Exhibit 10.26c
EXECUTION COPY
WAIVER AND AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT
Dated as of December 26, 2002
WAIVER AND AMENDMENT NO. 1 TO THE AMENDED AND RESTATED FIVE-YEAR
CREDIT AGREEMENT (this "Amendment") among POLYONE CORPORATION, an Ohio
corporation (the "Company"), the banks, financial institutions and other
institutional lenders parties to the Credit Agreement referred to below
(collectively, the "Lenders") and CITICORP USA, INC., as administrative agent
(the "Agent") for the Lenders.
PRELIMINARY STATEMENTS:
(1) The Company, the Lenders and the Agent have entered into a
Five-Year Credit Agreement dated as of October 30, 2000, amended and restated as
of March 28, 2002 (such Credit Agreement, as so modified, the "Credit
Agreement"). Capitalized terms not otherwise defined in this Amendment have the
same meanings as specified in the Credit Agreement.
(2) The Company and the Lenders have agreed to amend the Credit
Agreement and the other Loan Documents (as hereinafter defined) as hereinafter
set forth.
SECTION 1. Waiver. Subject to the satisfaction of the conditions
precedent set forth in Section 3, the Lenders hereby waive compliance with
Sections 5.03(a) and (b) of the Credit Agreement for the fiscal quarter ended
December 31, 2002.
SECTION 2. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 3, hereby amended for the period from
the date hereof through June 30, 2003 (the "Amendment Termination Date") as
follows:
(a) The definition of "Applicable Margin" in Section 1.01 is amended by
deleting the figures "2.250%" and "3.100%" set opposite Performance Level VIII
in the grid and substituting therefor the figures "2.650%" and "3.500%",
respectively.
(b) The definition of "Applicable Percentage" in Section 1.01 is amended by
deleting the figure "0.400%" set opposite Performance Level VIII in the grid and
substituting therefor the figure "0.500%".
(c) The definition of "EBITDA" in Section 1.01 is amended (i) by deleting
the word "and" immediately before clause (f) and substituting a comma therefor
and (ii) by inserting immediately before the phrase "in each case determined in
accordance with GAAP for such period" the phrase "and (g) extraordinary or
unusual losses deducted in calculating net income resulting from business
reorganizations in 2003 to the extent that the cash payments for losses
described in this clause (g) do not exceed $15,000,000 for the fiscal quarter
ending March 31, 2003 and do not exceed $25,000,000 for the period from January
1, 2003 through June 30, 2003".
(d) Section 4.01 is amended by adding to the end thereof a new subsection
(p) to read as follows:
(p) The Company is, individually and together with its Subsidiaries,
Solvent. "Solvent" means, with respect to any Person on a particular date,
that on such date (i) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (ii) the present fair
salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts
as they become absolute and matured, (iii) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay such debts and liabilities as they mature and (iv)
such Person is not engaged in business or a transaction, and is not about
to engage in business or a transaction, for which such Person's property
would constitute an unreasonably small capital. The amount of contingent
liabilities at any time shall be computed as the amount that, in the light
of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
(e) Section 5.01(i)(xi) is amended by (i) deleting the reference "Section
5.03(c)" and substituting therefor the reference "Section 5.03" and (ii)
deleting the punctuation "." at the end thereof and substituting therefor the
punctuation ";" and adding a new clause (xii) to read as follows:
(xii) as soon as available and in any event within 30 days after the
end of each calendar month other than December, and within 45 days after
the end of each December, the Consolidated balance sheet of the Company and
its Subsidiaries as of the end of such month and Consolidated statements of
income and cash flows of the Company and its Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end
of such month.
(f) Section 5.02(b) is amended by deleting the phrase "except that any
Subsidiary of the Company may merge or consolidate with or into, or dispose of
assets to, any other Subsidiary of the Company" and substituting therefor the
phrase "except that any Subsidiary Guarantor may merge or consolidate with or
into, or dispose of assets to, any other Subsidiary Guarantor and any Subsidiary
(other than a Subsidiary Guarantor) may merge or consolidate with or into, or
dispose of assets to, any other Subsidiary of the Company".
(g) Section 5.02(f) is amended (i) by adding to the end of clause (i) a
proviso to read "provided, that additional investment in wholly owned
Subsidiaries organized outside of the United States shall be made only by other
Subsidiaries organized outside of the United States for the period from January
1, 2003 through June 30, 2003" and (ii) clause (iv) is amended by deleting the
phrase "acquisitions of Techmer, PM, LLC and SoFteR S.p.a. for an aggregate
amount not to exceed $37,000,000" and substituting therefor the phrase "the
contribution of up to $10,000,000 to a joint venture to consist of the
polyurethane system businesses of the Company and Bayer Corporation".
(h) Section 5.02(g) is amended (i) by deleting the phrase "At any time
after December 31, 2001 that the Borrowed Debt/EBITDA Ratio is greater than or
equal to 4.00:1 and until the Borrowed Debt/EBITDA Ratio is less than or equal
to 3.50:1 for two consecutive fiscal quarters," and (ii) by deleting clauses
(i)(B) and (C) and substituting therefor the phrase "intentionally omitted".
(i) Section 5.02(i) is amended in full to read as follows:
(i) Capital Expenditures. Make or permit any of its Subsidiaries to
make, Capital Expenditures that would cause the aggregate of all such
Capital Expenditures made by the
Company and its Subsidiaries in any fiscal quarter to exceed $15,000,000
plus Investments permitted pursuant to Section 5.02(f)(iv), provided that
the aggregate amount of Capital Expenditures made during the period from
January 1, 2003 through June 30, 2003 shall not exceed $25,000,000.
(j) The following new sections are added to the end of Section 5.02:
(k) Prepayments, Etc., of Debt. Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or
make any payment in violation of any subordination terms of, any Debt,
except (i) the prepayment of the Advances in accordance with the terms of
this Agreement, (ii) the prepayment of loans under working capital
revolving lines of credit, (iii) the prepayment of the Company's 9 3/8%
Senior Notes due 2003 with the proceeds of Debt other than the Advances and
(iv) regularly scheduled or required repayments or redemptions of Debt, or
amend, modify or change in any manner any term or condition of any Debt
other than the Advances, or permit any of its Subsidiaries to do any of the
foregoing other than to prepay any Debt payable to the Company.
(l) Partnerships, Etc. Become a general partner in any general or
limited partnership or joint venture, or permit any of its Subsidiaries to
do so, other than any Subsidiary the sole assets of which consist of its
interest in such partnership or joint venture or as permitted pursuant to
Section 5.02(f)(iv).
(k) Section 5.03(a) is amended in full to read as follows:
(a) Interest Coverage Ratio. Maintain an Interest Coverage Ratio
during each fiscal quarter set forth below of not less than the ratio set
opposite such fiscal period:
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Period Ratio
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January 1, 2003 through
June 30, 2003 1.90:1
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July 1, 2003 and thereafter 4.00:1
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(l) Section 5.03(b) is amended in full to read as follows:
(b) Borrowed Debt/EBITDA Ratio. Maintain a Borrowed Debt/EBITDA Ratio
during each fiscal quarter set forth below of not more than the ratio set
opposite such fiscal period:
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Period Ratio
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From January 1, 2003
through June 30, 2003 6.00 to 1
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From July 1, 2003 through
September 30, 2003 4.00 to 1
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From October 1, 2003 and
thereafter 3.50 to 1
----------------------------------------------------
(m) Exhibit B-1 is amended by deleting the period at the end of clause (B),
substituting therefor the word "; and" and adding immediately above the
signature block a new clause (C) to read as follows:
(C) the proceeds of the Proposed Revolving Credit Borrowing will
be used to fund known or anticipated cash requirements of the Company
and its Subsidiaries in the ordinary course of their respective
businesses.
(n) Exhibit B-2 is amended by deleting the period at the end of clause (d),
substituting therefor the word "; and" and adding immediately above the
signature block a new clause (e) to read as follows:
(e) the proceeds of the Proposed Competitive Bid Borrowing will
be used to fund known or anticipated cash requirements of the Company
and its Subsidiaries in the ordinary course of their respective
businesses.
SECTION 3. Conditions to Effectiveness. This Amendment shall become
effective as of the date first above written when, and only when, on or before
December 26, 2002 the Agent shall have received (a) an amendment fee, for the
account of the Lenders approving this Amendment in an amount equal to 0.35% of
their respective Commitments, (b) counterparts of this Amendment executed by the
Company and the Required Lenders or, as to any of the Lenders, advice
satisfactory to the Agent that such Lender has executed this Amendment, (c) a
notice from the Company pursuant to Section 2.05 of the Credit Agreement, to
reduce ratably the Commitments of the Lenders to an aggregate amount of not more
than $125,000,000 and (d) in sufficient copies for each Lender, in form and
substance satisfactory to the Agent:
(i) Certified copies of the resolutions of the Board of Directors of
the Company evidencing approval of this Amendment.
(ii) A certificate of the Secretary or an Assistant Secretary of the
Company certifying the names and true signatures of the officers of the
Company authorized to sign this Amendment.
(iii) A favorable opinion of senior legal counsel for the Company in
substantially the form of Exhibit F-1 to the Credit Agreement, with such
changes as are appropriate to address the Credit Agreement as amended
hereby.
This Amendment is subject to the provisions of Section 9.01 of the
Credit Agreement.
SECTION 4. Representations and Warranties of the Company. The Company
represents and warrants as follows:
(a) The representations and warranties contained in the Credit
Agreement, as amended hereby, are true and correct in all material respects at
and as of the date of this Amendment.
(b) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction indicated in the recital of
parties to this Amendment.
(c) The execution, delivery and performance by the Company of this
Amendment, the Credit Agreement and the Notes, as amended hereby, and the
consummation of the transactions contemplated hereby are within the Company's
corporate powers, have been duly authorized by all
necessary corporate action and do not contravene (i) the Company's charter or
by-laws or (ii) law or any contractual restriction binding on or affecting the
Company.
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other third
party is required for the due execution, delivery or performance by the Company
of this Amendment or the Credit Agreement and the Notes, as amended hereby.
(e) This Amendment has been duly executed and delivered by the Company
and is the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with its terms.
(f) To the best of the Company's knowledge, there is no pending or
threatened action, suit, investigation, litigation or proceeding, including,
without limitation, any Environmental Action, affecting the Company or any of
its Subsidiaries before any court, governmental agency or arbitrator that (i)
could be reasonably likely to have a Material Adverse Effect (other than the
Disclosed Litigation) or (ii) purports to affect the legality, validity or
enforceability of this Amendment or the Credit Agreement and the Notes to be
delivered by the Company, as amended hereby, and there has been no adverse
change in the status, or financial effect on the Company or any of its
Subsidiaries, of the Disclosed Litigation from that described on Schedule
3.01(b) to the Credit Agreement.
(g) After giving effect to this Amendment, no Default has occurred and
is continuing.
SECTION 5. Reference to and Effect on the Credit Agreement.
(a) On and after the effectiveness of this Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of
like import referring to the Credit Agreement and each reference to the Credit
Agreement in each other Loan Document, shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement, as specifically amended by this Amendment,
is and shall continue to be in full force and effect and is hereby in all
respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Agent under the Credit Agreement, nor
constitute a waiver of any provision of the Credit Agreement.
(d) On the Amendment Termination Date, without any further action by
the Agent and the Lenders, all of the terms and provisions set forth in the Loan
Documents with respect to Defaults thereunder that are waived or otherwise
remedied hereunder (other than in respect of the waiver contained in Section 1
of this Amendment) and not cured prior to the Amendment Termination Date shall
have the same force and effect as if this Amendment had not been entered into by
the parties hereto, and the Agent and the Lenders shall have all of the rights
and remedies afforded to them under the Loan documents with respect to such
Defaults as though no waiver or amendment had been granted by them hereunder.
SECTION 6. Costs and Expenses. The Company agrees to pay on demand all
costs and expenses of the Agent in connection with the preparation, execution,
delivery and administration, modification and amendment of this Amendment and
the other instruments and documents to be delivered hereunder (including,
without limitation, title insurance premiums and search fees and the reasonable
fees
and expenses of counsel for the Agent) in accordance with the terms of Section
9.04 of the Credit Agreement.
SECTION 7. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 8. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
POLYONE CORPORATION
By
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Title:
CITICORP USA, INC.,
as Agent and as Lender
By
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Title:
BANK ONE, NA
(as successor by merger with Bank One,
Michigan)
By
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Title:
DEUTSCHE BANK AG NEW YORK BRANCH
By
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Title:
By
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Title:
KEYBANK NATIONAL ASSOCIATION
By
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Title:
ABN AMRO BANK, N.V.
By
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Title:
By
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Title:
BANK OF AMERICA, N.A.
By
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Title:
COMERICA BANK
By
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Title:
MELLON BANK, N.A.
By
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Title:
JPMORGAN CHASE BANK
By
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Title:
NATIONAL CITY BANK
By
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Title:
SCOTIABANC, INC.
By
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Title:
THE BANK OF NEW YORK
By
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Title:
CONSENT
Dated as of December 26, 2002
Each of the undersigned, as a Subsidiary Guarantor under the Subsidiary
Guaranty dated as of January 25, 2002 (such Guaranty as amended and supplemented
or otherwise modified through the date hereof) in favor of the Secured Parties
under the Credit Agreement referred to in the foregoing Amendment, hereby
consents to such Amendment and hereby confirms and agrees that (i) each Loan
Document to which it is a party is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, except that on and
after the effectiveness of such Amendment, each reference in the Loan Documents
to the "Credit Agreement", "thereunder", "thereof" or words of like import shall
mean and be reference to the Credit Agreement as amended by such Amendment and
(ii) the Collateral described in each Loan Document to which such Guarantor is a
party do, and shall continue to, secure the payment of all the Secured
Obligations (in each case as defined therein).
POLYONE DISTRIBUTION COMPANY
By
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Title:
POLYONE ENGINEERED FILMS, INC.
By
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Title:
POLYONE DIAGNOSTICS, INC.
By
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Title:
LINCOLN & SOUTHERN RAILROAD CO.
By
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Title:
