payable to holders of minority interests in such Restricted Subsidiary from the
proceeds of such transaction.
     “Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys’ fees,
accountants’ fees, underwriters’ or placement agents’ fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
     “Obligations” means, with respect to any Indebtedness, any principal,
interest, penalties, fees, indemnification, reimbursements, costs, expenses,
damages and other liabilities payable under the documentation governing such
Indebtedness.
     “Permitted Business” means (1) the same or a similar line of business as
Issuer and the Restricted Subsidiaries are engaged in on the date of the
Indenture as described in this prospectus and (2) such business activities as
are complementary, incidental, ancillary or

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related to, or are reasonable extensions of, the foregoing.
     “Permitted Indebtedness” has the meaning set forth in the second paragraph
under “— Certain Covenants — Limitation on Incurrence of Indebtedness.”
     “Permitted Investment” means:
     (1) any Investment in Temporary Cash Investments or the Notes;
     (2) any Investment in Issuer or any Restricted Subsidiary;
     (3) any Investment by Issuer or any Restricted Subsidiary in a Person, if
as a result of such Investment:

  •   such Person becomes a Restricted Subsidiary; or     •   such Person is
merged or consolidated with or into, or Transfers or conveys all or
substantially all of its assets to, or is liquidated into, Issuer or a
Guarantor;

     (4) receivables owing to Issuer or any Restricted Subsidiary if created or
acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; provided that such trade terms may
include such concessionary trade terms as Issuer or any such Restricted
Subsidiary deems reasonable under the circumstances;
     (5) loans or advances to employees of Issuer or any Restricted Subsidiary
that are made in the ordinary course of business consistent with past practices
of Issuer or such Restricted Subsidiary, in an aggregate amount, taken together
with all other loans or advances made pursuant to this clause (5) that are at
the time outstanding, not to exceed $15.0 million;
     (6) Investments in any Person to the extent such Investment represents the
non-cash portion of the consideration received in an Asset Sale as permitted
pursuant to the covenant described under “— Certain Covenants — Limitation on
Asset Sales” or represents consideration received from the sale of assets not
considered to be an Asset Sale for purposes of such covenant;
     (7) Investments of cash or Temporary Cash Investments in any Restricted
Subsidiary that is not a Guarantor in the form of Indebtedness that is not
subordinated by its terms to any other obligations;
     (8) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
     (9) Hedging Obligations incurred pursuant to clause (7) of the definition
of “Permitted Indebtedness”;
     (10) Additional Investments in an aggregate amount, taken together with all
other Investments made pursuant to this clause (10) that are at that time
outstanding, not to exceed $100.0 million;
     (11) any Investment by Issuer or a Wholly Owned Subsidiary of Issuer in a
Securitization Entity; provided that such Investment is in the form of a
Purchase Money Note or an equity interest or interests in accounts receivable
generated by Issuer or any of its Subsidiaries;
     (12) any Indebtedness of Issuer to any of its Subsidiaries incurred in
connection with the purchase of accounts receivable and related assets by Issuer
from any such Subsidiary which assets are subsequently conveyed by Issuer to a
Securitization Entity in a Qualified Securitization Transaction;
     (13) any guarantees of Indebtedness permitted by clause (6) or (17) of the
definition of “Permitted Indebtedness”; and
     (14) Investments consisting of take-or-pay obligations contained in supply
agreements relating to products, services or commodities of a type that Issuer
or any of its Subsidiaries uses or sells in the ordinary course of business.
     The amount of any Investments outstanding for purposes of clause (10) or
(14) above and the amount of Investments deemed made since the Issue Date for
purposes of clause (8) of “— Certain Covenants — Limitation on Restricted
Payments” shall be equal to the aggregate amount of Investments made pursuant to
such clause reduced (but not below zero) by the following (to the extent not
included in the calculation of Consolidated Net Income for purposes of
determining the Basket and without duplication):

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  •   the aggregate net proceeds (including the Fair Market Value of assets
other than cash) received by Issuer or any Restricted Subsidiary upon the sale
or other disposition of any Investment made pursuant to such clause;     •   the
net reduction in Investments made pursuant to such clause resulting from
dividends, repayments of loans or advances or other Transfers of assets to
Issuer or any Restricted Subsidiary;     •   to the extent that the amount
available for Investments under such clause was reduced as the result of the
designation of an Unrestricted Subsidiary, the portion (proportionate to
Issuer’s equity interest in such Subsidiary) of the Fair Market Value of the net
assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary
is redesignated, or liquidated or merged into, a Restricted Subsidiary; and    
•   the net reduction in Investments made pursuant to such clause resulting from
repayment of letters of credit or the expiration of letters of credit undrawn.

     “Permitted Liens” means:
          (1) Liens on assets of a Person at the time such Person becomes a
Subsidiary; provided that (a) such Lien was not incurred in anticipation of or
in connection with the transaction or series of related transactions pursuant to
which such Person became a Subsidiary and (b) such Lien does not extend to or
cover any assets of Issuer or any other Restricted Subsidiary;
          (2) Liens existing on the Issue Date;
          (3) Liens imposed by law that are incurred in the ordinary course of
business and do not secure Indebtedness for borrowed money, such as carriers’,
warehousemen’s, mechanics’, landlords’, materialmen’s, employees’, laborers’,
employers’, suppliers’, banks’, repairmen’s and other like Liens, in each case,
for sums not yet due or that are being contested in good faith by appropriate
proceedings and that are appropriately reserved for in accordance with GAAP if
required by GAAP;
          (4) Liens for taxes, assessments and governmental charges not yet due
or payable or subject to penalties for non-payment or that are being contested
in good faith by appropriate proceedings and that are appropriately reserved for
in accordance with GAAP if required by GAAP;
          (5) Liens on assets acquired or constructed after the Issue Date
securing Purchase Money Indebtedness and Capital Lease Obligations; provided
that such Liens shall in no event extend to or cover any assets other the such
assets acquired or constructed after the Issue Date with the proceeds of such
Purchase Money Indebtedness of Capital Lease Obligations;
          (6) zoning restrictions, easements, rights-of-way, restrictions on the
use of real property, other similar encumbrances on real property incurred in
the ordinary course of business and minor irregularities of title to real
property that do not (a) secure Indebtedness, or (b) individually or in the
aggregate materially impair the value or marketability of the real property
affected thereby or the occupation, use and enjoyment in the ordinary course of
business of Issuer and the Restricted Subsidiaries at such real property;
          (7) terminable or short-term leases or permits for occupancy, which
leases or permits
          (a) expressly grant to Issuer or any Restricted Subsidiary the right
to terminate them at any time on not more than six months’ notice and (b) do not
individually or in the aggregate interfere with the operation of the business of
Issuer or any Restricted Subsidiary or individually or in the aggregate impair
the use (for its intended purpose) or the value of the property subject thereto;
          (8) Liens resulting from operation of law with respect to any
judgments, awards or orders to the extent that such judgments, awards or orders
do not cause or constitute an Event of Default; provided that any such Liens
shall be paid, discharged, bonded or stayed prior to the sale or forfeiture of
any portion of the collateral on account of such Liens;
          (9) bankers’ Liens, rights of setoff and other similar Liens existing
solely with respect to cash and cash equivalents on deposit in one or more
accounts maintained by Issuer or any Restricted Subsidiary in accordance with
the provisions of the Indenture in each case granted in the ordinary course of
business in favor of the bank or banks with which such accounts are maintained,
securing amounts owing to such bank with respect to cash management and
operating account arrangements; provided that in no case shall any such Liens
secure (either directly or indirectly) the repayment of any Indebtedness;
          (10) Liens securing Refinancing Indebtedness relating to Permitted
Liens of the type described in clauses (1), (2) and (5) of this definition;
provided that such Liens extend only to the assets securing the Indebtedness
being Refinanced;

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          (11) other Liens securing obligations in an aggregate amount at any
time outstanding not to exceed the $50.0 million;
          (12) Liens securing Indebtedness incurred under clause (3) of the
second paragraph under “Certain Covenants — Limitation on Incurrence of
Indebtedness”;
          (13) Liens securing Hedging Obligations of the type described in
clause (7) of the definition of “Permitted Indebtedness”;
          (14) Liens securing Indebtedness of Foreign Subsidiaries;
          (15) Liens in favor of Issuer or any Guarantor;
          (16) Liens on assets or shares of stock of a Person at the time such
Person becomes a Subsidiary; provided that such Lien was not incurred in
anticipation of or in connection with the transaction or series of related
transactions pursuant to which such Person became a Subsidiary;
          (17) pledges of or Liens on raw materials or on manufactured products
as security for any drafts or bills of exchange drawn in connection with the
importation of such raw materials or manufactured products;
          (18) Liens in favor of banks that arise under Article 4 of the UCC on
items in collection and documents relating thereto and proceeds thereof and
Liens arising under Section 2-711 of the UCC;
          (19) Liens arising or that may be deemed to arise in favor of a
Securitization Entity arising in connection with a Qualified Securitization
Transaction;
          (20) pledges or deposits by such Person under workers’ compensation
laws, unemployment insurance laws or similar legislation, or good faith deposits
in connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or United
States government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import duties or for the
payment of rent or deposits as security for the payment of insurance-related
obligations (including, but not limited to, in respect of deductibles,
self-insured retention amounts and premiums and adjustments thereto), in each
case incurred in the ordinary course of business;
          (21) Liens in favor of issuers of surety, performance, judgment,
appeal and like bonds or letters of credit issued in the ordinary course of
business;
          (22) Liens occurring solely by the filing of a UCC statement, which
filing has not been consented to by Issuer or any Restricted Subsidiary;
          (23) any obligations or duties affecting any property of Issuer or any
Restricted Subsidiary to any municipality or public authority with respect to
any franchise, grant, license or permit that do not materially impair the use of
such property for the purposes for which it is held;
          (24) Liens on any property in favor of domestic or foreign
governmental bodies to secure partial, progress, advance or other payments
pursuant to any contract or statute, not yet due and payable;
          (25) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements; and
          (26) deposits, pledges or other Liens to secure obligations under
purchase or sale agreements.
          (27) Liens in the form of licenses, leases or subleases on any asset
incurred by the Issuer or any Restricted Subsidiary, which licenses, leases or
subleases do not interfere, individually or in the aggregate, in any material
respect with the business of the Issuer or such Subsidiary and is incurred in
the ordinary course of business;
          (28) Liens on receivables subject to factoring transactions;
          (29) Liens on goods or inventory the purchase, shipment or storage
price of which is financed by a documentary letter of credit or banker’s
acceptance issued or created for the account of the Issuer or any Restricted
Subsidiary; provided that such Lien secures only the obligations of the Issuer
or such Restricted Subsidiary in respect of such letter of credit or banker’s
acceptance;
          (30) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for sale of goods (including

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under Article 2 of the Uniform Commercial Code) and Liens that are contractual
rights of set-off relating to purchase orders and other similar agreements
entered into by the Issuer or any of its Restricted Subsidiaries;
     (31) Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto incurred in the ordinary course
of business;
     (32) ground leases in respect of real property on which facilities owned or
leased by the Issuer or any of its Restricted Subsidiaries are located; and
     (33) Liens or other matters disclosed in title policies in connection with
the Initial Credit Facilities.
     “Person”means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
     “Preferred Stock,”as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
     “principal”of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
     “Purchase Money Indebtedness”mean Indebtedness:

  •   consisting of the deferred purchase price of assets, conditional sale
obligations, obligations under any title retention agreement, other purchase
money obligations and obligations in respect of industrial revenue bonds or
similar Indebtedness, in each case where the maturity of such Indebtedness does
not exceed the anticipated useful life of the asset being financed; and     •  
incurred to finance the acquisition by Issuer or a Restricted Subsidiary of such
asset, including additions and improvements;

provided that any Lien arising in connection with any such Indebtedness shall be
limited to the specified asset being financed or, in the case of real property
or fixtures, including additions and improvements, the real property on which
such asset is attached; provided further that such Indebtedness is incurred
within 120 days after such acquisition of, or the completion of construction of,
such asset by Issuer or Restricted Subsidiary.
     “Purchase Money Note”means a promissory note evidencing a line of credit,
which may be irrevocable, from, or evidencing other Indebtedness owed to, Issuer
or any of its Subsidiaries in connection with a Qualified Securitization
Transaction, which note shall be repaid from cash available to the maker of such
note, other than amounts required to be established as reserves pursuant to
agreements, amounts paid to investors in respect of interest, principal and
other amounts owing to such investors and amounts paid in connection with the
purchase of newly generated receivables.
     “Qualified Securitization Transaction”means any transaction or series of
transactions that may be entered into by Issuer, any Restricted Subsidiary or a
Securitization Entity pursuant to which Issuer or such Restricted Subsidiary or
that Securitization Entity may, pursuant to customary terms, sell, convey or
otherwise transfer to, or grant a security interest in for the benefit of, (1) a
Securitization Entity or Issuer or any Restricted Subsidiary which subsequently
transfers to a Securitization Entity (in the case of a transfer by Issuer or
such Restricted Subsidiary) and (2) any other Person (in the case of transfer by
a Securitization Entity), any accounts receivable (whether now existing or
arising or acquired in the future) of Issuer or any Restricted Subsidiary which
arose in the ordinary course of business of Issuer or such Restricted
Subsidiary, and any assets related thereto, including, without limitation, all
collateral securing such accounts receivable, all contracts and contract rights
and all guarantees or other obligations in respect of such accounts receivable,
proceeds of such accounts receivable and other assets (including contract
rights) which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable.
     “Qualified Stock”means any Capital Stock of Issuer other than Disqualified
Stock.
     “Refinance”means, in respect of any Indebtedness, to refinance, extend,
increase, replace, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.
“Refinanced” and “Refinancing” shall have correlative meanings.

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     “Refinancing Indebtedness” means, with respect to any Indebtedness,
Indebtedness incurred to Refinance such Indebtedness that does not:
     (1) result in an increase in the aggregate principal amount of Indebtedness
being Refinanced as of the date of such proposed Refinancing (plus the amount of
any premium required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred in connection
with such Refinancing) or
     (2) create Indebtedness with (a) a Weighted Average Life to Maturity that
is less than the Weighted Average Life to Maturity of the Indebtedness being
Refinanced or (b) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced;
provided that (x) if the Indebtedness being Refinanced is subordinated in right
of payment by its terms to the Notes or a Guarantee, then such Refinancing
Indebtedness shall be subordinated in right of payment by its terms to the Notes
or such Guarantee at least to the same extent and in the same manner as the
Indebtedness being Refinanced and
     (y) the obligor(s) on the Refinancing Indebtedness shall not include any
Person that is not Issuer or a Guarantor or a Person that is an obligor on the
Indebtedness being Refinanced.
     “Registration Rights Agreement” has the meaning set forth under
“Registration Rights.”
     “Restricted Payment” means, with respect to any Person:
     (1) any dividend or other distribution declared or paid on any Capital
Stock of Issuer (other than dividends or distributions payable solely in
Qualified Stock);
     (2) any payment to purchase, redeem or otherwise acquire or retire for
value any Capital Stock of Issuer or any affiliate of Issuer (other than any
Restricted Subsidiary);
     (3) any payment to purchase, redeem, defease or otherwise acquire or retire
for value any Subordinated Obligations prior to the Stated Maturity thereof
(other than any Purchase Money Indebtedness incurred after the Issue Date upon
the sale of the related asset); or
     (4) the making of an Investment (other than a Permitted Investment),
including any Investment in an Unrestricted Subsidiary (including by the
designation of any Subsidiary of Issuer as an Unrestricted Subsidiary).
provided, however, that payments pursuant to the Plan of Reorganization shall
not constitute Restricted Payments.
     “Restricted Subsidiary” means each Subsidiary of Issuer that is not an
Unrestricted Subsidiary.
     “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies,
Inc., and any successor to its rating agency business.
     “Securitization Entity” means a Wholly Owned Subsidiary of Issuer (or
another Person in which Issuer or any Subsidiary of Issuer makes an Investment
and to which Issuer or any Subsidiary of Issuer Transfers accounts receivable):
     (1) which is designated by the Board of Directors (as provided below) as a
Securitization Entity and engages in no activities other than in connection with
the financing of accounts receivable;
     (2) no portion of the Indebtedness or any other obligations (contingent or
otherwise) of which (a) is guaranteed by Issuer or any of its Subsidiaries
(other than the Securitization Entity) (excluding guarantees of obligations
(other than the principal of, and interest on, Indebtedness)) pursuant to
Standard Securitization Undertakings), (b) is recourse to or obligates Issuer or
any of its Subsidiaries (other than the Securitization Entity) in any way other
than pursuant to Standard Securitization Undertakings or (c) subjects any asset
of Issuer or any of its Subsidiaries (other than the Securitization Entity),
directly or indirectly, contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization Undertakings and other than any
interest in the accounts receivable (whether in the form of an equity interest
in such assets or subordinated indebtedness payable primarily from such financed
assets) retained or acquired by Issuer or any of its Subsidiaries;
     (3) with which neither Issuer nor any of its Subsidiaries has any material
contract, agreement, arrangement or understanding other than on terms no less
favorable to Issuer or such Subsidiary than those that might be obtained at the
time from Persons that are not affiliates of Issuer, other than fees payable in
the ordinary course of business in connection with servicing receivables of

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     such entity; and
     (4) to which neither Issuer nor any of its Subsidiaries has any obligation
to maintain or preserve such entity’ financial condition or cause such entity to
achieve certain levels of operating results.
     Any such designation by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution giving
effect to such designation and an officers’ certificate certifying that such
designation complied with the foregoing conditions.
     “Significant Subsidiary” means (1) any Restricted Subsidiary that is a
“significant subsidiary” of Issuer on a consolidated basis within the meaning of
Regulation S-X promulgated by the SEC or (2) any Restricted Subsidiary that,
when aggregated with all other Restricted Subsidiaries that are not otherwise
Significant Subsidiaries and as to which any event described in clause (7) or
(8) under “— Events of Default” has occurred and is continuing, would constitute
a Significant Subsidiary under clause (1) of this definition.
     “Standard Securitization Undertakings” means representations, warranties,
covenants and indemnities entered into by Issuer or any of its Subsidiaries
which are reasonably customary in an accounts receivable securitization
transaction.
     “Stated Maturity” means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
     “Subordinated Obligation” means any Indebtedness of Issuer or a Guarantor
(whether outstanding on the Issue Date or thereafter incurred) which is
subordinated by its terms in right of payment to the Notes or the Guarantee of
Issuer or such Guarantor.
     “Subsidiary” means, in respect of any Person, any corporation, association,
partnership or other business entity of which Voting Stock representing more
than 50% of the total voting power of all outstanding Voting Stock of such
Person is at the time owned, directly or indirectly, by:

  •   such Person;     •   such Person and one or more Subsidiaries of such
Person; or     •   one or more Subsidiaries of such Person.

     “Temporary Cash Investments” means any of the following:
     (1) any investment in direct obligations of the United States of America or
any agency thereof or obligations guaranteed by the United States of America or
any agency thereof;
     (2) investments in time or demand deposit accounts, certificates of deposit
and money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any State thereof or any foreign country
recognized by the United States, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50,000,000 (or the
foreign currency equivalent thereof) and has outstanding debt which is rated
“A-2” or higher by Moody’s, “A” or higher by S&P or the equivalent rating by any
other nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor;
     (3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered into
with a bank meeting the qualifications described in clause (2) above;
     (4) investments in commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an affiliate of
Issuer) organized and in existence under the laws of the United States of
America, any State thereof or the District of Columbia or any foreign country
recognized by the United States of America with a rating at the time as of which
any investment therein is “P-2” or higher from Moody’s, “A-2” or higher from S&P
or the equivalent rating by any other nationally recognized statistical rating
organization (as defined above);
     (5) investments in securities with maturities of six months or less from
the date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least “A” by Moody’s or “A” by S&P; and

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     (6) shares of any money market mutual fund rated at least AAA or the
equivalent thereof by S&P, at least Aaa or the equivalent thereof by Moody’s or
any other mutual fund at least 95% of whose assets consist of the type specified
in clauses (1) through (5) above.
     “Total Assets” means the total assets of Issuer and its Restricted
Subsidiaries on a consolidated basis, as shown on the most recent balance sheet
of Issuer.
     “Transfer” means to sell, assign, transfer, lease (other than pursuant to
an operating lease entered into in the ordinary course of business), convey or
otherwise dispose of, consolidation, merger or otherwise, in one transaction or
a series of transactions. “Transferred,” “Transferor” and “Transferee” have
correlative meanings.

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     “Treasury Rate” means, as of any Redemption Date, the yield to maturity as
of such Redemption Date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the Redemption Date to February 28, 2012;
provided, however, that if the period from the Redemption Date to February 28,
2012 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year will be
used.
     “UCC” means the Uniform Commercial Code in effect in the applicable
jurisdiction.
     “Unrestricted Subsidiary” means:

  •   any Subsidiary of Issuer that at the time of determination shall have been
designated an Unrestricted Subsidiary by the Board of Directors; and     •   any
Subsidiary of an Unrestricted Subsidiary.

     The Board of Directors may designate any Subsidiary of Issuer (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any assets of, Issuer or any other
Subsidiary of Issuer that is not a Subsidiary of the Subsidiary to be so
designated; provided that:

  •   no Default has occurred and is continuing or would occur as a consequence
thereof;     •   (x) Issuer could incur at least $1.00 of additional
Indebtedness pursuant to the Coverage Ratio Exception or (y) the Consolidated
Coverage Ratio of Issuer and the Restricted Subsidiaries is equal to or greater
than immediately prior to such designation; and     •   either (x) the
Subsidiary to be so designated has total assets of $1,000 or less or (y) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under the covenant described under “— Certain Covenants — Limitation on
Restricted Payments” (treating the Fair Market Value of Issuer’s proportionate
interest in the net worth of such Subsidiary on such date calculated in
accordance with GAAP as the amount of the Investment).

     The Board of Directors may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that:

  •   no Default has occurred and is continuing; and     •   Indebtedness of
such Unrestricted Subsidiary and all Liens on any asset of such Unrestricted
Subsidiary outstanding immediately following such redesignation would, if
incurred at such time, be permitted to be incurred under the Indenture.

     “U.S. Government Obligations” means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer’s option.
     “Voting Stock” of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
     “Weighted Average Life to Maturity” means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
     (1) the then outstanding aggregate principal amount of such Indebtedness
into
     (2) the sum of the total of the products obtained by multiplying (x) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payment of principal, including payment at final maturity, in
respect thereof, by (y) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment.
     “Wholly Owned Subsidiary” means a Restricted Subsidiary all the Capital
Stock of which (other than directors’ qualifying shares) is owned by Issuer
and/or one or more Wholly Owned Subsidiaries.

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ANNEX I
     Registration rights
     Prior to or on the earliest date of original issuance of any of the Notes,
the Issuer will use its reasonable best efforts to enter into the Registration
Rights Agreement for the benefit of the Holders of the Notes. Pursuant to the
agreement, the Issuer will, at its expense:
· File with the SEC, or otherwise designate an existing registration statement
filed with the SEC, prior to or on the 150th day after the earliest date of
original issuance of any of the Notes, a shelf registration statement on such
form as the Issuer deems appropriate covering resales by Holders of all
Registrable Securities (as defined below) (such 150th day, the “filing target
date”);
· Use reasonable best efforts to cause such shelf registration statement to
become effective as promptly as is practicable, but in any event prior to or on
the 260th day after the earliest date of original issuance of any of the Notes
(such 260th day, the “effectiveness target date”); and
     · Use reasonable best efforts to keep the shelf registration statement
effective with respect to the Registrable Securities; provided that in no event
shall there be any requirement to keep the shelf registration statement
effective beyond the second anniversary of the earliest date of original
issuance of any of the Notes.
     “Registrable Securities” means each Note and related Guarantees until the
earlier of (i) the date on which such Note and related Guarantees have been sold
or otherwise transferred pursuant to an effective shelf registration statement;
(ii) the date on which such Note and the related Guarantees held by
non-affiliates are eligible to be resold without restriction pursuant to Rule
144 under the Securities Act or any successor provision thereto; or (iii) the
date such Note and the related Guarantees have been sold pursuant to Rule 144
under the Securities Act or any successor provision thereto.
     The Issuer will also agree to provide to each Holder copies of the
prospectus contained in the shelf registration statement, notify each Holder
when the shelf registration statement has become effective and take certain
other actions as are required to permit unrestricted resales of the Notes and
related Guarantees. A Holder who sells Notes pursuant to the shelf registration
statement generally will be required to be named a selling security holder in
the related prospectus and to deliver a prospectus to purchasers and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to that Holder (including certain indemnification and contribution
provisions). If a shelf registration statement covering those securities is not
effective, they may not be sold or otherwise transferred except pursuant to an
exemption from registration under the Securities Act and any other applicable
securities laws or in a transaction not subject to those laws.
     The Issuer may suspend the Holder’s use of the prospectus for a maximum of
60 days in any 90- day period, and not to exceed an aggregate of 120 days in any
12-month period, if the Issuer, in good faith, determines that because of valid
business reasons (not including avoidance of its obligations under the
Registration Rights Agreement), including without limitation proposed or pending
corporate developments and similar events or because of filings with the SEC, it
is in the Issuer’s best interests to suspend such use. However, if the
disclosure relates to a previously undisclosed proposed or pending material
business transaction, the disclosure of which the Issuer determines in good
faith would be reasonably likely to impede its ability to consummate such
transaction, or would otherwise be seriously detrimental to the Issuer and its
Subsidiaries taken as a whole, the Issuer may extend the suspension period from
60 days to 90 days (and not more than 120 days in any 12-month period). The
Issuer need not specify the nature of the event giving rise to a suspension in
any notice to Holders of the Notes of the existence of such suspension.
     Each of the following is a “registration default”:
· the shelf registration statement has not been filed (or designated) with the
SEC prior to or on the filing target date; or
· the shelf registration statement has not become effective prior to the
effectiveness target date, provided that a failure of the shelf registration
statement to become effective by the effectiveness target date will not
constitute a registration default if such failure arises from a delay in
effectiveness based upon the advice of the Issuer’s legal counsel and legal
counsel for the initial purchasers, unless such failure continues after the
first anniversary of the earliest date of original issuance of any of the Notes;
or
· the registration statement shall cease to be effective, become effective and
then cease to be effective or fail to be usable (other than pursuant to the
previous paragraph) for more than 30 days in any 12-month

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