Exhibit 99.2
SOLUTIA EUROPE SA/NV
AGREEMENT OF UNDERSTANDING AND WAIVERS
This AGREEMENT OF UNDERSTANDING AND WAIVERS (this "AGREEMENT" or the
"AGREEMENT OF UNDERSTANDING") is dated as of 9 November 2004 and entered
into by and among Solutia Europe SA/NV, a societe anonyme/naamloze
vennootschap (limited liability company) organized under the laws of Belgium
and registered in the Legal Entities Register under number 0460.474.440 (the
"ISSUER") and the Noteholders of the Notes party hereto (individually, a
consenting Noteholder and collectively the "CONSENTING NOTEHOLDERS") and is
made with reference to, among other things, that certain Fiscal Agency
Agreement (the "FISCAL AGENCY AGREEMENT") dated 11 February 2004 and entered
into by and among the Issuer, Kredietbank S.A. Luxembourgeoise, as fiscal
agent and paying agent (the "FISCAL AGENT") and KBC Bank NV as principal
paying agent (the "PRINCIPAL PAYING AGENT"), the Notes referred to herein,
that certain Collateral Agency Agreement referred to herein (the "COLLATERAL
AGENCY AGREEMENT") dated 11 February 2004 and entered into by and among the
Issuer, the Subsidiary Guarantors (as defined herein), the Collateral Agent
appointed pursuant thereto (the "COLLATERAL AGENT") and the Noteholders
party thereto and Amendment No. 1 to the Fiscal Agency Agreement and Terms
and Conditions of Notes (the "AMENDMENT") dated 9 November 2004 and entered
into by and among the Issuer, the Fiscal Agent, the Principal Paying Agent
and the Collateral Agent, a copy of which is attached hereto as EXHIBIT A.
Capitalized terms used herein but not otherwise defined herein shall have
the meaning set forth in the terms and conditions of the Notes, as amended
by the Amendment (the "TERMS AND CONDITIONS OF NOTES").
I. RECITALS
WHEREAS, on 11 February 2000, the Issuer agreed to issue euro 200,000,000
6.25 percent Notes due 2005 (the "ORIGINAL NOTES") pursuant to a
subscription agreement dated 11 February 2000, and the Paying Agents,
subject to the terms and conditions set forth in a fiscal agency agreement
dated 11 February 2000, agreed to act as the fiscal agent, paying agent and
principal paying agent in respect of the Original Notes.
WHEREAS, the Issuer agreed to amend and restate the Original Notes as euro
200,000,000 10.00 percent Notes due 2008 together with the Terms and
Conditions of Notes annexed thereto and incorporated by reference therein in
accordance with a meeting of the holders of the Original Notes held on 29
January 2004 pursuant to article 568 of the Belgian Companies Code.
WHEREAS, in accordance with Clause 13 and Schedule 5 to the Fiscal Agency
Agreement and at the direction of the Issuer, a meeting of the holders of
the Notes was held at the offices of Xxxxx & Xxxxx LLP at Xxxxxxxxxxxx 000X,
0000 Xxxxxxxx, Xxxxxxx on 8 November 2004, in accordance with article 568 of
the Belgian Company Code (the "THIRD NOTEHOLDERS' MEETING") to consider the
resolutions set forth in the convening notice (the "THIRD NOTEHOLDERS'
MEETING NOTICE") sent and published by or on behalf of the Issuer.
WHEREAS, a quorum of two or more persons holding or representing at least 50
percent of the aggregate principal amount of the Notes Outstanding was
present at the Third Noteholders' Meeting, and holders holding or
representing at least 75 percent of the aggregate principal
1 Agreement of Understanding
amount of the Notes Outstanding present or represented at the Third
Noteholders' Meeting agreed at the Third Noteholders' Meeting to adopt the
resolutions set forth in the minutes of the Third Noteholders' Meeting
attached as EXHIBIT B hereto (the "THIRD NOTEHOLDERS' MEETING MINUTES") and,
subject to the provisions set forth in the Third Noteholders' Meeting
Minutes, to consummate the transactions contemplated by the Amendment,
including, without limitation, the amendments providing for the Pharma Sale
and the application of at least 95 per cent of the Net Cash Proceeds thereof
to redeem the Notes, all as more specifically set forth therein.
WHEREAS, the Issuer, the Requisite Noteholders and the Collateral Agent have
approved forms of release, amendment and termination agreements to be
executed upon the satisfaction of the conditions set forth in Section
8(c)(D)(1) of the Terms and Conditions of Notes, attached hereto as
ATTACHMENTS 2 THROUGH 12 and have approved the form of amendments and
waivers to be executed upon the satisfaction of the conditions set forth in
Section 8(c)(D)(2) of the Terms and Conditions of Notes, attached hereto as
ATTACHMENTS 13 AND 14.
WHEREAS, the Board of Directors of the Issuer has approved on behalf of the
Issuer the resolutions approved by the Third Noteholders' Meeting and the
consummation of the transactions contemplated by the resolutions approved by
the Third Noteholders' Meeting and the Amendment.
WHEREAS, the Issuer will submit the Dutch and French versions of the
resolutions of the Third Noteholders' Meeting to the registry of the
commercial court for publication in the Belgian Official Gazette (such
notice the "ISSUER PUBLICATION NOTICE") and cause the resolutions of the
Third Noteholders' Meeting to be published in accordance with the laws of
Belgium.
WHEREAS, the Consenting Noteholders hereby instruct and direct the Committee
to undertake the actions contemplated by the resolutions approved by the
Third Noteholders' Meeting and the Agreement.
NOW, THEREFORE, for due and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
II. GENERAL MATTERS
1. The Issuer hereby agrees to take such action and execute, acknowledge and
deliver, at its sole cost and expense, such agreements, instruments or other
documents contemplated by, or reasonably requested by the Collateral Agent
or the Committee in order to effectuate the terms of the Amendment and this
Agreement.
2. The Issuer agrees to take all action necessary or desirable to maintain
the listing of the Notes with the Luxembourg Stock Exchange.
3. The Consenting Noteholders hereby confirm that all conditions precedent
set forth in item 12 of the Third Noteholders' Meeting Notice have been
satisfied or waived by the Committee.
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4. The Consenting Noteholders hereby confirm that the release and
termination documentation in substantially the forms annexed hereto as
ATTACHMENTS 1 THROUGH 14 are satisfactory, and the Committee hereby confirms
the same.
5. The Consenting Noteholders hereby instruct and direct the Committee to
undertake the actions contemplated by the Third Noteholders' Meeting
Minutes, the Amendment and this Agreement.
III. CERTAIN CONDITIONS AND COVENANTS
1. The Issuer covenants to perform the following obligations on or prior to
the dates specified herein:
(a) Supplement to the Offering Circular. The Issuer shall prepare and
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promptly file with the Luxembourg Stock Exchange a Supplement to the
Offering Circular dated 11 February 2000, as supplemented by the Supplement
dated 11 March, 2004.
(b) Publication Notice. As soon as practicable after the date of the
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execution of the Amendment, but in any event on or prior to the date which
is three weeks after the date of execution of this Agreement (or such later
date approved by the Committee) the Issuer shall prepare the Issuer
Publication Notice and submit it to the registry of the commercial court for
publication in the Belgian Official Gazette. The Issuer agrees to use
reasonable best efforts to have the Issuer Publication Notice published in
the Belgian Official Gazette within a reasonable period following the date
of submission to the registry of the commercial court, and will promptly
inform the Committee or its counsel of such publication in the Belgian
Official Gazette.
(c) Payment of Fees. The Issuer shall promptly pay all reasonable fees,
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costs and expenses of the Committee and their U.S., Swiss and Belgian
counsel, accountants, advisors and consultants and pay all translation and
publication costs for the Issuer Publication Notice.
(d) Opinions. As soon as practicable after the date hereof, but in any event
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prior to the date which is one week after the date of the execution of the
Amendment (or such later date approved by the Committee), the Issuer shall
cause to be delivered (A) an opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP, United
States counsel to the Credit Parties, in a form agreed upon by the Committee
and (B) an opinion of Xxxxx & Overy LLP, Belgium counsel to the Credit
Parties, in a form agreed upon by the Committee.
(e) SEC Filings. As soon as practicable after the date of the execution of
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the Amendment, but in any event prior to the date which is one week after
the date of the execution of the Amendment (or such later date approved by
the Committee), the Issuer shall cause to be delivered a copy of the
Parent's Form 8-K as filed with the SEC which includes a general description
of the Pharma Sale, the Third Noteholders' Meeting and the transactions
contemplated thereby and by the Amendment and attaching thereto the
Amendment, in form and substance reasonably acceptable to the Committee. If
the Credit Parties undertake the Pharma Sale or terminate their efforts to
consummate the Pharma Sale, the Issuer shall, at the request of any member
of the Committee, cause to be delivered, as soon as practicable after such
request, a
3 Agreement of Understanding
copy of the Parent's Form 8-K as filed with the SEC which includes such
matters as may be mutually agreed upon by the Issuer and the Committee.
(f) Approvals. The Issuer shall cause to be delivered all consents,
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authorizations and approvals of, and filings and registrations with any
Governmental Authority or other Person required in connection with the
transactions contemplated by this Agreement and the Amendment and the
consummation of the transactions contemplated hereby and thereby.
(g) Proceedings; Receipt of Documents. All proceedings in connection with
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the other transactions contemplated by this Agreement and the Amendment, and
all documents incidental hereto and thereto, shall be satisfactory to the
Committee and its counsel in accordance with the decisions of the Third
Noteholders' Meeting, and the Committee and such counsel shall have received
all such information and such counterpart originals or certified or other
copies of such documents as the Committee or such counsel may reasonably
request; provided, however, that it is understood that this clause (g) does
not contemplate that the Committee will review or approve any of the
definitive documentation of the Pharma Sale itself.
All deliveries set forth above shall be satisfactory to the Committee and
its counsel in accordance with the decisions of the Third Noteholders'
Meeting and, to the extent applicable, the Collateral Agent. The Committee
shall have the right to waive any requirement set forth herein.
2. The Committee covenants to perform the following obligation on or prior
to the date specified herein:
(a) CPFilms Inventory Threshold. As soon as practicable after the date
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hereof, the Committee shall instruct the Collateral Agent to amend the
security transfer agreement dated 4th March 2004 and entered into between
CPFilms Germany as transferor and KBC Bank NV as transferee (the "SECURITY
TRANSFER AGREEMENT") to delete section 13(a) thereto in its entirety and to
substitute the following:
"(a) to inform the Transferee promptly (unverzuglich) of any
subsequent changes which impacts negatively on the average
aggregate monthly value of the Security Assets, provided that
such change of the average aggregate monthly value of the
Security Assets exceeds Euro 350,000, with respect to the
total number of Security Assets, excluding values attributed
to exchange risks and depreciation of the Security Assets."
IV. REPRESENTATIONS AND WARRANTIES
The Issuer represents and warrants to the Collateral Agent, the
Committee and each Noteholder as of the date hereof as follows: (i) this
Agreement and the Amendment have been duly authorized, executed and
delivered by the Issuer and constitute legal, valid and binding obligations
of the Issuer, enforceable against the Issuer in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similarly laws affecting the enforcement
of creditors' rights generally and general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity or at
law), (ii), the execution, delivery and performance by the Issuer of this
Agreement and the Amendment, do not and will not contravene its charter or
by-laws, or other organizational
4 Agreement of Understanding
documents, as applicable, or any applicable law or any contractual
restriction binding on or otherwise affecting it or any of its properties,
and do not and will not result in or require the creation of any Lien upon
or with respect to any of its properties, and do not and will not result in
any default, noncompliance, suspension, revocation, impairment, forfeiture
or nonrenewal of any permit, license, authorization or approval applicable
to its operations or any of its properties, (iii) no authorization or
approval or other action by, and no notice to or filing with, any
Governmental Authority is required in connection with the due execution,
delivery and performance by the Issuer of this Agreement or the Amendment,
(iv) after giving effect to the Amendment and the transactions contemplated
thereby, no Default or Event of Default has occurred which is continuing,
and (v) after giving effect to the Amendment and the transactions
contemplated thereby, each of the representations made by each Credit Party
in each Credit Document is true and correct in all material respects (or, to
the extent that such representation specifically relates to an earlier date,
such representation was true, correct and complete in all material respects
on and as of such earlier date).
V. WAIVERS
The Committee, on behalf of the Consenting Noteholders constituting
sufficient numbers to be deemed Requisite Noteholders, hereby agree to the
following waivers:
(a) Antwerp. The Issuer shall be deemed to have satisfied the requirements
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of Section 13.8(b) of the Mortgage Mandate (hypothecaire volmacht) dated 11
February 2004 made by the Issuer in favor of the Collateral Agent (the
"MORTGAGE MANDATE") which requires the Issuer to use its best efforts to
obtain the consent of the Gemeentelijk Havenbedrijf (the "Port Authority",
i.e. the public authority responsible for the management of the Antwerp
port) to the Mortgage Mandate and to the granting of a mortgage in relation
to the Antwerp Property, it being understood that the Issuer shall have no
further obligation with respect to the actions contemplated thereby.
(b) Issuer Capital Stock. Any past or future breach, Default or Event of
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Default arising under Section 9(f) of the Terms and Conditions of Notes
relating to the grant and creation of a legal, valid and enforceable
security interest in the Capital Stock owned by the Issuer in itself or any
failure to disclose such Lien pursuant to any Credit Document is hereby
waived.
(c) Attempt to Sell Capital Stock of Amcis or Carbogen. In no event shall
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any attempt by the Issuer or any other Credit Party to market, sell or
otherwise dispose of the Capital Stock of Amcis or Carbogen constitute a
breach under Section 5.4(d) of the Share Pledge Agreements dated 11 February
2004 made by the Issuer in favor of the Collateral Agent providing for the
pledge by the Issuer of the Capital Stock of Amcis and Carbogen (the "SWISS
PLEDGE AGREEMENTS") or constitute an Event of Default hereunder, and any
past breach, Default or Event of Default relating to the marketing of or
preparing to sell the Capital Stock of Amcis or Carbogen is hereby waived.
(d) CPFilms Germany Inventory Threshold. Any past breach, Default or Event
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of Default arising relating to CPFilms Germany's failure to comply with
section 13(a) of the Security Transfer Agreement is hereby waived.
5 Agreement of Understanding
(e) Carbogen Patents. Any past breach, Default or Event of Default relating
to the issuing of any patents in the name of Solutia that should have been
issued in the name of Carbogen is hereby waived.
VI. MISCELLANEOUS
1. HEADINGS. Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose or be given any substantive effect.
2. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to
the benefit of the Parties and their respective successors, assigns, heirs,
executors, administrators and representatives; provided, however, that the
rights and obligations of the Issuer may not be assigned without the written
consent of all other Parties.
3. COUNTERPARTS; EFFECTIVENESS. This Agreement and the Amendment may be
executed in any number of counterparts and by different parties hereto and
thereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each party hereto. The Amendment shall become
effective after the publication of the Issuer Publication Notice in the
Belgian Official Gazette and upon the execution of a counterpart thereof by
each party thereto.
4. SEVERABILITY. In case any provision in or obligation under this Agreement
or the Amendment shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. In case
of any such illegality, invalidity or unenforceability, the parties shall
negotiate in good faith with a view to agree on the replacement of such
provision by a provision which is legal, valid and enforceable and which is
to the extent practicable in accordance with the intents and purposes of
this Agreement and the Amendment and which in economic effect comes as close
as practicable to the provision being replaced.
5. ENGLISH LANGUAGE. This Agreement and the Amendment are executed in
English only, and no translation hereof and thereof shall be binding on the
parties hereto or consulted in order to interpret this Agreement or the
Amendment.
6. GOVERNING LAW.
THIS AGREEMENT AND THE AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
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STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
7. ACKNOWLEDGEMENT. The parties hereto agree that Xxxxx & Xxxxx LLP, Lawfort
and their respective partners and other lawyers shall have no liability or
responsibility whatsoever in connection with the translation of the Third
Noteholders' Meeting Minutes, including the Amendment.
7 Agreement of Understanding
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officers as of
the date first above written.
SOLUTIA EUROPE SA/NV
By: /s/ Xxxxxxx Xxxxxxxx
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Title: Proxy Holder
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By execution below, the Noteholders identified below consent to this
Agreement and the transactions contemplated hereby:
DB DISTRESSED OPPORTUNITIES FUND, L.P.
DB DISTRESSED OPPORTUNITIES FUND, LTD.
SPHINX DISTRESSED FUND SPC
SOUTH DAKOTA INVESTMENT COUNCIL
HFR ASSET MANAGEMENT, LLC
LIGHTHOUSE MULTI-STRATEGY MASTER FUND, L.P.
THE OPPORTUNITY FUND LLC
POST TOTAL RETURN FUND, L.P.
POST HIGH YIELD, L.P.
POST BALANCED FUND, L.P.
POST OPPORTUNITY FUND, L.P.
MW POST PORTFOLIO FUND LTD.
MW POST OPPORTUNITY OFFSHORE FUND, LTD.
MW POST LONG/SHORT OPPORTUNITY FUND, LTD.
GUGGENHEIM PORTFOLIO COMPANY XXX, LLC
MW POST TRADITIONAL HIGH YIELD FUND, L.P.
By: POST ADVISORY GROUP, LLC
By: /s/ Xxxxxxxx X. Post
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Xxxxxxxx X. Post
Title: Chief Executive Officer
FARALLON CAPITAL INSTITUTIONAL PARTNERS III, L.P.
FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P.
FARALLON CAPITAL PARTNERS, L.P.
TINICUM PARTNERS, L.P.
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P.
By: FARALLON PARTNERS, L.L.C.
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Title: Attorney in Fact
FARALLON CAPITAL OFFSHORE INVESTORS, INC.
By: FARALLON CAPITAL MANAGEMENT, L.L.C.
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Title: Attorney in Fact
WATERSHED CAPITAL PARTNERS, L.P.
WATERSHED CAPITAL INSTITUTIONAL PARTNERS, L.P.
By: WS PARTNERS, L.L.C.
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Title: Senior Managing Member
WATERSHED CAPITAL PARTNERS (OFFSHORE), LTD.
By: WATERSHED ASSET MANAGEMENT, L.L.C.
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Title: Senior Managing Member
CASPIAN CAPITAL PARTNERS, L.P.
MARINER OPPORTUNITIES FUND, LP
MARINER LDC
By: MARINER INVESTMENT GROUP, INC.
By: /s/ Xxxxx X'Xxxxxx
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Xxxxx X'Xxxxxx
Title: General Counsel and Assistant
Secretary
TRILOGY PORTFOLIO COMPANY LLC
By: TRILOGY CAPITAL, LLC
By: /s/ Xxxxxxxx Xxxxxxxxxx
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Xxxxxxxx Xxxxxxxxxx
Title: Managing Member
