Attached files
file | filename |
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10-Q - LANXESS Solutions US Inc. | v201157_10q.htm |
EX-4.2 - LANXESS Solutions US Inc. | v201157_ex4-2.htm |
EX-4.3 - LANXESS Solutions US Inc. | v201157_ex4-3.htm |
EX-32.2 - LANXESS Solutions US Inc. | v201157_ex32-2.htm |
EX-31.1 - LANXESS Solutions US Inc. | v201157_ex31-1.htm |
EX-32.1 - LANXESS Solutions US Inc. | v201157_ex32-1.htm |
EX-31.2 - LANXESS Solutions US Inc. | v201157_ex31-2.htm |
EXECUTION
COPY
BANC
OF
AMERICA
SECURITIES
LLC
BANK
OF
AMERICA,
N.A.
One
Bryant Park
New
York, NY
10036
|
|
WELLS
FARGO
CAPITAL
FINANCE,
LLC
2450
Colorado
Avenue,
Suite
3000 West,
Santa
Monica, CA
90404
|
|
CITIGROUP
GLOBAL
MARKETS
INC.
390
Greenwich
Street
New
York, New
York
10013
|
|
BARCLAYS
CAPITAL
BARCLAYS
BANK
PLC
745
Seventh
Avenue
New
York, New
York
10019
|
|
GOLDMAN
SACHS
LENDING
PARTNERS
LLC
200
West Street
New
York, New
York 10282
|
August
11, 2010
Chemtura
Corporation
199
Benson Road
Middlebury,
CT 06749
Attention: Stephen
Forsyth
Chief
Financial Officer
Re: Commitment
for Senior Credit Facility
Ladies
and Gentlemen:
Chemtura
Corporation, a Delaware corporation (the “Company” or “you”), has advised
Bank of America, N.A. (“Bank of America”),
Banc of America Securities LLC (“BAS”), Wells Fargo
Capital Finance, LLC (“Wells Fargo”),
Citigroup (as defined below), Barclays Bank PLC (“Barclays Bank”),
Barclays Capital, the investment banking division of Barclays Bank (“Barclays Capital”
and, together with Barclays Bank, “Barclays”), and
Goldman Sachs Lending Partners LLC (“GS”) that the Company
and certain of its subsidiaries, each a debtor and debtor-in-possession under
chapter 11 (“Chapter
11”) of title 11 of the United States Code (the “Bankruptcy Code”),
intend to be reorganized pursuant to a Chapter 11 plan of
reorganization. In connection therewith, you have advised us that the
Company intends (a) to establish a $275 million senior secured asset-based
revolving credit facility (the “Senior Credit
Facility”) having the terms set forth on Exhibits A and B hereto, and (b)
to issue at least $750 million in aggregate principal amount of senior secured
term loans (the “Term
Loans”) and/or senior unsecured notes (the “Senior Notes”), the
proceeds of which would be used by the Company (i) to refinance the Company’s
amended and restated senior secured superpriority debtor-in-possession credit
agreement dated as of February 3, 2010 (as heretofore and hereafter amended,
supplemented or otherwise modified, the “Existing Credit
Agreement”), (ii) to pay related transaction costs, fees and expenses,
(iii) to fund distributions to be made in accordance with the Plan (as defined
in Exhibit B) and (iv) for other general corporate purposes and
activities. For purposes hereof, “Citigroup” shall mean Citigroup
Global Markets Inc. (“CGMI”), Citibank,
N.A., Citicorp USA, Inc., Citicorp North America, Inc. and/or any of their
affiliates as Citigroup shall determine to be appropriate to provide the
services contemplated herein. BAS, Bank of America, Wells Fargo,
Citigroup, Barclays and GS are herein referred to as “we”, “us”, or the “Commitment
Parties”. Bank of America, Wells Fargo, Citigroup, Barclays
and GS are herein referred to as the “Initial
Lenders”. This letter and the exhibits and annexes attached
hereto are herein referred to collectively as this “Commitment
Letter”.
Subject
to the terms and conditions of this Commitment Letter, severally and not
jointly, each of the Initial Lenders is pleased to confirm its respective
several (and not joint) commitment to provide the Borrowers (as defined in
Exhibit A hereto) with its portion of the full $275 million principal amount of
the Senior Credit Facility, with (i) Bank of America pleased to offer its
commitment to provide $61.875 million in principal amount of the Senior Credit
Facility, (ii) Wells Fargo pleased to offer its commitment to provide $61.875
million in principal amount of the Senior Credit Facility, (iii)
CGMI, on behalf of Citigroup, pleased to offer its commitment to provide $61.875
million in principal amount of the Senior Credit Facility, (iv) Barclays Bank
pleased to offer its commitment to provide $61.875 million in principal amount
of the Senior Credit Facility and (v) GS pleased to offer its commitment to
provide $27.5 million in principal amount of the Senior Credit
Facility. Each commitment of an Initial Lender hereunder is referred
to hereinafter as such Initial Lender’s “Commitment”. BAS,
Wells Fargo and Citigroup are pleased to advise you of their willingness in
connection with the foregoing commitment to act as joint lead arrangers (in such
capacities, the “Arrangers”) for the
Senior Credit Facility, and to form, with your consent (not to be unreasonably
withheld), a syndicate of financial institutions (“Lenders”) for the
Senior Credit Facility, and BAS and Wells Fargo shall receive league table
credit in connection with such capacities. BAS, Wells Fargo,
Citigroup, Barclays Capital and GS are pleased to advise you of their
willingness in connection with the foregoing commitment to act as joint book
runners for the Senior Credit Facility. Each Commitment Party’s
obligations hereunder are several and not joint with any other Commitment
Party.
Bank of
America will act as the sole and exclusive administrative and collateral agent,
Wells Fargo will act as the sole and exclusive syndication agent and Citigroup,
Barclays Bank and GS will act as co-documentation agents, in each case for the
Senior Credit Facility. No additional agents, co-agents or arrangers
will be appointed and no other titles will be awarded unless you and we shall so
agree. In any marketing material with respect to the Senior Credit
Facility, BAS’s and Bank of America’s names shall appear above or to the left of
the name of any other Commitment Party or Lender and Wells Fargo’s name shall
appear immediately to the right of the name of BAS and Bank of America and above
or to the left of the name of any other Commitment Party or Lender other than
BAS and Bank of America. You agree that, effective upon your
acceptance of this Commitment Letter and continuing through 30 days after the
Closing Date (as defined in Exhibit A hereto) (or, if earlier, the expiration or
termination of the Commitments hereunder), you shall not solicit any other bank,
investment bank, financial institution, person or entity to provide, structure,
arrange or syndicate the Senior Credit Facility or any other senior financing
similar to the Senior Credit Facility; provided that, the
Company and its subsidiaries shall be allowed to solicit any other bank,
investment bank, financial institution, person or entity to provide, structure,
arrange or syndicate any other senior financing similar to the Senior Credit
Facility to the extent the Company and its subsidiaries do so in discharge of
their fiduciary duties and obligations as debtors-in-possession.
The
undertakings of the Commitment Parties herein are subject to satisfaction of the
following conditions: (a) the preparation, execution and delivery of loan
documentation, including without limitation, a credit agreement, an
intercreditor agreement with the holders of the Term Loans or their
representative(s), security agreements, pledge agreements, guaranties and other
agreements, incorporating substantially the terms and conditions set forth in
Exhibits A and B hereto and, to the extent not covered by such terms and
conditions, otherwise reasonably acceptable to the Company and the Commitment
Parties; (b) the Company’s engagement of one or more investment banks
satisfactory to the Commitment Parties to publicly sell or privately place the
Senior Notes; (c) the approval of the Bankruptcy Court (as defined in the Plan),
by a date no later than August 13, 2010, for the payment of all fees, expenses,
indemnities and other obligations set forth herein and in the Fee Letter dated
as of the date hereof and delivered herewith (the “Fee Letter”); (d)
your compliance in all material respects (or, with respect to any term that is
qualified as to materiality, your compliance in all respects) with the terms of
this Commitment Letter with respect to syndication, supplementing Information
and Projections, compensation, reimbursement and indemnification, and with the
terms of the Fee Letter; and (e) from and after the date hereof until the
earlier of completion of the syndication of the Senior Credit Facility and the
date that is 30 days after the Closing Date, there shall be no competing
offering, placement or arrangement of any debt securities or bank financing by
or on behalf of Company or any of its subsidiaries other than the Senior Notes,
the Term Loans and any Foreign Asset Based Financing (as defined in Exhibit A
hereto).
-2-
The
Arrangers intend to commence syndication efforts promptly upon your acceptance
of this Commitment Letter and the Fee Letter; provided that the
Arrangers and Initial Lenders agree that notwithstanding their respective rights
to syndicate the Senior Credit Facility and receive commitments with respect
thereto, no such commitment from any other Lender shall release such Initial
Lender from its Commitment or otherwise reduce or reallocate such Commitment
prior to the Closing Date, and each Initial Lender shall retain exclusive
control over all rights and obligations with respect to its Commitment,
including all rights with respect to consents, modifications and amendments of
this Commitment Letter and the Fee Letter (as defined below), until the Closing
Date has occurred. You agree to use commercially reasonable efforts
to assist the Arrangers in achieving a syndication of the Senior Credit Facility
that is reasonably satisfactory to the Arrangers (provided, that your obligation
to use such efforts shall cease upon the earlier of completion of such
syndication and the date that is 60 days after the Closing
Date). Such assistance shall include (a) your providing, and using
commercially reasonable efforts to cause your advisors to provide, to the
Commitment Parties and the other Lenders, upon request, all information
reasonably deemed necessary by the Commitment Parties to complete syndication;
(b) your assistance in the preparation of a customary Information
Memorandum to be
used in connection with the syndication; (c) your using commercially reasonable
efforts to ensure that the syndication efforts benefit from your existing
banking relationships; and (d) otherwise using commercially reasonable efforts
to assist the Commitment Parties in their syndication efforts, including by
making your senior management and using commercially reasonable efforts to make
your advisors available from time to time to attend and make presentations
regarding the business and prospects of Company and subsidiaries at one or more
meetings of prospective Lenders at mutually agreed upon times as the Commitment
Parties may reasonably request. Notwithstanding the foregoing or
anything herein to the contrary, the syndication of the Senior Credit Facility
shall not be a condition precedent to the closing of the Senior Credit
Facility.
It is
understood and agreed that BAS in consultation with
you will manage all aspects of the syndication, including decisions as to the
selection of prospective Lenders (subject to your prior approval (not to be
unreasonably withheld) of all Lenders) and any titles offered to proposed
Lenders, when commitments will be accepted and the final allocations of the
commitments among the Lenders. It is understood that no Lender
participating in the Senior Credit Facility will receive compensation from you
in order to obtain its commitment, except on the terms provided herein, and that
all fees and other compensation payable to the Lenders in order to obtain their
commitments to the Senior Credit Facility shall be paid from the fees set forth
in the Fee Letter (and the Company shall have no additional liability
therefor). It is
also understood and agreed that the amount and distribution of fees among the
Lenders will be at the discretion of the Commitment Parties.
-3-
You
hereby represent, warrant and covenant that (a) all information, other than
Projections (as defined below), which has been or is hereafter made available to
any Commitment Party, any Lender or any potential Lender by you or any of your
representatives (or on your or their behalf) in connection with the transactions
contemplated hereby (collectively, “Information”) is and
will be (taken as a whole) complete and correct in all material respects and
does not and will not (taken as a whole) contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein, taken as a whole, not misleading in light of the
circumstances under which such statements were or are made; and (b) all
financial projections concerning Company and subsidiaries that have been or are
hereafter made available to any Commitment Party, any Lender or any potential
Lender by you or any of your representatives (“Projections”) have
been and will be prepared in good faith based upon assumptions that are or were
reasonably believed by the preparer thereof to be reasonable as of the date of
the preparation of such Projections (it being understood that the Projections
are subject to significant uncertainties and contingencies, many of which are
beyond the Company’s control, and that no assurance can be given that the
Projections will be realized). If, at any time from the date hereof
until the earlier of 30 days after the Closing Date and the termination of this
Commitment Letter, any of the representations and warranties in the preceding
sentence would not be accurate and complete in any material respect if the
Information or Projections were being furnished, and such representations and
warranties were being made, at such time, then the Company agrees to promptly
supplement the Information and/or Projections from time to time so that the
representations and warranties contained in this paragraph remain accurate and
complete in all material respects as described in the preceding
sentence. In issuing its commitment and in arranging and syndicating
the Senior Credit Facility, each Commitment Party is
and will be relying on, without independent verification, the Information and
Projections.
By
executing this Commitment Letter, you agree to pay, or reimburse the Commitment
Parties on demand for, all reasonable and documented out-of-pocket costs and
expenses incurred by the Commitment Parties (whether incurred before or after
the date hereof) in connection with the Senior Credit Facilities and the
preparation, negotiation, execution and delivery of this Commitment Letter, the
definitive documentation therefor and the other transactions contemplated
hereby, including without limitation, third-party appraisal costs, per diem
costs and other charges of field examiners and other employees in connection
with matters relating to the collateral, due diligence expenses and the
reasonable fees and expenses of Shearman & Sterling LLP (it being understood
that fees and expenses of not more than one counsel for all of the
Commitment Parties shall be payable or reimburseable under the preceding
provisions of this sentence) and special and local counsel (in each case
reasonably retained by the Commitment Parties jointly), regardless of whether
any of the transactions contemplated hereby are consummated. You will
also pay all documented out-of-pocket costs and expenses of the Commitment
Parties (including without limitation, the reasonable fees and disbursements of
Shearman & Sterling LLP and special and local counsel (in each case
reasonably retained by the Commitment Parties jointly)) incurred in connection
with the enforcement of any of their rights and remedies under this Commitment
Letter.
You agree
to indemnify and hold harmless each Commitment Party,
each Lender, and each of their respective affiliates and each of their
respective officers, directors, employees, agents, advisors and representatives
(each, an “Indemnified
Party”) from and against (and will reimburse each Indemnified Party as
the same are incurred for) any and all claims, damages, losses, liabilities and
expenses (including, without limitation, the reasonable and documented fees and
disbursements of outside counsel) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or the preparation of a defense in
connection therewith) (a) any matters contemplated by this Commitment Letter or
any related transaction or (b) the Senior Credit Facility or any use made or
proposed to be made with the proceeds thereof, except to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted primarily from such
Indemnified Party’s gross negligence or willful misconduct. In the
case of an investigation, litigation or proceeding to which the indemnity in
this paragraph applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Company, any of its
directors, security holders or creditors, an Indemnified Party or any other
person or whether or not an Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are
consummated. You also agree that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort, or otherwise) to you
or your affiliates or to your or their respective security holders or creditors
arising out of, related to or in connection with any aspect of the transactions
contemplated hereby, except to the extent such liability is determined in a
final, non-appealable judgment by a court of competent jurisdiction to have
resulted primarily from such Indemnified Party’s gross negligence or willful
misconduct. In no event, however, shall any Indemnified Party be
liable on any theory of liability for any special, indirect, consequential or
punitive damages (including without limitation, any loss of profits, business or
anticipated savings). It is further agreed that each Commitment Party
shall only have liability to you (as opposed to any other person), and that each
Initial Lender shall be liable solely in respect of its own Commitment on a
several, and not joint, basis with any other Commitment Party or
Lender. Notwithstanding any other provision of this Commitment
Letter, no Indemnified Party shall be liable for any damages arising from the
use by others of information or other materials obtained through electronic
telecommunications or other information transmission systems, except to the
extent such liability is determined in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted primarily from such Indemnified
Party’s gross negligence or willful misconduct.
-4-
By
accepting delivery of this Commitment Letter, the Company agrees that this
Commitment Letter is for the Company’s confidential use only and that neither
its existence nor its terms will be disclosed by the Company to any person other
than the Company’s affiliates and its and their respective officers, directors,
employees, advisors, agents and representatives (the “Company
Representatives”), and then only on a confidential and “need to know”
basis in connection with the transactions contemplated hereby; provided,
however, that the Company may make public disclosures of the terms and
conditions hereof (other than the Fee Letter and its terms and substance, except
as set forth in the Fee Letter) (a) as it is required by law or regulations or
by subpoena or similar legal process (in which case the Company shall use
commercially reasonable efforts to inform the Commitment Parties promptly
thereof prior to such disclosure to the extent it is legally permitted to do
so), in the opinion of the Company’s counsel, to make, (b) in connection with
any exercise of remedies under or in connection with a breach of this letter
agreement or the definitive agreement entered into in connection herewith, (c)
to the extent necessary to obtain required approval from any governmental
authority (including a bankruptcy court) for the Senior Credit Facility or the
fees, expenses, indemnities and other obligations set forth herein and in the
Fee Letter or (d) to any official committee appointed in the Company’s
bankruptcy cases and to the ad hoc committee of bondholders in the Company’s
bankruptcy cases and their respective legal and financial advisers.
The
Commitment Parties will treat as confidential all confidential information
provided to them by or on behalf of the Company hereunder and will not disclose
any such information to any person without the prior written consent of the
Company; provided that nothing
herein shall prevent any Commitment Party from disclosing any such information
(a) to such Commitment Party’s and its affiliates’ employees,
officers, directors, agents and advisors who are informed of the confidential
nature of such information and instructed to keep such information confidential,
(b) to the extent requested by any regulatory or self-regulatory authority, (c)
to the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) in connection with the exercise of any remedies
hereunder or the enforcement of rights hereunder or any suit, action or
proceeding relating to this letter or other agreements in connection herewith,
(e) to assignees or participants or potential assignees or participants in the
Senior Credit Facility, or (f) to the extent that such information becomes
publicly available other than by reason of disclosure by such Commitment Party
in violation of this paragraph or becomes available to such Commitment Party on
a nonconfidential basis from a source other than the Company or the Company
Representatives, provided that such source is not known by such Commitment Party
to be bound by a confidentiality obligation to the Company or the Company
Representatives.
You
acknowledge that each Commitment Party or its affiliates may be providing
financing or other services to parties whose interests may conflict with
yours. Each Commitment Party agrees that it will not furnish
confidential information obtained from you to any of its other customers and
that it will treat confidential information relating to you and your affiliates
with the same degree of care as it treats their own confidential
information. The Commitment Parties further advise you that they will
not make available to you confidential information that they have obtained or
may obtain from any other customer. In connection with the services
and transactions contemplated hereby, you agree that each Commitment Party is
permitted to access, use and share, with any of its affiliates, agents, advisors
or representatives, any information concerning you or any of your affiliates
that is or may come into the possession of such Commitment Party or any of its
affiliates.
-5-
In
connection with all aspects of each transaction contemplated by this letter, you
acknowledge and agree, and acknowledge your affiliates’ understanding, that (a)
the Senior Credit Facility and any related arranging or other services described
in this letter constitute an arm’s-length commercial transaction between you and
your affiliates, on the one hand, and each Commitment Party and its affiliates,
on the other hand, and you are capable of evaluating and understanding, and do
understand and accept, the terms, risks and conditions of the transactions
contemplated by this Commitment Letter; (b) in connection with the process
leading to such transaction, each Commitment Party is and has been acting solely
as a principal and is not the financial advisor, agent or fiduciary for you or
any of your affiliates, stockholders, creditors or employees or any other party;
(c) no Commitment Party has assumed or will assume an advisory, agency or
fiduciary responsibility in your or your affiliates’ favor with respect to any
of the transactions contemplated hereby or the process leading thereto
(irrespective of whether such Commitment Party has advised or is currently
advising you or your affiliates on other matters) and no Commitment Party has
any obligation to you or your affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth in this letter;
(d) each Commitment Party and its affiliates may be engaged in a broad range of
transactions that involve interests that differ from yours and your affiliates,
and no Commitment Party has any obligation to disclose any of such interests by
virtue of any advisory, agency or fiduciary relationship; and (e) no Commitment
Party has provided any legal, accounting, regulatory or tax advice with respect
to any of the transactions contemplated hereby and you have consulted your own
legal, accounting, regulatory and tax advisors to the extent you have deemed
appropriate. You hereby waive and release, to the fullest extent
permitted by law, any claims that you may have against any Commitment Party with
respect to any breach or alleged breach of agency or fiduciary
duty.
This
Commitment Letter and the Fee Letter shall be governed by the laws of the State
of New York. Each of you and the Commitment Parties hereby
irrevocably waives any and all right to trial by jury in any action, proceeding
or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Commitment Letter, the Fee Letter, the transactions
contemplated hereby or thereby, or the actions of any Commitment Party in the
negotiation, performance or enforcement hereof or thereof. The
Company irrevocably and unconditionally (i) submits to the exclusive
jurisdiction of any Federal court located in the City of New York (including the
Bankruptcy Court) or, if that court does not have subject matter jurisdiction,
in any New York State court located in the City of New York, over any suit,
action or proceeding arising out of or relating to this Commitment Letter, (ii)
accepts for itself and in respect of its property the jurisdiction of such
courts, (iii) waives any objection to the laying of venue of any such suit,
action or proceeding brought in any such courts and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum and (iv)
consents to the service of any process, summons, notice or document in any such
suit, action or proceeding by registered mail addressed to the Company at its
address specified on the first page of this Commitment Letter. A
final judgment in any such suit, action or proceeding will be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing herein will affect the right of any
Commitment Party to serve legal process in any other manner permitted by law or
affect any Commitment Party’s right to bring any suit, action or proceeding
against the Company or its property in the courts of other
jurisdictions.
-6-
Upon the
effectiveness of this Commitment Letter in accordance with the terms of the last
paragraph of this Commitment Letter, in the event of any termination of this
Commitment Letter or any undertaking hereunder, the compensation, reimbursement,
indemnification, confidentiality, syndication, jurisdiction, governing law and
waiver of jury trial provisions contained herein and in the Fee Letter shall
remain in full force and effect regardless of whether definitive financing
documentation for the Senior Credit Facility shall be executed and delivered and
notwithstanding the termination of this Commitment Letter, any Commitment or any
of the Commitment Parties’ agreements to perform any services described herein;
provided that
your obligations under this Commitment Letter, other than those relating to
confidentiality and to the syndication of the Senior Credit Facility, shall, to
the extent covered by the definitive documentation relating to the Senior Credit
Facility, automatically terminate and be superseded by the applicable provisions
contained in such definitive documentation upon the initial extension of credit
under the Senior Credit Facility.
This
Commitment Letter and the Fee Letter may be executed in counterparts which,
taken together, shall constitute an original. Delivery of an executed
counterpart of this Commitment Letter or the Fee Letter by facsimile or
electronic transmission shall be effective as delivery of a manually executed
counterpart hereof or thereof.
The
Commitment Parties hereby notify you that pursuant to the requirements of the
USA Patriot Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001)
(“Act”), the
Commitment Parties are required to obtain, verify and record information that
identifies Company, which information includes Company's legal name, address,
tax ID number and other information that will allow the Commitment Parties to
identify Company in accordance with the Act. The Commitment Parties
will also require information regarding each personal guarantor, if any, and may
require information regarding Company’s management and owners, such as legal
name, address, social security number and date of birth.
This
Commitment Letter and the Fee Letter embody the entire agreement and
understanding among the Commitment Parties, you and your affiliates with respect
to the Senior Credit Facility, and supersede all prior agreements and
understandings relating thereto. However, please note that the terms
of the undertakings of the Commitment Parties hereunder are not limited to those
set forth in this Commitment Letter. Those matters that are not
covered or made clear are subject to mutual agreement of the
parties. No party has been authorized by any Commitment Party to make
any oral or written statements that are inconsistent with this Commitment Letter
and the Fee Letter. This Commitment Letter is not assignable by
Company without our prior written consent and is intended to be solely for the
benefit of the parties hereto and the Indemnified Parties.
This
offer will expire at 5:00 p.m. (New York City time) on August 11, 2010, unless
you execute this letter and the Fee Letter and return them to us prior to that
time. This Commitment Letter and the Fee Letter shall be of no force
and effect unless (a) executed by you and delivered to us within the time frame
required by the preceding sentence, and (b) the Bankruptcy Court shall have
approved the payment of all fees, expenses, indemnities and other obligations
set forth in this Commitment Letter and in the Fee Letter. If this
Commitment Letter and the Fee Letter shall have become effective, this
undertaking and the Commitments will thereafter expire on November 30, 2010
(unless extended with the consent of the Initial Lenders), unless the definitive
documentation for the Senior Credit Facility is executed and delivered by that
date.
[Remainder
of page intentionally left blank]
-7-
We look
forward to working with you in the coming weeks on this important
financing.
BANK
OF AMERICA, N.A.
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By
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Name:
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Title:
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BANC
OF AMERICA SECURITIES LLC
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By
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Name:
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Title:
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WELLS
FARGO CAPITAL FINANCE, LLC
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By
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Name:
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Title:
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CITIGROUP
GLOBAL MARKETS INC.
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By
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Name:
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Title:
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BARCLAYS
BANK PLC
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By
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Name:
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Title:
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GOLDMAN
SACHS LENDING PARTNERS LLC
|
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By
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Name:
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Title:
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Accepted
and Agreed to as of
|
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the
date first above written:
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CHEMTURA
CORPORATION
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By
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Name:
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Title:
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CONFIDENTIAL
Exhibit
A
Chemtura
Corporation
Summary
of Material Terms and Conditions of Revolving Facility
Borrowers:
|
Chemtura
Corporation, a Delaware corporation (the “Company”), and all of
the Company’s direct and indirect wholly-owned material domestic
subsidiaries that own any assets included in the Borrowing Base
(collectively, the “Subsidiary Borrowers”
and, together with the Company, the “Borrowers”).
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Guarantors:
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All
of the Company’s direct and indirect wholly-owned subsidiaries (other than
the Subsidiary Borrowers and those subsidiaries contemplated under the
Plan (as defined in Exhibit B) to be liquidated, dissolved or merged into
other Guarantors prior to the date that is 90 days after the Closing Date
(provided that such subsidiaries shall be required to become Guarantors if
not so liquidated, dissolved or merged by such date)) that were guarantors
under the Company’s amended and restated senior secured superpriority
debtor-in-possession credit agreement dated as of February 3, 2010 (as
heretofore and hereafter amended, supplemented or otherwise modified, the
“Existing Credit
Agreement”), and all of the Company’s direct and indirect
wholly-owned material domestic subsidiaries formed or acquired after the
Closing Date (collectively, the “Guarantors”). The
Borrowers and the Guarantors are referred to herein as “Loan Parties” and
each, a “Loan Party”. All obligations of the Borrowers under the
Revolving Facility and the Loan Parties’ obligations under any interest
rate protection or other hedging arrangements (“Revolving Facility Hedging
Arrangements”) entered into with, and under any cash management
services (“Revolving
Facility Cash Management Services”) provided by, any entity that is
a Revolving Lender at the time of such transaction, or any affiliate
thereof, will be unconditionally guaranteed by the
Guarantors.
|
|
Revolving
Lenders:
|
An
affiliate of each Arranger and other financial institutions or entities
acceptable to the Administrative Agent, with the consent of the Company
(not to be unreasonably withheld) (the “Revolving Lenders” or
the “Lenders”).
|
|
Administrative
Agent:
|
Bank
of America, N.A. or an affiliate thereof (in such capacity, the “Administrative
Agent”).
|
A-1
Syndication
Agent:
|
Wells
Fargo Capital Finance, LLC.
|
|
Co-Documentation
Agents:
|
Citibank,
N.A. or an affiliate thereof, Barclays Bank PLC or an affiliate thereof
and Goldman Sachs Lending Partners LLC.
|
|
Collateral
Agent:
|
Bank
of America, N.A. or an affiliate thereof (in such capacity, the “Collateral Agent” and
together with the Administrative Agent, the “Agents”).
|
|
Joint
Lead Arrangers:
|
Banc
of America Securities LLC, Wells Fargo Capital Finance, LLC and Citigroup
Global Markets Inc. (collectively, “Arrangers”).
|
|
Joint
Book Runners:
|
Banc
of America Securities LLC, Wells Fargo Capital Finance, LLC, Citigroup
Global Markets Inc., Barclays Capital, the investment banking division of
Barclays Bank PLC and Goldman Sachs Lending Partners
LLC.
|
|
Revolving
Facility:
|
A
senior secured revolving credit facility in an aggregate principal amount
of $275 million (initially), subject to Availability (the “Revolving
Facility”). A letter of credit subfacility for letters of
credit (“Letters of
Credit”) in an aggregate amount of $125 million shall be available
under the unused commitments of the Revolving Facility. A bank
affiliate of Wells Fargo Capital Finance, LLC (and/or any other Lender
that from time to time agrees with the Borrowers to become an issuer of
Letters of Credit) shall be the issuing bank with respect to Letters of
Credit. Loans under the Revolving Facility (the “Revolving Loans”) shall
be denominated in US Dollars.
|
|
All
Revolving Loans shall become due and payable on the Revolving Facility
Termination Date.
|
||
Revolving
Facility Termination Date:
|
The
“Revolving Facility
Termination Date” shall be the earlier of (a) the fifth anniversary
of the closing date of the Revolving Facility (the “Closing Date”) and (b)
the acceleration of the Revolving Loans and the termination of the
commitments under the Revolving Facility in accordance with the Loan
Documents.
|
|
Availability:
|
Availability
under the Revolving Facility (the “Availability”) will be
equal to (i) the lesser of (A) the Borrowing Base (as defined below) and
(B) the then effective commitments under the Revolving Facility minus (ii) the
aggregate amount of the Revolving Loans and any undrawn or unreimbursed
Letters of Credit (the “Revolving Facility
Usage”).
|
A-2
“Borrowing Base” shall
mean the sum of (i) 85% of eligible accounts receivable, plus (ii) the lesser of
(A) 85% of the Orderly Liquidation Value Percentage (as defined below) of
eligible inventory and (B) 75% of the cost of eligible inventory, in each
case less such
eligibility reserves as the Administrative Agent, in its reasonable
judgment, consistent with standards for similar asset-based financings
taking into account current market conditions, deems appropriate and in
each case, subject to field audits, asset appraisals and such other
reports.
“Orderly Liquidation Value
Percentage” shall mean the orderly liquidation value (net of costs
and expenses incurred in connection with liquidation) of inventory as a
percentage of the cost of such inventory, which percentage shall be
determined by reference to the most recent third-party appraisal of such
inventory received by the Administrative Agent.
Notwithstanding
anything to the contrary herein, criteria for reserves against the
Borrowing Base and the definition of Orderly Liquidation Value Percentage
shall be substantially similar to (and in any event no less favorable to
the Company than) the Existing Credit Agreement.
|
||
Eligibility:
|
Eligibility
of accounts receivable and inventory for purposes of computing “Availability” and the
Borrowing Base will be determined by the Administrative Agent in
accordance with criteria substantially similar to (and in any event no
less favorable to the Company than) the Existing Credit
Agreement.
|
|
The
Administrative Agent shall have the right to conduct field audits and
examinations of receivables and inventory and appraisals of inventory (i)
unless clause (ii) or (iii) applies, no more than twice per calendar year,
(ii) if Availability is less than the greater of (x) $40 million and (y)
15% of the aggregate commitments under the Revolving Facility, three times
per calendar year(provided that no such field audit and examination and
appraisal shall be required under the circumstances described in this
clause (ii) unless (A) 120 days have passed since the most recent field
audit and examination and appraisal conducted by the Administrative Agent
and (B) Availability continues to be less than the minimum amount
described in this clause (ii)) and (iii) at any time, at the reasonable
request of the Administrative Agent, if an event of default has occurred
and is
continuing.
|
A-3
Purpose:
|
Proceeds
of the Revolving Loans shall be used solely to refinance the Existing
Credit Agreement and for other general corporate purposes and activities
(including payment of fees and expenses in connection with the
transactions contemplated hereby and working capital).
|
|
Loan
Documents:
|
The
Revolving Facility will be documented by a credit agreement (the “Revolving Facility Credit
Agreement”) and other guarantees, security agreements, an
intercreditor agreement with the holders of the Term Loans or their
representative(s), and other relevant documentation (together with the
Revolving Facility Credit Agreement, collectively, the “Loan Documents”)
reflecting the terms and provisions set forth in this term sheet
(including Annex A attached hereto) and Exhibit B to the Commitment Letter
and, to the extent not covered by such terms and provisions, otherwise
reasonably acceptable to the Company and the Initial
Lenders.
|
|
Interest
Rates and Fees:
|
As
set forth on Annex A attached hereto.
|
|
Commitment
Increase:
|
The
Company will have the right, no more than twice a year, to increase the
aggregate commitments under the Revolving Facility (the “Facility Amount”), in
minimum increments of $25,000,000, to a maximum Facility Amount of
$400,000,000; provided that no Event
of Default, or event which with the giving of notice or lapse of time or
both would be an Event of Default, has occurred and is continuing.
The Company may offer the increase to (x) its existing Revolving Lenders,
and each existing Revolving Lender will have the right, but no obligation,
to commit to all or a portion of the proposed increase (the “Proposed Increased
Commitment”) or (y) third party financial institutions acceptable
to the Administrative Agent (such acceptance not to be unreasonably
withheld or delayed), provided that the
minimum commitment of each such third party financial institution equals
or exceeds $5,000,000.
|
|
Optional
Prepayments:
|
The
Company may, upon at least 3 business days’ notice for LIBO Rate Loans and
1 business day’s notice for Base Rate Loans and at the end of any
applicable interest period (or at other times with the payment of
applicable breakage costs), prepay in full or in part, without premium or
penalty (other than such breakage costs), the Revolving Loans; provided that each such
partial prepayment shall be in an aggregate amount of $1,000,000 or
multiples of $500,000 (or, if less, the then outstanding principal amount
of the Revolving
Loans).
|
A-4
Mandatory
Prepayments:
|
Mandatory
prepayments of the Revolving Loans (and cash collateralization of
outstanding Letters of Credit) shall be required (a) if the Revolving
Facility Usage exceeds the lesser of (i) the Borrowing Base and (ii) the
then effective commitments under the Revolving Facility and (b) with net
cash proceeds from sales or casualty events of any Revolving Facility
Collateral (excluding sales or other dispositions of inventory and certain
other assets in the ordinary course of business), subject to customary
exceptions (no less favorable to the Company than in the Existing Credit
Agreement, except to the extent that making a provision less favorable is
necessary to protect the interests of the Lenders to substantially the
same degree as the corresponding interests of the lenders under the
Existing Credit Agreement were protected by the corresponding provision
under the Existing Credit Agreement (it being acknowledged by the Initial
Lenders that after review of the Existing Credit Agreement they are aware
of no such provisions on the date of the Commitment Letter)) and a dollar
threshold to be mutually agreed upon for excluded sales and casualty
events.
If
at the end of any business day the amount of unrestricted cash and cash
equivalents held by the Loan Parties (other than cash and cash equivalents
held in (x) collection, lockbox and disbursement accounts in the ordinary
course of collections and disbursements, (y) payroll accounts, trust
accounts, escrow accounts or security deposits established pursuant to
statutory obligations or for the payment of taxes or holding funds in
trust for third parties not affiliated with the Company in the ordinary
course of business or in connection with acquisitions, investments or
dispositions permitted under the Revolving Facility Credit Agreement,
deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security,
and reserve accounts expressly contemplated under the Plan and/or the
disclosure statement for the Plan (the “Disclosure
Statement”) (including, but not limited to reserves expressly
contemplated under the Plan and/or Disclosure Statement for diacetyl
claims and environmental claims, and escrow accounts established pursuant
to contractual obligations to third parties not affiliated with the
Company for casualty payments and insurance proceeds)) shall exceed $20
million in the aggregate, mandatory prepayments of the Revolving Loans
(and cash collateralization of outstanding Letters of Credit) shall be
required on the following business day in an amount necessary to eliminate
such excess (net of the Company’s known cash uses (for example, Senior
Note and Term Loan interest payments) on the date of such prepayment and
for the 2 business days
thereafter).
|
A-5
Mandatory
prepayments of the Revolving Facility shall be applied first to repay
Revolving Loans (without reducing commitments), and second, to cash
collateralize outstanding Letters of Credit (without reducing
commitments).
|
||
Commitment
Reductions:
|
The
Company may, upon at least 3 business days’ notice, reduce in full or in
part, without premium or penalty, commitments under the Revolving
Facility; provided
that each such partial reduction shall be in an aggregate amount of
$10,000,000 or multiples of $5,000,000 in excess
thereof.
|
|
Security
and Priority:
|
All
amounts owing by the Borrowers under the Revolving Facility, any Revolving
Facility Hedging Arrangements and any Revolving Facility Cash Management
Services (provided that in the case of Revolving Facility Hedging
Arrangements and Revolving Facility Cash Management Services, customary
reserves (substantially similar to (and in any event no less favorable to
the Company than) those in the Existing Credit Agreement) are applied to
the Borrowing Base) and by the Guarantors in respect thereof shall be
secured by (i) first priority liens on the Revolving Facility Collateral
and (ii) second priority liens on the Term Facility
Collateral.
“Revolving Facility
Collateral” means all of the existing and future inventory and
accounts (as defined in the Existing Credit Agreement) of the Loan
Parties, together with all general intangibles relating to inventory and
accounts, all contract rights under agreements relating to inventory and
accounts, all documents relating to inventory, all supporting obligations
and letter-of-credit rights relating to inventory and accounts, all
instruments evidencing payment for inventory and accounts; all money,
cash, cash equivalents, securities and other property of any kind held
directly or indirectly by the Administrative Agent or any Revolving Lender
under the Revolving Facility; all deposit accounts (it being understood
that account control agreements shall be entered into within a reasonable
time period (to be mutually agreed upon in the Loan Documents) after the
Closing Date and shall not be required with respect to payroll accounts,
trust accounts, escrow accounts or security deposits established pursuant
to statutory obligations or for the payment of taxes or holding funds in
trust for third parties not affiliated with the Company in the ordinary
course of business or in connection with acquisitions, investments or
dispositions permitted under the Revolving Facility Credit Agreement,
deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security,
and reserve accounts expressly contemplated under the Plan and/or
Disclosure Statement (including, but not limited to reserves expressly
contemplated under the Plan and/or Disclosure Statement for diacetyl
claims and environmental claims, and escrow accounts established pursuant
to contractual obligations to third parties not affiliated with the
Company for casualty payments and insurance proceeds), or with respect to
deposit accounts holding deposits below $500,000), credits, and balances
with any financial institution with which any Loan Party maintains
deposits and which contain proceeds of or collections on, inventory and
accounts; all books, records and other property related to or referring to
any of the foregoing, including books, records, account ledgers, data
processing records, computer software and other property and all proceeds
of any of the foregoing, including, proceeds of any insurance policies,
claims against third
parties.
|
A-6
“Term Facility
Collateral” means all tangible and intangible assets of the Loan
Parties (other than any assets comprising Revolving Facility Collateral),
including, without limitation, real property, equipment, intellectual
property, equity interests of their direct subsidiaries (including 100% of
the non-voting capital stock of their respective foreign subsidiaries and
no more than (to the extent the pledge of any greater percentage would
result in material adverse tax consequences to the Loan Parties) 65% of
the voting capital stock of their respective foreign subsidiaries that are
classified as controlled foreign corporations under Section 957 of the
International Revenue Code (“CFC”) and entities that
are treated as partnerships or disregarded entities for United States
federal income tax purposes and whose assets are solely capital stock of
CFCs) and other investment property.
The
Revolving Facility Collateral and the Term Facility Collateral are
collectively referred to herein as the “Collateral”.
Notwithstanding
the foregoing, the Collateral and the requirements for perfecting a
security interest in the Collateral shall in each case contain exceptions
substantially similar to those in the Existing Credit Agreement, it being
understood that in circumstances where the Company and the Administrative
Agent reasonably agree that the cost of perfecting a security interest in
any Collateral is materially excessive in relation to the benefit afforded
the Lenders, the Loan Parties shall not be required to perfect such
security interest.
|
A-7
Intercreditor
Agreement:
|
The
lien priority, relative rights and other creditors’ rights issues in
respect of the Collateral, including, without limitation, the right of the
Collateral Agent to enter upon and use the Term Facility Collateral to
assemble, process, remove, sell, protect, secure and otherwise enforce the
rights of the secured parties under the Revolving Facility in the
Revolving Facility Collateral, will be set forth in a customary
intercreditor agreement (the “Intercreditor
Agreement”) reasonably acceptable to the Company and the Initial
Lenders.
|
|
Conditions
Precedent to the Initial Extension of Credit:
|
As
set forth in Exhibit B.
|
|
Conditions
Precedent to Each Loan and Letter of Credit:
|
On
the funding date of each Revolving Loan (and on the date of issuance of
any Letter of Credit) (i) no Event of Default, or event which with the
giving of notice or lapse of time or both would be an Event of Default,
shall have occurred and be continuing under the Loan Documents and (ii)
the representations and warranties of the Borrowers and each Guarantor
therein shall be true and correct in all material respects (or, with
respect to any representation or warranty that is qualified as to
materiality, true and correct in all respects) immediately prior to, and
after giving effect to, such funding or issuance, other than any such
representations or warranties that, by their terms, refer to a specific
earlier date, in which case such representations or warranties shall have
been true and correct in all material respects as of such specific
date.
|
A-8
Representations
and Warranties:
|
The
Loan Documents will contain representations and warranties customarily
found in the Administrative Agent’s loan agreements for similar
asset-based financings and other representations and warranties reasonably
deemed by the Administrative Agent appropriate to the specific transaction
(which will be applicable to the Borrowers, the Guarantors and their
respective subsidiaries, and will be substantially similar (and in any
event not less favorable to the Company in any material respect, except to
the extent that making a provision less favorable is necessary to protect
the interests of the Lenders to substantially the same degree as the
corresponding interests of the lenders under the Existing Credit Agreement
were protected by the corresponding provision under the Existing Credit
Agreement (it being acknowledged by the Initial Lenders that after review
of the Existing Credit Agreement they are aware of no such provisions on
the date of the Commitment Letter)) to the representations and warranties
set forth in the Existing Credit Agreement, subject to the right of the
Initial Lenders to negotiate such representations and warranties in good
faith), including, without limitation with respect to: valid existence,
compliance with law, requisite power, due authorization, approvals, no
conflict with agreements or applicable law, enforceability of the Loan
Documents, ownership of subsidiaries, material accuracy of financial
statements and all other information provided, absence of Material Adverse
Change, solvency, absence of material adverse litigation, taxes, margin
regulations, no burdensome restrictions, no default under material
agreements or the Loan Documents, inapplicability of Investment Company
Act, use of proceeds, insurance, labor matters, ERISA, environmental
matters, security interests, existing debt, liens and investments,
necessary rights to intellectual property and ownership of
properties.
|
|
Affirmative
Covenants:
|
The
Loan Documents will contain affirmative covenants customarily found in the
Administrative Agent’s loan agreements for similar asset-based financings
and other affirmative covenants reasonably deemed by the Administrative
Agent to be appropriate to the specific transaction, subject to, where
appropriate, materiality thresholds, carve-outs and exceptions as agreed
(which will applicable to the Borrowers, the Guarantors and their
respective subsidiaries, and will be substantially similar (and in any
event not less favorable to the Company in any material respect except as
expressly set forth in item M below and except to the extent that making a
provision less favorable is necessary to protect the interests of the
Lenders to substantially the same degree as the corresponding interests of
the lenders under the Existing Credit Agreement were protected by the
corresponding provision under the Existing Credit Agreement (it being
acknowledged by the Initial Lenders that after review of the Existing
Credit Agreement they are aware of no such provisions on the date of the
Commitment Letter)) to the affirmative covenants set forth in the Existing
Credit Agreement, subject to the right of the Initial Lenders to negotiate
such affirmative covenants in good faith), including, without limitation,
the
following:
|
A-9
A.
|
Preservation
of corporate existence.
|
||
B.
|
Compliance
with laws (including ERISA and applicable environmental
laws).
|
||
C.
|
Conduct
of business.
|
||
D.
|
Payment
of taxes.
|
||
E.
|
Maintenance
of insurance.
|
||
F.
|
Access
to books and records and visitation rights.
|
||
G.
|
Maintenance
of books and records.
|
||
H.
|
Maintenance
of properties.
|
||
I.
|
Use
of proceeds.
|
||
J.
|
Provision
of additional collateral, guarantees and mortgages.
|
||
K.
|
Use
of reasonable efforts to deliver landlord and bailee
waivers.
|
||
L.
|
Further
assurances.
|
||
M.
|
Maintenance
with respect to bank accounts (with exceptions as set forth above under
the “Security and Priority” provisions) of account control agreements in
form and substance reasonably acceptable to the Administrative
Agent. Cash dominion (i.e., required daily transfer of balances in
lockbox collection accounts to repay outstanding Revolving Loans) by the
Administrative Agent will be exercisable only during the period from the
date the Availability falls below the greater of (i) $40 million and (ii)
15% of the aggregate commitments under the Revolving Facility, to the date
Availability has been at least equal to the greater of (i) $40 million and
(ii) 15% of the aggregate commitments under the Revolving Facility for 45
consecutive days (with a grace period to cure Availability falling below
the foregoing threshold and/or provisions for increasing the frequency of
Availability reporting, in each case to be set forth in the Revolving
Facility Credit Agreement). Notwithstanding anything to the contrary
herein, the Company and its subsidiaries shall be permitted to retain
their cash management system and deposit accounts at Citibank and its
affiliates, subject to obtaining such account control
agreements.
|
A-10
Negative
Covenants:
|
The
Loan Documents will contain negative covenants customarily found in the
Administrative Agent’s loan agreements for similar asset-based financings
and other negative covenants reasonably deemed by the Administrative Agent
to be appropriate to the specific transaction and where appropriate,
subject to materiality thresholds, carve-outs and exceptions as agreed
(which will be applicable to the Borrowers, the Guarantors and their
respective subsidiaries, and will be substantially similar (and in any
event not less favorable to the Company in any material respect except as
expressly described below and except to the extent that making a provision
less favorable is necessary to protect the interests of the Lenders to
substantially the same degree as the corresponding interests of the
lenders under the Existing Credit Agreement were protected by the
corresponding provision under the Existing Credit Agreement (it being
acknowledged by the Initial Lenders that after review of the Existing
Credit Agreement they are aware of no such provisions on the date of the
Commitment Letter)) to the negative covenants set forth in the Existing
Credit Agreement, subject to the right of the Initial Lenders to negotiate
such negative covenants in good faith), including, without limitation, the
following:
|
A-11
A.
|
Limitations
on debt and guarantees (with exceptions in any event permitting (i) the
Senior Notes and the Term Loans, (ii) debt and guarantees outstanding on
the Closing Date as permitted under the Existing Credit Agreement that is
in effect as of the date of the Commitment Letter (as modified by any
amendments, modifications or waivers thereto (other than those that are
adverse to the interests of the Lenders in more than a de minimis
respect)) and (in the case of the Loan Parties) contemplated under (and
remaining outstanding on the Closing Date in accordance with) the Plan
and/or Disclosure Statement, (iii) up to $250 million (or the foreign
currency equivalent) at any time outstanding of asset-based financing
(including receivables and/or and inventory based financing), factoring
arrangements or other securitization programs, in each case of foreign
subsidiaries of the Company (collectively, “Foreign Asset Based
Financing”), (iv) guarantee by the Company of up to 15 million
pounds Sterling of its repayment obligations to Chemtura Manufacturing UK
Limited, to assure funding of contributions to the Great Lakes (UK)
Limited Pension Plan, (v) guarantees of obligations of joint ventures and
other non-Loan Party subsidiaries of the Company to the extent investments
would be permitted in such entities under paragraph C below,
(vi) purchase money debt and capital leases not exceeding $30 million
at any time outstanding, plus any leases (including operating leases that
are recharacterized as capital leases) outstanding on the Closing Date as
permitted under the Existing Credit Agreement that is in effect as of the
date of the Commitment Letter (as modified by any amendments,
modifications or waivers thereto (other than those that are adverse to the
interests of the Lenders in more than a de minimis respect)),
(vii) an additional $20 million of debt outstanding at any time in
excess of the $5 million permitted under section 5.02(b)(xi) of the
Existing Credit Agreement that is in effect as of the date of the
Commitment Letter, and (viii) an additional $40 million of debt of
foreign subsidiaries outstanding at any time in excess of the $10 million
permitted under section 5.02(b)(vi) of the Existing Credit Agreement that
is in effect as of the date of the Commitment Letter).
|
||
B.
|
Limitations
on liens (with exceptions in any event permitting (i) the liens securing
the Term Loans and, to the extent the Senior Notes are secured, the Senior
Notes, (ii) liens outstanding on the Closing Date as permitted under the
Existing Credit Agreement that is in effect as of the date of the
Commitment Letter (as modified by any amendments, modifications or waivers
thereto (other than those that are adverse to the interests of the Lenders
in more than a de minimis respect)), (iii) liens securing up to $250
million (or the foreign currency equivalent) at any time outstanding of
Foreign Asset Based Financing, (iv) general “basket” for liens on assets
of the foreign subsidiaries of the Company securing up to $50 million (or
the foreign currency equivalent) at any time outstanding of obligations of
the Company’s foreign subsidiaries, (v) liens on (and restrictions on
additional liens on) assets of Chemtura Manufacturing UK Limited securing
obligations to its U.K. pension plan trustees, (vi) general “basket” for
liens on assets (other than collateral included in the calculation of the
Borrowing Base) securing up to $25 million at any time outstanding of
obligations of the Company and/or its domestic subsidiaries and (vii)
liens on assets (other than collateral included in the calculation of the
Borrowing Base) corresponding to secured debt, capital leases and
guarantees permitted under the debt covenant described in item A
above).
|
A-12
C.
|
Limitations
on loans and investments (with exceptions in any event permitting (w)
loans and investments not to exceed $25 million at any time outstanding,
(x) loans and investments outstanding on the Closing Date as permitted
under the Existing Credit Agreement that is in effect as of the date of
the Commitment Letter (as modified by any amendments, modifications or
waivers thereto (other than those that are adverse to the interests of the
Lenders in more than a de minimis respect)) , (y) investments in (and
guarantees of obligations of) joint ventures in an amount not to exceed $5
million at any time outstanding (with unfunded guarantees not counting
against such limitation), it being understood that funding and
reimbursement arrangements with respect to the Rubicon joint venture that
are consistent with past practices shall not be deemed loans or
investments subject to limitation under this covenant, and (z) any loan or
investment if (a) immediately after giving effect to such transaction, on
a proforma basis, (i) the Fixed Charge Coverage Ratio shall be at least
1.1 to 1.0 and (ii) each of the Average Excess Availability (as defined in
Annex A) for the 30 day period prior to such transaction, and the
Availability on the date of such transaction, shall be at least equal to
the greater $40 million and 20% of the aggregate commitments under the
Revolving Facility (the conditions described in this clause (a) being the
“Fixed Charge
and Liquidity Conditions”) and (b) no default exists immediately
before or after giving effect to such transaction).
|
||
D.
|
Limitations
on asset dispositions, including, without limitation, the issuance and
sale of capital stock of subsidiaries (with exceptions in any event
permitting up to $250 million (or the foreign currency equivalent) at any
time outstanding of Foreign Asset Based Financing).
|
||
E.
|
Limitations
on dividends, redemptions, repurchases with respect to capital stock and
prepayments, redemptions and repurchases of debt (collectively, “Restricted
Payments”) (with exceptions in any event permitting (x) dividends,
redemptions and repurchases contemplated under (and made in accordance
with) the Plan and/or the Disclosure Statement and (y) any other
Restricted Payments if (a) the Fixed Charge and Liquidity Conditions are
satisfied and (b) no default exists immediately before or after giving
effect to such Restricted
Payment).
|
A-13
F.
|
Limitations
on mergers, consolidations, acquisitions, joint ventures or creation of
subsidiaries (with exceptions in any event permitting (x) mergers,
consolidations, acquisitions and subsidiaries contemplated under (and
consummated in accordance with) the Plan and/or the Disclosure Statement,
(y) mergers and consolidations of any Loan Party with another Loan Party
(provided that the surviving entity in any such merger or consolidation
involving the Company shall be the Company), any non-Loan Party subsidiary
with another non-Loan Party subsidiary, any non-Loan Party subsidiary with
a Loan Party (provided that the surviving entity shall be a Loan Party)
and (z) any mergers, consolidations, acquisitions, joint ventures or
creations of subsidiaries if (a) the Fixed Charge and Liquidity Conditions
are satisfied, (b) no default exists immediately before or after giving
effect to such transaction, and (c) in the case of a merger or
consolidation of any Loan Party, the surviving entity shall be a Loan
Party and, in the case of a merger or consolidation of the Company, the
Company shall be the surviving entity). The Loan Documents shall
permit any Guarantor to be liquidated, dissolved or merged into other
Guarantors or the Company after the Closing Date, and shall contain
customary automatic guaranty release provisions for any Guarantors that
are so liquidated, dissolved or merged.
|
||
G.
|
Limitations
on material changes in business.
|
||
H.
|
Limitations
on transactions with affiliates.
|
||
I.
|
Limitations
on restrictions on distributions from subsidiaries and granting of
negative pledges.
|
||
J.
|
Limitations
on changes in accounting treatment and reporting practices (except as
permitted or required by generally accepted accounting principles) or the
fiscal year without the Administrative Agent’s consent (it being
understood that application of fresh start accounting shall not be
restricted).
|
||
K.
|
Limitations
on sale/leasebacks and operating leases.
|
||
L.
|
Limitations
on speculative transactions except for the sole purpose of hedging in the
normal course of business and consistent with industry
practices.
|
A-14
Financial
Covenants:
|
Financial
covenants will be limited to a minimum Fixed Charge Coverage Ratio of 1.1
to 1.0 at all times during any Testing Period.
“Testing
Period” means the period from the date the Availability falls
below the greater of (i) $34 million and (ii) 12.5% of the aggregate
commitments under the Revolving Facility, to the date Availability has
been at least equal to the greater of (i) $34 million and (ii) 12.5% of
the aggregate commitments under the Revolving Facility for 45 consecutive
days.
“Fixed
Charge Coverage Ratio” means, at any time, the ratio, determined on a
consolidated basis for the Company and its subsidiaries for the most
recently ended period of twelve fiscal months, of (a) EBITDA for such
period minus capital
expenditures made (other than those funded by the issuance of debt or
equity) during such period minus taxes
paid in cash during such period (to the extent added back to net income in
the calculation of EBITDA for such period), to (b) the sum of (i) interest
expense paid in cash during such period plus (ii) scheduled principal
payments made on borrowed money plus (iii) declared or paid dividend or
other distributions, or repurchases, redemption or other acquisition or
retirement for value, in each case to the extent paid (or declared for
payment) in cash with respect to capital stock (except that this
clause (iii) shall not include such payments made or declared
(1) to the Company or its subsidiaries or (2) by a subsidiary of
the Company to a person other than the Company or its subsidiaries if such
payment or declaration is made ratably to holders of the relevant class of
capital stock of the relevant subsidiary), plus (iv) to the extent not
deducted from consolidated net income to determine EBITDA during such
period, amounts paid during such period with respect to any (A)
environmental liabilities, and (B) pension and other post employment
benefit liabilities. Notwithstanding anything herein to the contrary, (A)
the amounts described in clauses (i), (ii), (iii) and (iv) of the
preceding sentence shall not include amounts paid as contemplated under
and in accordance with the Plan and/or Disclosure Statement, (B) the
initial contribution (and the payments made to fund such contribution) to
the Great Lakes (UK) Limited Pension Plan on or after the Closing Date in
an amount not in excess of 15 million Pounds Sterling shall be deemed to
be contemplated under (and made in accordance with) the Plan and the
Disclosure Statement, and (C) for purposes of calculating the Fixed Charge
Coverage Ratio for any portion of the relevant 12-month period that occurs
prior to the Closing Date, the amount of each of the various components of
the Fixed Charge Coverage Ratio calculation described in the preceding
sentence in each month set forth on Annex B attached hereto shall be
deemed to be the amount therefor set forth opposite such month in Annex
B.
|
A-15
“EBITDA”
means, for any person for any period, (a) consolidated net income (or net
loss) plus (b) without duplication, to the extent included in the
calculation of consolidated net income of such person for such period in
accordance with GAAP, the sum of (i) interest expense, (ii) income tax
expense, (iii) depreciation expense, (iv) amortization expense, (v)
non-cash charges related to restructuring (including but not limited to
facility closure and severance expense), asset impairment or other
extraordinary items and fees and expenses incurred in connection with the
Chapter 11 reorganization, the Plan, the financings expressly contemplated
by the Plan and/or Disclosure Statement, the adoption of fresh start
accounting and any Foreign Asset Based Financing, (vi) any losses from
sales of assets other than in the ordinary course of business, (vii)
non-cash expenses in respect of employees’ compensation payable in equity
interests, (viii) losses incurred on the early extinguishment of debt,
(ix) charges for legal and other expenses in connection with Designated
Litigation Liabilities (to be defined as liabilities for litigation
matters the liability for which have been estimated or determined under
and in accordance with the Plan and/or Disclosure Statement) in an
aggregate amount not to exceed $15,000,000 and (x) losses incurred after
the Closing Date as a result of the adoption of fresh start accounting
(which losses are required to be disclosed to SEC within 210 days of the
adoption of fresh start accounting), minus (c) without duplication, (i)
cash payments for non-cash restructuring charges reserved in a prior
period to the extent a charge or expense for such payments was included in
EBITDA for a prior period pursuant to clause (b) above, (ii) gains
recognized on the early extinguishment of debt, (iii) gains incurred after
the Closing Date as a result of the adoption of fresh start accounting
(which gains are required to be disclosed to SEC within 210 days of the
adoption of fresh start accounting), and (iv) to the extent included in
the calculation of net income of such Person for such period in accordance
with GAAP, any gains from sales of assets other than in the ordinary
course of business and any other extraordinary gains, provided, however,
that in any event and for all periods, non-cash gains or losses on foreign
currency translation in connection with the re-measurement of balance
sheet assets and liabilities shall be excluded from the calculation of
EBITDA. For the purposes of calculating EBITDA for any period, if
during such period the Company or any of its subsidiaries shall have made
an acquisition, EBITDA for such period shall be calculated after giving
pro forma effect thereto as if such acquisition occurred on the first day
of such period. For purposes of calculating the Fixed Charge
Coverage Ratio for any portion of the relevant 12-month period that occurs
prior to the Closing Date, EBITDA for each month set forth in Annex B
attached hereto shall be deemed to be the amount set forth opposite such
month in Annex B.
|
A-16
Financial
Reporting Requirements:
|
The
Company shall provide: (i) monthly consolidated financial statements of
the Company, the Borrowers, the Guarantors and their respective
subsidiaries, including balance sheet, income statement and cash flow
statement within 30 days of month-end, certified by the Company’s
Responsible Officer; (ii) quarterly consolidated financial statements of
the Company, the Borrowers, the Guarantors and their respective
subsidiaries within 45 days of quarter-end for the first 3 fiscal quarters
of the fiscal year (except that if the Confirmation Order (as defined in
Exhibit B) shall have been entered by the Bankruptcy Court (as defined in
the Plan) on or prior to September 16, 2010, such period shall be 90 days
with respect to the third fiscal quarter of 2010), certified by the
Company’s Responsible Officer; (iii) annual audited consolidated financial
statements of the Company and its subsidiaries within 90 days of year-end
(except that such period shall be 105 days with respect to the 2010 fiscal
year), certified with respect to such consolidated statements by
independent certified public accountants reasonably acceptable to the
Administrative Agent; (iv) copies of all reports on Form 10-K, 10-Q or 8-K
filed with the Securities and Exchange Commission; (v) monthly
certificates certifying as to the Fixed Charge Coverage Ratio as of the
end of each calendar month (regardless of whether a Testing Period then
applies); and (vi) projections for the balance of the term of the
Revolving Facility provided annually and annual business and financial
plans provided in each case within 45 days after the beginning of each
fiscal year.
|
|
Other
Reporting Requirements:
|
The
Loan Documents will contain other reporting requirements customarily found
in the Administrative Agent’s loan documents for similar asset-based
financings and other reporting requirements deemed by the Administrative
Agent appropriate to the specific transaction (which will be substantially
similar (and in any event not more burdensome to the Company in any
material respect except in circumstances where the Administrative Agent
believes in good faith other modifications are appropriate) to the
reporting requirements set forth in the Existing Credit Agreement),
including, without limitation, with respect to litigation, contingent
liabilities, ERISA or environmental events and Borrowing Base and Fixed
Charge Coverage Ratio certificates on a monthly basis (or (in the case of
Borrowing Base certificates) weekly basis during any Testing Period) and
appropriate supporting data for such Borrowing Base and Fixed Charge
Coverage Ratio certificates at such times and in form and substance as is
reasonably satisfactory to the Administrative
Agent.
|
A-17
Events
of Default:
|
The
Loan Documents will contain events of default customarily found in the
Administrative Agent’s loan agreements for similar asset-based financings
and other events of default reasonably deemed by the Administrative Agent
to be appropriate to the specific transaction (which will be applicable to
the Company, the Borrowers, the Guarantors and their respective
subsidiaries, and will be substantially similar (and in any event not less
favorable to the Company in any material respect except in circumstances
where the Administrative Agent believes in good faith other modifications
are appropriate) to the events of default set forth in the Existing Credit
Agreement, subject to the right of the Initial Lenders to negotiate such
events of default in good faith), including, without limitation, the
following, with, where appropriate, customary grace periods and exceptions
(which grace periods and exceptions shall in any event not be less
favorable to the Company than those in the Existing Credit Agreement,
except to the extent that making a provision less favorable is necessary
to protect the interests of the Lenders to substantially the same degree
as the corresponding interests of the lenders under the Existing Credit
Agreement were protected by the corresponding provision under the Existing
Credit Agreement (it being acknowledged by the Initial Lenders that after
review of the Existing Credit Agreement they are aware of no such
provisions on the date of the Commitment Letter)) as set forth in the
Revolving Facility Credit
Agreement:
|
A.
|
Failure
to pay principal, interest or any other amount when
due.
|
||
B.
|
Representations
and warranties incorrect in any material respect when
given.
|
A-18
C.
|
Failure
to comply with covenants (with grace period as
appropriate).
|
||
D.
|
Cross-default
to payment defaults, or default or event of default if the effect is to
accelerate or permit acceleration of indebtedness with a principal amount
in excess of $20 million; provided that any cross-default that results
from the breach of a financial covenant under the Term Loans but that has
not resulted in the acceleration of the Term Loans shall be subject to a
grace period to be agreed.
|
||
E.
|
Commencement
of enforcement of any judgment that is not stayed or vacated, or failure
(for a period of 30 days or longer) to satisfy or stay execution of any
judgment, in each case if the aggregate amount of such judgments exceeds
$20 million (except to the extent fully covered by insurance or
indemnity).
|
||
F.
|
Bankruptcy
or insolvency of the Company or any material subsidiary of the
Company.
|
||
G.
|
The
occurrence of certain ERISA events that result in or are reasonably likely
to result in liability in excess of $20 million.
|
||
H.
|
Actual
or asserted invalidity or impairment of any Loan Document
(including the failure of any lien to remain
perfected).
|
||
I.
|
Change
of control after the Closing Date (to be defined as mutually agreed upon
in the Loan
Documents).
|
Indemnification:
|
The
Loan Documents will contain customary indemnification provisions
(including coverage of environmental liabilities) by the Loan Parties in
favor of the Agents, each Arranger, each Revolving Lender, each
Letter of Credit issuer and each of their respective affiliates and the
respective officers, directors, employees, agents, advisors, attorneys and
representatives of each of
them.
|
A-19
Expenses:
|
The
Company and each Borrower shall jointly and severally pay or reimburse the
Agents and the Arrangers for all reasonable and documented out-of-pocket
costs and expenses incurred by the Agents and the Arrangers (including,
without limitation, third-party appraisal costs, per diem costs and other
charges of field examiners and other employees in connection with matters
relating to the collateral and reasonable attorneys’ fees and expenses (it
being agreed that reasonable fees and expense of not more than one counsel
for all of the Agents and Arrangers (with one additional counsel if there
is a conflict between or among the Agents and the Arrangers in the opinion
of counsel) shall be payable or reimbursable under the preceding
provisions of this sentence, together with reasonable fees and expenses of
special and local counsel, in each case reasonably retained by the
Commitment Parties jointly)) in connection with (i) the preparation,
negotiation and execution of the Loan Documents; (ii) the syndication and
funding of the Revolving Loans and any issuance of Letters of Credit;
(iii) the creation, perfection or protection of the liens under the Loan
Documents (including all search, filing and recording fees); and (vi) the
on-going administration of the Loan Documents (including the preparation,
negotiation and execution of any amendments, consents, waivers,
assignments, restatements or supplements thereto).
The
Company and each Borrower further agree to jointly and severally pay or
reimburse the Agents and each of the Revolving Lenders and Letter of
Credit issuers for all documented out-of-pocket costs and expenses,
including reasonable attorneys’ fees and expenses, incurred by the Agents
or such Revolving Lenders and Letter of Credit issuers in connection with
(i) the enforcement of the Loan Documents; (ii) any refinancing or
restructuring of the Revolving Facility in the nature of a “work-out” or
any insolvency or bankruptcy proceeding; and (iii) any legal proceeding
relating to or arising out of the Revolving Facility or the other
transactions contemplated by the Loan Documents.
|
|
Assignments
and Participations:
|
Assignments
must be in a minimum amount of $5 million and except for assignments to
another Revolving Lender or an affiliate or approved fund of a Revolving
Lender, are subject to the consent of the Administrative Agent and the
Company, which in the case of the Company, shall not be unreasonably
withheld or delayed or during the continuance of an event of default under
the Loan Documents, required. No participation shall include voting
rights, other than for customary matters requiring consent of 100% of the
Revolving Lenders.
|
|
Requisite
Revolving Lenders:
|
Revolving
Lenders holding at least 50% of the outstanding commitments and/or
exposure under the Revolving Facility (the “Requisite Revolving
Lenders”).
|
|
Amendments:
|
Requisite
Revolving Lenders, except for provisions customarily requiring approval by
affected Revolving Lenders to be mutually agreed
upon.
|
A-20
Miscellaneous:
|
The
Loan Documents will include (i) standard yield protection provisions
(including, without limitation, provisions relating to compliance with
risk-based capital guidelines, increased costs and payments free and clear
of withholding taxes (subject to customary qualifications)), (ii) waivers
of consequential damages and jury trial, and (iii) normal agency, set-off
and sharing language.
|
|
Governing
Law and Submission to Exclusive Jurisdiction:
|
State
of New York.
|
|
Counsel
to Administrative Agent:
|
|
Shearman
& Sterling
LLP.
|
A-21
ANNEX
A
TO
EXHIBIT A
Asset-Based
Revolving Facility
Interest
Rates And Fees
Interest
Rates:
|
Loans
will bear interest, at the option of the Company, at one of the following
rates:
|
|
(i)
the Applicable Margin (as defined below) plus the Administrative
Agent’s fluctuating Base Rate (as defined below), payable monthly in
arrears; or
|
||
(ii)
the Applicable Margin plus the current LIBO
rate as quoted by the Administrative Agent, adjusted for reserve
requirements, if any, and subject to customary change of circumstance
provisions, for interest periods of one, two, three or six months (the
“LIBO Rate”),
payable at the end of the relevant interest period, but in the case of any
interest period of 6 months, also at the end of the third month of such
interest period.
|
||
|
“Applicable Margin”
means the applicable percentage per annum set forth below determined by
reference to (i) for the fiscal quarter in which the Closing Date occurs
and the first full fiscal quarter ending after the Closing Date, Average
Excess Availability as of the Closing Date (after giving effect to all
transactions contemplated to occur on the Closing Date) and (ii) for each
subsequent fiscal quarter, Average Excess Availability for the immediately
preceding fiscal
quarter:
|
Average
|
||||||||
Excess
|
||||||||
Availability
|
LIBO Rate Loan
|
Base Rate Loan
|
||||||
<$100
million
|
3.25 | % | 2.25 | % | ||||
$100
million to $200 million
|
3.00 | % | 2.00 | % | ||||
>$200
million
|
2.75 | % | 1.75 | % |
“Average Excess
Availability” means, for any period the average amount of
Availability for each day during such period.
|
||
|
“Base Rate” means the
highest of (i) Bank of America, N.A.’s “prime rate”, (ii) the Federal
Funds Effective Rate plus 1/2 of 1% and (iii) the one-month LIBO Rate plus
1.00%.
|
A-22
Interest
shall be calculated on the basis of the actual number of days elapsed in a
360-day year.
|
||
Default
Interest:
|
During
the continuance of an event of default (as defined in the Loan Documents),
Loans will bear interest at an additional 2% per
annum.
|
|
Unused
Commitment Fee:
|
From
and after the Closing Date, a non-refundable unused commitment fee at the
rate of 0.50% per
annum will accrue as a percentage of the daily average unused
portion of the Revolving Facility (whether or not then available), payable
monthly in arrears and on the Revolving Facility Termination
Date.
|
|
Letter
of Credit Fees:
|
A
percentage per annum equal to the Applicable Margin for LIBO Rate Loans to
the Revolving Lenders and 0.125% per annum to the
applicable Letter of Credit issuer will accrue on the outstanding undrawn
amount of any Letter of Credit, payable monthly in arrears and computed on
a 360-day basis. In addition, the Borrowers will pay to the
applicable Letter of Credit issuer standard opening, amendment,
presentation, wire and other administration charges applicable to each
Letter of Credit.
|
|
|
During
the continuance of an event of default (as defined in the Loan Documents),
the Letter of Credit Fees will increase by an additional 2% per
annum.
|
A-23
ANNEX
B
TO
EXHIBIT A
Fixed
Charge Coverage Ratio Components
A-24
Exhibit
B
Chemtura
Corporation
Conditions
Precedent to Initial extension of Credit
1.
|
Confirmation
Order: The Bankruptcy Court shall have entered a final
order (the “Confirmation
Order”) confirming a Chapter 11 plan of reorganization for the
Debtors (as amended, supplemented or modified, or with any of the terms or
conditions thereof waived, in each case as described below, the “Plan”) in accordance
with Section 1129 of the Bankruptcy Code, which plan shall be
substantially as set forth in the plan dated July 20, 2010 (together with
all exhibits and other attachments thereto, as such plan and any of the
foregoing shall be amended, modified or supplemented from time to time or
any of the terms or conditions thereof waived (with the consent of the
Initial Lenders with respect to any amendment, modification, supplement or
waiver that is adverse in any material respect to the Initial Lenders (it
being understood that any amendment, modification, supplement or waiver
that would result in an aggregate increase of more than $75 million in (w)
debt of or reinstated liquidated claims against the Company and its
subsidiaries and/or (x) Restricted Payments by the Company and its
subsidiaries and/or (y) amounts (without duplication of amounts in clause
(w)) secured by liens on assets of the Company and its subsidiaries or (z)
investments or loans by the Company and its subsidiaries, in each case
from the respective amounts therefor contemplated under the Plan and/or
Disclosure Statement, each as in effect on the date of the Commitment
Letter, shall be deemed (solely for purposes of this sentence) adverse in
a material respect to the Initial Lenders), as reasonably determined by
the Initial Lenders), the “Plan Documents”), or
otherwise reasonably satisfactory to the Initial Lenders. The
Confirmation Order shall approve the transactions contemplated by
Revolving Facility, shall be in full force and effect and shall not have
been stayed, reversed or vacated, or otherwise amended or modified in any
manner that is materially adverse to the rights or interests of the
Lenders (unless otherwise reasonably satisfactory to the Initial
Lenders). The Plan shall have, or contemporaneous with the
effectiveness of the Revolving Facility and the initial extension of
credit thereunder will, become effective. Further, either (i) the
settlement of certain diacetyl claims as set forth in the settlement
agreement (the “Settlement Agreement”),
a copy of which is annexed to the motion filed with the Bankruptcy Court
on July 29, 2010 (the “Settlement Motion”),
shall have been approved, without material modification (it being
understood that modifications contemplated under and in accordance with
Section 3.3 of the Settlement Agreement are not material), by an order of
the Bankruptcy Court (the “Settlement Order”) and
both (x) the Settlement Agreement shall remain in full force and effect,
without a right of the Company to terminate the Settlement Agreement in
accordance with Section 4.2 thereof and (y) the Settlement Order shall not
be reversed, vacated or stayed or (ii) claims that were the subject of the
Settlement Agreement in an amount and number such that (if such amount and
number of claimants had accepted the Settlement Agreement) the Company
would not have had the right to terminate the Settlement Agreement in
accordance with Section 4.2 thereof, shall have been (A) estimated, for
purposes of creating a cash reserve that will provide the sole source of
recovery for such estimated claims, and/or (B) settled pursuant to
settlement agreements in full force and effect, with such settlements and
estimates described in clauses (A) and (B) being in an aggregate cash
amount substantially consistent with (or less than) the aggregate
settlement amount set forth in the Settlement Agreement and in each case
being approved pursuant to one or more orders of the Bankruptcy Court
(collectively, the “Estimation/Settlement
Orders”), and such Estimation/Settlement Orders shall
not be reversed, vacated or
stayed.
|
B-1
2.
|
Other
Indebtedness. The Lenders shall have received reasonably
satisfactory evidence that the obligations of the Company and each of its
other debtor subsidiaries with respect to the Existing Credit Agreement
have been satisfied and discharged and any collateral in respect thereof
released, except that letters of credit issued under the Existing Credit
Agreement that are supported by cash or letters of credit issued under the
Senior Credit Facility may remain outstanding. Concurrently with the
consummation of the Plan, all pre-existing indebtedness of the Company and
its subsidiaries (other than indebtedness permitted to remain outstanding
under the Plan and the Loan Documents) shall have been repaid,
repurchased, discharged or otherwise satisfied in full, all commitments
relating thereto shall have been terminated, and all liens or security
interests related thereto shall have been terminated or released.
In addition, the Agents shall have received evidence that the
Company has received the net cash proceeds from the issuance of at least
$750 million in principal amount of Term Loans and/or the Senior
Notes. (a) Neither the Term Loans nor the Senior Notes shall (i)
have a stated maturity date earlier or a weighted average life to maturity
shorter than six months after the Revolving Facility Termination Date or
(ii) have any direct restriction on any specific payment of the Revolving
Facility or impose any other direct restriction on the Company or any of
its subsidiaries that by its express terms conflicts with any express term
or provision set forth in the Loan Documents and (b) the priority of any
lien on the Revolving Facility Collateral securing the Term Loans or
Senior Notes shall be junior to the lien securing the Revolving Facility,
as described under the heading “Security and Priority” in Exhibit A, and
shall be subject to an intercreditor agreement described under the heading
“Intercreditor Agreement” in Exhibit A. The terms of the Term Loans,
taken as a whole, shall be substantially consistent with those set forth
on the term sheet attached to the engagement letter dated as of the date
of the Commitment Letter among the Company and the joint book runners or
their affiliates, except to the extent failure to be substantially
consistent is not materially adverse to the interests of the
Lenders. The terms of each of the Senior Notes and the Term Loans
shall not contain any financial covenant with such maximum or minimum
level for any period that (i) is materially adverse to the interests of
the Lenders or (ii) does not take into account drawings under the
Revolving Facility and the forecasts delivered by the Company pursuant to
Section 3(iv) below.1
|
3.
|
Financial
Statements. The Lenders shall have received (i) audited
annual financial statements of the Company and its subsidiaries, on a
consolidated basis, for the year ended December 31, 2009; (ii) interim
unaudited monthly and quarterly financial statements of the Company and
its subsidiaries since December 31, 2009 through the most recently ended
fiscal month ending at least 30 days prior to the Closing Date (or in the
case of quarterly financial statements, through the most recently ended
fiscal quarter ending at least 45 days prior to the Closing Date); (iii)
customary unaudited pro forma financial statements; and (iv) the Company’s
business plan which shall include a financial forecast on a monthly basis
for the first twelve months after the Closing Date and on an annual basis
thereafter through the year 2014, prepared by the Company’s
management.
|
1 After
the definitive terms of the Term Loans and the Senior Notes are provided to the
Initial Lenders, the Initial Lenders shall as soon as practicable, but in any
event prior to the funding of the Senior Notes and the Term Loans, notify the
Company whether or not such definitive terms satisfy the conditions set forth in
the last three sentences of this paragraph.
B-2
4.
|
Minimum
Availability. Availability under the Revolving Facility,
after giving effect to the all borrowings and issuances of letters of
credit on the Closing Date, and to all other transactions contemplated in
paragraph 1 above to occur on the Closing Date, shall be no less than $150
million.
|
5.
|
Payment of
Fees. All costs, fees and expenses (including, without
limitation, legal fees and expenses, title premiums, survey charges and
recording taxes and fees) and other compensation contemplated by the
Commitment Letter and the Fee Letter and payable to the Agents or the
Lenders shall have been paid to the extent
due.
|
6.
|
Customary Closing
Documents. The Administrative Agent shall have received: (i)
customary legal opinions, corporate records and documents from public
officials, lien searches and officer’s certificates; (ii) customary
evidence of authority; (iii) reasonably satisfactory commitments for title
insurance; (iv) a customary solvency certificate from the chief financial
officer of the Company and each Borrower and Guarantor, in form and
substance reasonably satisfactory to the Administrative Agent; (v) a field
exam and audit with respect to inventory and receivables and an appraisal
with respect to inventory of the Borrowers performed by the Administrative
Agent working in conjunction with the administrative agent under the
Existing Credit Agreement (and conducted in accordance with criteria for
eligibility of accounts receivable and inventory substantially similar to
(and in any event no less favorable to the Company than) the Existing
Credit Agreement, except to the extent that making a criterion less
favorable is necessary to protect the interests of the Lenders to
substantially the same degree as the corresponding interests of the
lenders under the Existing Credit Agreement were protected by the
corresponding criterion under the Existing Credit Agreement (it being
acknowledged by the Initial Lenders that after review of the Existing
Credit Agreement they are aware of no such criteria on the date of the
Commitment Letter)); and (vi) all material third party and governmental
consents necessary in connection with the Plan, the material related
transactions or the financing thereof. The Lenders shall have
received all documentation and other information requested by the
Administrative Agent (to the extent requested no later than 3 business
days prior to the Closing Date) as is required by bank regulatory
authorities under applicable “know-your-customer” and anti-money
laundering rules and regulations, including the Patriot Act. The
Loan Documents (including the Revolving Facility Credit Agreement,
guarantees, security agreements and the Intercreditor Agreement) shall
have been duly executed and
delivered.
|
7.
|
Security.
The Collateral Agent, for the benefit of the Revolving Lenders, shall have
been granted perfected first priority security interests in the Revolving
Facility Collateral, and second priority security interests in the Term
Facility Collateral, in each case to the extent described in Exhibit A to
the Commitment Letter in the section titled “Security and Priority”, and
in each case in form and
substance reasonably satisfactory to the
Agents.
|
B-3
8.
|
Material Adverse
Effect. Since December 31, 2009, there shall not have
occurred a material adverse change, or any event or occurrence which could
reasonably be expected to result in a material adverse change, in (i) the
business, condition (financial or otherwise), operations, performance,
properties, contingent liabilities, material agreements or prospects of
the Company, the Borrowers, the Guarantors and their respective
subsidiaries, taken as a whole (it being understood that (a) matters
disclosed prior to the date hereof in connection with the Cases, and (b)
to the extent consistent with the disclosure described in clause (a), the
continuation and prosecution of the Cases, and the filing, solicitation of
approvals and negotiation of the Plan for the Cases, shall not constitute
such a change), (ii) the rights and remedies of the Agents or any Lender
under any Loan Document and (iii) the ability of any Loan Party to perform
its obligations under any Loan Document to which its is a party (any of
the foregoing being a “Material Adverse
Change”). There shall exist no action, suit, investigation,
litigation or proceeding pending in any court or before any arbitrator or
governmental instrumentality that (i) could reasonably be expected to
result in a Material Adverse Change or (ii) restrains, prevents or imposes
or can reasonably be expected to impose conditions materially adverse to
the Lenders upon the Revolving Facility or any of the other material
transactions contemplated
hereby.
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B-4