Exhibit 99.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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:
IN RE : Chapter 11
:
SOLUTIA INC., ET AL., : Case No. 03-17949 (PCB)
:
Debtors. : (Jointly Administered)
:
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THIS PLAN APPLIES TO:
X All Debtors Axio Research Corporation
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Solutia Inc. Solutia Investments, LLC
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Solutia Business Enterprises Inc. Beamer Road Management Company
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Solutia Systems, Inc. Monchem, Inc.
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Solutia Overseas, Inc. Solutia Inter-America, Inc.
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CPFilms Inc. Solutia International Holding, LLC
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Solutia Management Company, Inc. Solutia Taiwan, Inc.
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Monchem International, Inc. Solutia Greater China, Inc.
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DEBTORS' JOINT PLAN OF REORGANIZATION
-------------------------------------
KIRKLAND & ELLIS LLP
Citigroup Center
153 East 53rd Street
New York, New York 10022-4611
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
Richard M. Cieri (RC 6062)
Jonathan S. Henes (JH 1979)
Counsel to the Debtors and Debtors
in Possession
Dated: February 14, 2006
TABLE OF CONTENTS
Page
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INTRODUCTION......................................................................................................1
ARTICLE I DEFINED TERMS, RULES OF INTERPRETATION AND COMPUTATION OF TIME..........................................1
A. Defined Terms...................................................................................1
1. "Abernathy Settlement Agreement".......................................................1
2. "Actual Amount"........................................................................1
3. "Additional Shares Numerator"..........................................................1
4. "Adjusted GUC Recovery"................................................................1
5. "Administrative Expense Claim".........................................................1
6. "Administrative Expense Claim Bar Date"................................................2
7. "Affiliate"............................................................................2
8. "Allowed Claim"........................................................................2
9. "Allowed . . . Claim"..................................................................2
10. "Anniston Global Settlement Agreement".................................................2
11. "Anniston Litigation Settlement Agreements"............................................2
12. "Anniston Side Letter Agreement".......................................................2
13. "Avoidance Actions"....................................................................2
14. "Axio Claims"..........................................................................2
15. "Axio Liquidation Sale"................................................................2
16. "Backstop Fee".........................................................................2
17. "Backstop Fee Order"...................................................................3
18. "Ballot"...............................................................................3
19. "Bankruptcy Code"......................................................................3
20. "Bankruptcy Court".....................................................................3
21. "Bankruptcy Rules".....................................................................3
22. "Bar Date".............................................................................3
23. "Bar Date Order".......................................................................3
24. "Base GUC Recovery"....................................................................3
25. "Business Day".........................................................................3
26. "Cash".................................................................................3
27. "Causes of Action".....................................................................3
28. "CERCLA"...............................................................................3
29. "Chapter 11 Cases".....................................................................3
30. "Chemicals Assets".....................................................................4
31. "Chemicals Liabilities"................................................................4
32. "Claim"................................................................................4
33. "Claims Adjustment Value"..............................................................4
34. "Claims Difference"....................................................................4
35. "Claims Objection Deadline"............................................................4
36. "Class"................................................................................4
37. "Commercial and Operating Agreements"..................................................4
38. "Confirmation".........................................................................4
39. "Confirmation Date"....................................................................4
40. "Confirmation Hearing".................................................................4
41. "Confirmation Order"...................................................................4
42. "Consummation".........................................................................4
43. "Convenience Claims"...................................................................4
44. "Court Approved Equity Value"..........................................................4
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45. "Creditors' Committee".................................................................4
46. "Debtor Intercompany Claim"............................................................4
47. "DIP Agreement"........................................................................5
48. "DIP Claims"...........................................................................5
49. "DIP Lender"...........................................................................5
50. "Directors' and Officer Indemnity Claims"..............................................5
51. "Disclosure Statement Order"...........................................................5
52. "Disputed Claim".......................................................................5
53. "Disputed General Unsecured Claim".....................................................5
54. "Distribution".........................................................................5
55. "Distribution Agreement"...............................................................5
56. "Distribution Date"....................................................................5
57. "Distribution Record Date".............................................................5
58. "Effective Date".......................................................................5
59. "Eligible Holder"......................................................................5
60. "Entity"...............................................................................5
61. "Environmental Liability"..............................................................5
62. "Environmental Liability Costs"........................................................5
63. "Equity Committee".....................................................................5
64. "Equity Committee Adversary Proceeding"................................................6
65. "Equity Interest"......................................................................6
66. "ERISA"................................................................................6
67. "Estate" and, collectively, "Estates"..................................................6
68. "Exchange Act".........................................................................6
69. "Executory Contract and/or Unexpired Lease"............................................6
70. "Exit Financing Facility"..............................................................6
71. "Exit Financing Facility Agent Bank"...................................................6
72. "Exit Financing Facility Commitment Letter"............................................6
73. "Final Order"..........................................................................6
74. "Formalin Purchase Agreement"..........................................................6
75. "Funding Co"...........................................................................6
76. "Funding Co Charter"...................................................................6
77. "General Unsecured Claims".............................................................6
78. "General Unsecured Claims Reserve".....................................................7
79. "General Unsecured Claims Pool Adjustment".............................................7
80. "Global Settlement"....................................................................7
81. "GUC Stock Pool".......................................................................7
82. "HCN Purchase Agreement"...............................................................7
83. "HMD Purchase Agreement"...............................................................7
84. "HMTA Purchase Agreement"..............................................................7
85. "Holdback Amount"......................................................................7
86. "Holdback Escrow Account"..............................................................7
87. "Holder" and, collectively, "Holders"..................................................7
88. "HSR Act"..............................................................................8
89. "Impaired".............................................................................8
90. "Impaired Claim".......................................................................8
91. "Impaired Class".......................................................................8
92. "Incentive Stock Option Plan"..........................................................8
93. "Insured Claims".......................................................................8
94. "Interim Distribution".................................................................8
95. "Internal Revenue Code"................................................................8
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96. "IRS"..................................................................................8
97. "Legacy Claims"........................................................................8
98. "Legacy Sites".........................................................................8
99. "Legacy Site Claims"...................................................................8
100. "Lien".................................................................................8
101. "Master Operating Agreement"...........................................................8
102. "Monsanto".............................................................................8
103. "Monsanto Claims"......................................................................8
104. "Monsanto Contribution"................................................................8
105. "Monsanto Funding Co Contribution".....................................................9
106. "Monsanto/Pharmacia Injunction"........................................................9
107. "Monsanto Pool A Stock Amount".........................................................9
108. "Monsanto's Professionals".............................................................9
109. "Monsanto Reserve".....................................................................9
110. "Monsanto Tort Management".............................................................9
111. "National Securities Exchange".........................................................9
112. "New By-laws"..........................................................................9
113. "New Certificate of Incorporation".....................................................9
114. "New Common Stock"....................................................................10
115. "Nominee".............................................................................10
116. "Non-Debtor Intercompany Claim".......................................................10
117. "NRD Claims"..........................................................................10
118. "NYSE"................................................................................10
119. "Ordinary Course Professionals Order".................................................10
120. "PBGC"................................................................................10
121. "PCBs"................................................................................10
122. "Pension Plan"........................................................................10
123. "Percentage Recovery".................................................................10
124. "Person"..............................................................................10
125. "Petition Date".......................................................................10
126. "Pharmacia"...........................................................................10
127. "Pharmacia Contribution"..............................................................11
128. "Pharmacia Claims"....................................................................11
129. "Plan Documents"......................................................................11
130. "Plan Supplement".....................................................................11
131. "Pool A Common Stock".................................................................11
132. "Pool B Common Stock".................................................................11
133. "Pool C Common Stock".................................................................11
134. "Prepetition Indenture"...............................................................11
135. "Prepetition Indenture Trustee".......................................................11
136. "Prepetition Indenture Trustee Adversary Proceeding"..................................12
137. "Priority Non-Tax Claim"..............................................................12
138. "Priority Tax Claim"..................................................................12
139. "Pro Rata"............................................................................12
140. "Professional"........................................................................12
141. "Professional Fee Claims".............................................................12
142. "Professional Fee Order"..............................................................12
143. "Quarterly Distribution Date".........................................................12
144. "Registration Rights Agreement".......................................................12
145. "Reinstated" or "Reinstatement".......................................................12
146. "Relationship Agreement"..............................................................13
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147. "Reorganized . . ."...................................................................13
148. "Restructuring Transactions"..........................................................13
149. "Restructuring Transactions Agreement"................................................13
150. "Retained Sites"......................................................................13
151. "Retirees"............................................................................13
152. "Retiree Approval Order"..............................................................13
153. "Retiree Benefits"....................................................................13
154. "Retiree Claim".......................................................................13
155. "Retirees' Committee".................................................................14
156. "Retiree Settlement Agreement"........................................................14
157. "Retiree Trust".......................................................................14
158. "Rights"..............................................................................14
159. "Rights Offering".....................................................................14
160. "Rights Offering Order"...............................................................14
161. "Rights Offering Procedures"..........................................................14
162. "Rights Subscription Exercise Form"...................................................14
163. "Schedules"...........................................................................14
164. "Secured Claim".......................................................................14
165. "Securities Act"......................................................................14
166. "Security Claims".....................................................................14
167. "Senior Secured Notes"................................................................14
168. "Senior Secured Note Claims"..........................................................14
169. "Separation Agreement"................................................................15
170. "Settled Adversary Proceedings".......................................................15
171. "Shareholders Agreement"..............................................................15
172. "Shared Sites"........................................................................15
173. "Spinoff".............................................................................15
174. "Spinoff Indemnity Claim".............................................................15
175. "Stipulation of Amount and Nature of Claim"...........................................15
176. "Subsidiary" or "Subsidiaries"........................................................15
177. "Tolbert Settlement Agreement"........................................................15
178. "Tort Claims".........................................................................15
179. "Treasury Regulations"................................................................16
180. "Undeliverable Distribution"..........................................................16
181. "Uniform Commercial Code".............................................................16
182. "Unimpaired"..........................................................................16
183. "Unimpaired Claim"....................................................................16
184. "Unimpaired Class"....................................................................16
185. "United States of America"............................................................16
186. "Unsecured Claim".....................................................................16
187. "Unsecured Notes Claims"..............................................................16
188. "Value"...............................................................................16
189. "Voting Agent"........................................................................16
190. "Voting Deadline".....................................................................16
191. "Voting Record Date"..................................................................16
B. Rules of Interpretation and Computation of Time................................................17
1. Rules of Interpretation...............................................................17
2. Computation of Time...................................................................17
ARTICLE II CLASSES OF CLAIMS AND EQUITY INTERESTS................................................................18
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ARTICLE III TREATMENT OF CLAIMS AND EQUITY INTERESTS.............................................................19
A. Unclassified Claims............................................................................19
1. Payment of Administrative Expense Claims..............................................19
2. Payment of Priority Tax Claims........................................................21
B. Unimpaired Classes of Claims...................................................................21
1. Priority Non-Tax Claims (Class 1).....................................................21
2. Secured Claims (Class 2)..............................................................21
3. Senior Secured Note Claim (Class 3)...................................................22
4. Convenience Claims (Class 4)..........................................................22
5. NRD Claims (Class 5)..................................................................22
6. Insured Claims (Class 6)..............................................................23
7. Tort Claims (Class 7).................................................................23
C. Impaired Classes of Claims and Equity Interests................................................23
1. Monsanto Claims (Class 8).............................................................23
2. Legacy Site Claims (Class 9)..........................................................24
3. General Unsecured Claims (Class 10)...................................................24
4. Retiree Claim (Class 11)..............................................................24
5. Non-Debtor Intercompany Claims (Class 12).............................................24
6. Debtor Intercompany Claims (Class 13).................................................25
7. Axio Claims (Class 14)................................................................25
8. Security Claims (Class 15)............................................................25
9. Equity Interests (Class 16)...........................................................26
ARTICLE IV ACCEPTANCE OR REJECTION OF THE PLAN...................................................................27
A. Special Provisions Governing Unimpaired Claims.................................................27
B. Classes Entitled to Vote.......................................................................27
C. Cramdown.......................................................................................27
ARTICLE V MEANS FOR IMPLEMENTATION OF THE PLAN...................................................................28
A. General Settlement of Claims...................................................................28
B. Global Settlement..............................................................................28
1. Monsanto Funding Co Contribution......................................................28
2. Monsanto Contribution.................................................................28
3. Pharmacia Contribution................................................................30
4. Settlement With Retirees..............................................................31
5. Settled Adversary Proceedings.........................................................31
6. Solutia's Assumption of Certain Environmental Liability...............................31
C. Restructuring Transactions.....................................................................31
D. Continued Corporate Existence and Vesting of Assets in the Reorganized Debtors.................32
E. Execution of Plan Documents....................................................................32
F. Corporate Governance, Directors and Officers and Corporate Action of the Reorganized
Debtors........................................................................................32
1. New Certificates of Incorporation and New By-Laws.....................................32
2. Directors and Officers of the Reorganized Debtors.....................................32
3. Corporate Action......................................................................33
4. The New Common Stock..................................................................33
5. Shareholders Agreement................................................................33
G. Exit Financing Facility, Obtaining Cash for Distributions and Transfers of Funds Among
the Debtors....................................................................................33
H. Rights Offering................................................................................34
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1. Rights Offering Procedures............................................................34
2. The Backstop Underwriting.............................................................34
I. Incentive Stock Option Plan....................................................................34
J. Release of Liens and Guarantee Claims..........................................................34
K. Cancellation of Existing Securities and Agreements.............................................34
L. Effectuating Documents.........................................................................35
M. Employment and Other Benefits Programs.........................................................35
ARTICLE VI TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.................................................36
A. Assumption and Rejection of Executory Contracts and Unexpired Leases...........................36
B. Claims Based on Rejection of Executory Contracts or Unexpired Leases...........................36
C. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed..........................36
D. Insurance Policies.............................................................................37
E. Anniston Settlement............................................................................37
F. Assumption of Pension Obligations..............................................................37
G. Contracts and Leases Entered Into After the Petition Date......................................37
ARTICLE VII PROVISIONS GOVERNING DISTRIBUTIONS...................................................................38
A. Distributions for Claims Allowed as of the Effective Date......................................38
B. Delivery of Distributions......................................................................38
C. Delivery and Distributions and Undeliverable or Unclaimed Distributions........................38
1. Delivery of Distributions in General..................................................38
2. Undeliverable Distributions...........................................................38
D. Compliance with Tax Requirements/Allocations...................................................39
E. Record Date for Distribution...................................................................39
F. Distributions of Whole Shares Only.............................................................39
G. Set-offs and Recoupments.......................................................................39
H. Surrender of Cancelled Instruments or Securities...............................................39
I. The General Unsecured Claims Pool Adjustment...................................................40
J. The Monsanto Reserve...........................................................................42
1. Deposit of New Common Stock on the Effective Date.....................................42
2. Procedure For Distributing New Common Stock to Monsanto...............................42
3. Property Held in Monsanto Reserve.....................................................42
K. The General Unsecured Claims Reserve...........................................................43
1. Deposit of New Common Stock on the Effective Date.....................................43
2. Calculation of Disputed General Unsecured Claims Reserve..............................43
3. Procedure For Distributing New Common Stock to Holders of Allowed General
Unsecured Claims......................................................................43
4. Property Held in General Unsecured Claims Reserve.....................................44
ARTICLE VIII PROCEDURES FOR TREATING DISPUTED CLAIMS.............................................................45
A. Objections to Claims...........................................................................45
B. General Unsecured Claims Monitor...............................................................45
C. No Distributions Pending Allowance.............................................................46
D. Estimation of Claims...........................................................................46
ARTICLE IX CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN.....................................47
A. Condition Precedent to Confirmation............................................................47
B. Conditions Precedent to Effective Date.........................................................48
C. Effect of Failure of Conditions................................................................48
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D. Waiver of Conditions...........................................................................49
ARTICLE X INJUNCTIONS, RELEASES, EXCULPATION AND DISCHARGE.......................................................50
A. Injunctions....................................................................................50
1. DEBTORS' INJUNCTION...................................................................50
2. MONSANTO/PHARMACIA INJUNCTION.........................................................50
B. Releases.......................................................................................51
1. RELEASES BY THE DEBTORS...............................................................51
2. RELEASES BY HOLDERS OF CLAIMS AND EQUITY INTERESTS....................................52
3. RETIREE RELEASE AND INJUNCTION........................................................53
C. EXCULPATION AND LIMITATION OF LIABILITY........................................................53
D. DISCHARGE OF CLAIMS AND TERMINATION OF EQUITY INTERESTS........................................53
ARTICLE XI RETENTION OF JURISDICTION.............................................................................55
A. Retention of Jurisdiction......................................................................55
ARTICLE XII MISCELLANEOUS PROVISIONS.............................................................................57
A. Binding Effect.................................................................................57
B. Preservation of Avoidance Actions..............................................................57
C. Claims of the United States of America.........................................................57
D. Applicability of Section 1125(e) of the Bankruptcy Code........................................57
E. Dissolution of the Creditors' Committee, Retirees' Committee and Equity Committee..............57
F. Payment of Statutory Fees......................................................................58
G. Modification of the Plan.......................................................................58
H. Severability...................................................................................58
I. Revocation or Withdrawal of the Plan...........................................................58
J. Section 1145 Exemption.........................................................................58
K. Section 1146 Exemption.........................................................................59
L. Notices........................................................................................59
1. The Debtors and the Reorganized Debtors...............................................59
2. The Creditors' Committee..............................................................59
3. The Retirees' Committee...............................................................60
4. The Equity Committee..................................................................60
5. The DIP Lenders.......................................................................60
6. The United States Trustee.............................................................61
7. Monsanto..............................................................................61
8. Pharmacia.............................................................................61
M. Governing Law..................................................................................61
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TABLE OF EXHIBITS
Exhibit A Relationship Agreement
Exhibit B Retiree Settlement Agreement
Exhibit C Exit Financing Facility Commitment Letter
Exhibit D Form of New Bylaws
Exhibit E Form of New Certificates of Incorporation
Exhibit F Initial Directors and Officers of Each Reorganized Debtor
Exhibit G List of Executory Contracts and Unexpired Leases to be Assumed
Exhibit H Rights Offering Procedures
Exhibit I Incentive Stock Option Plan
Exhibit J Registration Rights Agreement
Exhibit K Funding Co Charter
Exhibit L Shareholders Agreement
Exhibit M Restructuring Transaction Agreement
viii
INTRODUCTION
Solutia Inc. ("Solutia"), together with its direct and indirect
subsidiaries and its Affiliates Solutia Business Enterprises Inc., Solutia
Systems, Inc., Solutia Overseas, Inc., CPFilms Inc., Solutia Management
Company, Inc., Monchem International, Inc., Axio Research Corporation,
Solutia Investments, LLC, Beamer Road Management Company, Monchem, Inc.,
Solutia Inter-America, Inc., Solutia International Holding, LLC, Solutia
Taiwan, Inc. and Solutia Greater China, Inc., as debtors and debtors in
possession (collectively, the "Debtors"), propose this joint plan of
reorganization (the "Plan") for the resolution of the outstanding claims
against, and equity interests in, the Debtors. The Debtors are the
proponents of the Plan within the meaning of section 1129 of the Bankruptcy
Code (as defined below). Reference is made to the Debtors' disclosure
statement, which was filed with the Bankruptcy Court on February 14, 2006
(the "Disclosure Statement"), for a discussion of the Debtors' history,
businesses, results of operations, historical financial information,
accomplishments during the Chapter 11 Cases (as defined below), projections
and properties, and for a summary and analysis of this Plan and the
settlements contemplated herein and the Plan Documents. There also are other
agreements and documents, which are or will be filed with the Bankruptcy
Court, that are referenced in this Plan or the Disclosure Statement.
ARTICLE I
DEFINED TERMS, RULES OF INTERPRETATION
AND COMPUTATION OF TIME
A. DEFINED TERMS
As used in this Plan, capitalized terms have the meanings set forth
below or in the Introduction above. Any terms that are not otherwise defined
herein, but that are used in the Bankruptcy Code or the Bankruptcy Rules
(each as defined below), will have the meaning ascribed to them in the
Bankruptcy Code or the Bankruptcy Rules, as applicable.
1. "ABERNATHY SETTLEMENT AGREEMENT" means that certain settlement
agreement, dated September 9, 2003, resolving the lawsuit captioned Sabrina
Abernathy, et al. v. Monsanto Company, et al., Civil Action No. CY-01-832
(Etowah County).
2. "ACTUAL AMOUNT" shall have the meaning set forth in Section
VII.I hereof.
3. "ADDITIONAL SHARES NUMERATOR" shall have the meaning set forth
in Section VII.I hereof.
4. "ADJUSTED GUC RECOVERY" shall have the meaning set forth in
Section VII.I hereof.
5. "ADMINISTRATIVE EXPENSE CLAIM" means a Claim for costs and
expenses of administering the Estates that is allowed under sections 503(b),
507(b) or 1114(e)(2) of the Bankruptcy Code, including: (a) the actual and
necessary costs and expenses incurred after the Petition Date of preserving
the respective Estates and operating the businesses of the Debtors (such as
wages, salaries, commissions for services and payments for inventories,
leased equipment and premises), including DIP Claims; (b) compensation for
legal, financial advisory, accounting and other services and reimbursement
of expenses awarded or allowed under sections 330(a) or 331 of the
Bankruptcy Code, including Professional Fee Claims; (c) all fees and charges
assessed against the Estates under chapter 123 of title 28, United States
Code, 28 U.S.C. Sections 1911-1930; and (d) Claims for reclamation allowed
in accordance with section 546(c)(2) of the Bankruptcy Code and section
2-702 of the Uniform Commercial Code.
1
6. "ADMINISTRATIVE EXPENSE CLAIM BAR DATE" means the date that is
the forty-fifth (45th) day after the Effective Date.
7. "AFFILIATE" means, with respect to any Person or Entity, a
Person or Entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such person or Entity; provided, however, that in no event shall any
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of Monsanto, Solutia, Reorganized Solutia or Pharmacia be considered to be
affiliated for purposes of the Plan.
8. "ALLOWED CLAIM" means:
a. a Claim that: (i) has been listed by a particular
Debtor on its Schedules as other than disputed, contingent or
unliquidated; and (ii) is not otherwise a Disputed Claim;
b. a Claim (i) for which a proof of Claim or request for
payment of Administrative Claim has been filed by the applicable
Bar Date or otherwise been deemed timely filed under applicable law
or order of the Bankruptcy Court; (ii) as to which the Claims
Objection Deadline has passed; and (iii) that is not otherwise a
Disputed Claim; or
c. a Claim that is allowed: (i) in any Stipulation of
Amount and Nature of Claim; (ii) in any contract, instrument or
other agreement entered into in connection with the Plan and
approved by the Bankruptcy Court; (iii) in a Final Order; or (iv)
pursuant to the terms of the Plan.
9. "ALLOWED . . . CLAIM" means an Allowed Claim in the particular
Class or category specified. Any reference herein to a particular Allowed
Claim includes both the secured and unsecured portions of such Claim, as
applicable.
10. "ANNISTON GLOBAL SETTLEMENT AGREEMENT" means that certain
Global Settlement Agreement, dated September 9, 2003, among Solutia,
Monsanto and Pharmacia, which resolved certain lawsuits pending against
Solutia, Monsanto and Pharmacia in the United States District Court,
Northern District of Alabama and in the Circuit Court, Etowah County,
Alabama and was approved by those courts.
11. "ANNISTON LITIGATION SETTLEMENT AGREEMENTS" means the Abernathy
Settlement Agreement together with the Tolbert Settlement Agreement.
12. "ANNISTON SIDE LETTER AGREEMENT" means that certain agreement,
dated August 20, 2003, among Solutia, Monsanto and Pharmacia which sets
forth their respective obligations under the Anniston Litigation Settlement
Agreements.
13. "AVOIDANCE ACTIONS" means any and all actual or potential
Claims to avoid a transfer of property or an obligation incurred by the
Debtor pursuant to any applicable section of the Bankruptcy Code, including
sections 544, 545, 547, 548, 549, 550, 551, 553(b) and 724(a) of the
Bankruptcy Code.
14. "AXIO CLAIMS" means all Claims against Axio Research
Corporation.
15. "AXIO LIQUIDATION SALE" means that certain sale of the assets
of Axio Research Corporation pursuant to that certain order of the
Bankruptcy Court dated December 16, 2004.
16. "BACKSTOP FEE" means the $12.5 million fee to be paid to
Monsanto for Monsanto's underwriting of the Rights Offering; provided,
--------
however, that such Backstop Fee shall be waived by Monsanto on the Effective
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Date as set forth in the Backstop Fee Order.
2
17. "BACKSTOP FEE ORDER" means that certain order of the Bankruptcy
Court entered on ______, ____, approving the Backstop Fee and which may be
included in the Disclosure Statement Order.
18. "BALLOT" means the ballot forms distributed to each Holder of
an Impaired Claim on which the Holder may indicate, among other things,
whether it accepts or rejects the Plan.
19. "BANKRUPTCY CODE" means title 11 of the United States Code, as
applicable to the Chapter 11 Cases.
20. "BANKRUPTCY COURT" means the United States Bankruptcy Court for
the Southern District of New York, which has jurisdiction over the Chapter
11 Cases and, to the extent of the withdrawal of any reference under section
157 of title 28 of the United States Code, the United States District Court
for the Southern District of New York.
21. "BANKRUPTCY RULES" means, collectively, the Federal Rules of
Bankruptcy Procedure and the local rules of the Bankruptcy Court, as
applicable to the Chapter 11 Cases.
22. "BAR DATE" means, with respect to Claims against the Debtors,
(a) November 30, 2004, or (b) any other bar date for the filing of Claims
established by (i) the Bar Date Order, (ii) a separate order of the
Bankruptcy Court, (iii) a stipulation between or among the Debtors and a
Holder in connection with the Chapter 11 Cases or (iv) a supplemental bar
date established by the Debtors in accordance with the Bar Date Order.
23. "BAR DATE ORDER" means that certain order of the Bankruptcy
Court entered on October 1, 2004, which established a Bar Date for filing
proofs of Claims in the Chapter 11 Cases, as the same may be amended,
modified or supplemented.
24. "BASE GUC RECOVERY" shall have the meaning set forth in Section
VII.I hereof.
25. "BUSINESS DAY" means any day, other than a Saturday, Sunday or
"legal holiday" (as defined in Bankruptcy Rule 9006(a)).
26. "CASH" means legal tender of the United States of America.
27. "CAUSES OF ACTION" means all actions, causes of action,
liabilities, obligations, rights, suits, damages, judgments, remedies,
demands, setoffs, defenses, recoupments, crossclaims, counterclaims,
third-party claims, indemnity claims, contribution claims or any other
claims whatsoever, whether known or unknown, matured or unmatured, fixed or
contingent, liquidated or unliquidated, disputed or undisputed, suspected or
unsuspected, foreseen or unforeseen, direct or indirect, choate or inchoate,
existing or hereafter arising, in law, equity or otherwise, based in whole
or in part upon any act or omission or other event occurring prior to the
Petition Date or during the course of the Chapter 11 Cases, including
through the Effective Date.
28. "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Sections 9601,
et seq.
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29. "CHAPTER 11 CASES" means (a) when used with reference to a
particular Debtor, the chapter 11 case pending for that Debtor under chapter
11 of the Bankruptcy Code in the Bankruptcy Court and (b) when used with
reference to all Debtors, the procedurally consolidated chapter 11 cases
pending for the Debtors in the Bankruptcy Court.
3
30. "CHEMICALS ASSETS" means the assets constituting "Chemicals
Assets" as defined and set forth in the Distribution Agreement.
31. "CHEMICALS LIABILITIES" means the liabilities constituting
"Chemicals Liabilities" as defined and set forth in the Distribution
Agreement.
32. "CLAIM" means a "claim," as defined in section 101(5) of the
Bankruptcy Code, against any Debtor.
33. "CLAIMS ADJUSTMENT VALUE" shall have the meaning set forth in
Section VII.I hereof.
34. "CLAIMS DIFFERENCE" shall have the meaning set forth in Section
VII.I hereof.
35. "CLAIMS OBJECTION DEADLINE" means, for each Claim, the later of
(a) 180 days after the Effective Date and (b) such other period of
limitation as may be specifically fixed by an order of the Bankruptcy Court
for objecting to such Claim.
36. "CLASS" means a class of Claims or Equity Interests, as
described in Article II herein.
37. "COMMERCIAL AND OPERATING AGREEMENTS" means the Master
Operating Agreement, the HCN Purchase Agreement, the HMD Purchase Agreement,
the HMTA Purchase Agreement and the Formalin Purchase Agreement.
38. "CONFIRMATION" means the entry of the Confirmation Order on the
docket of the Chapter 11 Cases.
39. "CONFIRMATION DATE" means the date on which the Bankruptcy
Court enters the Confirmation Order on its docket, within the meaning of
Bankruptcy Rules 5003 and 9021.
40. "CONFIRMATION HEARING" means the hearing held by the Bankruptcy
Court on Confirmation of the Plan, as such hearing may be continued from
time to time.
41. "CONFIRMATION ORDER" means the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
42. "CONSUMMATION" means the occurrence of the Effective Date.
43. "CONVENIENCE CLAIMS" means a Claim that otherwise would be a
General Unsecured Claim included in Class 10, but (a) the amount of such
Claim is equal to or less than $2,500 or (b) the Holder of such Claim, in
full settlement of such Claim, agrees, by the applicable voting deadline as
specified in the Disclosure Statement, pursuant to an election made by such
Holder on its Ballot, to reduce such Claim to $2,500.
44. "COURT APPROVED EQUITY VALUE" means $________ (i.e., the
----
aggregate value of all equity interests in Reorganized Solutia, as approved
by the Bankruptcy Court).
45. "CREDITORS' COMMITTEE" means the official committee of
unsecured creditors of the Debtors appointed by the United States Trustee in
the Chapter 11 Cases pursuant to section 1102 of the Bankruptcy Code, as
reconstituted from time to time.
46. "DEBTOR INTERCOMPANY CLAIM" means any Claim of one Debtor
against another Debtor.
4
47. "DIP AGREEMENT" means that certain Financing Agreement, dated
as of January 16, 2004, as amended on March 1, 2004, July 20, 2004 and June
1, 2005, among Solutia and Solutia Business Enterprises Inc, as borrowers,
all of the other Debtors, as guarantors, Citicorp USA, Inc., as
administrative, collateral and documentation agent, and Citibank, N.A., as
Issuer, and the lenders party thereto, as the same may be amended from time
to time prior to the Confirmation Date.
48. "DIP CLAIMS" means all Claims arising under or pursuant to the
DIP Agreement.
49. "DIP LENDER" means, collectively, (a) those entities identified
as "Lenders" in the DIP Agreement and their respective successors and
assigns and (b) Citibank, N.A. (as Issuer).
50. "DIRECTORS' AND OFFICER INDEMNITY CLAIMS" means all Claims
filed by the Debtors' current and former directors, officers and employees
for indemnification or contribution.
51. "DISCLOSURE STATEMENT ORDER" means that certain order of the
Bankruptcy Court entered on ________, 2006, which is annexed to the
Disclosure Statement as Exhibit B.
52. "DISPUTED CLAIM" means any Claim which is not an Allowed Claim.
53. "DISPUTED GENERAL UNSECURED CLAIM" means any General Unsecured
Claim that, as of the date of determination, is a Disputed Claim.
54. "DISTRIBUTION" means any distribution made under the Plan to a
Holder of an Allowed Claim.
55. "DISTRIBUTION AGREEMENT" means that certain agreement, dated as
of September 1, 1997, as amended on July 1, 2002 and otherwise from time to
time, by and between Solutia and Pharmacia.
56. "DISTRIBUTION DATE" means any date on which a Distribution is
made.
57. "DISTRIBUTION RECORD DATE" means the date that is five Business
Days after the Confirmation Date.
58. "EFFECTIVE DATE" means the day that is the first Business Day
after all conditions to occurrence of the Effective Date have been met or
waived pursuant to Sections IX.B and IX D.
59. "ELIGIBLE HOLDER" means a Holder of a General Unsecured Claim
that is eligible, pursuant to the Rights Offering Procedures, to participate
in the Rights Offering.
60. "ENTITY" shall have the meaning set forth in section 101(15) of
the Bankruptcy Code.
61. "ENVIRONMENTAL LIABILITY" means any liability constituting an
"Environmental Liability" as defined and set forth in the Relationship
Agreement.
62. "ENVIRONMENTAL LIABILITY COSTS" means any costs constituting
"Environmental Liability Costs" as defined and set forth in the Relationship
Agreement.
63. "EQUITY COMMITTEE" means the official committee of equity
security holders of the Debtors appointed in the Chapter 11 Cases pursuant
to section 1102 of the Bankruptcy Code, as reconstituted from time to time.
5
64. "EQUITY COMMITTEE ADVERSARY PROCEEDING" means the adversary
proceeding filed on March 7, 2005 by the Equity Committee against Pharmacia
and Monsanto, Case No. 05-01202.
65. "EQUITY INTEREST" means any share of common stock, preferred
stock or other instrument evidencing an ownership interest in any of the
Debtors, whether or not transferable, and any option, warrant or right,
contractual or otherwise, to acquire any such interest.
66. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
67. "ESTATE" and, collectively, "ESTATES" means the estate created
for that Debtor in its Chapter 11 Case pursuant to section 541 of the
Bankruptcy Code.
68. "EXCHANGE ACT" means the Securities Exchange Act of 1934, 15
U.S.C. Sections 78a-78jj, as now in effect or hereafter amended.
69. "EXECUTORY CONTRACT AND/OR UNEXPIRED LEASE" means a contract or
lease to which one or more of the Debtors is a party and that is subject to
assumption or rejection under section 365 of the Bankruptcy Code.
70. "EXIT FINANCING FACILITY" means a senior secured credit
facility that will be entered into by the Reorganized Debtors, the Exit
Financing Facility Agent Bank and the relevant lenders on the Effective
Date.
71. "EXIT FINANCING FACILITY AGENT BANK" means the agent bank under
the Exit Financing Facility.
72. "EXIT FINANCING FACILITY COMMITMENT LETTER" means a binding
commitment letter for the Exit Financing Facility.
73. "FINAL ORDER" means an order or judgment of the Bankruptcy
Court, or other court of competent jurisdiction, as entered on the docket in
the Chapter 11 Cases or the docket of any other court of competent
jurisdiction, which has not been reversed, stayed, modified or amended, and
as to which the time to appeal or seek certiorari has expired, and no appeal
or petition for certiorari has been timely taken, or as to which any appeal
that has been taken or any petition for certiorari that has been timely
filed has been resolved by the highest court to which the order or judgment
was appealed or from which certiorari was sought.
74. "FORMALIN PURCHASE AGREEMENT" means the Raw Material Purchase
Agreement for Formalin dated September 1, 1997, as amended on April 1, 1999
and on September 26, 2003, between Solutia and Monsanto (as assignee of
Pharmacia).
75. "FUNDING CO" means a newly created, special purpose,
tax-efficient, bankruptcy-remote subsidiary of Reorganized Solutia, funded
with (a) the Monsanto Funding Co Contribution and/or (b) the proceeds, if
any, of the Rights Offering.
76. "FUNDING CO CHARTER" means the agreement governing Funding Co,
substantially in the form of Exhibit K.
77. "GENERAL UNSECURED CLAIMS" means Unsecured Claims, including,
but not limited to, the Unsecured Notes Claims, other than Convenience
Claims, Debtor Intercompany Claims, Insured Claims
6
(only to the extent that such Insured Claims are payable by any available
insurance coverage proceeds), the Monsanto Claims, Non-Debtor Intercompany
Claims, NRD Claims, the Pharmacia Claims, the Legacy Site Claims, the
Retiree Claim, Unsecured Claims against Axio Research Corporation and Tort
Claims.
78. "GENERAL UNSECURED CLAIMS RESERVE" means the reserve
established and maintained by the Reorganized Debtors to hold the shares of
Pool A Common Stock to be Distributed to Holders of Allowed General
Unsecured Claims pending the resolution of Disputed Claims in accordance
with the terms of Section VII.K hereof.
79. "GENERAL UNSECURED CLAIMS POOL ADJUSTMENT" shall have the
meaning set forth in Section VII.I hereof.
80. "GLOBAL SETTLEMENT" means the settlement between the Creditors'
Committee, Monsanto, Pharmacia, the Retirees and the Debtors, settling all
Claims and controversies regarding the Retirees, Monsanto and Pharmacia,
including, but not limited to, the Retiree Claim, the Monsanto Claims, the
Pharmacia Claims, the Settled Adversary Proceedings and all causes of action
asserted in the Equity Committee Adversary Proceeding, as more fully
described in the Disclosure Statement and Section V.B hereof; provided,
--------
however, that the Global Settlement shall not settle or resolve any claims,
- -------
obligations, suits, damages, demands, debts, rights, causes of action or
liabilities as between Monsanto and Pharmacia under the Separation
Agreement.
81. "GUC STOCK POOL" means a number of shares of Pool A Common
Stock equal to (a) 47.5% of the New Common Stock, less (b) 61.45% of the
shares of New Common Stock distributed on account of the Retiree Claim.
82. "HCN PURCHASE AGREEMENT" means the Raw Material Purchase
Agreement for HCN dated September 1, 1997, as amended on April 1, 1999,
between Solutia and Monsanto (as assignee of Pharmacia).
83. "HMD PURCHASE AGREEMENT" means the Raw Material Purchase
Agreement for HMD dated September 1, 1997, as amended from time to time,
between Solutia and Monsanto (as assignee of Pharmacia).
84. "HMTA PURCHASE AGREEMENT" means the Raw Material Conversion
Agreement for HMTA dated September 1, 1997, as amended on April 1, 1999,
between Solutia and Monsanto (as assignee of Pharmacia).
85. "HOLDBACK AMOUNT" means the aggregate holdback of those
Professional fees billed to the Debtors during the Chapter 11 Cases that are
held back pursuant to the Professional Fee Order or any other order of the
Bankruptcy Court, which amount is to be deposited in the Holdback Escrow
Account as of the Effective Date. The Holdback Amount shall not be
considered property of the Debtors or the Reorganized Debtors except as set
forth in Section III.A.1.d.ii.a.(iii).
86. "HOLDBACK ESCROW ACCOUNT" means the escrow account established
by Reorganized Solutia into which Cash equal to the Holdback Amount shall be
deposited on the Effective Date for the payment of Allowed Professional Fee
Claims to the extent not previously paid or disallowed.
87. "HOLDER" and, collectively, "HOLDERS" means a Person or Entity
legally holding a Claim or Equity Interest.
7
88. "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
89. "IMPAIRED" means, with respect to a Claim or Equity Interest
(or Class of Claims or Equity Interests), a Claim or Equity Interest (or
Class of Claims or Equity Interests) that is impaired within the meaning of
section 1124 of the Bankruptcy Code.
90. "IMPAIRED CLAIM" means a Claim classified in an Impaired Class.
91. "IMPAIRED CLASS" means each of Classes 8, 9, 10, 11, 12, 13,
14, 15 and 16 as set forth in Article III of the Plan.
92. "INCENTIVE STOCK OPTION PLAN" means the incentive stock option
plan to be implemented in accordance with Section V.I. hereof substantially
in the form annexed hereto as Exhibit I.
93. "INSURED CLAIMS" means any Claims (other than Tort Claims and
Environmental Liabilities) that are covered under any insurance policies
that are maintained by any of the Debtors, Pharmacia or Monsanto, but only
to the extent of such coverage.
94. "INTERIM DISTRIBUTION" shall have the meaning set forth in
Section VII.K.3. herein.
95. "INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended from time to time, and any applicable rulings, Treasury
Regulations, judicial decisions and notices, announcements and other
releases of the United States Treasury Department or the IRS.
96. "IRS" means the Internal Revenue Service of the United States
of America.
97. "LEGACY CLAIMS" means all Claims, including, but not limited
to, Tort Claims and Legacy Sites Claims, arising under or related to the
Distribution Agreement, including any and all Claims relating to or arising
out of the Spinoff, the Chemicals Liabilities and the Spinoff Indemnity
Claims.
98. "LEGACY SITES" means the "Legacy Sites" as defined and set
forth in the Relationship Agreement.
99. "LEGACY SITE CLAIMS" means all Environmental Liability Costs
with respect to the Legacy Sites.
100. "LIEN" means any lien, lease, right of first refusal,
servitude, claim, pledge, option, charge, hypothecation, easement, security
interest, right-of-way, encroachment, mortgage, deed of trust or any other
encumbrance, restriction or limitation whatsoever.
101. "MASTER OPERATING AGREEMENT" means that certain master
operating agreement, dated as of September 1, 1997, as amended from time to
time, by and between Solutia and Monsanto (as assignee of Pharmacia).
102. "MONSANTO" means Monsanto Company, a Delaware corporation, and
its Affiliates.
103. "MONSANTO CLAIMS" means any and all Claims of Monsanto,
including all Claims of Monsanto on account of Solutia's breach of the
Distribution Agreement.
104. "MONSANTO CONTRIBUTION" means, among other things, (a) the
Monsanto Funding Co Contribution, (b) the Monsanto Tort Management, (c)
Monsanto's settlement of adversary proceedings (including the Settled
Adversary Proceedings), contested matters, disputes and the Monsanto Claim,
8
(d) Monsanto's management, litigation and settlement of various Legacy Claims,
including the Tort Claims from the Petition Date through the Effective Date,
(e) Monsanto's agreement to take financial responsibility, as between itself
and Reorganized Solutia only, for the Legacy Site Claims and Environmental
Liability for the Shared Sites, subject to the sharing mechanism set forth
in the Relationship Agreement, and (f) Monsanto's agreement to (i) pay
certain liabilities, including certain environmental liabilities as set
forth in Section V.B herein and in the Relationship Agreement, (ii) forever
release the Debtors from any and all indemnity obligations owed to Monsanto
arising under the Distribution Agreement and/or any other agreement (other
than as set forth in the Relationship Agreement and the Commercial and
Operating Agreements), including any amendments to the Distribution
Agreement, related to the Legacy Claims or otherwise, (iii) enter into the
Relationship Agreement and amend the Master Operating Agreement, (iv) waive
any right to file surrogate Claims pursuant to Bankruptcy Rule 3005, (v)
waive the Backstop Fee and (vi) grant certain indemnities to the Reorganized
Debtors pursuant to the terms of the Relationship Agreement.
105. "MONSANTO FUNDING CO CONTRIBUTION" means the "backstop"
underwriting by Monsanto of the $250 million Rights Offering, which will be
effected pursuant to the Rights Offering Procedures, and which will guaranty
the contribution of $250 million to fund Funding Co and the Retiree Trust,
the funding mechanics of which are set forth in the Relationship Agreement,
in accordance with the provisions of Section V.B.1 herein.
106. "MONSANTO/PHARMACIA INJUNCTION" means the injunction in favor
of Monsanto and Pharmacia as set forth in Section X.A.2 herein.
107. "MONSANTO POOL A STOCK AMOUNT" means a number of shares of
Pool A Common Stock equal to (a) 29.8% of the New Common Stock, less (b)
38.55% of the shares of New Common Stock distributed on account of the
Retiree Claim.
108. "MONSANTO'S PROFESSIONALS" means Willkie Farr & Gallagher LLP,
Bryan Cave LLP, Boies, Schiller & Flexner LLP, Greenhill & Co., LLC, Kramer
Capital Partners, Groom Law Group, ARCADIS, FTI Consulting, Dickstein
Shapiro Morin & Oshinky LLP and Sonnenschein Nath & Rosenthal LLP.
109. "MONSANTO RESERVE" means the reserve established and
maintained by the Reorganized Debtors to hold the shares of Pool A Common
Stock to be Distributed to Monsanto pending the final calculation of the
General Unsecured Claims Adjustment in accordance with the terms of Section
VII.J hereof.
110. "MONSANTO TORT MANAGEMENT" means Monsanto's agreement to take
financial responsibility, as between itself and Reorganized Solutia only,
for the management and payment of the Tort Claims and indemnify Reorganized
Solutia for the Tort Claims, pursuant to the terms of the Relationship
Agreement.
111. "NATIONAL SECURITIES EXCHANGE" means any exchange registered
pursuant to Section 6(a) of the Exchange Act.
112. "NEW BY-LAWS" means the form of the by-laws of each of the
Reorganized Debtors, which form is annexed hereto as Exhibit D.
113. "NEW CERTIFICATE OF INCORPORATION" means, the form of the
certificates of incorporation of each of the Reorganized Debtors, which form
is annexed hereto as Exhibit E.
9
114. "NEW COMMON STOCK" means the shares of common stock, par value
$.01 per share, of Reorganized Solutia, authorized pursuant to the New
Certificate of Incorporation of Reorganized Solutia. For Distribution
purposes only, the New Common Stock shall be distributed as Pool A Common
Stock, Pool B Common Stock and Pool C Common Stock.
115. "NOMINEE" means any broker, dealer, commercial bank, trust
company, savings and loan financial institution or other nominee in whose
name securities were registered or held of record on behalf of a beneficial
Holder.
116. "NON-DEBTOR INTERCOMPANY CLAIM" means any Claim owed by a
Debtor to a non-Debtor Affiliate as of the Petition Date.
117. "NRD CLAIMS" means Claims filed in the Chapter 11 Cases in
accordance with the Bar Date Order under Section 107(a)(4)(C) of CERCLA, 42
U.S.C. Section 9607(a)(4)(C), or other provision of law, for damages for
injury to, destruction of or loss of natural resources, including the
reasonable cost of assessing such damages.
118. "NYSE" means the New York Stock Exchange.
119. "ORDINARY COURSE PROFESSIONALS ORDER" means that certain order
of the Bankruptcy Court entered on January 16, 2004, which authorized the
employment and payment of Professionals by the Debtors in the ordinary
course of business.
120. "PBGC" means the Pension Benefit Guaranty Corporation.
121. "PCBS" means polychlorinated biphenyls.
122. "PENSION PLAN" means the Solutia Inc. Employees' Pension Plan,
dated September 1, 1997, as amended and restated from time to time.
123. "PERCENTAGE RECOVERY" shall mean, as of the date of the
determination, the ratio, expressed as a percentage, that is calculated by
DIVIDING: (a) the aggregate amount of Allowed General Unsecured Claims by
(b) the aggregate amount of Disputed General Unsecured Claims plus the
aggregate amount of Allowed General Unsecured Claims.
124. "PERSON" shall have the meaning set forth in section 101(41)
of the Bankruptcy Code.
125. "PETITION DATE" means December 17, 2003, the date on which the
Debtors commenced the Chapter 11 Cases.
126. "PHARMACIA" means Pharmacia Corporation, formerly known as
Monsanto Company, a Delaware corporation.
10
127. "PHARMACIA CONTRIBUTION" means, pursuant to the provisions of
Article V hereof, Pharmacia's agreement to (a) subject to the indemnity
agreement to be provided by the Reorganized Debtors pursuant to the
Relationship Agreement, forever release the Debtors and the Reorganized
Debtors from any and all Legacy Claims, including any indemnity obligations
arising under the Distribution Agreement, or otherwise, and any other claims
or liabilities Pharmacia holds, has held or may in the future hold against
the Debtors and the Reorganized Debtors, related to the Distribution
Agreement or the Legacy Claims, and (b) waive the Pharmacia Claims in their
entirety with prejudice.
128. "PHARMACIA CLAIMS" means all Claims asserted by Pharmacia, its
parent and Affiliates, including Pfizer Inc., including Legacy Claims and
any Claims for indemnification, contribution or otherwise arising under or
related to the Distribution Agreement or any other agreement.
129. "PLAN DOCUMENTS" means (a) the Relationship Agreement, (b) the
Exit Financing Facility, (c) the Exit Financing Facility Commitment Letter,
(d) the New Certificate of Incorporation of each Reorganized Debtor, (e) the
New By-laws of each Reorganized Debtor, (f) the list of Executory Contracts
and Unexpired Leases to be assumed, (g) the Rights Offering Procedures, (h)
the Commercial and Operating Agreements, (i) the Incentive Stock Option
Plan, (j) the Registration Rights Agreement, (k) the Restructuring
Transactions Agreement, (l) the Retiree Settlement Agreement, (m) the
Funding Co Charter, (n) the Shareholders Agreement, and (o) any and all
instruments, certificates, agreements or other documents executed,
delivered, entered into or filed in connection with the Plan or any of the
foregoing.
130. "PLAN SUPPLEMENT" means the following forms of documents: (a)
the Exit Financing Facility Commitment Letter; (b) the New Certificate of
Incorporation of each Reorganized Debtor; (c) the New By-laws of each
Reorganized Debtor; (d) the list of Executory Contracts and Unexpired Leases
to be assumed; (e) the Incentive Stock Option Plan; (f) the Registration
Rights Agreement; (g) the Restructuring Transactions Agreement; (h) the
Funding Co Charter; (i) the identity and affiliations of any Person proposed
to serve on the initial board of directors or be an officer of each of the
Reorganized Debtors and to the extent any director or officer of Reorganized
Solutia is an "insider" under the Bankruptcy Code, the nature and amount of
any compensation to be paid to such director or officer; and (j) the
Shareholders Agreement, substantially final forms or final forms, as
applicable, of which will be filed with the Bankruptcy Court at least ten
(10) days prior to the Confirmation Hearing.
131. "POOL A COMMON STOCK" means that portion of the New Common
Stock to be distributed to Holders of Allowed General Unsecured Claims and
Monsanto (other than on account of the Monsanto Funding Co Contribution).
132. "POOL B COMMON STOCK" means that portion of the New Common
Stock to be distributed to Monsanto in exchange for the Monsanto Funding Co
Contribution and any parties exercising Rights in connection with the Rights
Offering.
133. "POOL C COMMON STOCK" means that portion of the New Common
Stock to be Distributed in accordance with the Retiree Settlement Agreement.
134. "PREPETITION INDENTURE" means that certain Indenture, dated
October 1, 1997, as the same may have been subsequently modified, amended or
supplemented, together with all instruments and agreements related thereto,
between Solutia and the Prepetition Indenture Trustee, under which Solutia
issued two series of unsecured public notes: (a) $150 million in 6.72% notes
due October 15, 2037 and (b) $300 million in 7.375% notes due October 15,
2027.
135. "PREPETITION INDENTURE TRUSTEE" means JPMorgan Chase Bank, or
any successor thereto, as indenture trustee under the Prepetition Indenture.
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136. "PREPETITION INDENTURE TRUSTEE ADVERSARY PROCEEDING" means the
adversary proceeding commenced on May 27, 2005 by the Prepetition Indenture
Trustee against Solutia in the Bankruptcy Court, Case No. 05-01843.
137. "PRIORITY NON-TAX CLAIM" means any Claim, other than an
Administrative Expense Claim or a Priority Tax Claim, entitled to priority
in right of payment under section 507(a) of the Bankruptcy Code.
138. "PRIORITY TAX CLAIM" means any Claim of a governmental unit of
the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.
139. "PRO RATA" means the ratio of the amount of an Allowed Claim
in a particular Class to the aggregate amount of all Allowed Claims in such
Class.
140. "PROFESSIONAL" means (a) any professional employed in the
Chapter 11 Cases by an order or orders of the Bankruptcy Court issued
pursuant to section 327, 328 or 1103 of the Bankruptcy Code and (b) any
professional or other Entity seeking compensation and reimbursement in
connection with the Chapter 11 Cases pursuant to section 503(b)(4) of the
Bankruptcy Code.
141. "PROFESSIONAL FEE CLAIMS" means all Administrative Expense
Claims for the compensation of Professionals and the reimbursement of
expenses incurred by such Professionals (to the extent Allowed under
sections 328, 330, 331, 363 or 503 of the Bankruptcy Code) through the
Effective Date.
142. "PROFESSIONAL FEE ORDER" means that certain order of the
Bankruptcy Court entered on January 16, 2004, establishing procedures for
interim compensation and reimbursement of expenses of Professionals.
143. "QUARTERLY DISTRIBUTION DATE" means the last Business Day of
the month following the end of each calendar quarter after the Effective
Date; provided, however, that if the Effective Date is within 45 days before
-------- -------
the end of a calendar quarter, the first Quarterly Distribution Date will be
the last Business Day of the month following the end of the first calendar
quarter after the calendar quarter in which the Effective Date falls.
144. "REGISTRATION RIGHTS AGREEMENT" means the agreement, a form of
which is attached hereto as Exhibit J, whereby Reorganized Solutia will be
obligated to register certain shares of New Common Stock pursuant to the
terms and conditions of such agreement.
145. "REINSTATED" or "REINSTATEMENT" means a Claim or Equity
Interest unimpaired within the meaning of section 1124 of the Bankruptcy
Code. Unless the Plan specifies a particular method of Reinstatement, when
the Plan provides that an Allowed Claim or Allowed Equity Interest will be
Reinstated, such Claim or Equity Interest will be Reinstated, at the
applicable Reorganized Debtor's sole discretion, in accordance with one of
the following:
a. The legal, equitable and contractual rights to which
such Claim or Equity Interest entitles the holder will be
unaltered; or
b. Notwithstanding any contractual provision or applicable
law that entitles the Holder of such Claim or Equity Interest to
demand or receive accelerated payment of such Claim or Interest
after the occurrence of a default:
12
i. any such default that occurred before or after
the Petition Date, other than a default of a kind
specified in section 365(b)(2) of the Bankruptcy Code,
will be cured;
ii. the maturity of such Claim or Equity
Interest, as such maturity existed before such default,
will be reinstated;
iii. the Holder of such Claim or Equity Interest
will be compensated for any damages incurred as a result
of any reasonable reliance by such Holder on such
contractual provision or such applicable law to the extent
required by section 1124(c) of the Bankruptcy Code; and
iv. the legal, equitable or contractual rights to
which such Claim or Equity Interest entitles the Holder of
such Claim or Equity Interest will not otherwise be
altered.
146. "RELATIONSHIP AGREEMENT" means that certain agreement between
and among Reorganized Solutia, Monsanto and Funding Co, substantially in the
form of Exhibit A.
147. "REORGANIZED . . ." means, when used in reference to a
particular Debtor, such Debtor on and after the Effective Date.
148. "RESTRUCTURING TRANSACTIONS" means those mergers,
consolidations, restructurings, transfers, conversions, dispositions,
liquidations or dissolutions that the Debtors or Reorganized Debtors
determine to be necessary or appropriate to effect a restructuring of a
Debtor's business or a restructuring of the overall corporate structure of
the Reorganized Debtors, all of which shall be effected by the Restructuring
Transactions Agreement.
149. "RESTRUCTURING TRANSACTIONS AGREEMENT" means the agreement or
agreements that govern the Restructuring Transactions, as set forth on
Exhibit M.
150. "RETAINED SITES" means the "Retained Sites" as defined and set
forth in the Relationship Agreement.
151. "RETIREES" has the meaning set forth in the preamble to the
Retiree Settlement Agreement.
152. "RETIREE APPROVAL ORDER" means an order of the Bankruptcy
Court, approving the Retiree Settlement Agreement.
153. "RETIREE BENEFITS" means the benefits provided to the Retirees
as set forth in the Retiree Settlement Agreement.
154. "RETIREE CLAIM" means an Allowed non-priority, Unsecured Claim
on account of certain consensual benefit reductions included in the Retiree
Settlement Agreement, in the aggregate amount of $35 million, which shall
(a) result in a Distribution of Pool C Common Stock in accordance with the
terms of the Retiree Settlement Agreement and the Plan, and (b) not be
adjusted based on the General Unsecured Claim Adjustment or otherwise,
except for dilution on account of the Incentive Stock Option Plan, to be
held in trust (or sold) for the benefit of Retirees in accordance with the
Retiree Settlement Agreement.
13
155. "RETIREES' COMMITTEE" means the official committee of retirees
of the Debtors appointed by the United States Trustee in the Chapter 11
Cases pursuant to section 1114 of the Bankruptcy Code.
156. "RETIREE SETTLEMENT AGREEMENT" means that certain agreement,
effective as of the Effective Date, between the Debtors and the Retirees'
Committee, substantially in the form of Exhibit B.
157. "RETIREE TRUST" has the meaning set forth in the Retiree
Settlement Agreement.
158. "RIGHTS" means the non-transferable rights to subscribe for
and to acquire, on the Effective Date, an aggregate of 22.7% of the New
Common Stock, which will be allocated for Plan purposes only as shares of
Pool B Common Stock, in exchange for $250 million in Cash in accordance with
the terms and conditions of the Rights Offering as set forth in the Rights
Offering Procedures.
159. "RIGHTS OFFERING" means the offering of the Rights by the
Debtors to Eligible Holders.
160. "RIGHTS OFFERING ORDER" means that certain order of the
Bankruptcy Court entered on _______, 2006, approving the Rights Offering
Procedures and the Rights Offering, which may be included in the Disclosure
Statement Order.
161. "RIGHTS OFFERING PROCEDURES" means those certain Rights
Offering Procedures, which set forth the terms and conditions of the Rights
Offering, which shall be in substantially the form annexed hereto as Exhibit H.
162. "RIGHTS SUBSCRIPTION EXERCISE FORM" means that certain form
distributed to each Eligible Holder, which form such Eligible Holder may use
to exercise Rights.
163. "SCHEDULES" means the schedules of assets and liabilities and
the statements of financial affairs filed by the Debtors with the Bankruptcy
Court, as required by section 521 of the Bankruptcy Code and the Official
Bankruptcy Forms, as the same may have been or may be amended, modified or
supplemented.
164. "SECURED CLAIM" means a Claim, other than a Senior Secured
Note Claim or DIP Claim, that is secured by a lien on property in which an
Estate has an interest or that is subject to setoff under section 553 of the
Bankruptcy Code, to the extent of the value of the Holder's interest in the
applicable Estate's interest in such property or to the extent of the amount
subject to setoff, as applicable, as determined pursuant to section 506(a)
of the Bankruptcy Code and, if applicable, section 1129(b) of the Bankruptcy
Code.
165. "SECURITIES ACT" means the Securities Act of 1933, 15 U.S.C.
Sections 77a-77aa, as now in effect or hereafter amended.
166. "SECURITY CLAIMS" means any Claim (a) arising from rescission
of a purchase or sale of a security of any of the Debtors, (b) for damages
arising from the purchase or sale of such security, (c) for reimbursement or
contribution allowed under section 502 of the Bankruptcy Code on account of
such Claim; or (d) otherwise subject to subordination under section 510(b)
of the Bankruptcy Code.
167. "SENIOR SECURED NOTES" means those certain 11.25% Senior
Secured Notes, due on July 15, 2009, issued pursuant to that certain
Indenture, dated July 9, 2002, as amended from time to time.
168. "SENIOR SECURED NOTE CLAIMS" means any Claim arising from the
Senior Secured Notes.
14
169. "SEPARATION AGREEMENT" means that certain agreement, dated as
of September 1, 2000, as amended, by and between Pharmacia and Monsanto.
170. "SETTLED ADVERSARY PROCEEDINGS" means the following adversary
proceedings commenced in the Bankruptcy Court: Solutia Inc. v. Pharmacia
Corp., Case No. 03-93700 (PCB), filed Dec. 17, 2003; Solutia Inc. v.
Pharmacia Corp, et al., Case. No. 04-2969 (PCB), filed April 20, 2004;
Official Committee of Retirees v. Solutia Inc., et al., Case No. 04-3057
(PCB), filed May 7, 2004; and Solutia Inc. vs. Monsanto Company and
Pharmacia Corporation, Case No. No. 05-03353 (PCB), filed on December 17,
2005.
171. "SHAREHOLDERS AGREEMENT" means that certain agreement between
Reorganized Solutia and Monsanto, substantially in the form of Exhibit L
hereto.
172. "SHARED SITES" means the "Shared Sites" as defined and set
forth in the Relationship Agreement.
173. "SPINOFF" means the transaction contemplated by the
Distribution Agreement, whereby Pharmacia spun-off its Chemicals Assets and
Chemicals Liabilities to Solutia.
174. "SPINOFF INDEMNITY CLAIM" means any Claim or claim against any
of the Debtors, the Subsidiaries or Solutia's Affiliates, as appropriate,
for indemnification or contribution held by Monsanto or Pharmacia, including
the Monsanto Claims and the Pharmacia Claims, that arise from or relate to
the Spinoff or the Distribution Agreement.
175. "STIPULATION OF AMOUNT AND NATURE OF CLAIM" means a
stipulation or other agreement between a Debtor or Reorganized Debtor,
subject to Section VIII.B herein, or the claims monitor, and a Holder of a
Claim approved by the Bankruptcy Court or an agreed order of the Bankruptcy
Court, establishing the allowed amount and nature of a Claim.
176. "SUBSIDIARY" or "SUBSIDIARIES" means the direct and indirect
subsidiaries of Solutia.
177. "TOLBERT SETTLEMENT AGREEMENT" means that certain settlement
agreement, dated September 9, 2003, resolving the lawsuit captioned Tolbert,
et al. v. Monsanto Company, et al., Civil Action No. 01-C-1407-S.
178. "TORT CLAIMS" means all legal, equitable or other claims,
demands, costs, causes of action and/or other liabilities arising under tort
law (including demands for indemnification or contribution relating to or
arising out of any such liability, whether arising under contract, tort law
or otherwise), whether currently asserted or asserted in the future, whether
known or unknown, (a) which constitute Chemicals Liabilities assumed by
Solutia under the Distribution Agreement, (b) for which Solutia was required
to indemnify Monsanto and Pharmacia under the Distribution Agreement, and
(c) which are for property damage, personal injury, products liability or
premises liability or other damages arising out of or related to exposure to
asbestos, PCB, dioxin, benzene, vinyl chloride, silica, butadiene,
pentachlorophenol, styrene tars, other chemical exposure or environmental
contamination, regardless of whether (i) any of the Debtors is, was or will
be named as a defendant in any action commenced by or on behalf of the
holder of such Tort Claim, or (ii) such holder has filed a proof of claim in
the Chapter 11 Case. "Tort Claims" shall not include, among other things:
NRD Claims; claims for medical or retiree benefits, including retiree
medical, disability and life insurance benefits; monitoring obligations with
respect to PAB-exposed former employees; workers compensation claims brought
solely pursuant to worker compensations statutes and not constituting or
arising out of a claim, demand, cost, cause of action and/or other liability
that would otherwise be defined as a "Tort Claim" herein; antitrust
15
claims; commercial, business or contract claims; Environmental Liability
Costs; any other remediation obligations covered by the Relationship
Agreement; Legacy Claims for "response" as defined under Section 101(25) of
CERCLA; claims asserted in connection with any pension or similar
obligations of Solutia, including (x) claims asserted in the actions
entitled Davis et al. v. Solutia Inc. Employees' Pension Plan, No.
3:05CV736, Scharringhausen et al. v. Solutia Inc. Employees' Pension Plan,
No. 3:06CV00099, and the administrative charge entitled Larry Probst, et al.
v. Monsanto Company and Solutia, Inc., EEOC Charge Nos. 280 A 00618 through
280 A 00652, and any similar litigation and (y) claims asserted in the
action entitled Miller et al v. Pharmacia Corporation, No. 4:04CV981, or any
similar litigation; or any claims, including claims for exposure to
chemicals or other substances, arising from Solutia's operations after the
Spinoff.
179. "TREASURY REGULATIONS" means regulations (including temporary
and proposed regulations) promulgated under the Internal Revenue Code, as
amended from time to time, by the United States Treasury Department.
180. "UNDELIVERABLE DISTRIBUTION" means a Distribution of New
Common Stock or Cash that is returned to the Reorganized Debtors as
undeliverable or is otherwise unclaimed for one year after the date such
Distribution was made.
181. "UNIFORM COMMERCIAL CODE" means the uniform code of laws
governing various commercial transactions, including the sale of goods,
banking transactions, secured transactions in personal property and other
matters, as applicable in the relevant state(s).
182. "UNIMPAIRED" means, with respect to a Claim (or Class of
Claims), a Claim (or Class of Claims) that is unimpaired within the meaning
of section 1124 of the Bankruptcy Code.
183. "UNIMPAIRED CLAIM" means a Claim classified in an Unimpaired
Class.
184. "UNIMPAIRED CLASS" means each of Classes 1, 2, 3, 4, 5, 6 and
7 as set forth in Article III of the Plan.
185. "UNITED STATES OF AMERICA" means the United States of America
and all of its agencies, subdivisions and instrumentalities.
186. "UNSECURED CLAIM" means any Claim that is neither secured nor
entitled to priority under the Bankruptcy Code or any order of the Court,
including any Claim arising from the rejection of an Executory Contract or
Unexpired Lease under section 365 of the Bankruptcy Code.
187. "UNSECURED NOTES CLAIMS" means Claims arising from the
Prepetition Indenture.
188. "VALUE" shall have the meaning set forth in Section VII.I
hereof.
189. "VOTING AGENT" means Financial Balloting Group LLC, 757 Third
Avenue, 3rd Floor, New York, New York 10017.
190. "VOTING DEADLINE" means the date set by the Bankruptcy Court
by which all Ballots for acceptance or rejection of the Plan must be
received by the Voting Agent.
191. "VOTING RECORD DATE" means the record date set by the
Bankruptcy Court, pursuant to Bankruptcy Rule 3017(d), for determining which
creditors and equity security holders are entitled to receive solicitation
materials and, when applicable, to vote on the Plan.
16
B. RULES OF INTERPRETATION AND COMPUTATION OF TIME
1. RULES OF INTERPRETATION
For purposes of the Plan, unless otherwise provided
herein: (a) whenever from the context it is appropriate, each term, whether
stated in the singular or the plural, will include both the singular and the
plural; (b) unless otherwise provided in the Plan, any reference in the Plan
to a contract, instrument, release or other agreement or document being in a
particular form or on particular terms and conditions means that such
document will be substantially in such form or substantially on such terms
and conditions; (c) any reference in the Plan to an existing document or
exhibit filed or to be filed means such document or exhibit, as it may have
been or may be amended, modified or supplemented pursuant to the Plan or
Confirmation Order; (d) any reference to an Entity as a Holder of a Claim or
Equity Interest includes that Entity's successors, assigns and, where
applicable, Affiliates; (e) all references in the Plan to sections, articles
and exhibits are references to sections, articles and exhibits of or to the
Plan; (f) the words "herein," "hereunder" and "hereto" refer to the Plan in
its entirety rather than to a particular portion of the Plan; (g) captions
and headings to articles and sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the
interpretation of the Plan; (h) subject to the provisions of any contract,
certificates of incorporation, by-laws, similar constituent documents,
instrument, release or other agreement or document entered into or delivered
in connection with the Plan, the rights and obligations arising under the
Plan will be governed by, and construed and enforced in accordance with,
federal law, including the Bankruptcy Code and the Bankruptcy Rules; and (i)
the rules of construction set forth in section 102 of the Bankruptcy Code
will apply.
2. COMPUTATION OF TIME
In computing any period of time prescribed or allowed by
the Plan, the provisions of Bankruptcy Rule 9006(a) will apply.
17
ARTICLE II
CLASSES OF CLAIMS AND EQUITY INTERESTS
All Claims and Equity Interests, except Administrative Expense
Claims and Priority Tax Claims, are placed in the Classes described below
for all purposes, including voting and Distribution pursuant to the Plan. In
accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative
Expense Claims and Priority Tax Claims, as described in Section III.A, have
not been classified and, thus, are excluded from the Classes described
below. A Claim or Equity Interest is classified in a particular Class only
to the extent that the Claim or Equity Interest qualifies within the
description of that Class and is classified in other Classes to the extent
that any remainder of the Claim or Equity Interest qualifies within the
description of such other Classes.
CLASS DESIGNATION IMPAIRMENT ENTITLED TO VOTE
Class 1 Priority Non-Tax Claims Unimpaired No (deemed to accept)
Class 2 Secured Claims Unimpaired No (deemed to accept)
Class 3 Senior Secured Notes Claims Unimpaired No (deemed to accept)
Class 4 Convenience Claims Unimpaired No (deemed to accept)
Class 5 NRD Claims Unimpaired No (deemed to accept)
Class 6 Insured Claims Unimpaired No (deemed to accept)
Class 7 Tort Claims Unimpaired No (deemed to accept)
Class 8 Monsanto Claims Impaired Yes
Class 9 Legacy Site Claims Impaired Yes
Class 10 General Unsecured Claims Impaired Yes
Class 11 Retiree Claim Impaired Yes
Class 12 Non- Debtor Intercompany Claims Impaired Yes
Class 13 Debtor Intercompany Claims Impaired No (deemed to accept)
Class 14 Axio Claims Impaired No (deemed to reject)
Class 15 Security Claims Impaired No (deemed to reject)
Class 16 Equity Interests Impaired No (deemed to reject)
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ARTICLE III
TREATMENT OF CLAIMS AND EQUITY INTERESTS
A. UNCLASSIFIED CLAIMS
1. PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS
a. ADMINISTRATIVE EXPENSE CLAIMS IN GENERAL
Except as specified in this Section III.A, and subject
to the Administrative Expense Claim Bar Date provisions herein, unless
otherwise agreed to by the Holder of an Administrative Expense Claim and the
applicable Debtor or Reorganized Debtor, each Holder of an Allowed
Administrative Expense Claim will receive, in full satisfaction of its
Administrative Expense Claim, Cash equal to the amount of such Allowed
Administrative Expense Claim either (i) on the Effective Date or as soon
thereafter as reasonably practicable or (ii) if the Administrative Expense
Claim is not Allowed as of the Effective Date, 30 days after the date on
which an order allowing such Administrative Expense Claim becomes a Final
Order.
b. ORDINARY COURSE LIABILITIES
Allowed Administrative Expense Claims based on liabilities
incurred by a Debtor in the ordinary course of its business will be paid by
the applicable Reorganized Debtor pursuant to the terms and conditions of
the particular transaction giving rise to such Allowed Administrative
Expense Claims, without any further action by the Holders of such Allowed
Administrative Expense Claims.
c. DIP CLAIMS
On the Effective Date, or as soon thereafter as reasonably
practicable, unless otherwise agreed to by the DIP Lenders pursuant to the
DIP Agreement, the Allowed DIP Claims will be paid in Cash in amounts equal
to the amount of such Allowed DIP Claims.
d. BAR DATES FOR ADMINISTRATIVE EXPENSE CLAIMS
i. GENERAL ADMINISTRATIVE EXPENSE CLAIM BAR DATE PROVISIONS
Except as otherwise provided in this Section III.A,
unless a request for the payment of an Administrative Expense Claim
previously was filed with the Bankruptcy Court, requests for payment of an
Administrative Expense Claim must be filed with the Bankruptcy Court and
served on the Reorganized Debtors, pursuant to the procedures specified in
the Confirmation Order and the notice of entry of the Confirmation Order, no
later than 45 days after the Effective Date. Any Holder of an Administrative
Expense Claim that is required to file and serve a request for payment of
such Administrative Expense Claim and that does not file and serve such a
request within the time established by this Section __ of the Plan will be
forever barred from asserting such Administrative Expense Claim against the
Debtors, the Reorganized Debtors or their respective property and such
Administrative Expense Claim will be deemed discharged as of the Effective
Date. Objections to such requests for payment of an Administrative Expense
Claim must be filed with the Bankruptcy Court and served on the Debtors or
the Reorganized Debtors, as applicable, and the requesting party by the
later of (A) 120 days after the Effective Date or (B) 60 days after the
filing of the applicable request for payment of the Administrative Expense
Claims with the Bankruptcy Court.
19
ii. BAR DATES FOR CERTAIN ADMINISTRATIVE EXPENSE CLAIMS
a. PROFESSIONAL COMPENSATION
(i) FINAL FEE APPLICATIONS. All final requests for
payment of Professional Fee Claims must be filed with the Bankruptcy Court
and served on Reorganized Solutia no later than 45 days after the Effective
Date. After notice and a hearing in accordance with the procedures
established by the Bankruptcy Code and prior orders of the Bankruptcy Court
in the Chapter 11 Cases, the allowed amounts of such Professional Fee Claims
shall be determined by the Bankruptcy Court.
(ii) PAYMENT OF INTERIM AMOUNTS. Subject to the
Holdback Amount, on the Effective Date, the Debtors or Reorganized Debtors
shall pay all amounts owing to Professionals for all outstanding amounts
payable relating to prior periods through the Effective Date. To receive
payment on the Effective Date for unbilled fees and expenses incurred
through such date, the Professionals shall reasonably estimate fees and
expenses due for periods that will not have been billed as of the Effective
Date and shall deliver such estimate to the Debtors and the United States
Trustee prior to the Effective Date. The Debtors or Reorganized Debtors, as
applicable, shall pay the Professionals' reasonably estimated amount of such
fees and expenses as soon as reasonably practicable after receiving the
estimate, but in no event prior to the Effective Date. Within forty-five
(45) days after the Effective Date, a Professional receiving payment for the
estimated period shall submit a detailed invoice covering such period in the
manner and providing the detail as set forth in the Professional Fee Order.
If the estimated payment received by any Professional exceeds the actual
fees and expenses for such period, as ultimately approved by the Bankruptcy
Court in connection with the relevant final fee application, such excess
amount will be credited against the Holdback Amount for such Professional
or, if the award of the Holdback Amount for such matter is insufficient,
disgorged by such Professional within 45 days after the issuance of the
Order approving the relevant final fee application. If the estimated payment
received by any Professional is lower than the actual fees and expenses for
such period as ultimately approved by the Bankruptcy Court in connection
with the relevant final fee application, the difference between the amount
approved and the estimated payment shall promptly be paid to such
Professional.
(iii) HOLDBACK AMOUNT. On the Effective Date, the
Debtors or the Reorganized Debtors shall fund the Holdback Escrow Account
with Cash equal to the aggregate Holdback Amount for all Professionals. The
Reorganized Debtors shall maintain the Holdback Escrow Account in trust for
the Professionals with respect to whom fees have been held back pursuant to
the Professional Fee Order. Such funds shall not be considered property of
the Debtors, or the Reorganized Debtors. The remaining Holdback Amount owing
to each Professional shall be paid to such Professional by Reorganized
Solutia from the Holdback Escrow Account when such Professional's
Professional Fee Claim is finally allowed by the Bankruptcy Court. When all
Professional Fee Claims have been paid in full, amounts remaining in the
Holdback Escrow Account, if any, shall be paid to the Reorganized Debtors.
b. ORDINARY COURSE LIABILITIES
Notwithstanding the provisions of Section III.A.1.d.i
above, Holders of Administrative Expense Claims based on liabilities
incurred by a Debtor in the ordinary course of its business will not be
required to file or serve any request for payment of such Administrative
Expense Claims. Such Administrative Expense Claims will be satisfied
pursuant to Section III.A.1.a.
20
2. PAYMENT OF PRIORITY TAX CLAIMS
Pursuant to section 1129(a)(9)(C) of the Bankruptcy Code, unless
otherwise agreed to by the Holder of a Priority Tax Claim and the applicable
Debtor or Reorganized Debtor, each Holder of an Allowed Priority Tax Claim
will receive, in full satisfaction of its Priority Tax Claim, deferred Cash
payments totaling 100% of the principal amount of such Allowed Priority Tax
Claim, plus interest as provided herein, over a period not exceeding 6 years
from the date of assessment of such Priority Tax Claim. Payments will be
made in equal annual installments of principal, plus simple interest
accruing from the Effective Date at the interest rate equal to the
applicable federal rate as determined in accordance with Section 1274(d) of
the Internal Revenue Code. Unless otherwise agreed to by the Holder of a
Priority Tax Claim and the applicable Debtor or Reorganized Debtor, the
first payment on account of such Priority Tax Claim will be payable 1 year
after the Effective Date or, if the Priority Tax Claim is not allowed within
1 year after the Effective Date, the first Quarterly Distribution Date after
the date on which an order allowing such Priority Tax Claim becomes a Final
Order; provided, however, that the Reorganized Debtors will have the right
-------- -------
to pay any Allowed Priority Tax Claim, or any remaining balance of such
Priority Tax Claim, in full at any time on or after the Effective Date,
without premium or penalty.
B. UNIMPAIRED CLASSES OF CLAIMS
1. PRIORITY NON-TAX CLAIMS (CLASS 1)
a. TREATMENT:
On the later of (i) the Effective Date or as soon thereafter as
reasonably practicable, (ii) the date on which a Priority Non-Tax Claim
becomes an Allowed Priority Non-Tax Claim, or as soon thereafter as
reasonably practicable or (iii) such other date as may be ordered by the
Bankruptcy Court, each Holder of an Allowed Priority Non-Tax Claim will
receive payment in full in Cash of such Allowed Priority Non-Tax Claim.
b. VOTING:
Class 1 is Unimpaired by the Plan. Pursuant to section 1126(f) of
the Bankruptcy Code, each Holder of an Allowed Priority Non-Tax Claim in
Class 1 is conclusively presumed to have accepted the Plan and is not
entitled to vote to accept or reject the Plan.
2. SECURED CLAIMS (CLASS 2)
a. TREATMENT:
On the later of (i) the Effective Date or as soon thereafter as
reasonably practicable, (ii) the date on which a Secured Claim becomes an
Allowed Secured Claim, or as soon thereafter as reasonably practicable or
(iii) such other date as may be ordered by the Bankruptcy Court, each
Allowed Secured Claim shall be, at the election of the applicable Debtor (a)
Reinstated, (b) paid in full, in Cash, in full satisfaction, settlement,
release and discharge of such Allowed Secured Claim, together with accrued
post-Petition Date interest to the extent allowable under section 506 of the
Bankruptcy Code, (c) satisfied by the Debtors' surrender of the collateral
securing such Allowed Secured Claim, (d) offset against, and to the extent
of, the Debtors' claims against the Holder of such Allowed Secured Claim or
(e) otherwise rendered Unimpaired, except to the extent that the Debtors and
a Holder of an Allowed Secured Claim may agree to a different treatment.
Each Secured Claim shall be deemed to be in a separate sub-class of Class 2
for all purposes hereunder.
21
b. VOTING:
Class 2 and each sub-class thereof is Unimpaired by the Plan.
Pursuant to section 1126(f) of the Bankruptcy Code, each Holder of an
Allowed Secured Claim in Class 2 and each sub-class thereof is conclusively
presumed to have accepted the Plan and is not entitled to vote to accept or
reject the Plan.
3. SENIOR SECURED NOTE CLAIM (CLASS 3)
a. TREATMENT:
On the Effective Date or as soon thereafter as reasonably practicable,
(a) Reorganized Solutia shall pay to the trustee of the Senior Secured Note
Claims, for the benefit of the Holders of such Claims, Cash in the amount of
the Allowed Senior Secured Note Claims or (b) at the election of the
applicable Debtor and subject to the reasonable consent of Monsanto and the
Creditors' Committee, the Senior Secured Note Claims shall be Reinstated.
The amount of the Allowed Senior Secured Note Claims will not include Claims
for any unamortized original issue discount, default interest, "make whole"
payments, call premiums or any other similar payments or penalties.
b. VOTING:
Class 3 is Unimpaired by the Plan. Pursuant to section 1126(f) of the
Bankruptcy Code, each Holder of an Allowed Senior Secured Note Claim in
Class 3 is conclusively presumed to have accepted the Plan and is not
entitled to vote to accept or reject the Plan.
4. CONVENIENCE CLAIMS (CLASS 4)
a. TREATMENT:
On the later of (i) the Effective Date or as soon thereafter as
reasonably practicable, or (ii) such other date as may be ordered by the
Bankruptcy Court, each Holder of an Allowed Convenience Claim will receive
Cash equal to the amount of such Claim (as reduced if applicable, pursuant
to an election by the Holder thereof).
b. VOTING:
Class 4 is Unimpaired by the Plan. Pursuant to section 1126(f) of the
Bankruptcy Code, each Holder of a Convenience Claim in Class 4 is
conclusively presumed to have accepted the Plan and is not entitled to vote
to accept or reject the Plan.
5. NRD CLAIMS (CLASS 5)
a. TREATMENT:
On the Effective Date, the NRD Claims shall be Reinstated. After the
Effective Date, the NRD Claims shall be liquidated and paid pursuant to
applicable law and in the ordinary course of business. Payment of the NRD
Claims will be allocated between Reorganized Solutia and Monsanto pursuant
to the terms of the Relationship Agreement.
22
b. VOTING:
Class 5 is Unimpaired by the Plan. Pursuant to section 1126(f) of the
Bankruptcy Code, each Holder of an Allowed NRD Claim in Class 5 is
conclusively presumed to have accepted the Plan and is not entitled to vote
to accept or reject the Plan.
6. INSURED CLAIMS (CLASS 6)
a. TREATMENT:
Each Holder of an Allowed Insured Claim shall be entitled to receive
the proceeds of any insurance policies available to cover such Insured
Claim. In the event that insurance coverage proceeds are insufficient to
completely satisfy any Allowed Claim that is partially an Insured Claim, the
Holder of such Insured Claim shall be entitled to an Allowed General
Unsecured Claim (or Claim in such other Class as may be applicable) in an
amount equal to the difference between the Allowed amount of the relevant
Claim and the amount of insurance coverage proceeds available to pay such
Claim.
b. VOTING:
Class 6 is Unimpaired by the Plan. Pursuant to section 1126(f) of the
Bankruptcy Code, each Holder of an Allowed Insured Claim in Class 6 is
conclusively presumed to have accepted the Plan and is not entitled to vote
to accept or reject the Plan.
7. TORT CLAIMS (CLASS 7)
a. TREATMENT:
In accordance with the Monsanto Tort Management, Monsanto shall take
financial responsibility, as between itself and Reorganized Solutia only,
for the management and payment of the Tort Claims, including all costs
related to the defense, mediation, arbitration, settlement, and any judgment
with respect to the Tort Claims.
b. VOTING:
Class 7 is Unimpaired by the Plan. Pursuant to section 1126(f) of the
Bankruptcy Code, each Holder of an Allowed Tort Claim in Class 7 is
conclusively presumed to have accepted the Plan and is not entitled to vote
to accept or reject the Plan.
C. IMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS
1. MONSANTO CLAIMS (CLASS 8)
a. TREATMENT:
The Monsanto Claims shall be treated in accordance with the Global
Settlement, as set forth in Section V.B of the Plan.
b. VOTING:
Class 8 is Impaired by the Plan. Pursuant to section 1126(a) of the
Bankruptcy Code, the Holder of the Monsanto Claims in Class 8 is entitled to
vote to accept or reject the Plan.
23
2. LEGACY SITE CLAIMS (CLASS 9)
a. TREATMENT:
In accordance with the Global Settlement, Monsanto shall take
financial responsibility, as between itself and Reorganized Solutia only,
for the management and payment of the Legacy Site Claims.
b. VOTING:
Class 9 is Impaired by the Plan. Pursuant to section 1126(a) of the
Bankruptcy Code, Holders of Legacy Site Claims in Class 9 are entitled to
vote to accept or reject the Plan.
3. GENERAL UNSECURED CLAIMS (CLASS 10)
a. TREATMENT:
In accordance with the procedures and timing for making
Distributions described in Article VII hereof, each Holder of an Allowed
General Unsecured Claim will receive a Pro Rata share of the GUC Stock Pool,
subject to adjustment as a result of the General Unsecured Claims Pool
Adjustment which is described in Section VII.I of this Plan and dilution on
account of the Incentive Stock Option Plan. In addition, each Eligible
Holder shall be entitled to participate in the Rights Offering pursuant to
the Rights Offering Procedures.
b. VOTING:
Class 10 is Impaired by the Plan. Pursuant to section 1126(a) of
the Bankruptcy Code, Holders of General Unsecured Claims in Class 10 are
entitled to vote to accept or reject the Plan.
4. RETIREE CLAIM (CLASS 11)
a. TREATMENT:
Subject to the terms of the Retiree Settlement Agreement, on the
Effective Date Reorganized Solutia shall contribute all of the Pool C Common
Stock to a trust established pursuant to the terms of the Retiree Settlement
Agreement, for the benefit of the Retirees. In accordance with the terms of
the Retiree Settlement Agreement, all Claims filed by individual Retirees on
account of reductions in benefits shall be deemed to be disallowed and
expunged in their entirety. Furthermore, in accordance with the Retiree
Settlement Agreement and the Retiree Approval Order, the Retirees' Committee
is deemed to be the Holder of the Retiree Claim.
b. VOTING:
Class 11 is Impaired by the Plan. Pursuant to section 1126(a) of the
Bankruptcy Code, the Holder of the Retiree Claim in Class 11 is entitled to
vote to accept or reject the Plan.
5. NON-DEBTOR INTERCOMPANY CLAIMS (CLASS 12)
a. TREATMENT:
On the Effective Date or as soon thereafter as reasonably practicable,
the amount of each Allowed Non-Debtor Intercompany Claim will be reduced by
60% and the remaining 40% of
24
each such Claim shall be Reinstated by virtue of book entries without the
Distribution of Cash or other consideration on account of such Claim.
b. VOTING:
Class 12 is Impaired by the Plan. Pursuant to section 1126(a) of the
Bankruptcy Code, the Holders of Non-Debtor Intercompany Claims in Class 12
are entitled to vote to accept or reject the Plan.
6. DEBTOR INTERCOMPANY CLAIMS (CLASS 13)
a. TREATMENT:
On the Effective Date or as soon thereafter as reasonably practicable,
the Debtor Intercompany Claims will be (a) eliminated or waived based on
accounting entries in the Debtors' books and records and other corporate
activities by the Debtors in their discretion or (b) discharged with no
Distributions thereon. There will be no Distributions on account of any of
the Debtor Intercompany Claims.
b. VOTING:
Class 13 is Impaired by the Plan. Holders of Debtor Intercompany
Claims shall receive no Distributions under the Plan. Notwithstanding the
foregoing, the Holders of Debtor Intercompany Claims, by virtue of their
status as Debtors and their authorization to file this Plan, are deemed to
accept the Plan.
7. AXIO CLAIMS (CLASS 14)
a. TREATMENT:
Holders of Axio Claims will receive no Distribution under the Plan on
account of such Claims.
b. VOTING:
Class 14 is Impaired by the Plan. Holders of Axio Claims shall
receive no Distributions under the Plan. Therefore, each Holder of an Axio
Claim in Class 15 is conclusively presumed to have rejected the Plan.
Pursuant to section 1126(g) of the Bankruptcy Code, Holders of Axio Claims
are not entitled to vote to accept or reject the Plan.
8. SECURITY CLAIMS (CLASS 15)
a. TREATMENT:
The Holders of Security Claims will receive no Distributions under
the Plan on account of such Claims.
b. VOTING:
Class 15 is Impaired by the Plan. Holders of Security Claims shall
receive no Distributions under the Plan. Therefore, each Holder of a
Security Claim in Class 15 is conclusively
25
presumed to have rejected the Plan. Pursuant to section 1126(g) of the
Bankruptcy Code, Holders of Security Claims are not entitled to vote to
accept or reject the Plan.
9. EQUITY INTERESTS (CLASS 16)
a. TREATMENT:
The Holders of Equity Interests in Solutia will receive no
Distributions under the Plan on account of such Equity Interests in Solutia.
As of the Effective Date, all existing Equity Interests in Solutia will be
cancelled pursuant to the Plan. To preserve the Debtors' corporate
structure, Equity Interests in all Debtors other than Solutia shall, subject
to the Restructuring Transactions Agreement, be Reinstated as equity
interests in the respective Reorganized Debtors as of the Effective Date.
b. VOTING:
Class 16 is Impaired by the Plan. Holders of Equity Interests in
Solutia shall receive no Distributions under the Plan on account of such
Equity Interests in Solutia. Therefore, each Holder of an Equity Interest in
Solutia in Class 16 is conclusively presumed to have rejected the Plan.
Pursuant to section 1126(g) of the Bankruptcy Code, Holders of Equity
Interests in Solutia are not entitled to vote to accept or reject the Plan.
26
ARTICLE IV
ACCEPTANCE OR REJECTION OF THE PLAN
A. SPECIAL PROVISIONS GOVERNING UNIMPAIRED CLAIMS
Except as otherwise provided in the Plan, nothing shall affect the
Debtors' rights and defenses with respect to any Unimpaired Claims,
including all rights with respect to legal and equitable defenses to
set-offs and recoupments against such Unimpaired Claims.
B. CLASSES ENTITLED TO VOTE
Classes 8, 9, 10, 11 and 12 are Impaired Classes and are entitled
to vote to accept or reject the Plan. By operation of law, each Unimpaired
Class of Claims is deemed to have accepted the Plan and is not entitled to
vote to accept or reject the Plan. Classes 1, 2, 3, 4, 5, 6 and 7 are
Unimpaired Classes and are deemed to have accepted the Plan. By operation of
law, any Class of Claims or Equity Interests that is not entitled to receive
or retain any property of the Debtors under the Plan is deemed to have
rejected the Plan. Classes 14, 15 and 16 are not entitled to receive or
retain any property of the Debtors, are not entitled to vote and are deemed
to have rejected the Plan.
C. CRAMDOWN
The Debtors request Confirmation under section 1129(b) of the
Bankruptcy Code with respect to any Impaired Class that does not accept the
Plan pursuant to section 1126 of the Bankruptcy Code. The Debtors reserve
the right, subject to the consent of Monsanto and the Creditors' Committee,
which consent shall not be unreasonably withheld, to modify the Plan to the
extent, if any, that Confirmation pursuant to section 1129(b) of the
Bankruptcy Code requires modification.
27
ARTICLE V
MEANS FOR IMPLEMENTATION OF THE PLAN
A. GENERAL SETTLEMENT OF CLAIMS
As discussed in detail in Article VI of the Disclosure Statement
and as otherwise provided herein, pursuant to section 1123 of the Bankruptcy
Code and Bankruptcy Rule 9019, and in consideration for the classification,
Distributions, releases and other benefits provided under the Plan, upon the
Effective Date, the provisions of the Plan shall constitute a good faith
compromise and settlement of all Claims and Equity Interests and
controversies resolved pursuant to the Plan. Subject to Article VII, all
Distributions made to Holders of Allowed Claims in any Class are intended to
be and shall be final.
B. GLOBAL SETTLEMENT
As discussed in detail in Article VI of the Disclosure Statement,
as set forth in the Confirmation Order, and as otherwise provided herein,
pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019,
and in consideration for the Monsanto Contribution, the Pharmacia
Contribution, and as a result of arm's-length negotiations with the
Retirees' Committee and the Creditors' Committee, the provisions of the Plan
shall constitute a good faith compromise and settlement of all Claims and
controversies between the Estates and (a) Monsanto, including the Monsanto
Claims and all causes of action asserted in the Equity Committee Adversary
Proceeding, (b) Pharmacia, including the Pharmacia Claims and all causes of
action asserted in the Equity Committee Adversary Proceeding, and (c) the
Retirees including all Claims to post-employment and other benefits asserted
by the Retirees; provided, however, that the Global Settlement shall not
-------- -------
settle or resolve any claims, obligations, suits, damages, demands, debts,
rights, causes of action or liabilities as between Monsanto and Pharmacia
under the Separation Agreement.
1. MONSANTO FUNDING CO CONTRIBUTION
As discussed in detail in Article VI of the Disclosure Statement,
in consideration for the Monsanto Funding Co Contribution, Monsanto shall
receive 100% of the Pool B Common Stock, constituting 22.7% of the New
Common Stock, subject to adjustment based on the amount of Pool B Common
Stock purchased by Eligible Holders exercising Rights in connection with the
Rights Offering and subject to dilution on account of the Incentive Stock
Option Plan.
2. MONSANTO CONTRIBUTION
As discussed in detail in Article VI of the Disclosure Statement and
summarized directly below, in consideration for the Monsanto Contribution,
other than the Monsanto Funding Co Contribution, and in settlement of the
Monsanto Claims, Monsanto shall receive, subject to the provisions below
regarding the Monsanto Reserve, the Monsanto Pool A Stock Amount, which will
be allocated as shares of Pool A Common Stock, and subject to adjustment as
a result of the General Unsecured Claims Pool Adjustment and dilution on
account of the Incentive Stock Option Plan.
a. THE DISTRIBUTION AGREEMENT
The Distribution Agreement and any amendments thereto shall be
deemed to be a prepetition, non-executory contract. The Distribution
Agreement and any amendments thereto shall not survive the Chapter 11 Cases
and, except as provided herein or in the Plan Documents, any Claims, or
28
other liabilities or obligations of the Debtors arising thereunder or
related thereto shall (i) be discharged, (ii) be released and not survive
the Chapter 11 Cases and (iii) be deemed to be included in the Monsanto
Claims and the Pharmacia Claims. Notwithstanding any provision to the
contrary herein, this Article V shall have no effect whatsoever on the
rights, defenses, obligations, or claims between Monsanto and Pharmacia
arising from or existing under the Separation Agreement, and Solutia's
assumption of debts, liabilities, guarantees, assurances, commitments and
obligations under the Distribution Agreement shall be deemed to survive the
Chapter 11 Cases solely with respect to the rights, defenses, obligations or
claims as between Monsanto and Pharmacia and their respective Affiliates
under the Separation Agreement, and those rights, defenses, obligations or
claims shall continue to exist as if the Distribution Agreement survives the
Chapter 11 Cases; provided, however, notwithstanding the foregoing, neither
-------- -------
Monsanto, Pharmacia nor any other Person or Entity shall be entitled to
assert any claim or Claim against any of the Debtors or Reorganized Debtors
or their respective property with respect to any debts, liabilities,
guarantees, assurances, commitments or obligations assumed by Solutia under
the Distribution Agreement.
b. RELATIONSHIP AGREEMENT
On the Effective Date, Reorganized Solutia, Monsanto and Funding Co
shall enter into the Relationship Agreement. As an element of the Monsanto
Contribution, Monsanto shall, pursuant to the Relationship Agreement, agree
to (i) fund various environmental remediation projects and perform various
environmental remediation activities related to the Legacy Sites and the
Shared Sites, (ii) take financial responsibility, as between itself and
Reorganized Solutia only, for the management and payment of the Tort Claims,
all as more fully set forth in the Relationship Agreement, (iii) take
financial responsibility, as between itself and Reorganized Solutia only,
for the management and payment of the Legacy Site Claims, all as more fully
set forth in the Relationship Agreement, and (iv) subject to the Rights
Offering, provide the Monsanto Funding Co Contribution. Subject to the terms
of the Relationship Agreement, the Relationship Agreement and the Commercial
and Operating Agreements shall constitute an integrated and unitary
executory contract.
c. COMMERCIAL AND OPERATING AGREEMENTS
On the Effective Date, the Commercial and Operating Agreements shall
be assumed by Reorganized Solutia.
On the Effective Date, the Master Operating Agreement shall be deemed
to be amended so that the "initial term" described in section 5.1 thereof
shall be extended from twenty years from the effective date of the Master
Operating Agreement to twenty-three years from such effective date, with all
other terms remaining the same.
d. MONSANTO TORT MANAGEMENT
As of the Effective Date, Monsanto shall take financial
responsibility, as between itself and Reorganized Solutia only, for the
management and payment of the Tort Claims and be solely responsible, as
between itself and Reorganized Solutia only, for all costs related to the
defense, mediation, arbitration, judgment and settlement of the Tort Claims
and shall indemnify Reorganized Solutia, pursuant to the terms of the
Relationship Agreement, with respect to such Tort Claims. In addition, since
the Petition Date, Monsanto has paid all costs arising in connection with
the Tort Claims.
29
e. BACKSTOP FEE
On the Effective Date, Monsanto shall be deemed to have waived the
Backstop Fee.
f. MONSANTO'S SETTLEMENT OF ADVERSARY PROCEEDINGS, CONTESTED MATTERS,
DISPUTES AND MONSANTO CLAIMS
Subject to the terms of the Plan, the Relationship Agreement and the
Plan Documents, Monsanto and Solutia agree to (a) resolve all matters
related to the Distribution Agreement (b) withdraw the Settled Adversary
Proceedings with prejudice, and resolve all claims asserted therein (where
applicable, with the consent of Pharmacia and the Retirees' Committee) and
(c) settle the Monsanto Claims.
g. MONSANTO'S PROFESSIONALS
Reorganized Solutia shall pay the reasonable fees and reimburse the
reasonable expenses of Monsanto's Professionals, for work substantially
related to the Chapter 11 Cases, in an amount equal to the lesser of (a)
Monsanto's actual out of pocket costs with respect to such reasonable fees
and expenses and (b) the aggregate fees of the Creditors' Committee's
professionals, as approved by the Bankruptcy Court. Monsanto shall not be
required to file any fee application or other request with the Bankruptcy
Court in connection with the payment of such fees and expenses; provided,
--------
however, that if any dispute between Solutia and Monsanto or the Creditors'
- -------
Committee and Monsanto regarding Monsanto's professional fees cannot be
resolved in a reasonable period of time, then the Bankruptcy Court shall
determine the amount of reasonable fees to be paid to Monsanto.
h. MONSANTO ADMINISTRATIVE CLAIM
To the extent Monsanto incurred any post-petition, actual
out-of-pocket expenses relating to the Retained Sites, Monsanto shall
receive an Allowed Administrative Expense Claim for such expenditures.
3. PHARMACIA CONTRIBUTION
Pursuant to the Confirmation Order, and except for the limited
indemnities in favor of Pharmacia expressly set forth in the Relationship
Agreement, Pharmacia shall be deemed to have released and shall release, the
Debtors and the Reorganized Debtors from any and all claims, Claims and
obligations of the Debtors and the Reorganized Debtors under the
Distribution Agreement, including the Legacy Claims and related indemnity
obligations arising under the Distribution Agreement or otherwise, and any
other Claims or liabilities it holds, has held or may, in the future, hold
against the Debtors and the Reorganized Debtors, related to the Distribution
Agreement and the Legacy Claims. Pharmacia's release herein shall have no
effect whatsoever on the rights, defenses, obligations or claims between
Monsanto and Pharmacia arising from or existing under the Separation
Agreement. In addition, Pharmacia agrees to waive the Pharmacia Claims in
their entirety with prejudice and such Pharmacia Claims shall be expunged
with prejudice, and Solutia's assumption of debts, liabilities, guarantees,
assurances, commitments and obligations under the Distribution Agreement
shall be deemed to survive the Chapter 11 Cases solely with respect to the
rights, defenses, obligations or claims as between Monsanto and Pharmacia
and their respective Affiliates under the Separation Agreement, and those
rights, defenses, obligations or claims shall continue to exist as if the
Distribution Agreement survives the Chapter 11 Cases; provided, however,
-------- -------
notwithstanding the foregoing, but subject to the parties' rights under the
Plan, the Relationship Agreement and the Plan Documents, neither Monsanto,
Pharmacia nor
30
any other Person or Entity shall be entitled to assert any claim or Claim
against any of the Debtors or Reorganized Debtors or their respective
property with respect to any debts, liabilities, guarantees, assurances,
commitments or obligations assumed by Solutia under the Distribution
Agreement.
4. SETTLEMENT WITH RETIREES
The terms of the settlement regarding modifications to post employment
and other benefits provided to Retirees are set forth in the Retiree
Settlement Agreement, attached as Exhibit B hereto.
5. SETTLED ADVERSARY PROCEEDINGS
By agreement among the various parties to the Settled Adversary
Proceedings, on the Effective Date, all of the Settled Adversary Proceedings
shall be deemed dismissed or withdrawn with prejudice.
6. SOLUTIA'S ASSUMPTION OF CERTAIN ENVIRONMENTAL LIABILITY
The Claim or claims held by governmental agencies related to
Environmental Liabilities with respect to the Retained Sites, other than
Claims relating to United States v. Mallinckrodt Inc. et al, Civil Action
No. 4:02CV1488-ERW, (E.D. Mo.) (Eastern Division), which shall constitute
and be treated as a General Unsecured Claim for all purposes and be in Class
10, and the Shared Sites shall be reinstated and unaffected by the Chapter
11 Cases. Reorganized Solutia shall be receiving a discharge from the Claims
held by governmental agencies related to Environmental Liabilities Costs
with respect to the Legacy Sites. As stated above and described in the
Relationship Agreement, Monsanto, as between itself and Reorganized Solutia
only, shall be financially responsible for Environmental Liability Costs
with respect to the Legacy Sites. Pursuant to the Relationship Agreement,
Reorganized Solutia shall be financially responsible, as between itself and
Monsanto only, for Environmental Liability Costs with respect to the
Retained Sites and Reorganized Solutia and Monsanto shall, subject to a
sharing mechanism set forth in the Relationship Agreement, be financially
responsible, as between themselves, for Environmental Liability Costs with
respect to the Shared Sites.
C. RESTRUCTURING TRANSACTIONS
On the Effective Date, and pursuant to the Restructuring Transactions
Agreement, the applicable Debtors or Reorganized Debtors shall enter into
the Restructuring Transactions and shall take any actions as may be
necessary or appropriate to effect a corporate restructuring of their
respective businesses or a corporate restructuring of the overall corporate
structure of the Reorganized Debtors, as and to the extent provided therein.
The Restructuring Transactions may include one or more mergers,
consolidations, restructurings, conversions, dissolutions, transfers or
liquidations as may be determined by the Debtors or the Reorganized Debtors,
with the consent of Monsanto and the Creditors' Committee, which consent
shall not be unreasonably withheld, to be necessary or appropriate, in each
case as and to the extent provided in the Restructuring Transactions
Agreement. The actions to effect the Restructuring Transactions may include,
in each case as and to the extent provided in the Restructuring Transactions
Agreement: (1) the execution and delivery of appropriate agreements or other
documents of merger, consolidation, restructuring, conversion, disposition,
transfer, dissolution or liquidation containing terms that are consistent
with the terms of the Plan and that satisfy the applicable requirements of
applicable law and any other terms to which the applicable Entities may
agree; (2) the execution and delivery of appropriate instruments of
transfer, assignment, assumption or delegation of any asset, property,
right, liability, debt or obligation on terms consistent with the terms of
the Plan and having other terms for which the applicable parties agree;
(3) the filing of appropriate certificates or articles of incorporation,
31
reincorporation, merger, consolidation, conversion or dissolution pursuant
to applicable state law; and (4) all other actions that the applicable
Entities determine to be necessary or appropriate, including making filings
or recordings that may be required by applicable law in connection with the
Restructuring Transactions.
D. CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE REORGANIZED
DEBTORS
Except as otherwise provided herein, or in the Restructuring Transactions
Agreement, each Debtor will, as a Reorganized Debtor, continue to exist
after the Effective Date as a separate corporate entity, with all the powers
of a corporation under applicable law and without prejudice to any right to
alter or terminate such existence (whether by merger, dissolution or
otherwise) under applicable state law. Except as otherwise provided herein,
as of the Effective Date, all property of the respective Estates of the
Debtors, and any property acquired by a Debtor or Reorganized Debtor under
the Plan, will vest in the applicable Reorganized Debtor, free and clear of
all Claims, Liens, charges, other encumbrances and Equity Interests, except
for obligations assumed or created under the Plan or the Plan Documents. On
and after the Effective Date, each Reorganized Debtor may operate its
businesses and may use, acquire and dispose of property and compromise or
settle any claims without supervision or approval by the Bankruptcy Court
and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules,
other than those restrictions expressly imposed by the Plan or the
Confirmation Order. Without limiting the foregoing, each Reorganized Debtor
may pay the charges that it incurs after the Effective Date for
Professionals' fees, disbursements, expenses or related support services
(including reasonable fees relating to the preparation of Professional fee
applications) without application to the Bankruptcy Court.
E. EXECUTION OF PLAN DOCUMENTS
On the Effective Date, the Reorganized Debtors and the other parties
thereto shall execute and deliver the Plan Documents, as applicable.
F. CORPORATE GOVERNANCE, DIRECTORS AND OFFICERS AND CORPORATE ACTION OF THE
REORGANIZED DEBTORS
1. NEW CERTIFICATES OF INCORPORATION AND NEW BY-LAWS
On or immediately prior to the Effective Date, the Reorganized Debtors
will file their respective New Certificates of Incorporation with the
applicable Secretaries of State and/or other applicable authorities in their
respective states of incorporation in accordance with the corporate laws of
the respective states of incorporation. After the Effective Date, the
Reorganized Debtors may amend and restate their respective New Certificates
of Incorporation and New By-Laws and other constituent documents as
permitted by the laws of their respective states of incorporation and their
respective New Certificates of Incorporation and New By-Laws.
2. DIRECTORS AND OFFICERS OF THE REORGANIZED DEBTORS
As of the Effective Date, the initial board of directors and the
officers of each of the Reorganized Debtors shall be appointed in accordance
with the respective New Certificates of Incorporation and New By-Laws. In
accordance with the Global Settlement, the initial Board of Directors of
Reorganized Solutia shall be appointed as follows: (a) three directors shall
be selected by Monsanto; (b) three directors shall be selected by the
Creditors' Committee; and (c) one director shall be Reorganized Solutia's
Chief Executive Officer. Pursuant to section 1129(a)(5) of the Bankruptcy
Code, the Debtors will disclose, by making a filing with the Bankruptcy
Court, the identity and affiliations of any Person proposed to serve on the
initial board of directors or be an officer of each of the Reorganized
32
Debtors. To the extent any such director or officer of Reorganized Solutia
is an "insider" under the Bankruptcy Code, the nature and amount of any
compensation to be paid to such director or officer will also be disclosed.
Each such director and officer shall serve from and after the Effective Date
pursuant to the terms of the New Certificates of Incorporation, New By-Laws
and other constituent documents of the Reorganized Debtors.
3. CORPORATE ACTION
As of the Effective Date, the adoption and filing of the New
Certificates of Incorporation, the approval of the New By-laws, the
resignation of all directors of the Debtors, the appointment of directors
and officers for Reorganized Debtors, and all actions contemplated hereby
shall be deemed to be authorized and approved in all respects (subject to
the provisions herein), without the need for any further corporate,
shareholder, director or other action. All matters provided for herein
involving the corporate structure of Reorganized Debtors, and any corporate
action required by the Debtors or Reorganized Debtors in connection with the
Plan, shall be deemed to have occurred and shall be in effect, pursuant to
applicable law, without any requirement of further action by the security
holders or directors of the Debtors or Reorganized Debtors. On the Effective
Date, the appropriate officers of the Reorganized Debtors and members of the
board of directors of the Reorganized Debtors are authorized and directed to
issue, execute and deliver the agreements, documents, securities and
instruments contemplated by the Plan in the name of and on behalf of
Reorganized Debtors, if no such other date is specified in such other
documents, and will be authorized and approved in all respects and for all
purposes without any requirement of further action by stockholders or
directors of any of the Debtors or Reorganized Debtors.
4. THE NEW COMMON STOCK
The New Common Stock shall represent all of the equity interests in
Reorganized Solutia as of the Effective Date, subject to dilution in
connection with the Incentive Stock Option Plan. Reorganized Solutia will
cause the New Common Stock to be listed on the NYSE on or as soon as
practicable after the Effective Date; provided, however, that in the event
-------- -------
the New Common Stock is not listed on the NYSE, Reorganized Solutia shall
list the New Common Stock on another National Securities Exchange or
inter-dealer quotation system. Monsanto and the Creditors' Committee shall
take any and all reasonable actions necessary, as requested by the Debtors,
to enable Reorganized Solutia to comply with the listing requirements for
the NYSE.
5. SHAREHOLDERS AGREEMENT
The Shareholders Agreement between Reorganized Solutia and Monsanto,
attached as Exhibit L hereto, will govern certain of Monsanto's rights and
obligations as a shareholder of Reorganized Solutia.
G. EXIT FINANCING FACILITY, OBTAINING CASH FOR DISTRIBUTIONS AND TRANSFERS
OF FUNDS AMONG THE DEBTORS
On the Effective Date, the Reorganized Debtors are authorized to
execute and deliver those documents necessary or appropriate to obtain the
Exit Financing Facility, subject to the reasonable consent of Monsanto and
the Creditors' Committee. All Cash necessary for the Reorganized Debtors to
make payments required pursuant to the Plan will be obtained from the
Reorganized Debtors' Cash balances or the Exit Financing Facility. Cash
payments to be made pursuant to the Plan will be made by the Reorganized
Debtors; provided, however, that the Debtors and the Reorganized Debtors
-------- -------
will be entitled to transfer funds between and among themselves as they
determine to be necessary or appropriate to enable the Reorganized Debtors
to satisfy their obligations under the Plan. Except as set forth herein,
33
any changes in intercompany account balances resulting from such transfers
will be accounted for and settled in accordance with the Debtors' historical
intercompany account settlement practices and will not violate the terms of
the Plan.
H. RIGHTS OFFERING
1. RIGHTS OFFERING PROCEDURES
Eligible Holders will be entitled to participate in the Rights
Offering, in accordance with the terms of the Rights Offering Procedures and
as approved by the Bankruptcy Court in the Rights Offering Order.
2. THE BACKSTOP UNDERWRITING
In the event the Rights Offering is not fully subscribed, Monsanto
shall pay to Funding Co $250 million less the gross proceeds of the Rights
Offering in accordance with the terms of the Relationship Agreement. In
addition, on the Effective Date, Monsanto shall waive the Backstop Fee.
I. INCENTIVE STOCK OPTION PLAN
As of the Effective Date, the Incentive Stock Option Plan shall be
adopted and shall be deemed to be adopted by Reorganized Solutia.
Reorganized Solutia shall, on the Effective Date, implement the Incentive
Stock Option Plan. The terms of the Incentive Stock Option Plan shall be
contained in the Plan Supplement.
J. RELEASE OF LIENS AND GUARANTEE CLAIMS
Except as otherwise provided herein or in any contract, instrument,
release or other agreement or document entered into or delivered in
connection with the Plan, on the Effective Date and concurrently with the
applicable Distributions made to Holders of Allowed DIP Claims, Secured
Clams and Senior Secured Note Claims pursuant to Article III herein, all
Liens, other security interests or Claims on account of guarantees of such
indebtedness against the property of any Estate related to such Claims
(except for Claims that are Reinstated) will be fully released and
discharged, and all of the right, title and interest of any holder of such
Liens, other security interests or Claims on account of guarantees of such
indebtedness, including any rights to any collateral thereunder, will revert
to the applicable Reorganized Debtor and its successors and assigns.
As a condition to the receipt of Distributions hereunder, Holders of
Allowed DIP Claims, Secured Claims and Senior Secured Note Claims shall be
required to deliver all documents necessary to effectuate the release of the
Liens securing such Claims. Pursuant to Article 9 of the Uniform Commercial
Code, all Holders of Allowed DIP Claims, Secured Clams and Senior Secured
Note Claims are deemed to have appointed the Debtors as their respective
agents with authority to make the relevant filings required by the Uniform
Commercial Code or other filings necessary to cause the release of such
Liens and security interests of record.
K. CANCELLATION OF EXISTING SECURITIES AND AGREEMENTS
Unless otherwise agreed to by the Debtors, on the Effective Date,
except to the extent otherwise provided herein, all notes, instruments,
certificates and other documents evidencing (1) the DIP Claims, (2) the
Secured Claims, (3) the Senior Secured Note Claims, (4) the Unsecured Notes
Claims and (5) Equity Interests in Solutia and those Debtors whose stock is
to be canceled pursuant to the Restructuring
34
Transactions, other than a Claim that is Reinstated, shall be cancelled and
the obligations of the Debtors or the Reorganized Debtors in any way related
thereto (except for obligations provided for under this Plan) shall be
discharged. On the Effective Date, except to the extent otherwise provided
herein, the Prepetition Indenture shall be deemed to be cancelled as
permitted by section 1123(a)(5)(F) of the Bankruptcy Code and the
obligations of the Debtors thereunder shall be discharged.
L. EFFECTUATING DOCUMENTS
The Chief Executive Officer, President, Chief Financial Officer,
Senior Vice President or any Vice President of each Debtor or Reorganized
Debtor will be authorized to execute, deliver, file or record such
contracts, instruments, releases and other agreements or documents and take
such actions as may be necessary or appropriate to effectuate and implement
the provisions of the Plan. The Secretary or any Assistant Secretary of each
Debtor or Reorganized Debtor will be authorized to certify or attest to any
of the foregoing actions.
M. EMPLOYMENT AND OTHER BENEFITS PROGRAMS
To the extent that any of the Debtors have in place as of the
Effective Date employment, retirement, indemnification and other agreements,
or arrangements with their respective active directors, officers and
employees who will continue in such capacities (or similar capacities) after
the Effective Date, or retirement income plans, welfare benefit plans and
other plans for such persons, such agreements, programs and plans shall
remain in place after the Effective Date, and the Reorganized Debtors will
continue to honor such agreements, programs, and plans as modified or
amended during the Chapter 11 Cases; provided, however, that the Directors'
-------- -------
and Officers Indemnity Claims shall be waived and the Reorganized Debtors
shall have no obligations with respect thereto, as of the Effective Date.
After the Effective Date, the Reorganized Debtors shall each have
the authority, consistent with the applicable agreements, to terminate,
amend or enter into employment, retirement, indemnification and other
agreements with their respective active directors, officers and employees
and to terminate, amend or implement retirement income plans, welfare
benefit plans and other plans for active employees.
As of the Effective Date, the Retiree Benefits shall be modified in
accordance with the Retiree Settlement Agreement.
35
ARTICLE VI
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
A. ASSUMPTION AND REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
On the Effective Date, except as otherwise provided herein, all
Executory Contracts or Unexpired Leases, not previously assumed or rejected
pursuant to an order of the Bankruptcy Court, will be deemed rejected, in
accordance with the provisions and requirements of sections 365 and 1123 of
the Bankruptcy Code, other than those Executory Contracts or Unexpired
Leases that are (1) to be assumed pursuant to the terms of this Article VI,
or Section V.B.2.c of the Plan, (2) listed on Exhibit G, (3) the subject of
a motion to assume Executory Contracts or Unexpired Leases that is pending
on the Effective Date or (4) subject to a motion to reject an Executory
Contract or Unexpired Lease pursuant to which the requested effective date
of such rejection is after the Effective Date. Entry of the Confirmation
Order by the Bankruptcy Court shall constitute approval of such rejections
and the assumption of the Executory Contracts or Unexpired Leases listed on
Exhibit G hereto pursuant to sections 365(a) and 1123 of the Bankruptcy
Code. Any motions to assume Executory Contracts or Unexpired Leases pending
on the Effective Date shall be subject to approval by the Bankruptcy Court
on or after the Effective Date by a Final Order. Each Executory Contract and
Unexpired Lease assumed pursuant to this Section VI.A or by any order of the
Bankruptcy Court, which has not been assigned to a third party prior to the
Effective Date, shall revest in and be fully enforceable by the Reorganized
Debtors in accordance with its terms, except as such terms are modified by
the provisions of the Plan or any order of the Bankruptcy Court authorizing
and providing for its assumption under applicable federal law.
B. CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES
All proofs of Claim with respect to Claims arising from the
rejection of Executory Contracts or Unexpired Leases, pursuant to the Plan
or the Confirmation Order, if any, must be filed with the Bankruptcy Court
within thirty days after the date of entry of an order of the Bankruptcy
Court (including the Confirmation Order) approving such rejection. Any
Claims arising from the rejection of an Executory Contract or Unexpired
Lease not filed with the Bankruptcy Court within such time will be forever
barred from assertion against the Debtors or the Reorganized Debtors, their
Estates, Monsanto, Pharmacia or their property.
C. CURE OF DEFAULTS FOR EXECUTORY CONTRACTS AND UNEXPIRED LEASES ASSUMED
Any monetary defaults under each Executory Contract and Unexpired
Lease to be assumed pursuant to the Plan shall be satisfied, pursuant to
section 365(b)(1) of the Bankruptcy Code, by payment of the default amount
in Cash on the Effective Date or on such other terms as the parties to such
Executory Contracts or Unexpired Leases may otherwise agree. In the event of
a dispute regarding: (1) the amount of any payments to cure such a default,
(2) the ability of the Reorganized Debtors or any assignee to provide
"adequate assurance of future performance" (within the meaning of section
365 of the Bankruptcy Code) under the contract or lease to be assumed or (3)
any other matter pertaining to assumption, the cure payments required by
section 365(b)(1) of the Bankruptcy Code shall be made following the entry
of a Final Order or orders resolving the dispute and approving the
assumption. At least 10 days prior to the Confirmation Hearing, the Debtors
shall provide for notices of proposed assumption and proposed cure amounts
to be sent to applicable third parties and for procedures for objecting
thereto and resolution of disputes by the Bankruptcy Court. Any counterparty
to an Executory
36
Contract and Unexpired lease that fails to object timely to the proposed
assumption or cure amount will be deemed to have assented to such matters.
D. INSURANCE POLICIES
All of the Debtors' insurance policies and any agreements, documents or
instruments relating thereto, are treated as executory contracts under the
Plan. On the Effective Date, the Debtors shall be deemed to have assumed all
insurance policies and any agreements, documents and instruments relating to
coverage of all Insured Claims. Notwithstanding the foregoing, Distributions
under the Plan to any Holder of an Allowed Insured Claim shall be in
accordance with the treatment provided under Article III of the Plan.
E. ANNISTON SETTLEMENT
Reorganized Solutia shall assume its obligations under the Anniston
Global Settlement Agreement, the Anniston Side Letter and all related
agreements, and shall continue to pay the $5 million annual installments of
the settlement amount, as set forth in the Anniston Side Letter, together
with all education fund and related obligations; provided, however, if
-------- -------
Solutia's obligations set forth in this sentence are in any way inconsistent
with the Relationship Agreement, the Relationship Agreement shall control.
To the extent provided in the Relationship Agreement, Reorganized Solutia
shall indemnify Monsanto and its Affiliates, and Pharmacia and its
Affiliates against any Reorganized Solutia default in performing its
obligations under the Anniston Global Settlement Agreement and the Anniston
Side Letter.
F. ASSUMPTION OF PENSION OBLIGATIONS
Pursuant to the Plan, the Debtors shall assume and continue the
Pension Plan in accordance with its terms, satisfy the minimum funding
standards pursuant to 26 U.S.C. Section 412 and 29 U.S.C. Section 1082, and
administer the Pension Plan in accordance with its terms and the provisions
of ERISA. Furthermore, nothing in the Plan shall be construed as
discharging, releasing or relieving the Debtors or the Debtors' successors,
including the Reorganized Debtors, or any party, in any capacity, from any
liability imposed under any law or regulatory provision with respect to the
Pension Plan or the PBGC. The PBGC and the Pension Plan shall not be
enjoined or precluded from seeking to enforce such liability as a result of
any provision of the Plan or the Confirmation Order. Notwithstanding any
provision of the Plan to the contrary, the Pension Plan shall be assumed and
administered in accordance with ERISA and the Internal Revenue Code.
G. CONTRACTS AND LEASES ENTERED INTO AFTER THE PETITION DATE
Contracts and leases entered into after the Petition Date by any
Debtor, including any Executory Contracts and Unexpired Leases assumed by
such Debtor, will be performed by the Debtor or Reorganized Debtor liable
thereunder in the ordinary course of its business. Accordingly, such
contracts and leases (including any assumed Executory Contracts and
Unexpired Leases) will survive and remain unaffected by entry of the
Confirmation Order.
37
ARTICLE VII
PROVISIONS GOVERNING DISTRIBUTIONS
A. DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE EFFECTIVE DATE
Except as otherwise provided herein or as may be ordered by the
Bankruptcy Court, Distributions to be made on account of Claims that are
Allowed as of the Effective Date shall be made on the Effective Date, or as
soon as reasonably practicable thereafter. Unless otherwise specifically
provided for or contemplated in the Plan or Confirmation Order, or required
by applicable bankruptcy law, postpetition interest shall not accrue or be
paid on any Claims and no Holder of a Claim shall be entitled to interest
accruing on or after the Petition Date. For tax purposes, Distributions
received in respect of Allowed Claims shall be allocated first to the
principal amount of the Allowed Claims with any excess allocated to unpaid
interest that accrued on such Claims.
B. DELIVERY OF DISTRIBUTIONS
Reorganized Solutia shall make all Distributions required to be distributed
under the Plan. Any Distribution required to be made pursuant to this Plan
on a day other than a Business Day shall be made on the next succeeding
Business Day or as soon thereafter as reasonably practicable. Reorganized
Solutia may employ or contract with other Entities to assist in or make the
Distributions required by the Plan without further order of the Court.
C. DELIVERY AND DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED DISTRIBUTIONS
1. DELIVERY OF DISTRIBUTIONS IN GENERAL
Distributions to Holders of Allowed Claims shall be made at the
address of the Holder of such Claim as indicated on (a) the relevant proof
of Claim, or (b) if no proof of Claim has been filed or no address is
indicated on a proof of Claim, the records of the Debtors. Nonetheless, if
such Holder holds such Claims through a Nominee, Distributions with respect
to such Claims will be made to such Nominee and such Nominee shall, in turn,
make appropriate Distributions and book entries to reflect such
Distributions to such Holders; provided, however; that Distributions on
-------- -------
account of the Unsecured Notes Claims shall be made to the Prepetition
Indenture Trustee for distribution to the Holders of such Claims.
2. UNDELIVERABLE DISTRIBUTIONS
a. TREATMENT OF UNDELIVERABLE DISTRIBUTIONS
Reorganized Solutia shall distribute any Undeliverable Distribution
of New Common Stock to the General Unsecured Claims Reserve or the Monsanto
Reserve, as applicable, the relevant amounts of such unclaimed New Common
Stock, in accordance with the terms of the Plan. The Reorganized Debtors
shall retain any Undeliverable Distribution of Cash and may use such Cash
for general corporate purposes.
b. FAILURE TO CLAIM UNDELIVERABLE DISTRIBUTIONS
Any Holder of an Allowed Claim that does not assert a claim pursuant
to the Plan for an undeliverable or unclaimed Distribution within one year
after the date such Distribution is due shall be deemed to have forfeited
its claim to such undeliverable or unclaimed Distribution and shall be
forever
38
barred from asserting any such claim against any of the Debtors, their
Estates, the Reorganized Debtors, Monsanto, Pharmacia, or their property, or
any party that has received Distributions under the Plan. Nothing contained
herein shall require Reorganized Solutia, or any other party, to attempt to
locate any Holder of an Allowed Claim.
D. COMPLIANCE WITH TAX REQUIREMENTS/ALLOCATIONS
In connection with the Plan, to the extent applicable, Reorganized
Solutia shall comply with all withholding and reporting requirements imposed
by any federal, state, local or foreign taxing authority, and all
Distributions pursuant hereto shall be subject to such withholding and
reporting requirements. In addition, Reorganized Solutia will pay taxes on
the taxable net income or gain allocable to Holders of Disputed Claims on
behalf of such Holders and, when such Disputed Claims are ultimately
resolved, Holders whose Disputed Claims are determined to be Allowed Claims
will receive Distributions from Reorganized Solutia net of the taxes that
Reorganized Solutia had paid previously on their behalf.
E. RECORD DATE FOR DISTRIBUTION
At the close of business on the Distribution Record Date, the transfer
register for the Holders of any Claims shall be closed and there shall be no
further changes in the record of Holders of any Claims. Moreover,
Reorganized Solutia shall have no obligation to recognize the transfer of
any Holders of any Unsecured Notes Claims occurring after the Distribution
Record Date, and shall be entitled for all purposes herein to recognize and
deal only with those Holders of record as of the close of business on the
Distribution Record Date.
F. DISTRIBUTIONS OF WHOLE SHARES ONLY
Notwithstanding any other provision of this Plan, only whole numbers
of shares of the New Common Stock will be issued. When any Distribution on
account of an Allowed Claim would otherwise result in the issuance of a
number of shares of New Common Stock that is not a whole number, the actual
Distribution of shares of such stock will be rounded as follows: (i)
fractions equal to or greater than one half will be rounded to the next
higher whole number and (ii) fractions less than one half will be rounded to
the next lower number. The total number of shares of the New Common Stock to
be distributed to Holders of Allowed Claims will be adjusted as necessary to
account for the rounding provided for in this Section. If such rounding
results in Distributions of New Common Stock totaling less than the
authorized number of shares of New Common Stock, then any excess New Common
Stock shall not be issued. No consideration shall be provided in lieu of
fractional shares that are rounded down pursuant to this Section.
G. SET-OFFS AND RECOUPMENTS
The Debtors or Reorganized Solutia may, but shall not be required to,
set-off against or recoup from the Holder of any Allowed Claim on which
payments are to be made pursuant to the Plan, any claims of any nature
whatsoever that the Debtors or the Reorganized Debtors may have against the
Holder of such Allowed Claim that are not released under Article X of the
Plan and the Distributions to be made pursuant hereto on account of such
Allowed Claim, but neither the failure to do so nor the allowance of any
Claim hereunder shall constitute a waiver or release by the Debtors of any
such claim, right of setoff or recoupment that the Debtors may have against
the Holder of such Allowed Claim.
H. SURRENDER OF CANCELLED INSTRUMENTS OR SECURITIES
Unless otherwise agreed to by the Debtors or the Reorganized Debtors,
as applicable, as a condition precedent to receiving any Distribution
pursuant to the Plan on account of an Allowed Claim,
39
the Holder of such Claim shall tender the applicable instruments, securities
or other documentation evidencing such Claim to Reorganized Solutia, and in
the case of the DIP Agreement, the agent under the DIP Agreement shall have
either (1) delivered such release documents as requested by the Debtors (at
the Debtors' expense) or (2) provided a letter of authorization to the
Debtors to execute and release any instruments, securities or other
documentation securing the DIP Agreement. Any Distribution to be made
pursuant to the Plan on account of any such Claim shall, pending such
surrender, be treated as an Undeliverable Distribution pursuant to Section
VII.C.2 hereof. Any Holder of such Claim that fails to (1) surrender such
instrument, security, note or other documentation evidencing such Claim or
(2) execute and deliver an affidavit of loss and/or indemnity, before the
first anniversary of the Effective Date shall be deemed to have forfeited
all rights and Claims and may not participate in any Distribution under the
Plan, and any Distributions to which such Holder would have been entitled
shall be treated as Undeliverable Distributions.
I. THE GENERAL UNSECURED CLAIMS POOL ADJUSTMENT
In accordance with the terms of the Global Settlement, the number of
shares of Pool A Common Stock to be distributed to Holders of Allowed
General Unsecured Claims and Monsanto shall be subject to adjustment based
on the aggregate amount of Allowed General Unsecured Claims as of the date
on which the allowance or disallowance of all Disputed General Unsecured
Claims has been finally determined being above or below $700,000,000. The
number of shares of Pool A Common Stock to be distributed subject to the
General Unsecured Claims Pool Adjustment shall be determined in accordance
with the following formula:
o MULTIPLYING: (a) the percentage of New Common Stock represented
by the GUC Stock Pool by (b) the Court Approved Equity Value
(such product, the "Base GUC Recovery")
o DIVIDING: (a) the Base GUC Recovery by (b) the aggregate amount
of Allowed General Unsecured Claims as of the date on which the
allowance or disallowance of all Disputed General Unsecured
Claims has been finally determined (this quotient, the "Actual
Amount");
o SUBTRACTING from the Actual Amount the quotient that is
determined by DIVIDING: (a) the Base GUC Recovery by (b)
$700,000,000 (this difference the "Claims Difference");
o MULTIPLYING the absolute value of the Claims Difference by
$700,000,000 (this product, the "Value");
o MULTIPLYING the Value by .45 (this product, the "Claims
Adjustment Value"); and (in the event the aggregate amount of
Allowed General Unsecured Claims, as of the date on which the
allowance or disallowance of all Disputed General Unsecured
Claims has been finally determined, exceeds $700,000,000),
o DIVIDING: (a) the Claims Adjustment Value by (b) the price per
share of the New Common Stock on the Effective Date (the
resulting amount, the "General Unsecured Claims Pool
Adjustment").
If the aggregate amount of Allowed General Unsecured Claims as of
the date on which the allowance or disallowance of all Disputed General
Unsecured Claims has been finally determined is greater than $700 million,
then the GUC Stock Pool shall be increased, and the Monsanto Pool A Stock
Amount shall be decreased, by the amount of the General Unsecured Claims
Pool Adjustment.
40
By way of example only: if (1) the aggregate amount of Allowed General
Unsecured Claims, as of the date on which the allowance or disallowance of
all Disputed General Unsecured Claims has been finally determined, is
$800,000,000, (2) the Court Approved Equity Value is $950,000,000 and (3)
the price per share of the New Common Stock on the Effective Date is $25,
then the equation for the calculation of the General Unsecured Claims Pool
Adjustment would be written as follows:
..45x[|{((47.5% x 950,000,000)/800,000,000) - ((47.5% x 950,000,000)/700,000,000))}| * 700,000,000]
- --------------------------------------------------------------------------------------------------
25
Accordingly, the number of shares of Pool A Common Stock distributable to
Monsanto would be reduced by 1,015,312 shares valued at $25,382,812.
If the aggregate amount of Allowed General Unsecured Claims as of
the date on which the allowance or disallowance of all Disputed General
Unsecured Claims has been finally determined is less than $700 million, then
additional New Common Stock shall be issued, and distributed to Monsanto and
all holders of Pool B Common Stock, in an amount sufficient to provide
Monsanto, on account of the Pool A Common Stock issued to Monsanto under the
Plan, incremental value equal to the Claims Adjustment Value, and to prevent
the dilution of Pool B Common Stock as a result of the issuance of such
stock to Monsanto.
The number of additional shares to be issued under these circumstances
shall be determined by:
o MULTIPLYING: (a) the total number of shares of Pool A Common Stock,
Pool B Common Stock and Pool C Common Stock to be issued (including to
the General Unsecured Claims Reserve and the Monsanto Reserve) as of
the Effective Date by (b) the Claims Adjustment Value (such product,
the "Additional Shares Numerator").
o SUBTRACTING the Claims Adjustment Value from the Base GUC Recovery
(the resulting amount, the "Adjusted GUC Recovery"); and
o DIVIDING the Additional Shares Numerator by the Adjusted GUC Recovery.
Of such additional shares, (a) 22.7% shall be issued to the holders
of Pool B Common Stock and (b) the remainder shall be issued to Monsanto, on
account of its Pool A Common Stock.
By way of example only: if (1) the aggregate amount of Allowed
General Unsecured Claims, as of the date on which the allowance or
disallowance of all Disputed General Unsecured Claims has been finally
determined, is $650,000,000, (2) the Court Approved Equity Value is
$950,000,000 and (3) the price per share of the New Common Stock on the
Effective Date is $25 for each of the 38,000,000 shares to be issued as of
the Effective Date, then the equation for the calculation of the Claims
Adjustment Value would be written as follows:
..45x[|{((47.5% x 950,000,000)/650,000,000) - ((47.5% x 950,000,000)/700,000,000))}| * 700,000,000]
- --------------------------------------------------------------------------------------------------
Accordingly, the Claims Adjustment Value would be $15,620,192. Under such
circumstances, the equation for calculating the number of additional shares
to be issued would be:
(38,000,000 x $15,620,192)/(($950,000,000 x 47.5%)-$15,620,192)= 1,362,550
41
22.7%, or 309,299, of these additional shares of New Common Stock
would be distributed to holders of Pool B Common Stock, and 77.3%, or
1,053,251, of these additional shares would be distributed to Monsanto, on
account the Pool A Common Stock distributed to Monsanto under the Plan.
J. THE MONSANTO RESERVE
1. DEPOSIT OF NEW COMMON STOCK ON THE EFFECTIVE DATE
On the Effective Date, the Reorganized Debtors shall deposit the
Monsanto Pool A Stock Amount in the Monsanto Reserve.
2. PROCEDURE FOR DISTRIBUTING NEW COMMON STOCK TO MONSANTO
On the Effective Date, and on a quarterly basis thereafter (and in
no event later than the fifth (5th) Business Day after the end of each
quarter) until the date on which the allowance or disallowance of all
Disputed General Unsecured Claims has been finally determined, Reorganized
Solutia shall distribute to Monsanto the number of shares of New Common
Stock held in the Monsanto Reserve that are in excess of the number that
would be needed to make the General Unsecured Claims Pool Adjustment as of
the date such calculation is made. Reorganized Solutia's calculation of the
General Unsecured Claims Pool Adjustment shall be subject to agreement by
Monsanto and after such agreement is reached, shall constitute a binding
calculation upon Monsanto and all Holders of General Unsecured Claims. For
purposes of the calculation only, Reorganized Solutia shall calculate the
General Unsecured Claims Adjustment by treating all Disputed General
Unsecured Claims as if they were Allowed General Unsecured Claims on the
date such calculation is made.
a. FINAL RELEASE OF NEW COMMON STOCK HELD IN THE MONSANTO RESERVE
On the date on which the allowance or disallowance of all Disputed
General Unsecured Claims has been finally determined, the remaining shares
of New Common Stock held in the Monsanto Reserve, if any, shall be
distributed to Monsanto or to the General Unsecured Claims Reserve, as
applicable, in accordance with the General Unsecured Claims Pool Adjustment.
3. PROPERTY HELD IN MONSANTO RESERVE
a. DIVIDENDS AND DISTRIBUTIONS
Cash dividends and other distributions on account of the New Common
Stock to be held in the Monsanto Reserve will be transferred to the Monsanto
Reserve, concurrently with the transfer of such dividends and other
Distributions to other holders of New Common Stock. Cash held in the
Monsanto Reserve as a result of such dividends and other distributions, (i)
will be deposited in a segregated account and held in trust pending
distribution pursuant to the General Unsecured Claims Adjustment by
Reorganized Solutia for the benefit of Monsanto or the Holders of Allowed
General Unsecured Claims, as applicable, (ii) will be accounted for
separately and (iii) will not constitute property of the Reorganized
Debtors. Reorganized Solutia will invest the Cash held in the Monsanto
Reserve in a manner consistent with the Reorganized Debtors' investment and
deposit guidelines. Reorganized Solutia also will place in the Monsanto
Reserve, the proceeds, net of any applicable fees, from such investment of
Cash, and Distributions to Monsanto or the Holders of Allowed General
Unsecured Claims, as applicable, will include a Pro Rata share from such
investment of Cash from the Monsanto Reserve.
42
b. RECOURSE
Monsanto and each Holder of a General Unsecured Claim that ultimately
becomes an Allowed General Unsecured Claim will have recourse only to the
undistributed New Common Stock and their pro rata share of the proceeds from
the investment of Cash and dividends, if any, held in the Monsanto Reserve
or the General Unsecured Claims Pool Adjustment Reserve, as applicable, for
satisfaction of the Distributions to which Monsanto and Holders of Allowed
General Unsecured Claims, as applicable, are entitled under the Plan, and
not to any Reorganized Debtor, Monsanto, Pharmacia, their respective
property or any assets previously distributed on account of any Allowed
Claim.
c. VOTING RIGHTS
For voting purposes only, Monsanto shall have the right to vote the
number of shares of New Common Stock held in the Monsanto Reserve that
Monsanto would be entitled to receive from the Monsanto Reserve if the
aggregate amount of Allowed General Unsecured Claims as of the date on which
the allowance or disallowance of all Disputed General Unsecured Claims has
been finally determined was $_____. The remaining shares of New Common Stock
held in the Monsanto Reserve that are not voted in accordance with the
calculation set forth in the immediately preceding sentence shall be voted
in accordance with, and in direct proportion to, the votes cast by those
shareholders, other than Monsanto or on account of the Retiree Claim, voting
on any and all matters for which a vote of the shareholders of the New
Common Stock is taken or required.
K. THE GENERAL UNSECURED CLAIMS RESERVE
1. DEPOSIT OF NEW COMMON STOCK ON THE EFFECTIVE DATE
On the Effective Date, the Reorganized Debtors shall deposit shares of
Pool A Common Stock equal to the GUC Stock Pool in the General Unsecured
Claims Reserve.
2. CALCULATION OF DISPUTED GENERAL UNSECURED CLAIMS RESERVE
On the Effective Date (or as soon thereafter as is reasonably
practicable), Reorganized Solutia shall reserve in the General Unsecured
Claims Reserve for each Disputed General Unsecured Claim the number of
shares of Pool A Common Stock that would have been distributed to the Holder
of such Disputed General Unsecured Claim if such Disputed General Unsecured
Claim had been an Allowed Claim on the Effective Date in an amount equal to
the lesser of (1) the asserted amount of the Claim filed with the Bankruptcy
Court or (if no proof of such Claim was filed) scheduled by the Debtors or
(2) the amount, if any, estimated by the Bankruptcy Court pursuant to
section 502(c) of the Bankruptcy Code. Notwithstanding anything to the
contrary contained herein, the New Common Stock reserved for any Disputed
General Unsecured Claim shall constitute the maximum amount of New Common
Stock to be distributed to the Holder of such Disputed General Unsecured
Claim, subject to the General Unsecured Claim Pool Adjustment.
3. PROCEDURE FOR DISTRIBUTING NEW COMMON STOCK TO HOLDERS OF ALLOWED
GENERAL UNSECURED CLAIMS
On the Effective Date, and on a quarterly basis thereafter (and in no
event later than the fifth (5th) Business Day after the end of each calendar
quarter) until no shares of New Common Stock (or distributions thereon)
remain in the General Unsecured Claims Reserve, Reorganized Solutia shall
distribute to Holders of Allowed General Unsecured Claims the number of
shares of New Common Stock
43
from the General Unsecured Claims Reserve that is determined by MULTIPLYING:
(a) the Percentage Recovery by (b) the total number of shares of New Common
Stock held in the General Unsecured Claims Reserve (the product of which is
the "Interim Distribution"). The Interim Distribution shall be distributed
Pro Rata to the Holders of Allowed General Unsecured Claims, so that on the
Effective Date, or in the applicable quarter, each Holder of an Allowed
General Unsecured Claim will have received an aggregate Distribution equal
to the Percentage Recovery.
4. PROPERTY HELD IN GENERAL UNSECURED CLAIMS RESERVE
a. DIVIDENDS AND DISTRIBUTIONS
Cash dividends and other Distributions on account of the New Common
Stock to be held in the General Unsecured Claims Reserve will be transferred
to the General Unsecured Claims Reserve, concurrently with the transfer of
such dividends and other Distributions to other holders of New Common Stock.
Cash held in the General Unsecured Claims Reserve as a result of such
dividends and other Distributions, (i) will be deposited in a segregated
account and held in trust pending distribution by Reorganized Solutia for
the benefit of Holders of Allowed General Unsecured Claims, (ii) will be
accounted for separately and (iii) will not constitute property of the
Reorganized Debtors. Reorganized Solutia will invest the Cash held in the
General Unsecured Claims Reserve in a manner consistent with the Reorganized
Debtors' investment and deposit guidelines. Reorganized Solutia also will
place in the General Unsecured Claims Reserve, the proceeds, net of any
applicable fees, from such investment of Cash, and Distributions on account
of Allowed General Unsecured Claims will include a Pro Rata share from such
investment of Cash from the General Unsecured Claims Reserve.
b. RECOURSE
Each Holder of an Allowed General Unsecured Claim (or a Disputed
General Unsecured Claim that ultimately becomes an Allowed General Unsecured
Claim) will have recourse only to the undistributed New Common Stock and
their pro rata share of the proceeds from the investment of Cash and
dividends, if any, held in the General Unsecured Claims Reserve or the
Monsanto Reserve, as applicable, for satisfaction of the Distributions to
which Holders of Allowed General Unsecured Claims are entitled under the
Plan, and not to any Reorganized Debtor, Pharmacia, Monsanto its property or
any assets previously distributed on account of any Allowed Claim.
c. VOTING RIGHTS
The New Common Stock held in the General Unsecured Claims Reserve
shall be voted in accordance with, and in direct proportion to, the votes
cast by those shareholders, excluding Monsanto and the Entity holding the
New Common Stock issued on account of the Retiree Claim, voting on any and
all matters for which a vote of the shareholders of the New Common Stock is
taken or required.
44
ARTICLE VIII
PROCEDURES FOR TREATING DISPUTED CLAIMS
A. OBJECTIONS TO CLAIMS
After the Effective Date and on or before the Claims Objection
Deadline, the Reorganized Debtors shall have the authority to file
objections to Claims or Equity Interests. The Reorganized Debtors may
settle, compromise, withdraw or litigate to judgment objections to Claims.
The Reorganized Debtors shall consult with Monsanto and the Creditors'
Committee (until the Creditors' Committee is dissolved under the terms of
this Plan) in the process of reconciling, objecting to and/or allowing
General Unsecured Claims and Monsanto may object to any General Unsecured
Claims.
B. GENERAL UNSECURED CLAIMS MONITOR
Upon the Effective Date, an entity selected by Monsanto and the
Creditors' Committee and approved by the Bankruptcy Court shall serve as an
independent claims monitor. The claims monitor shall be paid by the
Reorganized Debtors on a monthly basis in an amount agreed to, prior to the
Confirmation Hearing, between the Debtors and the claims monitor, with the
reasonable consent of Monsanto and the Creditors' Committee, and approved by
the Bankruptcy Court, until the General Unsecured Claims reconciliation
process is concluded. The claims monitor shall be authorized to retain
counsel of its choice and shall have standing to raise and appear on issues
concerning the General Unsecured Claims reconciliation process. The
Reorganized Debtors shall be responsible for compensating the claim
monitor's counsel for all reasonable fees and expenses incurred, in
accordance with the claim monitor's counsel's normal billing practices;
provided, however, that the total amount of the claim monitor's counsel's
- -------- -------
fees and expenses in connection with the General Unsecured Claims
reconciliation process for which the Reorganized Debtors shall be
responsible shall not exceed an amount in the aggregate agreed to, prior to
the Confirmation Hearing, between the Debtors and the claims monitor, with
the reasonable consent of Monsanto and the Creditors' Committee, and
approved by the Bankruptcy Court. If the claims monitor believes that the
Reorganized Debtors are failing to administer the General Unsecured Claims
reconciliation process adequately and, as a result, intends to take action,
then the claims monitor shall provide the Reorganized Debtors within five
(5) Business Days' written notice of its intent to take such proposed
action. During the notice period, the Reorganized Debtors may either consent
to the relief sought, agree to proceed in good faith with the proposed
action on their own, or petition the Bankruptcy Court for an order declaring
that such proposed action is unreasonable. If the Reorganized Debtors do not
so petition the Bankruptcy Court or the Bankruptcy Court determines that the
proposed action is reasonable, the Reorganized Debtors shall be responsible
for compensating the claims monitor's counsel for all reasonable fees and
expenses incurred in taking the proposed action and in seeking Bankruptcy
Court approval of payment with respect to such proposed action. To the
extent the Bankruptcy Court determines that such proposed action is
unreasonable, then the claim monitor's counsel shall not be reimbursed for
any fees or expenses incurred in connection with such proposed action or its
attempt to take such proposed action. Notwithstanding the foregoing, the
Reorganized Debtors reserve their right to dispute the reasonableness of
compensation sought by the claim monitor's counsel for services performed
and expenses incurred following the Effective Date by the filing of an
appropriate motion with the Bankruptcy Court. The Reorganized Debtors will
retain primary responsibility of the General Unsecured Claims reconciliation
process and will provide monthly reports of the status of the General
Unsecured Claims reconciliation process to the claims monitor, Monsanto and,
if it has not been dissolved in accordance with the terms hereof, the
Creditors' Committee.
45
C. NO DISTRIBUTIONS PENDING ALLOWANCE
Notwithstanding any other provision herein, if any portion of a
Claim is a Disputed Claim, no payment or Distribution provided hereunder
shall be made on account of such Claim unless and until such Disputed Claim
becomes an Allowed Claim, in whole or in part. No interest shall accrue on
such Disputed Claim until the date that such Disputed Claim, as applicable,
becomes an Allowed Claim.
D. ESTIMATION OF CLAIMS
The Debtors (prior to the Effective Date) or Reorganized Debtors
(after the Effective Date), the Creditors' Committee, if it has not been
dissolved in accordance with the terms hereof, and/or Monsanto may, at any
time, and from time to time, request that the Bankruptcy Court estimate any
Disputed Claim pursuant to section 502(c) of the Bankruptcy Code regardless
of whether an objection was previously filed with the Bankruptcy Court with
respect to such Claim, or whether the Bankruptcy Court has ruled on any such
objection, and the Bankruptcy Court will retain jurisdiction to estimate any
Claim at any time during litigation concerning any objection to any Claim,
including during the pendency of any appeal relating to any such objection.
In the event that the Bankruptcy Court estimates any Disputed Claim, that
estimated amount will constitute either the Allowed amount of such Claim or
a maximum limitation on such Claim against any party or Entity, as
determined by the Bankruptcy Court. If the estimated amount constitutes a
maximum limitation on such Claim, the Debtors (prior to the Effective Date)
or the Reorganized Debtors (after the Effective Date), the Creditors'
Committee, if it has not been dissolved in accordance with the terms hereof,
and/or Monsanto may elect to pursue any supplemental proceedings to object
to any ultimate Distribution on such Claim. All of the objection,
estimation, settlement and resolution procedures set forth in the Plan are
cumulative and not necessarily exclusive of one another. Claims may be
estimated and subsequently compromised, objected to, settled, withdrawn or
resolved by any mechanism approved by the Bankruptcy Court.
46
ARTICLE IX
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
A. CONDITION PRECEDENT TO CONFIRMATION
The Bankruptcy Court will not enter the Confirmation Order unless
and until the following conditions have been satisfied or duly waived
pursuant to Section IX.D of this Plan:
1. The Confirmation Order shall be reasonably acceptable in form
and substance to the Debtors, Monsanto, Pharmacia (solely with
respect to provisions directly affecting Pharmacia) and the
Creditors' Committee.
2. The Confirmation Order shall:
a. authorize and direct the Debtors and the Reorganized Debtors
to take all actions necessary or appropriate to enter into, implement and
consummate the contracts, instruments, releases, leases, indentures and
other agreements or documents created in connection with the Plan;
b. decree that the provisions of the Confirmation Order and the Plan
are nonseverable and mutually dependent;
c. authorize the Reorganized Debtors to (a) issue the New Common Stock
and the Rights pursuant to the exemption from "Registration" under the
Securities Act provided by section 1145 of the Bankruptcy Code and (b) enter
into the Plan Documents;
d. approve the releases and injunctions, including the Monsanto/
Pharmacia Injunction, as contemplated and to the extent set forth in Article
X herein;
e. decree that the Confirmation Order shall supersede any Bankruptcy
Court orders issued prior to the Confirmation Date that may be inconsistent
with the Confirmation Order;
f. authorize the implementation of the Plan in accordance with its
terms; and
g. provide that, pursuant to section 1146(c) of the Bankruptcy Code,
the assignment or surrender of any lease or sublease, and the delivery of
any deed or other instrument or transfer order, in furtherance of, or in
connection with this Plan, including any deeds, bills of sale or assignments
executed in connection with any disposition or transfer of assets
contemplated by this Plan, shall not be subject to any stamp, real estate
transfer, mortgage recording or other similar tax (including, without
limitation, any mortgages or security interest filing to be recorded or
filed in connection with the Exit Financing Facility).
3. The Debtors shall have received the Exit Financing Facility
Commitment Letter, which shall be in form and substance and with a
lender reasonably acceptable to the Debtors, Monsanto and the Creditors'
Committee.
4. The Equity Committee Adversary Proceeding shall have been dismissed
with prejudice.
47
5. The Prepetition Indenture Trustee Adversary Proceeding shall have been
dismissed with prejudice.
6. The Retiree Approval Order shall have been entered by the
Bankruptcy Court.
B. CONDITIONS PRECEDENT TO EFFECTIVE DATE
The Effective Date will not occur and the Plan will not be consummated
unless and until each of the following conditions have been satisfied or
duly waived pursuant to Section IX.D of this Plan:
1. The Confirmation Order shall (i) be in form and substance reasonably
acceptable to the Debtors, Monsanto, Pharmacia (solely with respect to
provisions directly affecting Pharmacia) and the Creditors' Committee,
(ii) be consistent with the terms described in Section IX.A above, and
(iii) have been entered by the Bankruptcy Court.
2. All actions, documents, instruments, and agreements necessary to
implement and effectuate the Plan, including the New Certificates of
Incorporation, the New By-laws and the Plan Documents, shall have been
taken or executed and delivered, as the case may be, and each
agreement shall be reasonably acceptable to Monsanto, Pharmacia and
the Creditors' Committee.
3. The Debtors shall have received all authorizations, consents,
regulatory approvals, rulings or documents that are necessary to
implement and effectuate the Plan.
4. The initial boards of directors of the Reorganized Debtors shall have
been appointed.
5. The Debtors shall have entered into the Exit Facility Financing.
6. The Retiree Approval Order shall have become a Final Order.
7. If the issuance or Distribution of any New Common Stock to Monsanto
hereunder is subject to notification requirements under the HSR Act,
any waiting period relating to such notification shall have expired or
otherwise been terminated.
8. All unliquidated General Unsecured Claims shall have been for
Distribution purposes estimated pursuant to section 502(c) of the
Bankruptcy Code, disallowed or fixed by an agreement between the
Debtors and any relevant Holders of General Unsecured Claims and
approved by the Bankruptcy Court.
9. The Confirmation Order shall have become a Final Order.
C. EFFECT OF FAILURE OF CONDITIONS
If the Consummation of the Plan does not occur, the Plan shall be
null and void in all respects and nothing contained in the Plan or the
Disclosure Statement shall: (1) constitute a waiver or release of any Claims
by or against, or any Equity Interests in, the Debtors; (2) prejudice in any
manner the rights of the Debtors or any creditors; or (3) constitute an
admission, acknowledgment, offer or undertaking by the Debtors or any
creditors in any respect.
48
D. WAIVER OF CONDITIONS
Each of the Debtors, Monsanto, Pharmacia (solely with respect to
provisions directly affecting Pharmacia) and the Creditors' Committee, may
waive, with the consent of each of such other parties, one or more of the
conditions precedent to Confirmation or Consummation set forth in Sections
IX.A and IX.B of this Plan; provided, however, that the condition contained
-------- -------
in Section IX.A.4 may not be waived.
49
ARTICLE X
INJUNCTIONS, RELEASES, EXCULPATION AND DISCHARGE
A. INJUNCTIONS
1. DEBTORS' INJUNCTION
ALL INJUNCTIONS OR STAYS PROVIDED FOR IN THE CHAPTER 11 CASES
PURSUANT TO SECTIONS 105 AND/OR 362 OF THE BANKRUPTCY CODE OR OTHERWISE AND
IN EFFECT ON THE CONFIRMATION DATE, SHALL REMAIN IN FULL FORCE AND EFFECT
UNTIL THE CLOSING OF THE CHAPTER 11 CASES PURSUANT TO SECTION 350(A) OF THE
BANKRUPTCY CODE. SUBJECT TO THE OCCURRENCE OF THE EFFECTIVE DATE, THE
CONFIRMATION ORDER SHALL PERMANENTLY ENJOIN ALL PERSONS, INCLUDING PHARMACIA
AND MONSANTO, THAT HAVE HELD, CURRENTLY HOLD OR MAY HOLD A CLAIM, INCLUDING
A LEGACY SITE CLAIM, AGAINST OR AN EQUITY INTEREST IN THE DEBTORS FROM
TAKING ANY OF THE FOLLOWING ACTIONS BASED ON SUCH CLAIM OR EQUITY INTEREST,
WHETHER DIRECTLY, INDIRECTLY, DERIVATIVELY, CONTRACTUALLY, STATUTORILY OR
OTHERWISE, OTHER THAN PHARMACIA'S, MONSANTO'S AND OTHER PARTIES' RIGHTS TO
ENFORCE THE TERMS OF THE PLAN, THE RELATIONSHIP AGREEMENT OR THE PLAN
DOCUMENTS: (A) COMMENCING, CONDUCTING OR CONTINUING IN ANY MANNER, DIRECTLY
OR INDIRECTLY, ANY SUIT, ACTION OR OTHER PROCEEDING OF ANY KIND AGAINST ANY
OR ALL OF THE DEBTORS OR THE REORGANIZED DEBTORS, OR THEIR RESPECTIVE
PROPERTY OR ASSETS; (B) ENFORCING, LEVYING, ATTACHING, COLLECTING OR
OTHERWISE RECOVERING IN ANY MANNER OR BY ANY MEANS, WHETHER DIRECTLY OR
INDIRECTLY, ANY JUDGMENT, AWARD, DECREE OR ORDER AGAINST ANY OR ALL OF THE
DEBTORS, THE REORGANIZED DEBTORS OR THEIR RESPECTIVE PROPERTY OR ASSETS; (C)
CREATING, PERFECTING OR ENFORCING IN ANY MANNER, DIRECTLY OR INDIRECTLY, ANY
LIEN AGAINST ANY OR ALL OF THE DEBTORS, THE REORGANIZED DEBTORS OR THEIR
RESPECTIVE PROPERTY OR ASSETS; (D) EXERCISING ANY SETOFF, RIGHT OF
SUBROGATION OR RECOUPMENT OF ANY KIND, DIRECTLY OR INDIRECTLY, AGAINST ANY
DEBT, LIABILITY OR OBLIGATION DUE TO THE DEBTORS, THE REORGANIZED DEBTORS OR
THEIR RESPECTIVE PROPERTY; OR (E) PROCEEDING IN ANY MANNER IN ANY PLACE
WHATSOEVER THAT DOES NOT CONFORM TO OR COMPLY WITH OR IS INCONSISTENT WITH
THE PROVISIONS OF THE PLAN; PROVIDED, HOWEVER, THAT THE TERMS OF THIS
-------- -------
INJUNCTION SHALL NOT PREVENT THE REORGANIZED DEBTORS, MONSANTO, PHARMACIA
OR, UNLESS THE CREDITORS' COMMITTEE HAS BEEN DISSOLVED, THE CREDITORS'
COMMITTEE, FROM ENFORCING THE TERMS OF THE GLOBAL SETTLEMENT, THIS PLAN AND
THE PLAN DOCUMENTS; PROVIDED, FURTHER, HOWEVER, THAT TERMS OF THE INJUNCTION
-------- ------- -------
SHALL NOT PREVENT THE HOLDERS OF TORT CLAIMS, NRD CLAIMS OR CLAIMS FOR
ENVIRONMENTAL LIABILITY ARISING FROM THE RETAINED SITES OR THE SHARED SITES
FROM EXERCISING THEIR RIGHTS AGAINST REORGANIZED SOLUTIA WITH RESPECT
THERETO.
2. MONSANTO/PHARMACIA INJUNCTION
SUBJECT TO THE OCCURRENCE OF THE EFFECTIVE DATE, AND BASED ON THE
MONSANTO CONTRIBUTION AND THE PHARMACIA CONTRIBUTION, THE CONFIRMATION ORDER
SHALL PERMANENTLY ENJOIN ALL PERSONS, INCLUDING THE PLAINTIFFS (AND ANY
MEMBERS OF A CLASS RAISING THE SAME OR SIMILAR CLAIMS) IN THE MATTERS
ENTITLED DAVIS ET AL. V. SOLUTIA INC. EMPLOYEES' PENSION PLAN, NO.
3:05CV736, SCHARRINGHAUSEN ET AL. V. SOLUTIA INC. EMPLOYEES' PENSION PLAN,
NO. 3:06CV00099 AND COMPLAINANTS IN LARRY PROBST, ET AL. V. MONSANTO COMPANY
AND SOLUTIA, INC, EEOC CHARGE NOS. 280 A 00618 THROUGH 280 A 00652, BUT NOT
PHARMACIA AND MONSANTO, THAT HAVE HELD, CURRENTLY HOLD OR MAY HOLD A CLAIM
AGAINST PHARMACIA OR MONSANTO RELATING TO ANY OF THE DEBTORS, INCLUDING A
LEGACY CLAIM, WHETHER SUCH CLAIM IS REDUCED TO JUDGMENT OR NOT, LIQUIDATED
OR UNLIQUIDATED, CONTINGENT OR NONCONTINGENT, ASSERTED OR UNASSERTED, FIXED
OR NOT, MATURED OR UNMATURED, DISPUTED OR UNDISPUTED, LEGAL OR EQUITABLE,
KNOWN OR UNKNOWN, FROM TAKING ANY OF THE FOLLOWING ACTIONS RELATED TO SUCH
CLAIM, WHETHER DIRECTLY, INDIRECTLY, DERIVATIVELY, CONTRACTUALLY,
STATUTORILY OR OTHERWISE: (A) COMMENCING, CONDUCTING OR CONTINUING IN ANY
MANNER, DIRECTLY OR INDIRECTLY, ANY SUIT, ACTION OR
50
OTHER PROCEEDING OF ANY KIND AGAINST MONSANTO OR PHARMACIA, THEIR RESPECTIVE
AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES,
PROFESSIONALS, ADVISORS, EMPLOYEE BENEFIT PLANS, OR ANY OF THEIR RESPECTIVE
PROPERTY OR ASSETS; (B) ENFORCING, LEVYING, ATTACHING, COLLECTING OR
OTHERWISE RECOVERING IN ANY MANNER OR BY ANY MEANS, WHETHER DIRECTLY OR
INDIRECTLY, ANY JUDGMENT, AWARD, DECREE OR ORDER AGAINST MONSANTO OR
PHARMACIA, THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, REPRESENTATIVES, PROFESSIONALS, ADVISORS, EMPLOYEE BENEFIT PLANS, OR
ANY OF THEIR RESPECTIVE PROPERTY OR ASSETS; (C) CREATING, PERFECTING OR
ENFORCING IN ANY MANNER, DIRECTLY OR INDIRECTLY, ANY LIEN AGAINST MONSANTO
OR PHARMACIA, THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, REPRESENTATIVES, PROFESSIONALS, ADVISORS, EMPLOYEE BENEFIT PLANS, OR
ANY OF THEIR RESPECTIVE PROPERTY OR ASSETS; (D) ASSERTING ANY SETOFF, RIGHT
OF SUBROGATION OR RECOUPMENT OF ANY KIND, DIRECTLY OR INDIRECTLY, AGAINST
ANY DEBT, LIABILITY OR OBLIGATION DUE TO MONSANTO OR PHARMACIA; AND (E)
PROCEEDING IN ANY MANNER IN ANY PLACE WHATSOEVER THAT DOES NOT CONFORM TO OR
COMPLY WITH OR IS INCONSISTENT WITH THE PROVISIONS OF THE PLAN; PROVIDED,
--------
HOWEVER, THAT THE TERMS OF THIS INJUNCTION SHALL NOT PREVENT THE REORGANIZED
- -------
DEBTORS, MONSANTO, PHARMACIA OR, UNLESS THE CREDITORS' COMMITTEE HAS BEEN
DISSOLVED, THE CREDITORS' COMMITTEE FROM ENFORCING THE TERMS OF THE GLOBAL
SETTLEMENT, THIS PLAN AND THE PLAN DOCUMENTS; PROVIDED, FURTHER, HOWEVER,
-------- ------- -------
THAT TERMS OF THIS INJUNCTION SHALL NOT PREVENT THE HOLDERS OF TORT CLAIMS,
NRD CLAIMS OR CLAIMS FOR ENVIRONMENTAL LIABILITY FROM EXERCISING THEIR
RIGHTS AGAINST MONSANTO OR PHARMACIA WITH RESPECT THERETO.
B. RELEASES
The following releases are hereby granted pursuant to the Plan and
the Confirmation Order:
1. RELEASES BY THE DEBTORS
AS OF THE EFFECTIVE DATE, FOR GOOD AND VALUABLE CONSIDERATION, THE
ADEQUACY OF WHICH IS HEREBY CONFIRMED, THE DEBTORS, THEIR ESTATES AND THE
REORGANIZED DEBTORS WILL BE DEEMED TO FOREVER RELEASE, WAIVE AND DISCHARGE
ALL CLAIMS, OBLIGATIONS, SUITS, JUDGMENTS, DAMAGES, DEMANDS, DEBTS, RIGHTS,
CAUSES OF ACTION AND LIABILITIES WHETHER DIRECT OR DERIVATIVE, LIQUIDATED OR
UNLIQUIDATED, FIXED OR CONTINGENT, MATURED OR UNMATURED, DISPUTED OR
UNDISPUTED, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, THEN EXISTING OR
THEREAFTER ARISING, IN LAW, EQUITY OR OTHERWISE THAT ARE BASED IN WHOLE OR
IN PART ON ANY ACT, OMISSION, TRANSACTION, EVENT OR OTHER OCCURRENCE TAKING
PLACE ON OR PRIOR TO EFFECTIVE DATE IN ANY WAY RELATING TO THE DEBTORS, THE
CHAPTER 11 CASES, THE PLAN, OR THE DISCLOSURE STATEMENT, INCLUDING ANY SUCH
CLAIMS, OBLIGATIONS, SUITS, JUDGMENTS, DAMAGES, DEMANDS, DEBTS, RIGHTS,
CAUSES OF ACTION AND LIABILITIES ARISING OUT OF OR IN CONNECTION WITH
RELEASE OF HAZARDOUS SUBSTANCES, OTHER TYPES OF CONTAMINATION OR OTHER
ENVIRONMENTAL MATTERS (INCLUDING CLAIMS UNDER CERCLA OR SIMILAR
ENVIRONMENTAL LAWS) ARISING OUT OF OR IN CONNECTION WITH ANY ASSETS
TRANSFERRED OR DEBTS, LIABILITIES, GUARANTEES, ASSURANCES, COMMITMENTS OR
OBLIGATIONS ASSUMED PURSUANT TO THE DISTRIBUTION AGREEMENT OR OTHER
TRANSACTIONS OCCURRING IN CONNECTION WITH THE DISTRIBUTION AGREEMENT, AND
THAT COULD HAVE BEEN ASSERTED AT ANY TIME, PAST OR PRESENT OR FUTURE BY OR
ON BEHALF OF THE DEBTORS, OR THEIR ESTATES AGAINST (A) THE CURRENT OR FORMER
REPRESENTATIVES, DIRECTORS, OFFICERS AND EMPLOYEES OF THE DEBTORS AND THE
DEBTORS' AGENTS, ADVISORS AND PROFESSIONALS, IN EACH CASE IN THEIR CAPACITY
AS SUCH, (B) THE CURRENT AND FORMER MEMBERS OF THE CREDITORS' COMMITTEE,
EXCEPT FOR THE PREPETITION INDENTURE TRUSTEE, AND THE ADVISORS AND ATTORNEYS
FOR THE CREDITORS' COMMITTEE, EXCEPT FOR ADVISORS TO THE PREPETITION
INDENTURE TRUSTEE, IN EACH CASE IN THEIR CAPACITY AS SUCH, (C) MONSANTO, (D)
PHARMACIA, (E) ANY EMPLOYEE BENEFIT PLANS OF MONSANTO OR PHARMACIA AND (F)
THE RESPECTIVE AFFILIATES AND CURRENT OR FORMER REPRESENTATIVES, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, MEMBERS, DIRECT AND INDIRECT SHAREHOLDERS,
ADVISORS, ATTORNEYS AND PROFESSIONALS OF THE FOREGOING, IN EACH CASE IN
THEIR CAPACITY AS SUCH; PROVIDED, HOWEVER, THAT THE TERMS OF THIS RELEASE
-------- -------
SHALL NOT PREVENT THE REORGANIZED DEBTORS FROM ENFORCING THE TERMS OF THE
51
GLOBAL SETTLEMENT, THIS PLAN AND THE PLAN DOCUMENTS; PROVIDED, FURTHER,
-------- -------
HOWEVER, THAT WITH RESPECT TO FORMER DIRECTORS AND OFFICERS OF THE DEBTORS,
- -------
NOTHING IN THIS PARAGRAPH SHALL BE CONSTRUED TO RELEASE SUCH FORMER
DIRECTORS AND OFFICERS FROM CLAIMS FOR FRAUD, GROSS NEGLIGENCE, WILLFUL
MISCONDUCT, CRIMINAL CONDUCT, VIOLATION OF FIDUCIARY DUTY, INCLUDING THE
UNAUTHORIZED USE OF CONFIDENTIAL INFORMATION, THAT CAUSES DAMAGES OR FOR
PERSONAL GAIN, TO (AND ONLY TO) THE EXTENT SUCH PERSONS ARE NOT EXCULPATED
THEREFROM BY ANY PROVISION OF APPLICABLE LAW OR ANY CERTIFICATE OF
INCORPORATION OR SIMILAR ORGANIZATIONAL DOCUMENT OF SOLUTIA, REORGANIZED
SOLUTIA, ANY OTHER DEBTOR OR ANY OTHER REORGANIZED DEBTOR, OR ULTRA VIRES
ACTS.
2. RELEASES BY HOLDERS OF CLAIMS AND EQUITY INTERESTS
AS OF THE EFFECTIVE DATE, EACH HOLDER OF A CLAIM OR EQUITY INTEREST
SHALL BE DEEMED TO FOREVER RELEASE, WAIVE AND DISCHARGE ALL CLAIMS OR EQUITY
INTERESTS, DEMANDS, DEBTS, RIGHTS, CAUSES OF ACTION OR LIABILITIES, WHETHER
DIRECT OR DERIVATIVE, LIQUIDATED OR UNLIQUIDATED, FIXED OR CONTINGENT,
MATURED OR UNMATURED, DISPUTED OR UNDISPUTED, KNOWN OR UNKNOWN, FORESEEN OR
UNFORESEEN, THEN EXISTING OR THEREAFTER ARISING, IN LAW, EQUITY OR OTHERWISE
THAT ARE BASED IN WHOLE OR IN PART ON ANY ACT OR OMISSION, TRANSACTION,
EVENT OR OTHER OCCURRENCE TAKING PLACE ON OR PRIOR TO THE EFFECTIVE DATE
RELATING TO THE DEBTORS, THE CHAPTER 11 CASES, THE PLAN, THE DISCLOSURE
STATEMENT OR ANY EMPLOYEE BENEFIT PLANS ADMINISTERED BY OR ON BEHALF OF
SOLUTIA, OR ANY LEGACY CLAIM OR LEGACY SITE CLAIMS OR OTHER OBLIGATIONS
ASSUMED BY SOLUTIA UNDER THE DISTRIBUTION AGREEMENT, BUT NOT INCLUDING
CLAIMS FOR ENVIRONMENTAL LIABILITY WHICH ARE RELATED TO RETAINED SITES OR
SHARED SITES, AGAINST (A) THE CURRENT OR FORMER REPRESENTATIVES, DIRECTORS,
OFFICERS AND EMPLOYEES OF THE DEBTORS, (B) THE DEBTORS' AGENTS, ADVISORS AND
PROFESSIONALS, IN EACH CASE IN THEIR CAPACITY AS SUCH, (C) THE CURRENT AND
FORMER MEMBERS OF THE CREDITORS' COMMITTEE, EXCEPT FOR THE PREPETITION
INDENTURE TRUSTEE, AND THE ADVISORS AND ATTORNEYS FOR THE CREDITORS'
COMMITTEE, EXCEPT FOR ADVISORS TO THE PREPETITION INDENTURE TRUSTEE, IN EACH
CASE IN THEIR CAPACITY AS SUCH, (D) MONSANTO, (E) PHARMACIA AND (F) THE
RESPECTIVE AFFILIATES AND CURRENT OR FORMER REPRESENTATIVES, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, MEMBERS, DIRECT AND INDIRECT SHAREHOLDERS,
ADVISORS, EMPLOYEE BENEFIT PLANS, ATTORNEYS AND PROFESSIONALS OF THE
FOREGOING, IN EACH CASE IN THEIR CAPACITY AS SUCH. NOTWITHSTANDING THE
FOREGOING, THE HOLDERS OF TORT CLAIMS, AS A RESULT OF THE MONSANTO TORT
MANAGEMENT, AND THE HOLDERS OF LEGACY SITE CLAIMS, AS A RESULT OF THE GLOBAL
SETTLEMENT, SHALL NOT BE DEEMED TO RELEASE THE DEBTORS, MONSANTO OR
PHARMACIA ON ACCOUNT OF ANY LIABILITY ARISING FROM OR RELATED TO THE TORT
CLAIMS, OR MONSANTO OR PHARMACIA ON ACCOUNT OF THE LEGACY SITE CLAIMS.
FURTHERMORE, THE HOLDERS OF NRD CLAIMS SHALL NOT BE DEEMED TO RELEASE THE
DEBTORS, MONSANTO OR PHARMACIA ON ACCOUNT OF ANY LIABILITY ARISING FROM OR
RELATED TO THE NRD CLAIMS. IN ADDITION, GOVERNMENTAL ENTITIES WITH RESPECT
TO CLAIMS FOR ENVIRONMENTAL LIABILITY COSTS RELATED TO LEGACY SITES SHALL
NOT BE DEEMED TO RELEASE MONSANTO OR PHARMACIA ON ACCOUNT OF ANY SUCH
CLAIMS; PROVIDED, HOWEVER, THAT THE TERMS OF THIS RELEASE SHALL NOT PREVENT
-------- -------
MONSANTO OR PHARMACIA FROM ENFORCING THE TERMS OF THE GLOBAL SETTLEMENT,
THIS PLAN AND THE PLAN DOCUMENTS; PROVIDED, FURTHER, HOWEVER, THAT NOTHING
-------- ------- -------
IN THIS PARAGRAPH SHALL AFFECT THE RIGHTS, DEFENSES, OBLIGATIONS OR CLAIMS
ARISING BETWEEN MONSANTO AND PHARMACIA, INCLUDING RIGHTS, DEFENSES,
OBLIGATIONS OR CLAIMS ARISING FROM OR EXISTING UNDER THE SEPARATION
AGREEMENT; PROVIDED, FURTHER STILL, HOWEVER, THAT WITH RESPECT TO FORMER
-------- ------- ----- -------
DIRECTORS AND OFFICERS OF THE DEBTORS, NOTHING IN THIS PARAGRAPH SHALL BE
CONSTRUED TO RELEASE SUCH FORMER DIRECTORS AND OFFICERS FROM CLAIMS FOR
FRAUD, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, CRIMINAL CONDUCT, VIOLATION OF
FIDUCIARY DUTY, INCLUDING THE UNAUTHORIZED USE OF CONFIDENTIAL INFORMATION,
THAT CAUSES DAMAGES OR FOR PERSONAL GAIN, TO (AND ONLY TO) THE EXTENT SUCH
PERSONS ARE NOT EXCULPATED THEREFROM BY ANY PROVISION OF APPLICABLE LAW OR
ANY CERTIFICATE OF INCORPORATION OR SIMILAR ORGANIZATIONAL DOCUMENT OF
SOLUTIA, REORGANIZED SOLUTIA, ANY OTHER DEBTOR OR ANY OTHER REORGANIZED
DEBTOR, OR ULTRA VIRES ACTS.
52
3. RETIREE RELEASE AND INJUNCTION
AS OF THE EFFECTIVE DATE, THE RETIREES' COMMITTEE, ITS MEMBERS AND
PROFESSIONALS, THE RETIREES AND EACH OF THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, HEIRS, EXECUTORS, ADMINISTRATORS SUCCESSORS AND
ASSIGNS (COLLECTIVELY, THE "RETIREE PARTIES") SHALL HEREBY BE DEEMED TO HAVE
RELEASED AND DISCHARGED THE DEBTORS, MONSANTO, PHARMACIA, ANY EMPLOYEE
BENEFIT PLANS OF MONSANTO OR PHARMACIA, AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AFFILIATES, SUCCESSORS, ASSIGNS, REPRESENTATIVES,
AGENTS, ADVISORS AND PROFESSIONALS (COLLECTIVELY, THE "RELEASED PARTIES")
FROM, AND THE CONFIRMATION ORDER AND THE RETIREE SETTLEMENT ORDER SHALL
OPERATE AS AN INJUNCTION AGAINST, THE COMMENCEMENT OR CONTINUATION OF ANY
ACTION, THE EMPLOYMENT OF PROCESS, OR ANY ACT TO COLLECT, RECOVER OR OFFSET,
ANY "CLAIM" (AS DEFINED IN SECTION 101(5) OF THE BANKRUPTCY CODE) AND ANY
"DEBT" (AS THAT TERM IS DEFINED IN SECTION 101(12) OF THE BANKRUPTCY CODE),
RELATED TO "RETIREE BENEFITS" (AS DEFINED IN SECTION 1114(A) OF THE
BANKRUPTCY CODE), INCLUDING THE PARTIAL RESERVATION OF CLAIMS IN THE CLASS
ACTION SETTLEMENT APPROVED BY THE U.S. DISTRICT COURT FOR THE NORTHERN
DISTRICT OF FLORIDA, PENSACOLA DIVISION, IN SOLUTIA INC. V. FORSBERG, ET
AL., NO. 3:98CV237, WHETHER SUCH CLAIM IS REDUCED TO JUDGMENT OR NOT,
LIQUIDATED OR UNLIQUIDATED, CONTINGENT OR NONCONTINGENT, ASSERTED OR
UNASSERTED, FIXED OR NOT, MATURED OR UNMATURED, DISPUTED OR UNDISPUTED,
LEGAL OR EQUITABLE, KNOWN OR UNKNOWN THAT THE RETIREE PARTIES HAD, HAVE OR
MAY HAVE AGAINST THE RELEASED PARTIES; PROVIDED, HOWEVER, THAT THE FOREGOING
-------- -------
SHALL NOT RELEASE AND DISCHARGE (A) THE REORGANIZED DEBTORS FROM THE
PERFORMANCE OF THEIR OBLIGATIONS UNDER THE RETIREE SETTLEMENT AGREEMENT OR
(B) MONSANTO FROM THE PERFORMANCE OF ITS OBLIGATIONS UNDER THE RETIREE
SETTLEMENT AGREEMENT.
C. EXCULPATION AND LIMITATION OF LIABILITY
EXCEPT AS PROVIDED IN THE PLAN OR THE CONFIRMATION ORDER, NONE OF
THE DEBTORS, MONSANTO, PHARMACIA, THE CREDITORS' COMMITTEE NOR THE CURRENT
OR FORMER INDIVIDUAL MEMBERS THEREOF, EXCEPT FOR THE PREPETITION INDENTURE
TRUSTEE, THE RETIREES' COMMITTEE NOR THE CURRENT INDIVIDUAL MEMBERS THEREOF,
NOR ANY OF THEIR RESPECTIVE PRESENT MEMBERS, REPRESENTATIVES, OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES, ADVISORS, ATTORNEYS, AFFILIATES OR
AGENTS ACTING IN SUCH CAPACITY, EXCEPT FOR ADVISORS TO THE PREPETITION
INDENTURE TRUSTEE, SHALL HAVE OR INCUR ANY LIABILITY TO, OR BE SUBJECT TO
ANY RIGHT OF ACTION BY, ANY HOLDER OF A CLAIM, INCLUDING, BUT NOT LIMITED
TO, A LEGACY CLAIM, OR AN EQUITY INTEREST, OR ANY OTHER PARTY IN INTEREST,
OR ANY OF THEIR RESPECTIVE AGENTS, DIRECT OR INDIRECT SHAREHOLDERS,
EMPLOYEES, REPRESENTATIVES, FINANCIAL ADVISORS, ATTORNEYS OR AFFILIATES, OR
ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS, FOR ANY ACT OR OMISSION IN
CONNECTION WITH, RELATING TO, OR ARISING OUT OF, THE CHAPTER 11 CASES, THE
PURSUIT OF CONFIRMATION OF THE PLAN, THE CONSUMMATION OF THE PLAN, OR THE
ADMINISTRATION OF THE PLAN OR THE PROPERTY TO BE DISTRIBUTED UNDER THE PLAN,
EXCEPT FOR THEIR WILLFUL MISCONDUCT, CRIMINAL CONDUCT, MISUSE OF
CONFIDENTIAL INFORMATION THAT CAUSES DAMAGES, FRAUD, ULTRA VIRES ACTS OR
GROSS NEGLIGENCE, AND IN ALL RESPECTS SHALL BE ENTITLED TO RELY REASONABLY
UPON THE ADVICE OF COUNSEL WITH RESPECT TO THEIR DUTIES AND RESPONSIBILITIES
UNDER THE PLAN. NOTHING IN THIS PARAGRAPH SHALL AFFECT THE RIGHTS, DEFENSES,
OBLIGATIONS OR CLAIMS ARISING BETWEEN MONSANTO AND PHARMACIA.
D. DISCHARGE OF CLAIMS AND TERMINATION OF EQUITY INTERESTS
EXCEPT AS PROVIDED IN THIS PLAN, THE PLAN DOCUMENTS OR THE CONFIRMATION
ORDER, PURSUANT TO SECTION 1141(D) OF THE BANKRUPTCY CODE, (1) THE RIGHTS
AFFORDED UNDER THE PLAN AND THE TREATMENT OF ALL CLAIMS, INCLUDING THE
LEGACY SITE CLAIMS, AND EQUITY INTERESTS SHALL BE IN EXCHANGE FOR AND IN
COMPLETE SATISFACTION, DISCHARGE AND RELEASE OF SUCH CLAIMS AND EQUITY
INTERESTS OF ANY NATURE WHATSOEVER, INCLUDING ANY INTEREST ACCRUED ON SUCH
CLAIMS FROM AND AFTER THE PETITION DATE, AGAINST ANY DEBTOR OR ANY OF THEIR
ASSETS OR PROPERTIES, (2) ON THE EFFECTIVE DATE, ALL SUCH CLAIMS AND EQUITY
INTERESTS IN, ANY DEBTOR SHALL BE SATISFIED, DISCHARGED AND RELEASED IN FULL
AND (3) ALL PERSONS
53
AND ENTITIES SHALL BE PRECLUDED FROM ASSERTING AGAINST THE REORGANIZED
DEBTORS AND THEIR RESPECTIVE SUCCESSORS OR THEIR ASSETS OR PROPERTIES ANY
OTHER OR FURTHER SUCH CLAIMS OR EQUITY INTERESTS BASED UPON ANY ACT OR
OMISSION, TRANSACTION OR OTHER ACTIVITY OF ANY KIND OR NATURE THAT OCCURRED
PRIOR TO THE EFFECTIVE DATE; PROVIDED, HOWEVER, THAT THE REORGANIZED DEBTORS
-------- -------
SHALL NOT RECEIVE A DISCHARGE FROM TORT CLAIMS, NRD CLAIMS OR ANY
ENVIRONMENTAL LIABILITY OR ENVIRONMENTAL LIABILITY COSTS RELATED TO THE
RETAINED SITES OR THE SHARED SITES.
54
ARTICLE XI
RETENTION OF JURISDICTION
A. RETENTION OF JURISDICTION
The Bankruptcy Court shall have exclusive jurisdiction of all
matters arising out of, and related to, the Chapter 11 Cases and the Plan
pursuant to, and for the purposes of, sections 105(a) and 1142 of the
Bankruptcy Code and for, among other things, the following purposes:
1. To hear and determine any applications for the assumption or rejection
of Executory Contracts or Unexpired Leases and the allowance of cure
amounts and Claims resulting therefrom;
2. To hear and determine any and all adversary proceedings, applications
and contested matters;
3. To hear and determine any objection to any Administrative Expense
Claims, or any objection to or request to estimate any Claim;
4. To estimate any Claim at any time, including during litigation
concerning any objection to such Claim or during the pendency of any
appeal relating to any such objection;
5. To enter and implement such orders as may be appropriate in the event
the Confirmation Order is for any reason stayed, revoked, modified or
vacated;
6. To issue such orders in aid of execution and consummation of the Plan,
to the extent authorized by section 1142 of the Bankruptcy Code;
7. To consider any amendments to, or modifications of, the Plan, to cure
any defect or omission or reconcile any inconsistency in any order of
the Bankruptcy Court, including the Confirmation Order or in the Plan;
8. To hear and determine all applications for compensation and
reimbursement of expenses of Professionals under sections 328, 330,
331 and 503(b) of the Bankruptcy Code;
9. To hear and determine disputes arising in connection with the
interpretation, implementation or enforcement of the Plan and the Plan
Documents, including the Relationship Agreement and the Confirmation
Order;
10. To recover all assets of the Debtors and property of the Debtors'
Estates, wherever located;
11. To hear and determine all Avoidance Actions and Causes of Action that
may be brought by Reorganized Solutia;
12. To hear and determine all disputes relating to the injunctions,
including the Monsanto/Pharmacia Injunction and the other releases
described in Article X of the Plan;
13. To hear and determine matters concerning state, local and federal
taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy
Code;
55
14. To examine, pursuant to Bankruptcy Rule 2004, any party whose
contribution is necessary to effectuate the Plan;
15. To hear and determine matters concerning the General Unsecured Claim
Reserve or the Monsanto Reserve;
16. To hear any other matter not inconsistent with the Bankruptcy Code;
and
17. To enter a final decree or decrees closing the Chapter 11 Cases.
56
ARTICLE XII
MISCELLANEOUS PROVISIONS
A. BINDING EFFECT
The Plan shall be binding upon and inure to the benefit of the
Debtors, the Reorganized Debtors, all Holders of Claims and Equity Interests
and their prospective successors and assigns, including all parties in
interest in the Chapter 11 Cases, including Professionals.
B. PRESERVATION OF AVOIDANCE ACTIONS
On and after the Effective Date, any and all Avoidance Actions
(other than the Avoidance Action against Monsanto and Pharmacia, which shall
be resolved pursuant to the Global Settlement) shall be preserved and
retained by the Reorganized Debtors, which shall have the exclusive right to
enforce, settle and prosecute any such Avoidance Actions. Reorganized
Solutia may pursue, abandon, settle or release any or all retained Avoidance
Actions, as it deems appropriate, subject to the reasonable consent of
Monsanto and the Creditors' Committee and Bankruptcy Court approval. Any
recovery received on account of an Avoidance Action may be retained by the
Reorganized Debtors. Reorganized Solutia may offset any claim supporting an
Avoidance Action against any payment due to any Holder of a Claim under the
Plan. In addition, if a Distribution is made in error, the Reorganized
Debtors can bring an action pursuant to section 502(d) of the Bankruptcy
Code to recoup such Distribution.
C. CLAIMS OF THE UNITED STATES OF AMERICA
Nothing in this Plan and the transactions approved hereby is
intended to or shall release any non-Debtor of any claims, rights or causes
of action arising in favor of the United States of America; provided,
--------
however, that nothing in this Plan or otherwise shall prevent any party from
- -------
asserting defenses, counterclaims or other rights against the United States
of America under applicable non-bankruptcy law.
D. APPLICABILITY OF SECTION 1125(e) OF THE BANKRUPTCY CODE
The protection afforded by section 1125(e) of the Bankruptcy Code
with regard to the solicitation of acceptances or rejections of the Plan and
with regard to the offer, issuance, sale or purchase of the New Common
Stock, or any other security, shall apply to the full extent provided by
law, and the entry of the Confirmation Order shall constitute the
determination by the Bankruptcy Court that the Debtors, Monsanto, the
Creditors' Committee and the Retirees' Committee and each of their
respective officers, directors, partners, employees, members, agents,
attorneys, accountants, financial advisors, investment bankers,
dealer-managers, placement agents, and other professionals, shall have acted
in good faith and in compliance with the applicable provisions of the
Bankruptcy Code pursuant to section 1125(e) of the Bankruptcy Code and that
the Plan has been proposed in good faith and not by any means forbidden by
law.
E. DISSOLUTION OF THE CREDITORS' COMMITTEE, RETIREES' COMMITTEE AND EQUITY
COMMITTEE
On the Effective Date, the Creditors' Committee, the Retirees'
Committee and the Equity Committee shall be dissolved and the members
thereof shall be released and discharged of and from all further authority,
duties, responsibilities and obligations relating to and arising from and in
connection with the Chapter 11 Cases, and the retention and employment of
their attorneys or other Professionals shall terminate; provided, however,
-------- -------
that the Creditors' Committee, Retiree Committee and Equity
57
Committee shall continue to exist after such date and their professional
fees and expenses shall be reimbursed by the Debtors or Reorganized Debtors,
as applicable, solely with respect to applications filed with the Bankruptcy
Court pursuant to sections 328, 330 and 331 of the Bankruptcy Code seeking
payment of Professional Fee Claims and for any appeals related thereto.
F. PAYMENT OF STATUTORY FEES
All fees payable pursuant to section 1930 of title 28 of the United
States Code, shall be paid, by the Debtors or the Reorganized Debtors, as
applicable, for each quarter (including any fraction thereof) until the
Chapter 11 Cases are converted, dismissed or closed, whichever occurs first.
G. MODIFICATION OF THE PLAN
Subject to the limitations contained in the Plan, (1) the Debtors
reserve the right, in accordance with the Bankruptcy Code and the Bankruptcy
Rules, to alter, amend or modify the Plan prior to the entry of the
Confirmation Order, provided, however, that any material alteration,
-------- -------
amendment or modification of the Plan shall be subject to the consent of
Monsanto, Pharmacia (if such provision directly affects Pharmacia) and the
Creditors' Committee, which shall not be unreasonably withheld, and (2)
after the entry of the Confirmation Order, the Debtors and the Reorganized
Debtors may, upon order of the Bankruptcy Court and with the consent of
Monsanto and, unless the Creditors' Committee has been dissolved, the
Creditors' Committee, which consent shall not be unreasonably withheld,
amend or modify the Plan, in accordance with section 1127(b) of the
Bankruptcy Code, or remedy any defect or omission or reconcile any
inconsistency in the Plan in such manner as may be necessary to carry out
the purpose and intent of the Plan. A Holder of a Claim that has accepted
the Plan shall be deemed to have accepted the Plan as altered, amended or
modified, if the proposed alteration, amendment or modification does not
materially and adversely change the treatment of the Claim of such Holder.
H. SEVERABILITY
In the event that the Bankruptcy Court determines that any
provision of the Plan, other than the terms of the Global Settlement, is
invalid, void or unenforceable, such provision shall be invalid, void or
unenforceable with respect to the Holder or Holders of such Claims or Equity
Interests as to which the provision is determined to be invalid, void or
unenforceable. The invalidity, voidness or unenforceability of any such
provision shall, with the consent of the Debtors, Monsanto and the
Creditors' Committee, which such consent shall not be unreasonably withheld,
in no way limit or affect the enforceability and operative effect of any
other provision of the Plan.
I. REVOCATION OR WITHDRAWAL OF THE PLAN
The Debtors reserve the right to revoke or withdraw the Plan prior
to the Confirmation Date; provided, however, that any such revocation or
-------- -------
withdrawal shall be subject to the consent of Monsanto and the Creditors'
Committee, which consent shall not be unreasonably withheld. If the Debtors
revoke or withdraw the Plan prior to the Confirmation Date, then the Plan
shall be deemed null and void. In such event, nothing contained in the Plan
shall constitute or be deemed a waiver or release of any Claims by or
against the Debtors or any other Person or Entity or to prejudice in any
manner the rights of the Debtors or any Person or Entity in any further
proceedings involving the Debtors.
J. SECTION 1145 EXEMPTION
Section 1145(a) of the Bankruptcy Code provides that, subject to
certain limitations, certain federal, state and local requirements regarding
registration of securities do not apply to securities that are
58
offered or sold under a plan of reorganization. The New Common Stock and
Rights issued pursuant to the Plan will be issued without "Registration"
under the Securities Act to the extent permitted by section 1145 of the
Bankruptcy Code, and may not be offered or sold except in compliance with
the Securities Act. The Debtors have not obtained, and do not intend to
obtain, a "no-action" letter from the Securities and Exchange Commission to
the effect that the Securities and Exchange Commission will not take
enforcement action if the New Common Stock is issued in accordance with the
provisions of the Plan without registration under the Securities Act.
K. SECTION 1146 EXEMPTION
Pursuant to section 1146(c) of the Bankruptcy Code, any transfers
of property pursuant hereto shall not be subject to any document recording
tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax,
stamp act, real estate transfer tax, mortgage recording tax or other similar
tax or governmental assessment, and the Confirmation Order shall direct the
appropriate state or local governmental officials or agents to forgo the
collection of any such tax or governmental assessment and to accept for
filing and recordation any of the foregoing instruments or other documents
without the payment of any such tax, recordation fee or governmental
assessment.
L. NOTICES
All notices, requests and demands to or upon the Debtors or, on and
after the Effective Date, the Reorganized Debtors, the Creditors' Committee,
the Retirees' Committee, the Equity Committee, the DIP Lenders, the Office
of the United States Trustee, Monsanto and Pharmacia to be effective shall
be in writing and, unless otherwise expressly provided in the Plan, shall be
deemed to have been duly given or made when actually delivered by messenger
or overnight courier service or, in the case of notice by facsimile
transmission, when received and telephonically confirmed, addressed as
follows:
1. THE DEBTORS AND THE REORGANIZED DEBTORS
Rosemary Klein, General Counsel
Solutia Inc.
575 Maryville Centre Dr.
St. Louis, Missouri 63141
Richard M. Cieri
Jonathan S. Henes
Kirkland & Ellis LLP
Citigroup Center
153 East 53rd Street
New York, NY 10022-4611
Fax: (212) 446-4900
(Counsel to the Debtors and Reorganized Debtors)
2. THE CREDITORS' COMMITTEE
Daniel H. Golden, Esq.
Ira S. Dizengoff, Esq.
Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, New York 10022
Fax: (212) 872-1002
59
(Counsel to the Creditors' Committee)
3. THE RETIREES' COMMITTEE
Daniel D. Doyle, Esq.,
Nicholas A. Franke, Esq.,
David M. Brown, Esq.
Spencer Fane Britt & Browne LLP
1 North Brentwood Boulevard, 10th Floor
St. Louis, MO 63105
Fax: (314) 862-4656
R. Scott Williams, Esq.
Haskell Slaughter Young & Rediker, LLC
400 Park Place Tower
2001 Park Place
North Birmingham, Alabama 35203
Fax: (205) 324-1133
(Counsel to the Retirees' Committee)
4. THE EQUITY COMMITTEE
Craig A. Barbarosh, Esq.
Pillsbury Winthrop Shaw Pittman LLP
650 Town Center Drive, 7th Floor
Costa Mesa, CA 92626
Fax: (714) 436-2800
(Counsel to the Equity Committee)
5. THE DIP LENDERS
David Jaffe
Citicorp USA, Inc.
390 Greenwich Street
New York, New York 10013
Fax: (212) 816-2613
Seth Jacobson, Esq.
Timothy R. Pohl, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
333 West Wacker Drive, Suite 2100
Chicago, IL 60606-1285
Fax: (312) 407-0411
(Counsel to the DIP Lenders)
60
6. THE UNITED STATES TRUSTEE
Greg M. Zipes, Esq.
OFFICE OF THE UNITED STATES TRUSTEE
33 Whitehall Street, 21st Floor
New York, NY 10004
Fax: (212) 668-2255
7. MONSANTO
Charles W. Burson, Secretary
Monsanto Company
800 North Lindbergh Boulevard
St. Louis, MO 63167
John C. Longmire, Esq.
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
Fax: (212) 728-8111
George T. Frampton, Jr., Esq.
Boies, Schiller & Flexner LLP
570 Lexington Avenue, 16th Floor
New York, New York 10022
Fax: 212-446-2350
Lloyd A. Palans, Esq.
Bryan Cave LLP
One Metropolitan Square
211 N. Broadway
St. Louis, Missouri 63102-2750
Fax: 314-259-2020
(Counsel to Monsanto)
8. PHARMACIA
Bruce R. Zirinsky, Esq.
John H. Bae, Esq.
Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, NY 10281
Fax: 212-504-6666
(Counsel to Pharmacia)
M. GOVERNING LAW
Except to the extent the Bankruptcy Code, Bankruptcy Rules or other
federal law is applicable, or to the extent an exhibit to the Plan provides
otherwise, the rights and obligations arising under the Plan shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York, without giving effect to the principles of conflicts of
law of such jurisdiction.
61
Dated: New York, New York Respectfully submitted,
February 14, 2006 SOLUTIA INC., on behalf of itself and all of
the Debtors
By: /s/Jeffry N. Quinn
------------------
Name: Jeffry N. Quinn
Title: President & Chief Executive Officer
62
Exhibit A
RELATIONSHIP AGREEMENT
___________, 2006
by and among
Solutia Inc.,
Monsanto Company,
and
[FUNDING CO].
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................2
Section 1.01 General................................................................................2
Section 1.02 Interpretation........................................................................10
ARTICLE II FUNDING CO............................................................................................11
Section 2.01 Funding Co............................................................................11
Section 2.02 Establishment of Accounts.............................................................12
Section 2.03 Deposit of Funds......................................................................12
Section 2.04 Investment of the Funds...............................................................13
Section 2.05 Payments Under Monsanto Notes.........................................................13
ARTICLE III ENVIRONMENTAL REMEDIATION............................................................................13
Section 3.01 Retained Sites........................................................................13
Section 3.02 Legacy Sites..........................................................................13
Section 3.03 Certain Waste Sites...................................................................14
Section 3.04 Shared Sites..........................................................................14
Section 3.05 Third Party Recoveries................................................................20
Section 3.06 No Admission of Liability to Other Persons............................................21
Section 3.07 Cooperation...........................................................................21
ARTICLE IV DISBURSEMENTS.........................................................................................22
Section 4.01 Disbursements.........................................................................22
ARTICLE V INDEMNIFICATION........................................................................................23
Section 5.01 Indemnification Obligations of Solutia................................................23
Section 5.02 Indemnification Obligations of Monsanto...............................................24
Section 5.03 Manner of Payment.....................................................................24
Section 5.04 Indemnification Claims................................................................24
Section 5.05 Third Party Claims....................................................................25
Section 5.06 Subrogation...........................................................................26
Section 5.07 Subsidiary Guarantees.................................................................26
ARTICLE VI CERTAIN TAX MATTERS...................................................................................26
Section 6.01 Net Operating Loss Carryforwards......................................................26
Section 6.02 Treatment of Funding Co...............................................................27
Section 6.03 Treatment of Earnings of Funding Co...................................................27
Section 6.04 Distributions by Funding Co...........................................................27
Section 6.05 Contribution to the Retiree Trust.....................................................27
Section 6.06 Treatment of Environmental Remediation................................................27
Section 6.07 Effect of the Agreement...............................................................28
Section 6.08 Cooperation...........................................................................28
ARTICLE VII COVENANTS............................................................................................28
Section 7.01 Further Assurances....................................................................28
Section 7.02 Business Combinations; Transfers of Covered Sites.....................................28
i
Section 7.03 Cooperation and Access................................................................29
Section 7.04 Confidentiality.......................................................................29
Section 7.05 Power of Attorney.....................................................................30
Section 7.06 Termination of PENNDOT Letter of Credit...............................................30
Section 7.07 Insurance.............................................................................30
ARTICLE VIII REPRESENTATIONS AND WARRANTIES......................................................................31
Section 8.01 Representations and Warranties of Monsanto............................................31
Section 8.02 Representations and Warranties of Solutia.............................................31
Section 8.03 Representations and Warranties of Funding Co..........................................32
Section 8.04 No Additional Representations or Warranties...........................................32
ARTICLE IX DISPUTE RESOLUTION....................................................................................33
Section 9.01 Agreement to Arbitrate................................................................33
Section 9.02 Bankruptcy Court Jurisdiction.........................................................33
Section 9.03 Procedures............................................................................33
ARTICLE X MISCELLANEOUS..........................................................................................34
Section 10.01 Expenses..............................................................................34
Section 10.02 Governing Law.........................................................................34
Section 10.03 Notices...............................................................................34
Section 10.04 Amendment and Modification............................................................36
Section 10.05 Successors and Assigns; No Third Party Beneficiaries..................................36
Section 10.06 Counterparts..........................................................................36
Section 10.07 Legal Enforceability..................................................................36
Section 10.08 Complete Agreement....................................................................36
APPENDICES:
Appendix A - Retained Sites
- ----------
Appendix B - Legacy Sites
- ----------
Appendix C - Shared Sites
- ----------
EXHIBITS:
Exhibit A - Confirmation Order
- ---------
Exhibit B - Anniston Consent Decree
- ---------
Exhibit C - Anniston Settlement Agreement
- ---------
Exhibit D - Anniston Side Letter
- ---------
Exhibit E - Plan
- ---------
Exhibit F - Services Agreement
- ---------
Exhibit G1 - Solutia Deferred Payment Note
- ----------
Exhibit G2 - Solutia Deferred NRD Note
- ----------
Exhibit H - Monsanto Note
- ---------
Exhibit I - Environmental Committee Charter
- ---------
Exhibit J - Solutia Subsidiary Guaranties
- ---------
Exhibit K1 - Section 7.02(b) Site (Anniston)
- ----------
ii
Exhibit K2 - Section 7.02(b) Site (Krummrich)
- ----------
Exhibit L - Transition Services Agreement
- ---------
Exhibit M - Power of Attorney
- ---------
Exhibit N - Pharmacia Indemnity Agreement
- ---------
Exhibit O - Funding Co Charter
- ---------
Exhibit P - Retiree Trust Agreement
- ---------
Exhibit Q1 - Anniston Plant Site
- ----------
Exhibit Q2 - Krummrich Plant Site
- ----------
iii
RELATIONSHIP AGREEMENT
----------------------
This RELATIONSHIP AGREEMENT (this "Agreement") is made as of
---------
_________, 2006 (the "Effective Date") by and among Solutia Inc., a Delaware
--------------
corporation ("Solutia"), Monsanto Company ("Monsanto") and [FUNDING CO], a
------- --------
Delaware limited liability company directly and wholly owned by Solutia
("Funding Co").
----------
RECITALS
--------
WHEREAS, Solutia was created as a subsidiary of Pharmacia
Corporation, formerly known as Monsanto Company ("Pharmacia"), to operate
---------
Pharmacia's chemicals business and was spun off to shareholders (the
"Solutia Spinoff") effective as of September 1, 1997 (the "Solutia Spinoff
--------------- ---------------
Date").
- ----
WHEREAS, in connection with the Solutia Spinoff, Solutia and
Pharmacia entered into the Distribution Agreement, setting forth the
allocation of the liabilities between Solutia and Pharmacia relating to
Pharmacia's historical chemicals business.
WHEREAS, Monsanto was created as a subsidiary of Pharmacia to
operate Pharmacia's agricultural business and was spun off to shareholders
(the "Monsanto Spinoff") on September 1, 2000 (the "Monsanto Spinoff Date").
---------------- ---------------------
WHEREAS, in connection with the Monsanto Spinoff, Monsanto agreed
to indemnify Pharmacia in the event and to the extent that Solutia failed to
perform or discharge certain of its liabilities under the Distribution
Agreement.
WHEREAS, on July 1, 2002, Pharmacia, Monsanto and Solutia entered
into an amendment to the Distribution Agreement, whereby Solutia agreed to
indemnify Monsanto for losses suffered by Monsanto as a result of Solutia's
failure or inability to fulfill its obligations to Pharmacia under the
Distribution Agreement.
WHEREAS, on December 17, 2003 (the "Petition Date"), Solutia
-------------
commenced a case ("Solutia Chapter 11 Case") with the Bankruptcy Court under
-----------------------
chapter 11 of the Bankruptcy Code.
WHEREAS, on _________, 2006, Solutia filed the Plan with the
Bankruptcy Court.
WHEREAS, on ___________, 2006, the Bankruptcy Court confirmed the
Plan pursuant to the confirmation order, a copy of which is attached hereto
as Exhibit A (the "Confirmation Order").
--------- ------------------
WHEREAS, in accordance with the Plan and the Confirmation Order,
the Distribution Agreement constitutes a prepetition, non-executory contract
and, subject to the Parties' obligations under the Plan, this Agreement and
the Plan Documents, is void and of no further force and effect.
WHEREAS, this Agreement, the Plan and the Plan Documents supersede
the Distribution Agreement and set out the relationship among the parties
hereto.
WHEREAS, on the Effective Date and in conjunction with the
execution of this Agreement, Solutia and Monsanto entered into the
shareholders agreement (the "Shareholders Agreement") setting forth
----------------------
Monsanto's rights and obligations as a shareholder of Solutia.
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, the parties agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01 General. As used in this Agreement, the following
-------
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"AAA" has the meaning set forth in Section 9.03.
--- ------------
"Action" means any demand, action, suit, countersuit, arbitration,
------
inquiry, proceeding or investigation by or before any Governmental
Authority, court or any arbitration or mediation tribunal.
"Affiliate" of any particular Person means any other Person
---------
controlling, controlled by or under common control with such particular
Person, where "control" means the possession, directly or indirectly, of the
power to direct the management and policies of a Person whether through the
ownership of voting securities, contract or otherwise; provided, that in no
--------
event shall Monsanto, Pharmacia or Solutia, be considered Affiliates of one
another.
"Agreement" has the meaning set forth in the preamble.
---------
"Agricultural Liabilities" means all liabilities retained by
------------------------
Pharmacia in the Solutia Spinoff that (i) were transferred to (or assumed
by) Monsanto in the Monsanto Spinoff and (ii) are defined as "Monsanto
Liabilities," as such term is defined and set forth in the Distribution
Agreement (as in effect immediately prior to the Effective Date), including
any and all liabilities related to a product consisting of a mix of
herbicides 2,4, dichlorophenoxyacetic acid and 2,4,5 trichlorophenoxyacetic
acid.
"Anniston Consent Decree" means the Revised Partial Consent Decree,
-----------------------
dated August 4, 2003, entered by the U.S. District Court for the Northern
District of Alabama in Civil Action No. 1:02-CV-0749-UWC, a copy of which is
attached hereto as Exhibit B, and any subsequent modifications to that
---------
Decree entered by the Court.
"Anniston Settlement Agreement" means the agreement among Solutia,
-----------------------------
Monsanto and Pharmacia, dated September 9, 2003, a copy of which is attached
hereto as Exhibit C.
---------
"Anniston Side Letter" means the letter from Pfizer, Inc., the
--------------------
parent company of Pharmacia, to Solutia, dated August 20, 2003, a copy of
which is attached hereto as Exhibit D.
---------
"Approval Notice" has the meaning set forth in Section 3.04(d)(v).
--------------- ------------------
2
"Approved ELC Amount" has the meaning set forth in Section
------------------- -------
3.04(d)(v).
- ----------
"Approved Unallocated Amount" has the meaning set forth in Section
--------------------------- -------
4.01(a).
- -------
"Arbitration Act" means the United States Arbitration Act, 9 U.S.C.
---------------
1-14, as amended.
"Bankruptcy Code" means title 11 of the United States Code as
---------------
applicable to the Solutia Chapter 11 Case.
"Bankruptcy Court" means the United States Bankruptcy Court for the
----------------
Southern District of New York, having jurisdiction over the Solutia Chapter
11 Case and, to the extent of the withdrawal of any reference under section
157 of title 28 of the United States Code, the United States District Court
for the Southern District of New York.
"Bankruptcy Rules" means, collectively, the Federal Rules of
----------------
Bankruptcy Procedure and the local rules of the Bankruptcy Court, as
applicable to the Solutia Chapter 11 Case.
"Board" means the Board of Directors of Solutia.
-----
"Budget" has the meaning set forth in Section 3.04(b).
------ ---------------
"Business Day" means any day other than a Saturday, Sunday or a
------------
legal holiday on which the commercial banks are closed in St. Louis, MO.
"CEO" has the meaning set forth in Section 9.03.
--- ------------
"CERCLA" means the Comprehensive Environmental Response,
------
Compensation, and Liability Act of 1980, as amended.
"Charter" has the meaning set forth in Section 3.04(b).
------- ---------------
"Chemicals Liabilities" has the meaning set forth in the
---------------------
Distribution Agreement.
"Commercial and Operating Agreements" has the meaning assigned to
-----------------------------------
it in the Plan.
"Confidential Information" of any party (a "Confidential Party")
------------------------ -----------------
means any and all information and data (whether written or oral and whatever
the form or storage medium) (a) that a Confidential Party or its
Representatives furnishes to another party or such other party's
Representatives pursuant to this Agreement; and/or (b) concerning the
business or affairs of such Confidential Party or any of its Affiliates (i)
that is nonpublic information, (ii) which is proprietary to such
Confidential Party or any of its Affiliates, (iii) the disclosure of which
could reasonably be expected to cause the Confidential Party or any of its
Affiliates or customers injury or loss of reputation or goodwill, (iv) that
gives, or may give, such Confidential Party or its Affiliates an advantage
over its competitors or (v) is marked by the Confidential Party prior to its
disclosure as "confidential". Because of the sensitive nature of this
information, the intent of the parties is that the term "Confidential
Information" shall be interpreted as broadly as possible and shall include
any and all data, reports, analyses, compilations, studies, projections,
forecasts, records, technology, methods of doing business, inventions,
know-how, designs, supplier and
3
customer information and all other financial, technical, commercial or other
information concerning the business and affairs of such Confidential Party,
in each case regardless of whether such information or item is marked as
"confidential". Notwithstanding the foregoing, Confidential Information
shall not include information which (x) is or becomes generally available to
the public other than as a result of a disclosure by any other party or its
Representatives in breach of Section 7.04 hereof, (y) was or becomes
------------
available to any other party on a non-confidential basis from a source other
than such Confidential Party or its Representatives; provided that, to such
--------
other party's actual knowledge, such source is not prohibited from
disclosing such information to such other party by a contractual, legal or
fiduciary obligation to such Confidential Party or its Affiliates, or (z) is
independently developed by any other party without violating such other
party's obligations under this Agreement.
"Confirmation Order" has the meaning set forth in the recitals.
------------------
"Cost Recovery Cases" has the meaning set forth in Section 3.05(a).
------------------- ---------------
"Covered Site" means any Retained Site, Legacy Site or Shared Site.
------------
"Deferral Notice" has the meaning set forth in Section 3.04(e).
--------------- ---------------
"Deferred NRD Payment Obligations" has the meaning set forth in
--------------------------------
Section 3.04(e).
- ---------------
"Deferred Payment Obligations" has the meaning set forth in Section
---------------------------- -------
3.04(e).
- -------
"Deposit Account" has the meaning set forth in Section 2.02.
--------------- ------------
"Dispute Notice" has the meaning set forth in Section 9.03.
-------------- ------------
"Disputed ELC Amount" has the meaning set forth in Section
------------------- -------
3.04(d)(v).
- ----------
"Disputed Unallocated Amount" has the meaning set forth in Section
--------------------------- -------
4.01(a).
- -------
"Distribution Agreement" means that certain Distribution Agreement,
----------------------
dated as of September 1, 1997, between Pharmacia and Solutia, as amended
through the date hereof, including by the Amendment dated as of July 1, 2002
by and among Pharmacia, Monsanto and Solutia.
"Effective Date" has the meaning set forth in the preamble.
--------------
"ELC Objection Notice" has the meaning set forth in Section
-------------------- -------
3.04(d)(v).
- ----------
"Environmental Account" has the meaning set forth in Section 2.02.
--------------------- ------------
"Environmental Committee" has the meaning set forth in Section
----------------------- -------
3.04(b).
- -------
"Environmental Laws" means all applicable federal, state, local and
------------------
foreign statutes, regulations and similar requirements of Governmental
Authorities having the force and effect of law, all judicial and
administrative orders and determinations, and all common law concerning
public health or safety, workplace health and safety, or pollution or
protection of the
4
environment, including all those pertaining to the presence, use,
production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation.
"Environmental Liability" means any liability (contingent or
-----------------------
otherwise, arising under statute or common law, at law or in equity, and
including liability for response costs or natural resource damages, fines or
penalties) or any investigatory, corrective or remedial obligation arising
under Environmental Law, whether or not discharged by the Solutia Chapter 11
Case, including all Environmental Liability Costs, any common law liability
for Environmental Remediation and any liability for any NRD Claim.
"Environmental Liability Costs" means all out-of-pocket costs and
-----------------------------
expenses actually incurred (1) to address any Environmental Liability, (2)
to perform (a) Environmental Remediation at any Covered Site mandated by a
Governmental Authority or court and (b) work deemed commercially reasonable
by (i) Solutia with respect to the Retained Sites, (ii) Monsanto with
respect to the Legacy Sites and (iii) the Environmental Committee with
respect to the Shared Sites, (3) in connection with the retention of, or
otherwise paid to, (a) consultants, attorneys, public relations personnel
and all other Persons retained to provide products or services in connection
with Environmental Liabilities (including all Recovery Costs) or (b)
contractors performing Environmental Remediation, (4) for or in connection
with land acquisition or easements for Environmental Remediation, (5) for
materials and equipment procured for Environmental Remediation and (6) for
or in connection with providing financial assurance required under
Environmental Law for these sites; provided that "Environmental Liability
--------
Costs" shall not include salaries and overhead of (x) Solutia employees
providing Environmental Remediation services for Retained Sites and Shared
Sites and (y) Monsanto employees providing Environmental Remediation
services for Legacy Sites and Shared Sites.
"Environmental Note" has the meaning set forth in Section 2.02.
------------------ ------------
"Environmental Reimbursement Statement" has the meaning set forth
-------------------------------------
in Section 3.04(d).
---------------
"Environmental Remediation" means any environmental investigatory,
-------------------------
corrective, removal, remedial or response action to the extent such action
is required or directed by, or conducted in response to orders, directives,
citations, notices or findings lawfully issued by, any Governmental
Authority or court or otherwise deemed commercially reasonable by (a)
Solutia with respect to the Retained Sites, (b) Monsanto with respect to the
Legacy Sites and (c) the Environmental Committee with respect to the Shared
Sites.
"Escalation Notice" has the meaning set forth in Section 9.03.
----------------- ------------
"Financing Agreement" means the Financing Agreement, dated as of
-------------------
January 16, 2004, by and among Solutia, as a debtor and debtor-in-
possession, and Solutia Business Enterprises, Inc., as a debtor and
debtor-in-possession, a New York corporation, each subsidiary of Solutia
listed as a "Guarantor" on the signature pages thereto, each as a debtor and
debtor-in-possession, the lenders from time to time party thereto (each a
"Lender" and collectively, the "Lenders"),
------ -------
5
Citicorp USA, Inc. ("CUSA"), as collateral agent for the Lenders, CUSA, as
----
administrative agent for the Lenders, and CUSA, as documentation agent for
the Lenders, as amended or modified from time to time.
"Funding Co" has the meaning set forth in the preamble.
----------
"Funding Co Accounts" has the meaning set forth in Section 2.02.
------------------- ------------
"Funding Co Payment" has the meaning set forth in Section 3.04(d).
------------------ ---------------
"Funds" has the meaning set forth in Section 2.02.
----- ------------
"Governmental Authority" means the United States of America or any
----------------------
other nation, any state or other political subdivision thereof, or any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of government.
"Indemnitee" has the meaning set forth in Section 5.05.
---------- ------------
"Indemnitor" has the meaning set forth in Section 5.05.
---------- ------------
"Insurance Recovery" has the meaning set forth in Section 7.07(a).
------------------ ---------------
"Investment Grade" means, with respect to debt, debt rated in one
----------------
of the four highest debt rating categories of Moody's Investor Services,
Inc. and Standard & Poor's Corporation (without regard to gradation).
"Joint Prosecution/Defense Agreement" means the Joint
-----------------------------------
Prosecution/Defense Agreement among Solutia, Pharmacia and Monsanto, dated
July 9, 2004.
"Legacy Offsite" means any property for which Solutia or Pharmacia
--------------
is or may become subject to Environmental Liability due to the migration
onto such property of contamination that originated on a Legacy Site
described in clauses (i) or (ii) of Section 3.02.
------------
"Legacy Sites" has the meaning set forth in Section 3.02.
------------ ------------
"Loss" has the meaning set forth in Section 5.01.
---- ------------
"Master Operating Agreement" means the Master Operating Agreement,
--------------------------
dated September 1, 1997, between Monsanto (as party thereto pursuant to the
Amendment to the Distribution Agreement, dated July 1, 2002) and Solutia, as
amended from time to time.
"Monsanto" has the meaning set forth in the preamble.
--------
"Monsanto Backstop Obligation" means $_________.(1)
----------------------------
<FN>
- --------
(1) Will equal the amount (in dollar terms) of shares of common stock of
Solutia offered by Solutia in the Rights Offering that Monsanto shall
be obligated to subscribe for and purchase if such shares are not
subscribed for and purchased by other Persons in the Rights Offering.
6
"Monsanto Claim" has the meaning assigned to it in the Plan.
--------------
"Monsanto Credit Limit" has the meaning set forth in Section 3.04(e).
--------------------- ---------------
"Monsanto ELC Review Period" has the meaning set forth in
--------------------------
Section 3.04(e)(v).
- ------------------
"Monsanto Indemnified Party" has the meaning set forth in Section 5.01.
-------------------------- ------------
"Monsanto Note" has the meaning set forth in Section 2.02.
------------- ------------
"Monsanto Payment" has the meaning set forth in Section 3.04(d).
---------------- ---------------
"Monsanto Payment Period" has the meaning set forth in Section 3.04(d).
----------------------- ---------------
"Monsanto Spinoff" has the meaning set forth in the recitals.
----------------
"Monsanto Spinoff Date" has the meaning set forth in the recitals.
---------------------
"Monsanto Unallocated Review Period" has the meaning set forth in
----------------------------------
Section 4.01(a).
- ---------------
"NRD Claims" means all claims under Section 107(a)(4)(c) of CERCLA,
----------
42 U.S.C. Section 9607(a)(4)(c), or other provision of law, for damages for
injury to, destruction of or loss of natural resources with respect to
Covered Sites, including the reasonable cost of assessing such damages,
regardless of whether such claims were filed in the Solutia Chapter 11 Case.
"Parties" means Solutia and Monsanto.
-------
"Payable Amount" has the meaning set forth in Section 3.04(d)(v).
-------------- ------------------
"PCB" means polychlorinated biphenyls.
---
"PENNDOT Case" means the action originally filed against United
------------
States Mineral Products Company in 1990 by the Commonwealth of Pennsylvania,
seeking damages caused by the presence of asbestos fireproofing in the
Transportation and Safety Building in Harrisburg, Pennsylvania, to which
Pharmacia was added as a defendant on February 7, 1997.
"Person" means an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or
any department, agency or political subdivision thereof.
"Petition Date" has the meaning set forth in the recitals.
-------------
"Pharmacia" has the meaning set forth in the recitals.
---------
"Pharmacia Indemnified Party" has the meaning set forth in
---------------------------
Section 5.01.
- ------------
"Pharmacia Indemnity Exhibit" means the Indemnification Agreement
---------------------------
between Pharmacia and Solutia, dated as of the date hereof, attached hereto
as Exhibit N.
---------
7
"Plan" means the plan of reorganization of Solutia that was dated
----
and filed on [ ] and confirmed in the Solutia Chapter 11 Case on ________,
2006, attached hereto as Exhibit E.
---------
"Plan Documents" has the meaning assigned to it in the Plan.
--------------
"Proceeding" has the meaning set forth in Section 5.05.
---------- ------------
"PRP" means a "potentially responsible party" as defined under
---
applicable Environmental Laws.
"Qualified Financial Institution" has the meaning set forth in
-------------------------------
Section 2.02.
- ------------
"Recovery Costs" means all out-of-pocket costs incurred by Solutia
--------------
or Monsanto following the commencement of the Solutia Chapter 11 Case in
connection with the pursuit of any Third Party Recoveries, whether or not
Solutia or Monsanto is successful in such pursuit.
"Remediation Plan" has the meaning set forth in Section 3.04(b).
---------------- ---------------
"Representative" has the meaning set forth in Section 8.04.
-------------- ------------
"Retained Offsite" means any property for which Pharmacia is or may
----------------
become subject to Environmental Liability due to contamination that
originated on a Retained Site described in clauses (i) or (ii) of Section 3.01
------------
prior to the Solutia Spinoff, which property is either (i) contiguous
to a Retained Site; or (ii) a waste disposal site on property proximate to a
Retained Site that was formerly owned or operated by Pharmacia prior to the
Solutia Spinoff. If additional property is contaminated as a result of
migration of such contamination from the properties identified in clauses
(i) or (ii) above, such property, to the extent of such contamination, shall
be considered part of the Retained Offsite.
"Retained Sites" has the meaning set forth in Section 3.01.
-------------- ------------
"Retiree Settlement Agreement" has the meaning assigned to it in
----------------------------
the Plan.
"Retiree Trust" has the meaning set forth in Section 2.02.
------------- ------------
"Retiree Trust Agreement" means the trust agreement that is
-----------------------
attached hereto as Exhibit P.
"Rights" has the meaning assigned to it in the Plan.
------
"Rights Offering" has the meaning assigned to it in the Plan.
---------------
"Sale" means any transaction, including a series of related
----
transactions involving any Party pursuant to which any Person or Persons
acquire (i) equity securities of such Party constituting a majority of the
voting securities entitled to vote generally in the election of the board of
directors of such Party (whether by tender offer, exchange offer, merger,
consolidation, or other sale or transfer of such Party's outstanding voting
securities) or (ii) all or substantially all of such Party's assets (any
Sale described in this subclause (ii), an "Asset Sale").
----------
"Services Agreement" has the meaning set forth in Section 2.01.
------------------ ------------
8
"Shared Payment Period" has the meaning set forth in Section 3.04(d).
--------------------- ---------------
"Shared Payments" has the meaning set forth in Section 3.04(d).
--------------- ---------------
"Shared Sites" has the meaning set forth in Section 3.04.
------------ ------------
"Shareholders Agreement" has the meaning set forth in the recitals.
----------------------
"Solutia" has the meaning set forth in the preamble.
-------
"Solutia Cap" has the meaning set forth in Section 3.04(e).
----------- ---------------
"Solutia Chapter 11 Case" has the meaning set forth in the
-----------------------
recitals.
"Solutia Deferred NRD Note" has the meaning set forth in
-------------------------
Section 3.04(e).
- ---------------
"Solutia Deferred Payment Note" has the meaning set forth in
-----------------------------
Section 3.04(e).
- ---------------
"Solutia Indemnified Party" has the meaning set forth in Section 5.02.
------------------------- ------------
"Solutia Legacy Liabilities" means all liabilities of Solutia with
--------------------------
respect to (a) retiree medical, retiree life insurance and disability
benefits obligations with respect to those retirees, including their
surviving spouses, dependent spouses and dependent children, and those
employees receiving disability benefits, who worked for Pharmacia or one of
its domestic subsidiaries and who retired, or became disabled, prior to the
Solutia Spinoff, and whose post-employment benefit or disability liabilities
were transferred to Solutia as a result of the Solutia Spinoff, (b)
Environmental Liabilities and/or (c) any other liabilities that were assumed
by Solutia under the Distribution Agreement.
"Solutia Payment Period" has the meaning set forth in Section 3.04(d).
---------------------- ---------------
"Solutia Payment" has the meaning set forth in Section 3.04(d).
--------------- ---------------
"Solutia Specified Environmental Receipts Account" means the
------------------------------------------------
specified environmental receipts account established pursuant to the
Financing Agreement.
"Solutia Spinoff" has the meaning set forth in the recitals.
---------------
"Solutia Spinoff Date" has the meaning set forth in the recitals.
--------------------
"Third Party Claim" has the meaning set forth in Section 5.05.
----------------- ------------
"Third Party Recoveries" has the meaning set forth in Section 3.05(b).
---------------------- ---------------
"Tort Claims" means all legal, equitable or other claims, demands,
-----------
costs, causes of action and/or other liabilities arising under tort law
(including demands for indemnification or contribution relating to or
arising out of any such liability, whether arising under contract, tort law
or otherwise), whether currently asserted or asserted in the future, whether
known or unknown, (a) which constitute Chemicals Liabilities assumed by
Solutia under the Distribution
9
Agreement, (b) for which Solutia was required to indemnify Monsanto and
Pharmacia under the Distribution Agreement, and (c) which are for property
damage, personal injury, products liability or premises liability or other
damages arising out of or related to exposure to asbestos, PCB, dioxin,
benzene, vinyl chloride, silica, butadiene, pentachlorophenol, styrene tars,
other chemical exposure or environmental contamination, regardless of
whether (i) any of the Debtors is, was or will be named as a defendant in
any action commenced by or on behalf of the holder of such Tort Claim, or
(ii) such holder has filed a proof of claim in the Solutia Chapter 11 Case.
"Tort Claims" shall not include, among other things: NRD Claims; claims for
medical or retiree benefits, including retiree medical, disability and life
insurance benefits; monitoring obligations with respect to PAB-exposed
former employees; workers compensation claims brought solely pursuant to
worker compensations statutes and not constituting or arising out of a
claim, demand, cost, cause of action and/or other liability that would
otherwise be defined as a "Tort Claim" herein; antitrust claims; commercial,
business or contract claims; Environmental Liability Costs; any other
remediation obligations covered by the Agreement; Legacy Claims for
"response" as defined under Section 101(25) of CERCLA; claims asserted in
connection with any pension or similar obligations of Solutia, including (x)
claims asserted in the actions entitled Davis et al. v. Solutia Inc.
Employees' Pension Plan, No. 3:05CV736, Scharringhausen et al. v. Solutia
Inc. Employees' Pension Plan, No. 3:06CV00099, and the administrative charge
entitled Larry Probst, et al. v. Monsanto Company and Solutia, Inc., EEOC
Charge Nos. 280 A 00618 through 280 A 00652, and any similar litigation and
(y) claims asserted in the action entitled Miller et al v. Pharmacia
Corporation, No. 4:04CV981, or any similar litigation; or any claims,
including claims for exposure to chemicals or other substances, arising from
Solutia's operations after the Solutia Spinoff.
"Transition Services Agreement" means the Transition and Continuing
-----------------------------
Services Agreement, dated as of the date hereof, between Solutia and
Monsanto in the form attached hereto as Exhibit L.
---------
"Unallocated Account" has the meaning set forth in Section 2.02.
------------------- ------------
"Unallocated Approval Notice" has the meaning set forth in
---------------------------
Section 4.01(a).
- ---------------
"Unallocated Expenses" has the meaning set forth in Section 4.01(a).
-------------------- ---------------
"Unallocated Objection Notice" has the meaning set forth in
----------------------------
Section 4.01(a).
- ---------------
"Unallocated Note" has the meaning set forth in Section 2.02.
---------------- ------------
"Unallocated Payable Amount" has the meaning set forth in
--------------------------
Section 4.01(a).
- ---------------
"Unallocated Reimbursement Statement" has the meaning set forth in
-----------------------------------
Section 4.01(a).
- ---------------
Section 1.02 Interpretation.
--------------
(a) References. References to any "Appendix," "Article,"
----------
"Exhibit," "Schedule" or "Section," without more, are to Appendices,
Articles, Exhibits, Schedules and Sections to or of this Agreement.
10
(b) Headings. The section headings contained in this
--------
Agreement are for reference only and shall not affect the meaning or
interpretation of this Agreement.
(c) Authorship. The parties hereto have participated
----------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party
hereto by virtue of the authorship of any of the provisions of this
Agreement.
(d) Word Usage. Except where the context clearly requires
----------
to the contrary, (i) instances of gender or entity-specific usage (e.g.,
"his," "her," "its," "person" or "individual") shall not be interpreted to
preclude the application of any provision of this Agreement to any
individual or entity, (ii) words in the singular shall include the plural
and words in the plural shall include the singular, (iii) the word "or"
shall not be applied in its exclusive sense; (iv) "including" shall mean
"including, without limitation," and "including, but not limited to" and (v)
accounting terms not defined shall have the meaning assigned to them in
accordance with United States generally accepted accounting principles.
(e) Laws. Unless otherwise provided herein, references to
----
laws, regulations and other governmental rules means such laws, regulations
and rules and any orders, instruments or official government interpretations
made under the relevant laws, regulations or rules as in effect at the time
of determination (taking into account any amendments, extensions or
supplements thereto effective at such time without regard to whether the
amendments, extensions or supplements were enacted or adopted after the
effective date of this Agreement) and includes all successor laws,
regulations and rules thereto.
(f) Currency. References to "$" or "dollars" means the
--------
lawful currency of the United States.
(g) Jurisdiction. The word "federal" refers to laws,
------------
agencies or other attributes of the United States (and not to any State or
locality thereof). The meaning of the terms "domestic" and "foreign" shall
be determined by reference to the United States.
(h) Dates and Time. References to "days" means calendar
--------------
days. All dates and times specified in this Agreement are of the essence and
shall be strictly enforced.
ARTICLE II
FUNDING CO
Section 2.01 Funding Co. Solutia and Monsanto shall take all actions
----------
and do all things necessary, proper and advisable to maintain Funding Co as
a bankruptcy-remote subsidiary of Solutia. Solutia shall provide certain
services to Funding Co pursuant to the Services Agreement, dated as of the
date hereof, between Funding Co and Solutia, a copy of which is attached
hereto as Exhibit F. Monsanto and Solutia shall not, prior to the date that
---------
is two years and one day after the final distribution of funds from the
Funding Co Accounts, acquiesce, petition or otherwise invoke, or cause
Funding Co to invoke, the process of any Governmental Authority or court for
the purpose of commencing or sustaining a case against Funding Co under any
federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator,
11
assignee, trustee, custodian, sequestrator or other similar official of
Funding Co or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of Funding Co.
Section 2.02 Establishment of Accounts. Any cash delivered to
-------------------------
Funding Co pursuant to this Agreement (including any cash proceeds of the
Rights Offering received from Persons other than Monsanto in excess of
$175,000,000 in the aggregate (it being understood that the first
$175,000,000 in such proceeds shall be delivered to Solutia to be
contributed to the Retiree Trust)), together with all income accrued
thereon, are referred to as the "Funds." Funding Co shall establish a
-----
deposit account (the "Deposit Account") with a commercial bank having at
---------------
least $10 billion in assets (a "Qualified Financial Institution") to hold
-------------------------------
any Funds not invested pursuant to Section 2.04 and from which disbursements
------------
shall be made pursuant to this Agreement. Funding Co shall maintain the
following two segregated subaccounts of the Deposit Account: (a) an
environmental liabilities account (the "Environmental Account") and (b) an
---------------------
unallocated account (the "Unallocated Account", and together with the
-------------------
Environmental Account, the "Funding Co Accounts"). Funding Co shall keep
-------------------
each Funding Co Account segregated on its books from all other accounts and
shall not deposit funds into or withdraw funds from the Deposit Account or
allocate Funds with respect to any Funding Co Account, except in accordance
with the terms of this Agreement. Whenever this Agreement requires funds to
be deposited into or disbursed from either Funding Co Account, Funding Co
shall deposit such funds into or disburse such funds from, as applicable,
the Deposit Account and concurrently allocate such funds to or from, as
applicable, such Funding Co Account. Funding Co shall not invest, distribute
or release the Funds, except in accordance with the terms of this Agreement.
Any income that accrues on Funds in any of the Funding Co Accounts shall be
allocated to the Funding Co Account containing the Funds on which such
income accrued.
Section 2.03 Deposit of Funds. On the Effective Date, simultaneously
----------------
with the execution and delivery of this Agreement, Monsanto shall deliver to
Funding Co, upon the terms and subject to the conditions of the Plan and
this Agreement, cash and/or two interest bearing demand promissory notes, in
the form attached hereto as Exhibit H. One note (the "Environmental Note")
--------- ------------------
shall be in an amount of $50,000,000 less two-thirds of the Funds delivered
to Funding Co on the Effective Date and the other note (the "Unallocated
-----------
Note" and, together with the Environmental Note, the "Monsanto Notes") shall
- ---- --------------
be in an amount of $25,000,000 less one-third of the Funds delivered to
Funding Co on the Effective Date. Interest shall accrue on the Monsanto
Notes at the same rate as interest accrues on the funds drawn under
Monsanto's commercial paper program. The Monsanto Notes shall not be
secured. Funding Co shall allocate (i) the Environmental Note (and any
payments thereunder) and two-third of the Funds delivered to Funding Co on
the Effective Date (for a total of $50,000,000) to the Environmental Account
and (ii) the Unallocated Note (and any payments thereunder) and one-third of
the Funds delivered to Funding Co on the Effective Date (for a total of
$25,000,000) to the Unallocated Account. In addition, on the Effective Date
and, in conjunction with the execution of this Agreement, Monsanto shall
deliver to Solutia, and Solutia shall in turn deliver to a voluntary
employees' beneficiary association trust account set up pursuant to the
Retiree Settlement Agreement and the Retiree Trust Agreement (the "Retiree
-------
Trust"), an amount equal to (i) the Monsanto Backstop Obligation minus (ii)
- -----
$75,000,000, in immediately available funds. This amount, together with up
to $175,000,000 of the cash proceeds of the Rights Offering, shall
12
result in the aggregate amount deposited by Solutia in the Retiree Trust on
the Effective Date being $175,000,000.
Section 2.04 Investment of the Funds. Funding Co shall invest any
-----------------------
Funds in short-term, well-diversified, high quality investment instruments,
with a primary objective of capital preservation, that are reasonably
acceptable to both Monsanto and Solutia, including, but not limited to, one
or more of: (a) interest bearing accounts with Qualified Financial
Institutions, (b) direct obligations of the United States, (c) obligations
for which the full faith and credit of the United States is pledged to
provide for the payment of principal and interest, (d) Investment Grade
commercial paper, (e) certificates of deposit issued by Qualified Financial
Institutions, (f) bankers' acceptances issued by Qualified Financial
Institutions, (g) repurchase agreements with Qualified Financial
Institutions, (h) floating rate notes rated at least AA or the equivalent,
(h) tax exempt municipal bonds and notes rated at least AA or the
equivalent, and (i) money market funds.
Section 2.05 Payments Under Monsanto Notes. At any time that there
-----------------------------
are insufficient Funds on deposit in the Environmental Account to pay any
Approved ELC Amount or any Payable Amount, Monsanto shall make a payment
under the Environmental Note (up to the remaining balance of such note) (by
wire transfer of immediately available funds to Funding Co) as necessary to
allow Funding Co to timely pay any Approved ELC Amount or Payable Amount in
accordance with Section 3.04(d)(v). At any time that there are insufficient
------------------
Funds on deposit in the Unallocated Account to pay any Approved Unallocated
Amount or any Unallocated Payable Amount, Monsanto shall make a payment
under the Unallocated Note (up to the remaining balance of such note) (by
wire transfer of immediately available funds to Funding Co) as necessary to
allow Funding Co to timely pay any Approved Unallocated Amount or
Unallocated Payable Amount in accordance with Section 4.01.
------------
ARTICLE III
ENVIRONMENTAL REMEDIATION
Section 3.01 Retained Sites. Solutia and Monsanto agree that,
--------------
solely as between themselves and regardless of any discharge, injunction, or
other protection of Solutia and/or Monsanto under the Plan or otherwise,
Solutia shall be liable for all Environmental Liabilities related to, and
shall have the responsibility for the Environmental Remediation projects
with respect to, (i) all sites listed on Appendix A attached hereto, (ii)
----------
any other site owned and/or operated by Solutia, or to which Solutia (but
not Monsanto or Pharmacia) sent waste at any time after the Solutia Spinoff
Date, and (iii) any Retained Offsite, unless any site referred to in clause
(ii) or (iii) above is specifically listed on Appendix B or Appendix C
---------- ----------
attached hereto (sites described in clauses (i), (ii) and (iii) above,
collectively, the "Retained Sites").
--------------
Section 3.02 Legacy Sites. Solutia and Monsanto agree that, solely
------------
as between themselves and regardless of any discharge, injunction, or other
protection of Solutia and/or Monsanto under the Plan or otherwise, Monsanto
shall be liable for all Environmental Liabilities related to, and shall have
the responsibility for the Environmental Remediation projects with respect
to, (i) all sites listed on Appendix B attached hereto, (ii) any other site
----------
(a) for which Solutia assumed Environmental Liability under the Distribution
Agreement, (b) that Solutia has never owned, operated or (subject to Section
-------
3.03) to which it never sent waste, and (c) for which
- ----
13
there is Environmental Liability due to Pharmacia's or a predecessor's
operations (including the offsite disposal of waste) at such sites prior to
the Solutia Spinoff Date, and (iii) any Legacy Offsites, unless any site
referred to in clauses (ii) or (iii) above is specifically listed on
Appendix A or Appendix C attached hereto (sites described in clauses (i),
- ---------- ----------
(ii) and (iii) above, collectively, the "Legacy Sites").
------------
Section 3.03 Certain Waste Sites. Solutia and Monsanto agree that,
-------------------
solely as between themselves and regardless of any discharge, injunction, or
other protection of Solutia and/or Monsanto under the Plan or otherwise, any
site that is not listed in Appendix A, B or C and was never owned or
---------- - -
operated by either Pharmacia or Solutia but to which both (a) Solutia and
(b) Pharmacia (during the period prior to the Solutia Spinoff Date) sent
waste giving rise to CERCLA (or any state law equivalent) liability
("Certain Waste Sites") shall be treated as both a Retained Site and, solely
-------------------
to the extent Solutia assumed liability with respect to such site under the
Distribution Agreement, a Legacy Site. The responsibility for Environmental
Liabilities at such site will be allocated, as between Solutia and Monsanto,
according to the volume and toxicity of waste sent by Solutia and Pharmacia,
respectively, to such site or by such other reasonable measure as the
Parties may agree upon consistent with customary allocation principles;
provided, that Monsanto shall have no liability under this Section 3.03 with
- -------- ------------
respect to Certain Waste Sites to which Pharmacia sent waste if Solutia did
not assume liability with respect to such site under the Distribution
Agreement. Solely as between the parties hereto, such allocation shall not
be affected by any discharge, injunction, or other protection of Solutia
and/or Monsanto from Environmental Liability under the Plan or otherwise.
Section 3.04 Shared Sites. Solutia and Monsanto agree that, solely
------------
as between themselves and regardless of any discharge, injunction, or other
protection of Solutia and/or Monsanto under the Plan, the Distribution
Agreement or the Separation Agreement, Environmental Liabilities with
respect to all sites listed on Appendix C attached hereto (the "Shared
---------- ------
Sites") will be shared by Solutia and Monsanto as set forth in clause (d)
- -----
below. The Environmental Remediation with respect to the Shared Sites shall
be administered as set forth in clauses (a) through (c) below.
(a) Administration. Except as expressly provided below with
--------------
respect to the authority of the Environmental Committee and the payments
required to be made by Monsanto pursuant to clause (d) below, Solutia shall
have the responsibility for the day to day implementation of the
Environmental Remediation with respect to the Shared Sites consistent with
the Budget and Remediation Plan for the Shared Sites approved by the
Environmental Committee and the procedures set forth in the Charter or
established by the Environmental Committee.
(b) Environmental Committee. As of the Effective Date,
-----------------------
Solutia and Monsanto shall have established a committee (the "Environmental
-------------
Committee") to oversee Solutia's Environmental Remediation with respect to
- ---------
the Shared Sites in accordance with the charter, attached hereto as Exhibit I
---------
(the "Charter"), which may be amended by the agreement of the Parties from
-------
time to time. The initial Charter shall include the following provisions:
(i) The Environmental Committee shall at all times
consist of five (5) members.
14
(ii) Solutia shall appoint two (2) members of the
Environmental Committee and Monsanto shall appoint three (3)
members of the Environmental Committee.
(iii) The Environmental Committee shall approve (A) the
annual budget for Environmental Remediation with respect to the
Shared Sites (the "Budget") and (B) a strategic plan for
------
Environmental Remediation with respect to all Shared Sites (the
"Remediation Plan").
----------------
(c) Cooperation.
-----------
(i) Subject to the Budget and Remediation Plan approved
by the Environmental Committee pursuant to clause (b)
above, Solutia and Monsanto shall cooperate to perform
Environmental Remediation with respect to the Shared
Sites in a cost effective and efficient manner that
complies with applicable Environmental Laws, including
(A) the reasonable use of Solutia property and Monsanto
property for management of materials generated by such
Environmental Remediation, (B) the application, where
legally permitted, of risk-based remediation standards,
deed restrictions and other institutional controls and
(C) reasonable communication between remediation
managers and other relevant personnel of Solutia and
Monsanto and the exchange of documents related to such
Environmental Remediation; provided, however, that, in
--------
case of clauses (A) and (B) above, such measures shall
be employed only to the extent that they are
technologically feasible, reasonably cost-effective and
can be accomplished in a manner that will not have a
material adverse impact on Solutia and/or Monsanto as
the case may be. Solutia and Monsanto may individually
or jointly investigate and consider in good faith
obtaining the use of risk transfer products, cost cap
policies or other insurance-related solutions to manage
and address the Environmental Liabilities related to the
Shared Sites on a basis that is mutually beneficial to
Solutia and Monsanto.
(d) Sharing Mechanism.
-----------------
(i) Funding Co shall make payments (the "Funding Co
----------
Payment") to Solutia for all Environmental Liabilities
-------
related to the Shared Sites from the Environmental
Account in accordance with clause (v) below until the
funds in the Environmental Account and the balance of
the Environmental Note (including any interest thereon)
are reduced to zero.
(ii) After the funds in the Environmental Account have been
reduced to zero, Monsanto shall pay the next $___ million(2)
(the "Monsanto Payment") in Environmental Liabilities
----------------
relating to the Shared Sites as set forth herein, on a
monthly basis (the period of time from the Effective Date
until the foregoing
<FN>
- --------
(2) Shall equal $50 million less all Environmental Liability Costs paid by
Monsanto with respect to Shared Sites during the course of the Solutia
Chapter 11 Case.
15
amounts are spent, the "Monsanto Payment Period") in accordance
-----------------------
with clause (v) below.
(iii) Commencing upon the expiration of the Monsanto
Payment Period, Solutia shall pay the next $325 million
of Environmental Liabilities (the "Solutia Payment")
---------------
related to the Shared Sites (the period of time during
which the $325 million is being spent, the "Solutia
-------
Payment Period"). During the Solutia Payment Period, the
--------------
Environmental Committee shall be entitled to review the
books and records of Solutia at reasonable times and
upon prior written notice to ensure the proper
allocation of costs between Retained Sites and Shared
Sites.
(iv) Commencing upon the expiration of the Solutia Payment
Period (the "Shared Payment Period"), Solutia and Monsanto
---------------------
shall each pay 50% of any Environmental Liabilities
related to the Shared Sites (the "Shared Payments") in
---------------
accordance with clause (v) below.
(v) Funding Co and Monsanto Payments. Solely for the
--------------------------------
purposes of the Funding Co Payment, the Monsanto Payment and
Monsanto's portion of the Shared Payments, the following
procedures shall apply:
(A) Solutia shall have the right, at any time and
from time to time (and as often as it desires but in any
event not more than once in any given two week period),
to deliver to Monsanto and, prior to the Monsanto
Payment Period, Funding Co (I) a written statement (an
"Environmental Reimbursement Statement") setting forth
-------------------------------------
in reasonable detail the amount and nature of
unreimbursed Environmental Liability Costs with respect
to the Shared Sites which Solutia has paid, (II) a copy
of all such invoices and/or other supporting
documentation related thereto, signed by Solutia project
managers responsible for such Environmental Liability
Costs, and (III) a written statement setting forth the
portion, if any, of such Environmental Liability Costs
that exceeds the amount of the Funds then on deposit in
the Environmental Account. As promptly as practicable,
but in any event within ten (10) Business Days after
Monsanto's receipt thereof (such ten (10)-Business Day
period, the "Monsanto ELC Review Period"), Monsanto
--------------------------
shall either (x) approve such Environmental
Reimbursement Statement in its entirety by delivering to
Solutia a written notice thereof (an "Approval Notice")
---------------
and/or (y) based on its reasonable, good faith judgment,
object, in whole or in part, thereto by delivering to
Solutia a written notice (an "ELC Objection Notice")
--------------------
setting forth the items and amount in dispute (such
amount, the "Disputed ELC Amount") and the reasonable
-------------------
good faith basis for such objection. If Monsanto timely
delivers to Solutia an ELC Objection Notice to only a
part of an Environmental Reimbursement Statement, such
Environmental Reimbursement Statement shall become final
and binding on all the parties hereto with respect to
any and all items of Environmental Liability Costs not
specifically identified in such ELC Objection Notice. If
Monsanto shall fail to timely deliver to Solutia an ELC
Objection Notice, Monsanto shall be deemed to have
approved all
16
Environmental Liability Costs contained in the relevant
Environmental Reimbursement Statement and such
Environmental Reimbursement Statement and Monsanto's
approval with respect to the Environmental Liability
Costs set forth therein shall become final and binding
on all parties hereto.
(B) If Monsanto shall timely submit an ELC Objection
Notice, the parties shall, during the fifteen (15) day
period following Solutia's receipt of such ELC Objection
Notice, negotiate in good faith to reach agreement as to
the portion, if any, of the Disputed ELC Amount which is
properly payable (the "Payable Amount"). If the Parties
--------------
are unable to resolve Monsanto's objection to the
Environmental Reimbursement Statement within such
fifteen (15) day period, the Payable Amount shall be
determined in accordance with Article IX hereof.
----------
(C) Any and all Environmental Liability Costs set
forth in an Environmental Reimbursement Statement in
respect of which Monsanto (x) timely delivers an
Approval Notice, (y) timely delivers an ELC Objection
Notice and which Environmental Liability Costs are not
specifically identified in such ELC Objection Notice or
(z) fails to timely deliver an ELC Objection Notice
shall, in each case, be an "Approved ELC Amount." Prior
-------------------
to the Monsanto Payment Period, Funding Co shall make or
cause to be made a payment from the Environmental
Account to Solutia in the amount of any Approved ELC
Amount as promptly as practicable, but in any event
prior to the expiration of the Monsanto ELC Review
Period. During the Monsanto Payment Period and the
Shared Payment Period, Monsanto shall, subject to the
sharing mechanism described in paragraphs (i) through
(iv) of this Section 3.04(d), pay to Solutia Monsanto's
---------------
portion (if any) of the amount of such Approved ELC
Amount in immediately available funds in accordance with
wire transfer instructions either contained or confirmed
in the relevant Environmental Reimbursement Statement as
promptly as practicable, but in any event prior to the
expiration of the Monsanto ELC Review Period. Any
payment by Monsanto pursuant to this Section 3.04(d)(v)
------------------
shall be made with interest accrued thereon from the
date that is ten (10) Business Days after Monsanto's
receipt of the Environmental Reimbursement Statement
until the date of payment at the same rate as interest
accrues on funds drawn on Solutia's then-existing
secured revolving credit facility. Prior to the Monsanto
Payment Period, Funding Co shall make or cause to be
made a payment from the Environmental Account to Solutia
in the amount of any Payable Amount as promptly as
practicable, but in no event more than five (5) Business
Days after the later of the dates that (x) such amount
becomes a Payable Amount and (y), if applicable, Funding
Co delivers to Monsanto a request for funds to be drawn
under the Environmental Note. During the Monsanto
Payment Period and the Shared Payment Period, Monsanto
shall, subject to the sharing mechanism described in
paragraphs (i) through (iv) of this Section 3.04(d), pay
---------------
to Solutia Monsanto's portion (if any) of the
17
amount of any Payable Amount in immediately available
funds in accordance with wire transfer instructions
either contained or confirmed in the relevant
Environmental Reimbursement Statement as promptly as
practicable, but in no event more than five (5) Business
Days after such amount becomes a Payable Amount.
(e) Solutia Cap; Monsanto Payment Obligations.
-----------------------------------------
(i) Notwithstanding the provisions of Section 3.04 to
------------
the contrary, so long as Monsanto has the power to appoint
and remove a majority of the members of the
Environmental Committee, if Solutia is required to make
any Solutia Payments or Shared Payments in any given
fiscal year of Solutia in excess of $30 million (such
$30 million, the "Solutia Cap" and such excess of $30
-----------
million, an "Excess Payment Obligation"), Solutia shall
-------------------------
have the right, in its sole discretion, to pay the
entire amount of the Excess Payment Obligation or defer
the payment of all or a portion of any such Excess
Payment Obligation in accordance with this Section 3.04(e)
---------------
(all such deferred payment obligations in the aggregate
outstanding at any given time, "Deferred Payment
----------------
Obligations"). As promptly as practicable after making a
-----------
decision to defer all or any portion of any Excess Payment
Obligation pursuant to this Section 3.04(e) and in any event
---------------
not later than five (5) Business Days prior to the date upon
which any Deferred Payment Obligation shall become due and
payable, Solutia shall notify Monsanto in writing (a
"Deferral Notice") of the amount, nature and payment terms of
---------------
any such Deferred Payment Obligation. Monsanto shall be
obligated to provide funds under the Solutia Deferred Payment
Note in an amount sufficient to pay any Deferred Payment
Obligations, but only to the extent that the total aggregate
amount (including accrued and unpaid interest) outstanding
under the Solutia Deferred Payment Note and the Solutia
Deferred NRD Note does not exceed $25 million (the "Monsanto
--------
Credit Limit"). Upon request from Solutia, Monsanto may elect
------------
to provide funds under the Solutia Deferred Payment Note to
pay Deferred Payment Obligations in excess of the Monsanto
Credit Limit, but in no event shall Monsanto be obligated to
do so. If Monsanto does not elect to do so, then
notwithstanding the first sentence of this Section 3.04(e)(i),
------------------
Solutia shall be obligated to pay any amount of Deferred
Payment Obligations in excess of the Monsanto Credit Limit.
Payments in any given fiscal year of Solutia made by Solutia
under the Solutia Deferred Payment Note shall be taken into
account in calculating (A) the Solutia Cap for the fiscal
year in which such payments are made, (B) the Solutia Payment
and/or (C) with respect to payments of principal only, the
Solutia share of the Shared Payment for the fiscal year in
which amounts being repaid were borrowed.
(ii) Solutia's obligation to repay the Deferred Payment
Obligations pursuant to this Section 3.04(e) shall be
---------------
evidenced by a promissory note in the form of Exhibit G1
----------
attached hereto (the "Solutia Deferred Payment Note"), which
-----------------------------
shall contain the following provisions:
(A) Solutia shall repay the principal amount of each
Deferred Payment Obligation funded under the Solutia
Deferred Payment Note in
18
four (4) equal installments on the last Business Day of
each fiscal quarter of Solutia commencing in the fiscal
quarter in the following fiscal year corresponding to
the fiscal quarter in which such Deferred Payment
Obligation originally arose; provided, that Solutia
--------
shall have the right to prepay all or any portion of the
Deferred Payment Obligations at any time.
(B) Interest shall accrue on the Solutia Deferred
Payment Note at the same rate as interest accrues on
funds drawn on Solutia's then-existing secured revolving
credit facility, plus 1.5%.
(C) Interest shall be payable on the last Business
Day of each of Solutia's fiscal quarters. Interest
payments on borrowed funds shall commence at the end of
the first fiscal quarter following the date of
borrowing.
(iii) Notwithstanding the provisions of Section 3.04 to
------------
the contrary, in the event that Monsanto does not have the
power to appoint and remove a majority of the members of the
Environmental Committee, if Solutia is required to pay any
Excess Payment Obligation in any given fiscal year of Solutia
and such payment includes costs associated with NRD Claims,
Solutia shall have the right, in its sole discretion, to pay
the entire amount of such Excess Payment Obligation in such
fiscal year or defer the payment of all or a portion of the
amount equal to the lesser of (x) the amount of such NRD
Claims and (y) the Excess Payment Obligations for such fiscal
year (all such deferred payment obligations in the aggregate
outstanding at any given time, "Deferred NRD Payment
--------------------
Obligations"). As promptly as practicable after making a
-----------
decision to defer payment pursuant to this Section 3.04(e)(iii)
--------------------
and in any event not later than five (5) Business Days prior
to the date upon which any Deferred NRD Payment Obligation
shall become due and payable, Solutia shall notify Monsanto
in a Deferral Notice of the amount and payment terms of any
such Deferred NRD Payment Obligation. Monsanto shall be
obligated to provide funds under the Solutia Deferred NRD
Note to pay the amount of the Deferred NRD Payment
Obligation, as and when due from its own funds, but such
obligation shall be subject to the Monsanto Credit Limit.
Upon request from Solutia, Monsanto may elect to provide
funds under the Solutia Deferred NRD Note to pay Deferred NRD
Payment Obligations in excess of the Monsanto Credit Limit,
but in no event shall Monsanto be obligated to do so. If
Monsanto does not elect to do so then, notwithstanding the
first sentence of Section 3.04(e)(iii), Solutia shall be
--------------------
obligated to pay any amount of the Deferred NRD Payment
Obligations in excess of the Monsanto Credit Limit. Payments
in any given fiscal year of Solutia made by Solutia under the
Solutia Deferred NRD Note shall be taken into account in
calculating (A) the Solutia Cap for the fiscal year in which
such payments are made, (B) the Solutia Payment and/or (C)
with respect to payments of principal only, the Solutia share
of the Shared Payment for the fiscal year in which amounts
being repaid were borrowed.
(iv) Solutia's obligation to repay the Deferred NRD
Payment Obligations pursuant to this Section 3.04(e) shall be
---------------
evidenced by a promissory
19
note in the form of Exhibit G2 attached hereto (the "Solutia
---------- -------
Deferred NRD Note"), which shall contain the following
-----------------
provisions:
(A) Solutia shall repay the principal amount of each
borrowing under the Solutia Deferred NRD Note on December 31
of the year following the year in which such funds are
borrowed; provided, that if such repayments, when combined
--------
with the Solutia Payment or Solutia's portion of the Shared
Payment for the fiscal year in which repayment is due, would
exceed the Solutia Cap, Solutia may defer such repayment to
December 31 of the following year; provided, further, that
-------- -------
in no event shall any borrowing under the Solutia
Deferred NRD Note not be repaid within five (5) years.
Notwithstanding the foregoing, Solutia shall have the
right to prepay all or any portion of the Deferred NRD
Payment Obligations at any time.
(B) Interest shall accrue on the Solutia Deferred NRD
Note at the same rate as interest accrues on funds drawn on
Solutia's then-existing secured revolving credit
facility, plus 1.5%.
(C) Interest payments shall be payable at the end of
each of Solutia's fiscal quarters. Interest payments on
borrowed funds shall commence at the end of the first
fiscal quarter following the date of borrowing.
(v) The payment of the Solutia Deferred Payment Note and
the Solutia Deferred NRD Note shall be guaranteed by certain
domestic subsidiaries of Solutia, pursuant to the agreements
set forth on Exhibit J.
---------
Section 3.05 Third Party Recoveries.
----------------------
(a) On the Effective Date, (i) any and all monies received
after the Petition Date and prior to the Effective Date by Solutia or
Monsanto from any Person other than Solutia or Monsanto or their respective
insurers, including any PRPs, with respect to Shared Sites, (ii) any and all
amounts then on deposit in the Solutia Specified Environmental Receipts
Account and (iii) any and all amounts on deposit in the escrow account
established pursuant to the Joint Prosecution/Defense Agreement shall be
split between the Parties such that Monsanto shall receive one third (1/3)
of all such monies and Solutia shall receive two thirds (2/3) of all such
monies.
(b) Following the Effective Date, any litigation for
contribution or cost recovery pursuant to CERCLA or similar state law or
allocation proceedings (whether by mediation or arbitration) to establish
the respective liability and allocation of costs of third parties ("Cost
----
Recovery Cases") with respect to the Shared Sites shall, subject to Section
- -------------- -------
3.05(c), be managed by the Environmental Committee in accordance with the
- -------
Joint Prosecution/Defense Agreement as amended or replaced from time to time
by mutual agreement of the Parties. Any and all monies received after the
Effective Date by Solutia or Monsanto from any Person other than Monsanto or
Solutia or their respective insurers, including any PRPs (as to any Cost
20
Recovery Cases for Covered Sites, collectively the "Third Party
-----------
Recoveries"), with respect to the Shared Sites shall be split between the
- ----------
Parties such that Monsanto shall receive one third (1/3) of each such Third
Party Recovery and Solutia shall receive two thirds (2/3) of each such Third
Party Recovery. A Party receiving a Third Party Recovery with respect to a
Shared Site shall (i) notify the other Party in writing of the receipt and
amount of such Third Party Recovery and (ii) pay to the other Party such
other Party's portion of the Third Party Recovery in immediately available
funds, in each case within five (5) Business Days of receipt of such Third
Party Recovery.
(c) Notwithstanding Section 3.05(b), Solutia shall, with
---------------
respect to any Cost Recovery Case with respect to any Shared Site, be
entitled, at its own expense, to select counsel to represent it with respect
to any issues relating to any liability or potential liability of Solutia
which is independent of its liability arising from activities that occurred
prior to the Solutia Spinoff.
(d) Third Party Recoveries with respect to the Retained Sites
received by Monsanto after the Effective Date shall be transferred promptly
to Solutia and Third Party Recoveries with respect to the Retained Sites
received by Solutia shall be Solutia's property.
(e) Third Party Recoveries with respect to the Legacy
Sites received by Solutia after the Effective Date shall be transferred
promptly to Monsanto and Third Party Recoveries with respect to the Legacy
Sites received by Monsanto shall be Monsanto's property.
(f) Solutia shall be entitled, at its own expense, to
select counsel to represent it with respect to any issues relating to its
liability or potential liability, with respect to a Retained Site.
(g) Monsanto shall be entitled, at its own expense, to
select counsel to represent it with respect to any issue relating to its or
Pharmacia's liability or potential liability, with respect to a Legacy Site.
(h) Solutia and Monsanto will consult and cooperate with one
another to obtain Third Party Recoveries, and, in furtherance thereof, shall
provide one another with reasonable access to the books and records and
personnel in their respective possession or control as are reasonably
necessary to pursue and obtain Third Party Recoveries. Notwithstanding the
foregoing, neither Solutia nor Monsanto shall be required to take any action
pursuant to this Section 3.05(h) if doing so would cause such Party undue
---------------
hardship, unreasonably interfere with the business or operations of such
Party or require such Party to spend more than an immaterial amount of money
or incur any liability other than an immaterial liability.
Section 3.06 No Admission of Liability to Other Persons. Nothing in
------------------------------------------
this Agreement shall constitute or be deemed to constitute an admission of
liability on the part of Monsanto, Solutia or any of their Affiliates in
respect of any Environmental Liability other than as between Monsanto and
Solutia as expressly set forth in this Article III.
Section 3.07 Cooperation. In connection with Environmental Remediation
-----------
at the Retained Sites and Legacy Sites, Solutia shall provide Monsanto with the
reasonable use of Solutia property and Monsanto shall provide Solutia with
the reasonable use of Monsanto
21
property, for management of material generated by such Environmental
Remediation; provided, that such use of property will not have a material
--------
adverse impact on Solutia and/or Monsanto, as the case may be.
ARTICLE IV
DISBURSEMENTS
Section 4.01 Disbursements.
-------------
(a) Distributions from the Unallocated Account. Except as
------------------------------------------
provided in Section 3.04(d)(v) with respect to the Environmental Account,
------------------
Funding Co shall disburse the Funds, or any portion thereof, only in
accordance with this Section 4.01. So long as there are Funds remaining in
------------
the Unallocated Account, Solutia shall have the right, at any time and from
time to time (and as often as it desires but in any event not more than once
in any given two week period), to deliver to Funding Co and Monsanto a
written statement (an "Unallocated Reimbursement Statement") setting forth
-----------------------------------
any Solutia Legacy Liabilities (including the Solutia Payments and Solutia's
portion of the Shared Payments) paid by Solutia but unreimbursed as to which
Solutia has decided to seek reimbursement from the Funds on deposit in the
Unallocated Account (the "Unallocated Expenses") and the portion, if any, of
--------------------
such Unallocated Expenses that exceeds the amount of the Funds then on
deposit in the Unallocated Account. As promptly as practicable, but in any
event within ten (10) Business Days of Monsanto's receipt thereof (such ten
(10)-Business Day period, the "Monsanto Unallocated Review Period"),
----------------------------------
Monsanto shall either (x) approve such Unallocated Reimbursement Statement
in its entirety by delivering to Solutia a written notice thereof and/or (y)
based on its reasonable, good faith judgment, object, in whole or in part,
thereto by delivering to Solutia a written notice (an "Unallocated Objection
---------------------
Notice") setting forth the items and amount in dispute (such amount, the
- ------
"Disputed Unallocated Amount") and the reasonable good faith basis for such
---------------------------
objection. If Monsanto timely delivers to Solutia an Unallocated Objection
Notice to only a part of an Unallocated Reimbursement Statement, such
Unallocated Reimbursement Statement shall become final and binding on all
the parties hereto with respect to any and all items of Unallocated Expenses
not specifically identified in such Unallocated Objection Notice. If
Monsanto shall fail to timely deliver to Solutia an Unallocated Objection
Notice, Monsanto shall be deemed to have approved all Unallocated Expenses
contained in the relevant Unallocated Reimbursement Statement and such
Unallocated Reimbursement Statement and Monsanto's approval with respect to
the Unallocated Expenses set forth therein shall become final and binding on
all parties hereto. If Monsanto shall timely submit an Unallocated Objection
Notice, the parties shall, during the fifteen (15) day period following
Solutia's receipt of such Unallocated Objection Notice, negotiate in good
faith to reach agreement as to the portion, if any, of the Disputed
Unallocated Amount which is properly payable (the "Unallocated Payable
-------------------
Amount"). If the Parties are unable to resolve Monsanto's objection to the
- ------
Unallocated Reimbursement Statement within such fifteen (15) day period, the
Unallocated Payable Amount shall be determined in accordance with Article IX
----------
hereof.
(b) Payment Procedures. Any and all Unallocated Expenses set
------------------
forth in an Unallocated Reimbursement Statement in respect of which Monsanto
(x) timely delivers an Unallocated Approval Notice (y) timely delivers an
Unallocated Objection Notice and which Unallocated Expenses are not
specifically identified in such Unallocated Objection Notice or (z)
22
fails to timely deliver an Unallocated Objection Notice shall, in each case,
be an "Approved Unallocated Amount." Any and all Approved Unallocated
---------------------------
Amounts and Unallocated Payment Amounts shall be paid as set forth in this
Section 4.01(b). Funding Co shall make or cause to be made payment from the
- ---------------
Unallocated Account to Solutia in the amount of any Approved Unallocated
Amount, as promptly as practicable, but in any event prior to the expiration
of the Monsanto Unallocated Review Period, in accordance with wire transfer
and account instructions either contained or confirmed in the relevant
Unallocated Reimbursement Statement. Funding Co shall make or cause to be
made payment from the Unallocated Account to Solutia in the amount of any
Unallocated Payment Amount as soon as practicable, but in any event within
five (5) Business Days after the later of the dates (x) such amount becomes
an Unallocated Payment Amount and (y), if applicable, Funding Co delivers to
Monsanto a request for funds to be drawn under the Unallocated Note, in
accordance with wire transfer and account instructions either contained or
confirmed in the relevant Unallocated Reimbursement Statement.
ARTICLE V
INDEMNIFICATION
Section 5.01 Indemnification Obligations of Solutia. After the
--------------------------------------
Effective Date, Solutia shall indemnify Monsanto and its Affiliates,
directors, officers, employees, employee benefit plans, successors and
assigns (collectively, "Monsanto Indemnified Parties") and shall indemnify
----------------------------
Pharmacia and its Affiliates, directors, officers, employees, successors and
assigns (collectively, "Pharmacia Indemnified Parties") pursuant to the
-----------------------------
Pharmacia Indemnity Exhibit and save and hold each of them harmless against,
and pay on behalf of or reimburse Monsanto Indemnified Parties and Pharmacia
Indemnified Parties as and when incurred for any loss, liability, action,
cause of action, cost, damage or expense, whether or not arising out of
third party claims (including interest, penalties, reasonable attorneys',
consultants' and experts' fees and expenses) (collectively, "Losses", and
------
each a "Loss"), which any Monsanto Indemnified Party or Pharmacia
----
Indemnified Party suffers, sustains or becomes subject to, as a result of or
arising out of:
(a) any Environmental Liability in connection with the
Retained Sites;
(b) any Environmental Liability in connection with the Shared
Sites for which Solutia is liable pursuant to Section 3.04 above;
------------
(c) failure of Solutia to pay any amounts required to be paid
by Solutia (i) pursuant to the Anniston Settlement Agreement as specified in
the Anniston Side Letter or (ii) to the education trust fund pursuant to
Section VI of the Anniston Consent Decree, or failure of Solutia to honor
any other obligation of Solutia under the Anniston Settlement Agreement;
(d) the PENNDOT Case; provided, that in no event shall Solutia
--------
be required to indemnify Monsanto Indemnified Parties or Pharmacia
Indemnified Parties in respect of any Losses suffered by Monsanto
Indemnified Parties or Pharmacia Indemnified Parties described in this
clause (d) to the extent the aggregate amount of all such Losses exceeds $20
million; and
(e) the Chemicals Liabilities; provided, that in no event
--------
shall Solutia be required to indemnify Monsanto Indemnified Parties or
Pharmacia Indemnified Parties in respect of any Losses suffered by Monsanto
Indemnified Parties or Pharmacia Indemnified Parties
23
described in this clause (e) to the extent that (i) Monsanto agreed to
indemnify Solutia Indemnified Parties for such Losses pursuant to Section 5.02
------------
or (ii) such Losses relate to "claims" (as defined in section 101(5) of the
Bankruptcy Code) that are not satisfied in full under the Plan arising in
connection with or related to Pharmacia's or Solutia's non-qualified plans
or arrangements at issue in Miller v. Pharmacia Corporation, Case No.
4:04CV981.
If and to the extent any provision of this Section 5.01 is
------------
unenforceable for any reason, Solutia hereby agrees to make the maximum
contribution to the payment and satisfaction of the Loss for which
indemnification is provided for in this Section 5.01 that is permissible
------------
under applicable laws.
Section 5.02 Indemnification Obligations of Monsanto. After the
---------------------------------------
Effective Date, Monsanto shall indemnify Solutia and its Affiliates,
directors, officers, employees, employee benefit plans, successors and
assigns (collectively, "Solutia Indemnified Parties") and save and hold each
---------------------------
of them harmless against, and pay on behalf of or reimburse Solutia
Indemnified Parties as and when incurred for any Losses which any Solutia
Indemnified Party suffers, sustains or becomes subject to, as a result of or
arising out of:
(a) any Environmental Liability in connection with the
Legacy Sites;
(b) any Environmental Liability in connection with the
Shared Sites for which Monsanto is liable pursuant to Section 3.04 above;
------------
(c) any Tort Claims; and
(d) the Agricultural Liabilities.
If and to the extent any provision of this Section 5.02 is
------------
unenforceable for any reason, Monsanto hereby agrees to make the maximum
contribution to the payment and satisfaction of the Loss for which
indemnification is provided for in this Section 5.02 that is permissible
------------
under applicable laws.
Section 5.03 Manner of Payment. Any indemnification owing pursuant
-----------------
to this Article V shall be effected by wire transfer of immediately
---------
available funds from the Indemnitor to an account designated in writing by
the Indemnitee within fifteen (15) days after the final determination of the
amount thereof pursuant to this Article V. The amount of any Losses for
---------
which indemnification is provided under this Article V shall be computed net
---------
of any third-party insurance proceeds and recoveries in respect of third
party indemnification obligations actually received by the Indemnitee in
connection with such Losses. The Indemnitee shall use its commercially
reasonable efforts to obtain recovery in respect of any Losses from any
insurer or other third party indemnity which is available in respect of such
Losses. If an Indemnitee receives such insurance proceeds or indemnification
recoveries in connection with Losses for which it has received
indemnification, such party shall refund to the Indemnitor the amount of
such insurance proceeds or recovery when received, up to the amount of
indemnification received.
Section 5.04 Indemnification Claims. Any indemnification claim which
----------------------
is not a result of a third party claim shall be asserted by written notice
given by the Indemnitee to the
24
Indemnitor. The Indemnitor shall have a period of thirty (30) days after the
receipt of such notice within which to respond thereto. If the Indemnitor
does not respond within such 30-day period, it shall be deemed to have
rejected such claim in whole. If the Indemnitor does not respond within such
30-day period or rejects such claim in whole or in part, the Indemnitee
shall be free to pursue such remedies as may be available to such party
under Article IX.
----------
Section 5.05 Third Party Claims
------------------
(a) If there occurs an event which a party asserts is an
indemnifiable event pursuant to this Article V, the party or parties seeking
---------
indemnification (the "Indemnitee") shall notify the other party or parties
----------
obligated to provide indemnification (the "Indemnitor") promptly in writing
----------
specifying the facts constituting the basis for such claim and the amount,
to the extent known, of the claim asserted. If such event involves (i) any
third party claim or (ii) the commencement of any suit, action, proceeding,
investigation or other claim (a "Proceeding") by a third Person (such third
----------
party claim and Proceeding hereinafter referred to collectively as a "Third
-----
Party Claim"), the Indemnitee will give such Indemnitor prompt written
- -----------
notice of such Third Party Claim or the commencement of such Proceeding;
provided, that the failure to provide prompt notice as provided herein
- --------
(whether with respect to a Third Party Claim or otherwise) will relieve the
Indemnitor of its obligations hereunder only to the extent that such failure
prejudices the Indemnitor hereunder. In case any such Third Party Claim
shall be brought against any Indemnitee, it shall notify the Indemnitor of
the commencement thereof promptly in writing specifying the facts
constituting the basis for such claim and the amount, to the extent known,
of the claim asserted.
(b) The Indemnitor shall be entitled to participate in the
defense of any Third Party Claim and to assume the defense thereof, with
counsel selected by the Indemnitor; provided, that the Indemnitor notifies
--------
the Indemnitee in writing of its election to assume such defense within
twenty (20) Business Days of receipt of notice from the Indemnitee of such
Third Party Claim. After notice from the Indemnitor to the Indemnitee of
such election so to assume the defense thereof, the Indemnitor shall not,
except as provided in the next sentence, be liable to the Indemnitee for any
legal expenses of other counsel or any other expenses subsequently incurred
by such party or parties in connection with the defense thereof.
Notwithstanding the Indemnitor's election to so assume the defense of any
such Third Party Claim, the Indemnitee shall have the right to employ
separate counsel (including local counsel) and participate in (but not
control) such defense; provided, that the Indemnitor shall bear the
--------
reasonable fees and expenses of such separate counsel only if (x) the
defendants in any such Proceeding include both the Indemnitee and the
Indemnitor and the Indemnitee has legal defenses available to it which are
different from or additional to those available to the Indemnitor; provided
--------
further, that, in each case, with respect to each Indemnitee in such
- -------
circumstance, the Indemnitor shall not be required to bear the fees and
expenses of more than one firm of attorneys in addition to one firm of local
counsel in each jurisdiction where the primary counsel is not admitted to
practice and where local counsel is necessary, or (y) counsel for the
Indemnitor shall authorize in writing the Indemnitee to employ separate
counsel at the expense of the Indemnitor.
(c) The Indemnitor and the Indemnitee agree to cooperate
fully with each other and their respective counsel in connection with the
defense, negotiation of settlement or settlement of any such Third Party
Claim, including providing access to any relevant books and
25
records, properties, employees, representatives and advisors (regardless of
whether the Indemnitor has assumed the defense thereof). If the Indemnitor
assumes the defense of a Third Party Claim, no settlement or compromise
thereof may be effected (x) by the Indemnitor without the written consent of
the Indemnitee (which consent shall not be unreasonably withheld or delayed)
unless (1) there is no finding or admission of any violation of law or any
violation of the rights of any Person by any Indemnitee and no adverse
effect on any other third party claims that may be made against any
Indemnitee and (2) it involves solely the payment of monetary damages and
all relief provided is paid or satisfied in full by the Indemnitor or (y) by
the Indemnitee without the consent of the Indemnitor, except to the extent
it involves only equitable or other non-monetary relief not binding on any
party other than the Indemnitee and ten (10) Business Days prior written
notice is given to the Indemnitor. If the Indemnitor elects not to assume
the defense of a Third Party Claim, the Indemnitee may assume the defense of
any such Third Party Claim with counsel selected by the Indemnitee, and the
Indemnitor shall bear reasonable fees and expenses of such counsel. In no
event shall an Indemnitor be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld or
delayed).
Section 5.06 Subrogation. In the event of payment by an Indemnitor to
-----------
an Indemnitee in connection with any Third Party Claim, the Indemnitor shall be
subrogated to and shall stand in the place of the Indemnitee as to any
events or circumstances in respect of which the Indemnitee may have any
right or claim relating to such claim against any claimant or plaintiff
asserting such claim. The Indemnitee shall cooperate with the Indemnitor in
a reasonable manner, and at the cost and expense of the Indemnitor, in
prosecuting any subrogated right or claim, including permitting the
Indemnitor to bring suit against such third party in the name of the
Indemnitee.
Section 5.07 Subsidiary Guarantees. The indemnification obligations of
---------------------
Solutia pursuant to this Article V shall be guaranteed by certain domestic
---------
subsidiaries of Solutia pursuant to the agreement set forth on Exhibit J;
---------
provided, that, notwithstanding anything to the contrary in this Section 5.07,
- -------- ------------
such guarantee shall in no event limit in any way whatsoever Solutia's
ability to (a) obtain any financing or refinancing (and such guarantee shall
be subordinated on customary terms to, but not terminated by, any guarantee
required in connection with any financing or refinancing) or (b) acquire or
sell any assets or businesses of Solutia (including the stock of any direct
or indirect Subsidiary of Solutia), in each case in bona fide arm's length
third party transactions. Upon any sale by Solutia of the stock of a direct
or indirect subsidiary that has executed such a guarantee in a bona fide
arm's length third party transaction, the guarantee provided by such
subsidiary pursuant to this Section 5.07 shall automatically terminate and
------------
be of no further force or effect.
ARTICLE VI
CERTAIN TAX MATTERS
Section 6.01 Net Operating Loss Carryforwards. Prior to transferring
--------------------------------
any common stock of Solutia received by Monsanto on the Effective Date in
connection with the consummation of the Plan, Monsanto shall consider the
potential impact, if any, of such transfer on the net operating loss
carryforwards of Solutia. Monsanto shall take commercially reasonable steps,
consistent with its business judgment, to structure any such transfer in a
manner that is
26
designed to mitigate or eliminate any such potential tax impact. Solutia
shall not apply the provisions of Section 382(l)(5) of the Internal Revenue
Code of 1986, as amended ("Code"), to the ownership change resulting from
----
the Plan in accordance with Section 382(l)(5)(H) of the Code and Treasury
Regulation Section 1.382-9(i) without the prior written consent of Monsanto.
Section 6.02 Treatment of Funding Co. Each of the parties hereto
-----------------------
acknowledges that on the date hereof for federal (and, where applicable,
state and local) income tax purposes, Funding Co is a "disregarded entity,"
as described in Treasury Regulation section 301.7701-3, wholly-owned by
Solutia. Neither Solutia nor Monsanto shall take any action or any position
on any tax return, financial statement, regulatory filing or other statement
inconsistent with the treatment of Funding Co as a disregarded entity for
federal (and, where applicable, state and local) income tax purposes. For
federal (and, where applicable, state and local) income tax purposes,
Solutia and Monsanto shall treat the deposit of the Monsanto Notes and Funds
by Monsanto with Funding Co described in Section 2.02 above as a capital
------------
contribution by Monsanto to Solutia in exchange for the capital stock of
Solutia issued by Solutia to Monsanto.
Section 6.03 Treatment of Earnings of Funding Co. Solutia and Monsanto
-----------------------------------
agree that Solutia will report all interest, dividend and other taxable
income of any type of Funding Co as taxable income of Solutia for federal
(and, where applicable, state and local) income tax purposes.
Section 6.04 Distributions by Funding Co. Solutia and Monsanto agree
---------------------------
that for federal (and, where applicable, state and local) income tax
purposes distributions by Funding Co (whether pursuant to Section 4.01 or
------------
otherwise):
(a) if made to Solutia, shall be disregarded, and
(b) if made to any Person other than Solutia, shall be
treated as if made by Solutia.
Section 6.05 Contribution to the Retiree Trust. Solutia and Monsanto
---------------------------------
agree that for federal (and, where applicable, state and local) income tax
purposes, the contribution to the Retiree Trust shall be deducted by Solutia
and that the amount paid by Monsanto with respect to the contribution to the
Retiree Trust shall be treated as a capital contribution by Monsanto to
Solutia on account of the shares of capital stock of Solutia received by
Monsanto on account of such contribution.
Section 6.06 Treatment of Environmental Remediation. Solutia and
--------------------------------------
Monsanto agree that for federal (and, where applicable, state and local)
income tax purposes all amounts paid for Environmental Liabilities and
Environmental Liability Costs, as provided in Article III, shall (subject to
-----------
the applicability of Section 6.04 with respect to amounts paid by Funding
------------
Co) be deducted (or capitalized, as appropriate) by Solutia and that any
amounts paid by Monsanto as provided in Article III shall be treated as a
-----------
capital contribution by Monsanto to Solutia on account of the shares of
Solutia received by Monsanto on account of the Monsanto Claim; provided,
--------
that any payments of Deferred Payment Obligations and Deferred NRD Payment
Obligations by Monsanto shall be treated as a loan by Monsanto to Solutia in
an amount equal to
27
such payment and a payment by Solutia of the underlying Environmental
Liability or Environmental Liability Cost.
Section 6.07 Effect of the Agreement. For the avoidance of doubt, this
-----------------------
Agreement shall have no effect on the tax treatment or characterization of
(i) any payments made, or to be made, pursuant to the Anniston Settlement
Agreement or the Anniston Side Letter or (ii) any payments made in respect
of Environmental Liabilities and/or Environmental Liability Costs prior to
the Effective Date.
Section 6.08 Cooperation. Subject to Section 6.02 through Section 6.07,
----------- ------------ ------------
Solutia and Monsanto agree to cooperate with each other in the preparation
of tax returns and similar filings, the defense of audits and similar
inquiries and the provision of requested tax related information. Such
cooperation shall include the provision of copies of records (at the expense
of the Party requesting such records) and making personnel of Solutia or
Monsanto, as applicable, available to the other Party. Solutia and Monsanto
agree to retain the appropriate records which may affect the determination
of the liability for taxes of either Solutia or Monsanto (or any of their
respective Affiliates) until such time as there has been a "determination"
(as such term is defined in section 1313 of the Internal Revenue Code but
applied to state, local, foreign and other taxes as well) with respect to
such liability.
ARTICLE VII
COVENANTS
Section 7.01 Further Assurances. Subject to the terms of this
------------------
Agreement, each party hereto shall use its commercially reasonable efforts
to take all actions and do all things necessary, proper or advisable in
order to consummate and make effective the transactions contemplated by this
Agreement.
Section 7.02 Business Combinations; Transfers of Covered Sites.
-------------------------------------------------
(a) Notwithstanding anything herein to the contrary, in the
event of a Sale of a Party, such Party shall assign all of its rights,
interests, duties, obligations and/or liabilities under this Agreement to
the acquirer of or successor to such Party in such Sale and shall cause such
acquirer or successor to accept the assignment of the rights and interests,
and to assume the duties, obligations and liabilities, under this Agreement.
(b) Notwithstanding anything herein to the contrary and
subject to the proviso at the end of this sentence, (i) Solutia shall have
the right to sell, transfer or otherwise dispose of (x) all or any portion
of any Retained Sites (other than the Anniston plant site (as described in
Exhibit K1 hereto) or the Krummrich plant site (as described in Exhibit K2
- ---------- ----------
hereto)) and (y) all or any portions of any Shared Site owned by Solutia, in
each case without the consent of Monsanto and without assigning its rights
and/or obligations with respect to such site under this Agreement to the
buyer of such site, (ii) any such sale, transfer or other disposition shall
not terminate and shall have no effect on the rights and obligations of
Solutia, Monsanto and/or Funding Co under this Agreement with respect to
such site and (iii) any such site that is a Retained Site shall remain a
Retained Site and any such site that is a Shared Site shall remain Shared
Site, in each case, regardless of such sale, transfer or other disposition;
provided that Solutia shall obtain the prior
- --------
28
written consent (which consent shall not be unreasonably withheld or
delayed) of Monsanto for any sale, transfer or other disposition (excluding
the execution of any operating lease) of either the Anniston plant site (as
described in Exhibit K1 hereto) or the Krummrich plant site (as described in
----------
Exhibit K2 hereto) or any part or portion thereof.
- ----------
Section 7.03 Cooperation and Access.
----------------------
(a) Subject to Section 7.04, each of Monsanto and Solutia
------------
will permit representatives (including legal counsel, accountants and
financing sources) of Solutia and Monsanto, respectively, to have reasonable
access and duplication rights during normal business hours to records and
documents (i) reasonably related to the Solutia Legacy Liabilities and
Covered Sites or (ii) reasonably requested for any audit, accounting,
intellectual property protection, litigation, disclosure, reporting or tax
purposes. The Parties also agree to provide each other with timely and
reasonable access during normal business hours upon prior written notice to
each others personnel, counsel and consultants with knowledge regarding
Covered Sites or Solutia Legacy Liabilities in responding to any claims or
inquiries by third parties or any Governmental Authority or court regarding
same. Furthermore, each Party shall use reasonable efforts to provide
assistance to the other Party with respect to any litigation and shall make
available to the other Party, upon written request and reasonable notice and
to the extent practicable taking into consideration business demands, its
officers, directors, agents and employees for the purpose of consultation
and/or as a witness, to the extent that the requesting Party believes any
such Person may reasonably be useful or required in connection with such
litigation; provided, however, the provisions of this sentence shall not
--------
apply to litigation between the Parties.
(b) A Party providing records, documents or services of its
directors, officers, agents or employees to the other Party hereunder shall
be entitled to receive from such other Party, upon presentation of invoices
therefor, reimbursement of any out-of-pocket expenses reasonably incurred in
providing such records, documents or services.
(c) With regard to Legacy Sites, Solutia shall transfer to
Monsanto all documents related to such sites and shall include any database
management technology, indexes or other materials associated with such
documents whether in Solutia's possession or the possession of Solutia's
outside consultants and/or counsel. With regard to Retained Sites, Monsanto
shall transfer to Solutia all documents related to such sites and shall
include any database management technology, indexes or other materials
associated with such documents whether in Monsanto's possession or the
possession of Monsanto's outside consultants and/or counsel. On the date
hereof Solutia and Monsanto shall enter into the Transition Services
Agreement that will provide for the cooperation of Monsanto and Solutia in
the orderly transfer described in the two preceding sentences and may
mutually agree to any other arrangement regarding access and cooperation
with respect to the Covered Sites.
Section 7.04 Confidentiality.
---------------
(a) From and after the Effective Date, each party hereto and
the members of the Environmental Committee shall hold, and shall cause such
party's employees, Affiliates, directors, officers, agents, attorneys,
accountants, financial and other advisors (collectively, each
29
such party's "Representatives") to hold in strict confidence any
---------------
Confidential Information of any other party and, in each case, shall not
disclose such Confidential Information to any other Person; provided,
--------
however, that such Confidential Information may be disclosed (i) to such
party's Representatives who need to know such information for the purpose of
performing such party's obligations under this Agreement, (ii) pursuant to
subpoena or court process subject to the provisions set forth in subsection
(b) below; and (iii) to the extent such party's attorneys advise such party
that disclosure is required by law or legal process (including applicable
securities laws and regulations and exchange rules and regulations), in each
case subject to the provisions set forth in subsection (b) below.
(b) In the event that any party or such party's
Representatives receive a request (by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or similar process) or
reasonably believes based on the advice of such party's attorneys that such
party is legally required to disclose all or any part of the Confidential
Information to a third party (such party, a "Disclosing Party"), the
----------------
Disclosing Party agrees to (i) immediately notify the Confidential Party of
the existence, terms and circumstances surrounding such request and provide
the Confidential Party with a copy thereof, (ii) consult with the
Confidential Party on the advisability of taking legally available steps to
resist or narrow such request and (iii) assist the Confidential Party in
seeking a protective order or other appropriate remedy. In the event that
such protective order or other remedy is not obtained or the Confidential
Party, in its sole discretion, waives compliance with the provisions hereof,
the Disclosing Party and/or the Disclosing Party's Representatives, as the
case may be, may, at the latest time practicable, disclose to any tribunal
or requesting party only that portion of the Confidential Information which
the Disclosing Party is advised by counsel is legally required by law, rule,
regulation or binding order to be disclosed, and shall exercise commercially
reasonable efforts to obtain reliable assurance that confidential treatment
will be accorded such Confidential Information. At least two Business Days
prior to making such disclosure, the Disclosing Party shall first disclose
such information to the Confidential Party in the form in which it is
proposed to be disclosed.
Section 7.05 Power of Attorney. Effective as of the date hereof,
-----------------
Pharmacia has provided Solutia and Monsanto new powers of attorney in the
form of Exhibit M attached hereto to replace and supercede any power of
---------
attorney provided under the Distribution Agreement.
Section 7.06 Termination of PENNDOT Letter of Credit. Monsanto and
---------------------------------------
Solutia hereby agree to terminate any obligation of Solutia to provide the
letter of credit to secure a portion of Pharmacia's obligations with respect
to an appeal bond in the PENNDOT Case.
Section 7.07 Insurance.
---------
(a) Any and all amounts paid by any insurer, including KWELM
and/or Equitas (net of any commission payable to The Claro Group (formerly
LECG)), to either Monsanto or Solutia (an "Insurance Recovery"), shall be
------------------
paid and payable (i) to Solutia if and to the extent that such Insurance
Recovery is paid or payable in respect of Losses incurred by Solutia in
defending or settling Chemicals Liabilities prior to the Petition Date (and
Monsanto shall promptly pay over to Solutia any such Insurance Recovery
received by Monsanto) and (ii) to Monsanto in all other cases (and Solutia
shall promptly pay over to Monsanto any such Insurance Recovery received by
Solutia). In addition, Monsanto shall receive and be entitled to
30
all Insurance Recoveries related to Tort Claims. Notwithstanding anything to
the contrary in this Section 7.07(a), Monsanto shall pay to Solutia any and
---------------
all Insurance Recoveries to the extent such amounts relate to Solutia's
out-of-pocket expenses or liabilities retained by Solutia pursuant to the
Plan, the Plan Documents and this Agreement. Monsanto and Solutia shall
cooperate with one another and take commercially reasonable efforts to
ensure that Solutia shall have the right to have direct access to and claim
reimbursement directly against any insurance policy that provides coverage
for any Loss incurred by Solutia in defending or settling Chemicals
Liabilities prior to the Petition Date, any Solutia's out-of-pocket expense
or any liability retained by Solutia pursuant to the Plan, the Plan
Documents and this Agreement, but not waive or terminate any such coverage.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.01 Representations and Warranties of Monsanto.
------------------------------------------
(a) Monsanto is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation. Monsanto possesses
all requisite power and authority necessary to carry out the transactions
contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement have been duly authorized by Monsanto. This Agreement, when
executed and delivered by Monsanto in accordance with the terms hereof,
shall constitute a valid and binding obligation of Monsanto, enforceable in
accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights generally
or by general principles of equity.
(c) The execution, delivery and performance by Monsanto of
this Agreement, and the fulfillment of and compliance with the respective
terms hereof by Monsanto, do not and shall not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a
default under (whether with or without the passage of time, the giving of
notice or both), (iii) give any third party the right to modify, terminate
or accelerate any obligation under, (iv) result in a violation of, or (v)
require any authorization, consent, approval, exemption or other action by
or notice or declaration to, or filing with, any Governmental Authority or
court pursuant to, (A) the organizational documents of Monsanto, (B) any law
to which Monsanto is subject, or (C) any material agreement, instrument,
order, judgment or decree to which Monsanto is subject.
(d) Other than presence of dioxin, including all congeners
of dioxin and furans, and except as provided in Schedule 8.01(d), Monsanto
has no knowledge of any fact or circumstance at the Kanawha River site with
respect to which Environmental Remediation may be necessary.
Section 8.02 Representations and Warranties of Solutia.
-----------------------------------------
(a) Solutia is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation. Solutia possesses
all requisite power and authority necessary to carry out the transactions
contemplated by this Agreement.
31
(b) The execution, delivery and performance of this
Agreement have been duly authorized by Solutia. This Agreement, when
executed and delivered by Solutia in accordance with the terms hereof, shall
constitute a valid and binding obligation of Solutia, enforceable in
accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights generally
or by general principles of equity.
(c) The execution, delivery and performance by Solutia of
this Agreement, and the fulfillment of and compliance with the respective
terms hereof by Solutia, do not and shall not (i) conflict with or result in
a breach of the terms, conditions or provisions of, (ii) constitute a
default under (whether with or without the passage of time, the giving of
notice or both), (iii) give any third party the right to modify, terminate
or accelerate any obligation under, (iv) result in a violation of, or (v)
require any authorization, consent, approval, exemption or other action by
or notice or declaration to, or filing with, any Governmental Authority or
court pursuant to, (A) the organizational documents of Solutia, (B) any law
to which Solutia is subject, or (C) any material agreement, instrument,
order, judgment or decree to which Solutia is subject.
Section 8.03 Representations and Warranties of Funding Co.
--------------------------------------------
(a) Funding Co is duly organized, validly existing and in
good standing under the laws of its jurisdiction of formation. Funding Co
possesses all requisite power and authority necessary to carry out the
transactions contemplated by this Agreement.
(b) The execution, delivery and performance of this
Agreement have been duly authorized by Funding Co. This Agreement, when
executed and delivered by Funding Co in accordance with the terms hereof,
shall constitute a valid and binding obligation of Funding Co, enforceable
in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights generally
or by general principles of equity.
(c) The execution, delivery and performance by Funding Co of
this Agreement, and the fulfillment of and compliance with the respective
terms hereof by Funding Co, do not and shall not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a
default under (whether with or without the passage of time, the giving of
notice or both), (iii) give any third party the right to modify, terminate
or accelerate any obligation under, (iv) result in a violation of, or (v)
require any authorization, consent, approval, exemption or other action by
or notice or declaration to, or filing with, any Governmental Authority or
court pursuant to, (A) the organizational documents of Funding Co, (B) any
law to which Funding Co is subject, or (C) any material agreement,
instrument, order, judgment or decree to which Funding Co is subject.
Section 8.04 No Additional Representations or Warranties. Except as
-------------------------------------------
expressly provided in this Article VIII, each party acknowledges and agrees
------------
that no party has made any representations or warranties in connection with
the transactions contemplated hereby or by the Plan.
32
ARTICLE IX
DISPUTE RESOLUTION
Section 9.01 Agreement to Arbitrate. Except as otherwise specifically
----------------------
provided in Article V and in Section 9.02 below, the procedures for
--------- ------------
discussion, negotiation and arbitration set forth in this Article IX shall
----------
apply to all disputes, controversies or claims (whether sounding in
contract, tort or otherwise) that may arise out of or relate to, or arise
under or in connection with, this Agreement, or the transactions or the
commercial or economic relationship contemplated hereby (including all
actions in furtherance of the transactions contemplated hereby on or prior
to the date hereof). Each party agrees that this Article IX shall provide
----------
the sole and exclusive remedy in connection with any dispute, controversy or
claim relating to any of the foregoing matters and irrevocably waives any
right to commence any action or proceeding in or before any Governmental
Authority or court, except as expressly provided in Section 9.02 and except
------------
to the extent provided under the Arbitration Act in the case of judicial
review of arbitration results or awards.
Section 9.02 Bankruptcy Court Jurisdiction. Notwithstanding anything
-----------------------------
to the contrary contained in this Agreement, for so long as the Solutia
Chapter 11 Case remains open, the Bankruptcy Court shall have exclusive
jurisdiction of all matters arising out of, and related to disputes arising
in connection with the interpretation, implementation or enforcement of this
Agreement as provided for in the Plan.
Section 9.03 Procedures.
----------
(a) Any party hereto alleging that there exists a dispute or
disagreement regarding the matters covered hereby shall notify in writing
the other parties hereto of such alleged dispute or disagreement (the
"Dispute Notice"). The parties shall attempt to resolve such alleged dispute
--------------
or disagreement through good faith negotiations among the members of
management of each party designated by each party promptly following the
sending or the receipt, as applicable, of a Dispute Notice. If the parties
hereto shall fail to resolve such alleged dispute or disagreement within
sixty (60) days from the date of the Dispute Notice, then any party involved
in such a dispute or disagreement shall have the right to deliver to the
other parties involved in such dispute or disagreement a notice (an
"Escalation Notice") requiring a meeting (which may be in person or
-----------------
telephonic) of the Chief Executive Officer (each, a "CEO") of each such
---
party, who shall meet (either in person or telephonically) within twenty
(20) days of the delivery of the Escalation Notice to such other parties to
seek to resolve such dispute or disagreement. If such dispute or
disagreement has not been resolved within twenty (20) days of the date of
such meeting between the CEOs, then any party involved in such dispute or
disagreement shall have the right to commence an arbitration in accordance
with the provisions of this Section 9.03.
------------
(b) The arbitration shall be held in St. Louis, MO or such
other place as the parties to the arbitration proceeding shall otherwise
agree in writing.
(c) The arbitration proceeding shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") in effect on the date of the commencement of the
---
arbitration. Each Party shall nominate one arbitrator and the
33
two arbitrators so appointed shall attempt to agree on the appointment of a
third arbitrator. If they are unable to so agree within thirty (30) days
after the second arbitrator is appointed, the third arbitrator shall be
appointed by AAA.
(d) The decision of the panel of arbitrators shall be final,
binding and incontestable and may be used as a basis for judgment thereon in
any jurisdiction. Such decision shall include a determination as to which of
the parties shall bear the costs of the arbitration proceeding.
(e) The parties hereby expressly agree to waive the right to
appeal from the decision of the arbitrators. Accordingly, there shall be no
appeal to any court or other authority (government or private) from the
decision of the arbitrators, and the parties shall not dispute nor question
the validity of such award before any regulatory or other authority in any
jurisdiction where enforcement action is taken by the party or parties in
whose favor the award was rendered.
(f) Notwithstanding the foregoing, any party may at any time
without regard to any notice periods required by the provisions hereof
(whether before, during or after arbitration), and as often as is necessary
or appropriate, seek provisional or interim relief (including, without
limitation, to the extent available under applicable law, a temporary
restraining order, preliminary injunction and/or pre-judgment attachment) in
a court of law.
(g) The commencement and pendency of an arbitration under
this Section 9.03 shall not relieve any of the parties of their respective
------------
obligations under this Agreement.
(h) The provisions of this Article IX shall survive the
----------
termination and/or expiration of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01 Expenses. Except as specifically provided in this
--------
Agreement, all costs and expenses of any party hereto whether incurred prior
to or after the Effective Date in connection with the negotiation,
preparation, execution and delivery of this Agreement and with the
consummation of the transactions contemplated by this Agreement, including
legal fees, shall be paid by such party.
Section 10.02 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware (other than
the laws regarding choice of laws and conflicts of laws) as to all matters,
including matters of validity, construction, effect performance and
remedies.
Section 10.03 Notices. All notices, requests, claims demands and other
-------
communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person or by
facsimile (provided confirmation is delivered to the recipient the next day
in the case of facsimile), by nationally recognized overnight courier, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
34
If to Solutia: General Counsel
Solutia, Inc.
575 Maryville Centre
St. Louis, MO 63141
Telephone: ______________
Facsimile: (314) 674-8703
with a copy (which shall not constitute notice) to:
Jonathan S. Henes/Thomas W. Christopher
Kirkland & Ellis LLP
153 East 53rd Street
New York, NY 10022
Telephone: 212-446-4800
Facsimile: 212-446-4900
If to Monsanto: ______________
______________
______________
______________
______________
Telephone: ____________
Facsimile: ____________
with a copy (which shall not constitute notice) to:
______________
______________
______________
______________
______________
Telephone: ____________
Facsimile: ____________
If to Funding Co: ______________
______________
______________
______________
______________
Telephone: ____________
Facsimile: ____________
35
with a copy (which shall not constitute notice) to:
______________
______________
______________
______________
______________
Telephone: ____________
Facsimile: ____________
or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 10.03.
-------------
Section 10.04 Amendment and Modification. This Agreement may be
--------------------------
amended, modified or supplemented only by a written agreement signed by all
of the parties hereto.
Section 10.05 Successors and Assigns; No Third Party Beneficiaries.
----------------------------------------------------
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their successors and
permitted assigns, but, except as provided in Section 7.02, neither this
------------
Agreement nor any of the rights, interests and obligations hereunder shall
be assigned by any party hereto without the prior written consent of the
other parties. Except for the provisions of Article V relating to
---------
Indemnitees, which are also for the benefit of the Indemnitees, this
Agreement is solely for the benefit of the parties hereto and is not
intended to confer upon any other Persons any rights or remedies hereunder.
Section 10.06 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 10.07 Legal Enforceability. Any provision of this Agreement
--------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Each party acknowledges that money damages would be an inadequate remedy for
any breach of the provisions of this Agreement and agrees that the
obligations of the parties hereunder shall be specifically enforceable.
Section 10.08 Complete Agreement. This Agreement and the Commercial
------------------
and Operating Agreements shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and shall supercede
all previous negotiations, commitments and writings with respect to such
subject matter. Solutia hereby waives any claims, rights or arguments it may
be able to assert on the basis that this Agreement and the Commercial and
Operating Agreements were not executed simultaneously or as part of the same
transaction. For all purposes, the Commercial and Operating Agreements shall
be integrated into this Agreement in the same way and on the same terms, if
at all, that they were integrated with the Distribution Agreement.
* * * *
36
IN WITNESS WHEREOF, the parties hereto have executed this
Relationship Agreement on the day and year first above written.
SOLUTIA INC.
By:____________________________
Name:
Title:
MONSANTO COMPANY
By:____________________________
Name:
Title:
[FUNDING CO]
By:____________________________
Name:
Title:
APPENDIX A
----------
Anniston Plant (as described in Exhibit Q1 hereto)
----------
Chocolate Bayou Plant
Columbia Plant
Runcorn Plant
Decatur Plant
Delaware River Plant
Foley Plant
Ghent Plant
Greenwood Plant
Indian Orchard Plant
Krummrich Plant (as described in Exhibit Q2 hereto)
----------
LaSalle Plant
Newport Plant
Nitro Armour Creek Landfill
Nitro Plant
Pensacola Plant
Queeny Plant
Ruabon Plant
Rhosymedre Quarry
Texas City (N80/S20 only)
Trenton Plant
Westport Plant
Augusta Landfills
Carondelet Plant
Beamer Road Property
Camden Plant
Carson Plant
Great Lakes Lawsuit (Solutia shall only be responsible for any
judgment obtained by the United States against Solutia. Solutia shall have
no obligation to indemnify Monsanto for any contribution sought by third
parties from Pharmacia).
APPENDIX B
----------
AAA Septic Tank
Anders Lane
Arlington Blending /Galloway Pits
Baxley
Bay Drum (Fla)
Bayonne Barrel
Berlin & Farro
Beulah Landfill
Bloomfield Site Shutdown
Blosenski Landfill
Bluff Road
Bob's Home Service
Boston Edison
Bottleworks Site
Brio
CBE Environmental
Chemsol
Combustion Inc.
Cranston Sanitary Landfill
Decatur Polysar (Novacor)
Diamond Alkali
Dixiana
DOP Operations & Maintenance
Everett Site Shutdown
Fike/Artel
Former HUB Property including property now owned by West Virginia
Alcohol Beverage
Control Authority(3)
Hayford Bridge / Findett
Hexagon Labs Superfund
Iron Horse Billerica
Jonas Transport
<FN>
- --------
(3) Regardless of the definition of Legacy Offsite, any contamination
migrating from this Legacy Site onto the Nitro Plant Retained Site (the
"Legacy Site Migration") shall be addressed by Solutia solely to the
extent that no additional or expanded remedial measures are required to
treat the contamination migrating onto the Nitro Plant Retained Site.
However, should the contributions to site conditions from the Legacy
Site Migration require different remediation technologies or larger
remediation systems or other additional or expanded remedial action
that will result in costs to Solutia greater than those that would have
been incurred by Solutia but for the Legacy Site Migration (the
"Additional Remediation"), Solutia will cooperate with Monsanto as to
the most cost effective remediation of the Legacy Site Migration and
Monsanto shall pay only any increased costs Solutia may incur for the
Additional Remediation. Monsanto shall have the right, at its sole
discretion, to perform the Additional Remediation at its expense rather
than pay any increased costs of the Additional Remediation to Solutia.
Kanawha River(4)
Kearny Site Shutdown
Kenilworth Site Shutdown
Lammers Barrel Factory Site
Lion Oil - El Dorado
Lion Oil - Gas Stations
Malone
Maryland Sand & Gravel
Maxey Flats
MEMC / Palo Alto
Metamora Landfill
MOTCO
PAS Clothier Drum Disposal
PAS Fulton Terminal
PAS Oswego
PASCO Landfill
Picillo
Port of Oakland
Port Plastics - Corrective Action
PSC Resources
Santa Clara
SCP - Carlstadt
Sikes
Skinner Landfill
Solvent Recovery
Spectron/Galaxy SF
Tex Tin
Texas City (Gulf Coast only)
Thermochem
Thompson Chemicals
Tulalip Landfill
White Chemical
Woburn Aberjona River
Woburn Industri-Plex (including parcel jointly owned by Solutia and Stauffer).
Incorporate all sites from Appendix B, Worldwide List of Shut Down or Sold
Operating Locations or Appendix C of the Distribution Agreement unless they
are (1) listed in Appendix A and C of this Agreement; (2) sites or portions
of sites owned and/or operated by Solutia or to which Solutia sent waste at
anytime after the Solutia Spinoff Date; or (3) Retained Offsites.
<FN>
- --------
(4) Monsanto will be responsible only for any dioxin-related (including
dioxin and all related congeners and furans) remediation and natural
resource damages (or NRDs) at this site.
APPENDIX C
----------
1. All areas outside of the Anniston Plant site (as described in Exhibit Q1
----------
hereto) that have or are alleged to have been contaminated (a) due to the
operations of or migration of contamination from the Anniston Plant site
prior to the Solutia Spinoff or (b) due to disposal sites on property
proximate to the Anniston Plant utilized by the Anniston Plant prior to the
Solutia Spinoff. Excluded are third party owned sites used for disposal of
waste by Pharmacia that would qualify as Legacy Sites, unless such sites are
proximate to the Anniston Plant.
2. All areas outside of the Krummrich Plant site (as described in Exhibit Q2
----------
hereto) that have or are alleged to have been contaminated (a) due to the
operations of or migration of contamination from the Krummrich Plant site
prior to the Solutia Spinoff, or (b) due to waste disposal sites on property
proximate to the Krummrich Plant utilized by the Krummrich Plant prior to
the Solutia Spinoff, including without limitation the Sauget Area 1 Sites
(inclusive of the Dead Creek Cell and Sites G, H, I, L, M and N), the Sauget
Area 2 Sites (inclusive of Sites O, P Q, R (including the Site R groundwater
migration control system (the barrier wall and pump treat system)and S), and
the Sauget - Metro East Sanitary District site. Excluded are third party
owned sites used for disposal of waste by Pharmacia that would qualify as
Legacy Sites, unless such sites are proximate to the Sauget Area 1 or Area 2
Sites.
Exhibit B
EXECUTION COPY
SETTLEMENT AGREEMENT
--------------------
This agreement (this "Agreement") presents the material terms of a
settlement (the "Retiree Settlement") among: (a) Solutia Inc. ("Solutia")
and its domestic subsidiaries (collectively with Solutia, the "Company");
(b) those retirees, including their surviving spouses, dependent spouses and
dependent children, and those employees receiving disability benefits, who
worked for Pharmacia Corporation (f/k/a Monsanto) or one of its domestic
subsidiaries ("Pharmacia") and who retired, or became disabled, prior to
Solutia's spin-off from Pharmacia in 1997, and whose post-employment benefit
or disability liabilities were transferred to Solutia as a result of such
spin-off (collectively, the "Pre-Spin Retirees"); (c) those retirees,
including their surviving spouses, dependent spouses and dependent children,
and those employees receiving disability benefits, who retired from Solutia
or became disabled after Solutia's spin-off from Pharmacia in 1997,
including those retirees (and their surviving spouses, dependent spouses and
dependent children) and disabled persons who worked for Pharmacia prior to
Solutia's spin-off from Pharmacia in 1997, and, thereafter worked for
Solutia, other than those retirees covered by a collective bargaining
agreement who retired on January 1, 2003, or later (collectively, the
"Post-Spin Retirees"); (d) any other person having a claim against Solutia
for "retiree benefits" as such term is defined in section 1114(a) of the
Bankruptcy Code (collectively, the "Retiree Claimants" and, together with
the Pre-Spin Retirees and the Post-Spin Retirees, the "Retirees");(1) (e)
Monsanto Company ("Monsanto"); (f) the official committee of unsecured
creditors (the "Creditors' Committee") appointed on January 6, 2004, in the
Company's chapter 11 cases currently pending before the Honorable Prudence
C. Beatty in the United States Bankruptcy Court for the Southern District of
New York (the "Bankruptcy Court"); and (e) the official committee of
retirees (the "Retirees' Committee") appointed on February 20, 2004, in the
Company's chapter 11 cases. The terms of the Retiree Settlement described
herein are intended to amend and supersede any previous offer made during
the Company's chapter 11 cases, constitute an integrated offer, are
indivisible except as described herein, are subject to the terms and
conditions hereof, and are not intended to be binding unless executed in
writing.
<FN>
- --------
(1) To "retire" from the Company means to incur a termination of employment
from Pharmacia prior to September 1, 1997, or from the Company
thereafter, in either case having met the eligibility requirements of a
retiree medical plan sponsored by Pharmacia or Solutia, as the case may
be.
SETTLEMENT OVERVIEW
MONSANTO FUNDING CO. AND On the effective date (the
RETIREE TRUST CONTRIBUTIONS "Effective Date") of the Company's
plan of reorganization (the "Plan"),
and subject to the terms of the Plan
and the Relationship Agreement (as
defined below), Monsanto(2) shall,
by virtue of its agreement to
underwrite and backstop the offering
of rights (the "Rights Offering") to
acquire shares of new common stock
(the "New Common Stock") in the
reorganized successor to Solutia
("Reorganized Solutia"), contribute
up to (a) $75 million in cash and/or
promissory notes, to fund a new
entity ("Funding Co."), which will
be a special purpose, tax-efficient,
bankruptcy-remote affiliate of
Reorganized Solutia, and (b) $175
million in cash to the Company,
which funds will be placed in a
trust (the "Retiree Trust") intended
to qualify as a "voluntary
employees' beneficiary association"
under Section 501(c)(9) of the
Internal Revenue Code of 1986 and
all of the rules and regulations
promulgated thereunder, as amended
(the "Internal Revenue Code").(3)
Funding Co. shall create two
separate accounts for its funds: (a)
an environmental liabilities account
containing $50 million (the
"Environmental Account"); and (b) an
account containing $25 million of
unallocated funds (the "Unallocated
Account").
RETIREE TRUST SUB ACCOUNTS The Retiree Trust shall be comprised
of two sub accounts: (a) "Sub
Account 1"; and (b) "Sub Account 2".
Sub Account 1 shall be funded by the
Company with the $175 million of
cash contributed by Monsanto and/or
the participants in the Rights
Offering, and shall be used to
reimburse Reorganized Solutia for
costs associated with providing
Other Post-Employment Benefits (as
defined below) to Pre-Spin Retirees
in accordance with the terms of this
Agreement. Sub Account 2 shall be
funded with the Retiree Shares (as
defined below) and the proceeds of
the sales thereof, and shall be used
to reimburse Reorganized Solutia for
costs associated with providing
Other Post-Employment Benefits to
Pre- and Post-Spin Retirees subject
to and in accordance with the terms
of this Agreement.
<FN>
- --------
(2) Monsanto was created on February 9, 2000, under the name "Monsanto Ag",
as a wholly-owned subsidiary of Pharmacia, and changed its name to
Monsanto Company on March 31, 2000. The Separation Agreement between
Monsanto and Pharmacia was entered into as of September 1, 2000.
(3) Monsanto's contribution of cash to the Company to be placed in the
Retiree Trust and cash and/or notes to Funding Co. will occur only in
the event that the Rights Offering is not fully subscribed. In the
event that the Rights Offering is not fully subscribed, Monsanto's
contribution will ensure that the Retiree Trust receives $175 million
in cash and that Funding Co. receives $75 million in funding.
2
THE RELATIONSHIP AGREEMENT The mechanism by which Funding Co.
will make contributions to
Reorganized Solutia from the
Environmental Account and the
Unallocated Account shall be
governed by an agreement (the
"Relationship Agreement"), which
will be executed by Reorganized
Solutia, Funding Co, and Monsanto
and which will be reasonably
acceptable to the Creditors'
Committee.
INVESTMENT OF RETIREE TRUST FUNDS Cash held by the Retiree Trust
shall, subject to the requirements
of the Employee Retirement Income
Security Act of 1974 and all of the
rules and regulations promulgated
thereunder, as amended ("ERISA") and
the Internal Revenue Code, be
invested by the Trustee (as defined
below) in short-term,
well-diversified, high quality
investment instruments, with a
primary objective of capital
preservation, that are reasonably
acceptable to Reorganized Solutia,
including one or more of: (a)
interest bearing accounts with a
commercial bank having at least $10
billion in assets (a "Qualified
---------
Financial Institution"); (b) direct
---------------------
obligations of the United States;
(c) obligations for which the full
faith and credit of the United
States is pledged to provide for the
payment of principal and interest;
(d) commercial paper rated in one of
the four highest debt rating
categories of Moody's Investor
Services, Inc. and Standard & Poor's
Corporation (without regard to
gradation); (e) certificates of
deposit issued by Qualified
Financial Institutions; (f) bankers'
acceptances issued by Qualified
Financial Institutions; (g)
repurchase agreements with Qualified
Financial Institutions; (h) floating
rate notes rated at least AA; (i)
tax exempt municipal bonds and notes
rated at least AA; and (j) money
market funds (collectively, the
"Permitted Investments").
REIMBURSEMENT OF OTHER POST-EMPLOYMENT Following the Effective Date and
BENEFITS subject to the terms of the Retiree
Trust Agreement (as defined below),
every two weeks, the Retiree Trust
shall reimburse Reorganized Solutia
or its successors in cash from Sub
Account 1 for its actual
out-of-pocket costs, including all
administrative costs, net of, among
other things, Medicare
reimbursements and Pre-Spin
Retirees' medical expense
contributions ("Net Costs"), for
providing retiree medical, retiree
life insurance and disability
benefits (collectively, "Other
Post-Employment Benefits" or
"OPEB") to Pre-Spin Retirees
following the Effective Date. The
reimbursement shall be for 100% of
such Net Costs for the first twelve
(12) months after the Effective
Date, and for 90% of such Net Costs
thereafter until the funds in Sub
Account 1 have been exhausted.
In addition, following the
Effective Date and subject to the
terms of the Retiree Trust Agreement,
every two weeks, the Retiree
3
Trust shall reimburse Reorganized
Solutia from Sub Account 2 for 100% of
its actual out-of-pocket costs,
including all administrative costs, net
of, among other things, Medicare
reimbursements and Pre and Post-Spin
Retirees' medical expense
contributions, for providing Other
Post-Employment Benefits to Pre- and
Post-Spin Retirees following the
Effective Date until the funds in
Sub Account 2 are exhausted;
provided, however, that Reorganized
-------- -------
Solutia may only seek the
reimbursements described above when
cash or other securities or
investments constituting Permitted
Investments are available in Sub
Account 2 and; provided further
-------- -------
that, to the extent that Reorganized
Solutia has not been reimbursed from
Sub Account 1 for the same cost or
expense, the funds in Sub Account 2
shall be used to reimburse
Reorganized Solutia for such current
costs and expenses and shall be
reserved in the following
proportion: (a) 58% of all amounts
deposited in Sub Account 2 during
the term of the Retiree Trust
Agreement, for Pre-Spin Retirees;
and (b) 42% of all amounts deposited
in Sub Account 2 during the term of
the Retiree Trust Agreement, for
Post-Spin Retirees.
MODIFICATION OF OTHER POST- In consideration for the reduction
EMPLOYMENT BENEFITS(4) in credit risk for Retirees in
connection with OPEB benefits, as a
result of (a) the formation,
structure and pre-funding of the
Retiree Trust and the Unallocated
Account and (b) Reorganized
Solutia's improved creditworthiness
(as compared to that of Solutia),
Reorganized Solutia shall retain
the rights and benefits reflected
in the Company's 2005 budget and
long range plan, including its
rights and benefits under the
"Forsberg Settlement".(5)
All rights and benefits provided to
the Retirees and the Company under
the Forsberg Settlement and the
Post-Settlement Plan (as defined
herein) shall be preserved and not
changed, unless specifically
modified or eliminated by the terms
of this Agreement, or as otherwise
permitted to be modified or
eliminated under the terms of the
Forsberg Settlement or the
Post-Settlement Plan. The Retirees'
continuing post-employment rights
and benefits shall be incorporated
into a comprehensive
post-employment medical and other
benefits plan (the "2006 Retiree
Welfare Plan").
In accordance with the foregoing,
Reorganized Solutia shall be
<FN>
- --------
(4) Capitalized terms, used but not defined in this section, shall have the
meanings ascribed to them in the Forsberg Plan (as defined below).
(5) On November 1, 2001, Solutia, Monsanto, Pharmacia and representatives
of the Retirees agreed to settle litigation related to medical benefits
provided to Retirees (the "Forsberg Settlement"). Under the terms of
the Forsberg Settlement, Solutia adopted and implemented the Solutia
Inc. Medical Benefits Plan For Retirees (2002) (the "Forsberg Plan").
4
permitted to implement the following
changes to medical benefits for
Retirees:
DEDUCTIBLE AMOUNT 50% of Medicare Part A Deductible.
COVERED PROPORTION Plan pays 80%.
RETAIL PRESCRIPTION DRUGS (UP TO Participant pays 20% up to a $50
30 DAY SUPPLY) CO-PAYMENT AMOUNT maximum per prescription or refill.
MAIL ORDER PRESCRIPTION DRUGS Participant pays 20% per prescription
(UP TO 90 DAY SUPPLY) CO-PAYMENT or refill.
AMOUNT
INDIVIDUAL MAXIMUM AGGREGATE $65,000.
BENEFIT FOR EXPENSES INCURRED
AFTER AGE 65
PARTICIPANT MEDICAL EXPENSE For all Forsberg Groups and
CONTRIBUTION(6) Post-Settlement Retirees(7), the
greater of 20% of the Annual Cost
Per Covered Group or the Defined
Dollar Limit Amount(8) as specified
in Exhibit A hereto.
---------
Subject to its rights under the
terms of the Forsberg Settlement and
the Post-Settlement Plan,
Reorganized Solutia will not reduce
the "Solutia Defined Dollar Limit"
set forth on Exhibit A hereto.
---------
FORSBERG PLAN(9) The Company's right to modify its
Other Post-Employment Benefits as
permitted by the terms of the
Forsberg Settlement shall be
retained by Reorganized Solutia and
shall be implemented on the
Effective Date or any date
thereafter. Specifically,
Reorganized Solutia intends to
exercise its absolute right to
amend or terminate the Forsberg
Plan as it applies on and after
January 1, 2007, to any member of
Groups IIB or V except as to a
Participant or covered Dependent
Spouse who is not then a Medicare
Eligible Participant. Reorganized
Solutia
<FN>
- --------
(6) Capitalized terms, used but not defined in this section, shall have the
meanings ascribed to them in the Forsberg Plan.
(7) Solutia is not waiving any of its rights pursuant to the Solutia Inc.
Medical Benefits Plan for Retirees (Post-Settlement) (the
"Post-Settlement Plan") to make changes to the Participant Medical
Expense Contribution or other provisions therein.
(8) The Defined Dollar Limit Amount shall be the difference between the
Annual Cost Per Covered Group and the Solutia Defined Dollar Limit
applicable to a Covered Group as delineated in Exhibit A.
(9) Capitalized terms, used but not defined in this section, shall have the
meanings ascribed to them in the Forsberg Plan.
5
intends to exercise its right to
amend or terminate the Forsberg Plan
as it applies to any Participant or
covered Dependent Spouse who is a
member of Groups IIB or V on the
earlier of (a) the date such
Participant or covered Dependent
Spouse becomes a Medicare Eligible
Participant if such date is after
January 1, 2007, or (b) the
fifteenth anniversary of the
Settlement Date (October 19, 2016).
Reorganized Solutia intends to
exercise its right to amend or
terminate the Forsberg Plan as to
any covered Dependent Child of a
Retired Employee on or after the
later of (a) the date Reorganized
Solutia could amend or terminate the
Forsberg Plan as to such Retired
Employee, or (b) the date
Reorganized Solutia could amend or
terminate the Forsberg Plan as to
such Retired Employee's covered
Dependent Spouse.
In addition, for Participants who
are not Medicare Eligible
Participants, any Deductible
Amount, any Covered Proportion
until a Maximum Out-of-Pocket
Amount is reached, any Covered
Proportion after a Maximum
Out-of-Pocket Amount is reached,
and any Maximum Out-of-Pocket
Amounts for a Plan Year shall be
determined under the Solutia Inc.
Salaried and Non-Union Hourly
Employees' Medical Benefits Plan,
and its successors (the "Active
Plan") and Medical Plan Choice
elected by the Covered Group.
Covered Medical Expenses with
respect to a Participant or Covered
Dependent who is not a Medicare
Eligible Participant shall be
determined under the Active Plan.
Participants who are not Medicare
Eligible Participants and whose
benefits were subject to a
collective bargaining agreement and
the Covered Dependents of such
Participants shall receive
prescription drug benefits on the
same terms and conditions as under
the Active Plan.
The terms of the OPEB benefits
provided under the Forsberg Plan
that are not otherwise modified by
the terms hereof shall be included
in the 2006 Retiree Welfare Plan,
subject to the terms and conditions
set forth in the Forsberg Plan.
POST-SETTLEMENT PLAN The Company's right to make
modifications permitted by the
terms of the Post-Settlement Plan
for Retirees who were not part of
the Forsberg Settlement shall be
retained by Reorganized Solutia and
shall be implemented on the
Effective Date or on any date
thereafter.
MEDICARE PART D Reorganized Solutia shall retain
100% of any subsidy related to
Medicare prescription drug coverage
("Medicare Part D"). Any
reimbursement received by
Reorganized Solutia will not be
applied to determine the Medical
Expense Contribution required of
Retirees for participation in the
2006 Retiree Welfare Plan.
6
NOTIFICATION OF MAXIMUM AGGREGATE Medicare eligible Retirees who
BENEFIT exceed 60 percent and 85 percent of
the Maximum Aggregate Benefit will
receive a notification of the
medical and pharmacy benefits
applied toward the Maximum Aggregate
Benefit. Upon reaching the Maximum
Aggregate Benefit, Retirees will
receive a notice of coverage
termination. Such notices shall
include a summary of medical and
pharmacy benefits applied toward the
Maximum Aggregate Benefit through
December 31, 2001, and annual
amounts applied thereafter. Such
Retirees shall retain their rights
under ERISA to appeal any such
calculation, although the
calculations shall bind any Retiree
who fails to timely appeal such
calculation. Amounts paid by the
Company for each Retiree shall be
included in the calculation of the
Maximum Aggregate Benefit, even if
such amounts are later reimbursed by
government subsidies under Medicare.
2006 RETIREE WELFARE PLAN The 2006 Retiree Welfare Plan will
modify, amend and supersede the
terms of the Forsberg and
Post-Settlement Plans as provided
in this Agreement.
The 2006 Retiree Welfare Plan will
be filed with the Bankruptcy Court
at least 10 days prior to the
hearing on confirmation of the Plan
(the "Confirmation Hearing"), and
the terms thereof shall be
reasonably acceptable to the
Retirees' Committee.
PLAN SPONSORSHIP The Company and the Retirees each
reserve all of their rights, if any,
with respect to Reorganized
Solutia's sponsorship of OPEB
benefits.
LIFE INSURANCE The 2006 Retiree Welfare Plan shall
provide life insurance benefits to
former employees covered under
Solutia's retiree life insurance
plan on the Effective Date
consistent with the following:
a) for each former employee
covered on the Effective
Date who retired prior to
January 1, 1986, such
former employee's current
life insurance coverage,
up to a maximum coverage
limit of $12,500;
b) for each former employee
covered on the Effective
Date who retired from
January 1, 1986 through
December 31, 2001, such
former employee's current
life insurance coverage,
up to a maximum coverage
limit of $10,000; and
c) for each former employee
covered on the Effective
Date who retired after
December 31, 2001, the
life insurance benefit
will be eliminated.
7
These life insurance benefits shall
not be subject to change. These life
insurance benefits shall continue in
the event that any recipient is not
covered for medical benefits under
the 2006 Retiree Welfare Plan.
RETIREE TRUST The Retiree Trust shall be
established on the Effective Date.
To the extent permitted under ERISA
and the Internal Revenue Code, the
Retiree Trust shall hold in trust
all assets contributed thereto.
The trustee for the Retiree Trust
(the "Trustee") shall be a
qualified institutional trustee
selected by the Company and
reasonably acceptable to the
Retirees' Committee and the
Creditors' Committee.
At least 10-days prior to the
Confirmation Hearing, the Retirees'
Committee shall appoint a 3-person
liaison committee (the "Retiree
Liaison Committee"). The duties of
the Retiree Liaison Committee shall
be set forth in the 2006 Retiree
Welfare Plan. Subject to the
requirements of, and solely to the
extent permitted by, ERISA and the
Internal Revenue Code, the Trustee
shall have the authority to
reimburse all reasonable, actual,
out-of-pocket expenses incurred by
the members of the Retiree Liaison
Committee in the performance of
their duties; provided, however,
-------- -------
that such reimbursements shall not
exceed $3,000 in the aggregate in
any calendar year.
The duties and powers of the
Trustee shall be enumerated in a
trust instrument (the "Retiree
Trust Agreement") subject to the
requirements of ERISA and the
Internal Revenue Code and
reasonably acceptable to the
Company, Monsanto, the Creditors'
Committee and the Retirees'
Committee. The Retiree Trust
Agreement shall provide for:
1. Payment (within 10 days from
the submission of detailed
invoices to the Trustee) of
Reorganized Solutia's requests
for reimbursement from the
Retiree Trust in compliance
with the terms of this
Agreement and the 2006 Retiree
Welfare Plan.
2. The Trustee's ability to sell
the Retiree Shares (defined
below) and use the proceeds of
such sales to reimburse
Reorganized Solutia in
accordance with the terms of
this Agreement and the 2006
Retiree Welfare Plan. Neither
Reorganized Solutia, Monsanto,
Funding Co., nor any of their
respective agents, directors,
officers or employees, shall
have or assume any liability
with respect to any decision by
the Trustee to sell or not sell
the Retiree Shares held in the
Retiree Trust at any given
time.
8
3. In the event that no Pre-Spin
Retirees are participating in
the 2006 Retiree Welfare Plan,
any amounts remaining in the
Retiree Trust shall be used to
reimburse Reorganized Solutia
for costs incurred in
connection with providing Other
Post-Employment Benefits to
Post-Spin Retirees. In the
event that no Pre-Spin Retirees
and fewer than 100 Post-Spin
Retirees are participating in
the 2006 Retiree Welfare Plan,
the amounts remaining in the
Retiree Trust shall be used to
reimburse Reorganized Solutia
for costs incurred in providing
Other Post-Employment Benefits
to Post-Spin Retirees and
medical and other welfare benefits
to Reorganized Solutia's active
employees.
RETIREE CLAIM The Retirees, as a class, shall be
entitled to an Allowed(10)
non-priority unsecured claim in the
aggregate amount of $35 million (the
"Retiree Claim"), based on
reductions in OPEB that the Company
could not have unilaterally imposed
on Retirees pursuant to the terms of
the Forsberg Settlement and its
other rights. In full and complete
satisfaction of the Retiree Claim,
and for the benefit of all Retirees,
Reorganized Solutia shall contribute
to the Retiree Trust, subject to any
consents or approvals required under
ERISA and the Internal Revenue Code
(including, for the avoidance of
doubt, the obtaining of an exemption
from any "prohibited transactions",
as defined in Section 4975 of the
Internal Revenue Code or Section 406
of ERISA), the number of shares of
New Common Stock necessary to
provide a recovery on account of the
Retiree Claim that is equal to the
implied recovery for General
Unsecured Creditors (as defined in
the Plan) prior to any adjustments
or dilution to General Unsecured
Creditor recoveries described in the
Plan, based on (i) the aggregate
equity value in Reorganized Solutia
distributable to General Unsecured
Creditors prior to any such
adjustment as approved by the
Bankruptcy Court (or the mid-point
of the range of values established
by the Bankruptcy Court), and (ii)
the mid-point of the range of
projected final aggregate amounts of
General Unsecured Claims, including
the Retiree Claim, as set forth in
the disclosure statement filed in
connection with the Plan and
approved by the Bankruptcy Court
(the "Implied Recovery"), provided,
--------
however, that the number of shares
-------
of New Common Stock distributed to
the Retiree Trust in satisfaction of
the Retiree Claim (collectively, the
"Retiree Shares") shall be subject
to pro-rata dilution on account of
the Incentive Stock Option Plan (as
defined in the Plan).
Notwithstanding anything contained
in the preceding sentence to
<FN>
- --------
(10) "Allowed" shall mean any claim that is determined to be a valid claim
in the Company's chapter 11 cases based on the Company's schedules or
through settlement, litigation or otherwise.
9
the contrary, in the event that the
consents and approvals described
above have not been obtained within
30 days from the Effective Date, in
full and complete satisfaction of
the Retiree Claim, Reorganized
Solutia shall deposit Retiree Shares
in the Retiree Trust equal to 10% of
the value of the Retiree Trust on
such date; provided that the value
--------
of such contribution shall not
exceed the Implied Recovery; and
provided further that if the
-------- -------
contribution of Retiree Shares to
the Retiree Trust in accordance with
the foregoing and/or the holding of
the Retiree Shares by the Retiree
Trust would constitute or result in
a "prohibited transaction", as
defined in Section 4975 of the
Internal Revenue Code or Section 406
of ERISA, the Retiree Shares shall
be sold and the proceeds of such
sale shall be contributed to the
Retiree Trust in lieu of the Retiree
Shares under circumstances
reasonably agreed to between the
Retirees' Committee and the Company.
The Retiree Shares and the proceeds
from sales thereof shall be held in
Sub Account 2 and shall be used to
reimburse Reorganized Solutia in
accordance with the terms of this
Agreement and the 2006 Retiree
Welfare Plan.
The Company and the Retirees'
Committee agree to use their
reasonable efforts to assist in
seeking any exemption of the
application of the "prohibited
transactions" rules described in
this section with respect to the
number of Retiree Shares to be
distributed to the Retiree Trust.
Any and all claims filed by
individual Retirees on account of
reductions in their OPEB benefits
as a result of the Company's
chapter 11 cases, shall be
disallowed and expunged from the
Company's claims register on the
Effective Date as duplicative of the
Retiree Claim.
RELEASE In consideration of Monsanto's
agreement to, among other things,
make the Monsanto Funding Co. and
Retiree Trust Contributions and
Pharmacia's agreement to waive
certain indemnity claims against
the Company, which will
collectively enable Reorganized
Solutia to satisfy its OPEB
obligations to Retirees as modified
by the Retiree Settlement, and
improve Reorganized Solutia's
creditworthiness, which
consideration is integral to the
effectuation of the Plan, the
consummation of any transactions
contemplated thereby and
Reorganized Solutia's ability to
perform its prospective
obligations, upon the Effective
Date, the Retirees' Committee, its
members and professionals, the
Retirees and each of their
respective officers, directors,
employees, heirs, executors,
administrators, successors and
assigns (collectively, the "Retiree
Parties") shall hereby be
10
deemed to have released and
discharged the Company, Monsanto,
Pharmacia, any employee benefit
plans of Monsanto or Pharmacia and
their respective officers,
directors, employees, affiliates,
successors, assigns,
representatives, agents, advisors
and professionals (collectively, the
"Released Parties") from, and the
order confirming the Plan (the
"Confirmation Order") and the order
approving the terms of this
Agreement (the "Retiree Approval
Order") shall operate as an
injunction against, the commencement
or continuation of any action, the
employment of process, or any act to
collect, recover or offset, any
"claim" (as defined in section
101(5) of the Bankruptcy Code) and
any "debt" (as that term is defined
in section 101(12) of the Bankruptcy
Code), related to "retiree benefits"
(as defined in section 1114(a) of
the Bankruptcy Code), including the
partial reservation of claims in the
class action settlement approved by
the U.S. District Court for the
Northern District of Florida,
Pensacola Division, in Solutia Inc.
v. Forsberg, et al., No. 3:98CV237,
whether such claim is reduced to
judgment or not, liquidated or
unliquidated, contingent or
noncontingent, asserted or
unasserted, fixed or not, matured or
unmatured, disputed or undisputed,
legal or equitable, known or unknown
that the Retiree Parties had, have
or may have against the Released
Parties. This Agreement, the Plan
and any order approving the Retiree
Settlement shall provide for and
effectuate a discharge of the
Released Parties to the fullest
extent permitted by applicable law
with respect to any and all claims
of the Retiree Parties related to
"retiree benefits" (as defined in
section 1114(a) of the Bankruptcy
Code); provided, however, that the
-------- -------
foregoing shall not release and
discharge (a) Reorganized Solutia
from the performance of its
obligations under this Agreement, or
(b) Monsanto from the performance of
its obligations under this
Agreement.
EXCULPATION The Plan and Confirmation Order shall
AND LIMITATION OF LIABILITY provide that the Retirees' Committee
and each of its current and former
members agents, advisors and
professionals, in each case in their
capacity as such, shall not have or
incur any liability to, or be
subject to any right of action by,
any Holder of a Claim (as defined in
the Plan), or any other party in
interest, or any of their respective
agents, direct or indirect
shareholders, employees,
representatives, financial advisors,
attorneys or affiliates, or any of
their respective successors or
assigns, for any act or omission in
connection with, relating to, or
arising out of, the Chapter 11
Cases, the pursuit of confirmation
of the Plan, the consummation of the
Plan, or the administration of the
Plan or the property to be
distributed under the Plan, except
for their willful misconduct,
criminal conduct, misuse of
confidential information that causes
11
damages, fraud, ultra vires acts or
gross negligence, and in all
respects shall be entitled to rely
reasonably upon the advice of
counsel with respect to their duties
and responsibilities under the Plan.
STAY OF APPEAL Upon the execution of this
Agreement, the Company and the
Retirees' Committee will jointly
seek to stay the appeal, captioned
Solutia Inc. et al. v. Official
Committee of Retirees (Civil no.
04-CIV-9587 (KMK)), pending before
the United States District Court
for the Southern District of New
York, pending approval of the
Retiree Settlement. On the
Effective Date, this appeal shall be
deemed withdrawn with prejudice.
WITHDRAWAL OF ADVERSARY On the Effective Date, that certain
PROCEEDINGS adversary proceeding, captioned, The
Official Committee of Retirees v.
Solutia, Inc., Pharmacia Corporation
and Monsanto Company (Adv. Proc. no.
04-03057 (PCB)) shall be deemed
withdrawn with prejudice.
RETIREE APPROVAL ORDER The Retiree Approval Order shall (i)
approve the terms of this Agreement,
including all releases, injunctions,
exculpations and limitations of
liability contained herein, pursuant
to section 1114 of the Bankruptcy
Code, Bankruptcy Rule 9019 and any
other applicable provisions of the
Bankruptcy Code and Bankruptcy
Rules; (ii) direct the Company and
the Retirees' Committee to file a
copy of this Agreement and the
Retiree Approval Order with the U.S.
District Court for the Northern
District of Florida, Pensacola
Division, in Solutia Inc. v.
Forsberg, et al., No. 3:98CV237;
(iii) specify that the prior order
approving the Forsberg Settlement
and the Forsberg Plan has been
superseded in all respects by the
terms of this Agreement; (iv)
provide that the Retirees' Committee
is authorized and empowered to
execute and deliver this Agreement
on behalf of the Retirees pursuant
to section 1114(e)(1)(B) of the
Bankruptcy Code; and (v) expressly
reserve exclusive jurisdiction for
the enforcement of the terms of this
Agreement and the Retiree Settlement
in the United States Bankruptcy
Court for the Southern District of
New York.
12
SUPPORT The Retirees' Committee agrees to
support confirmation of the Plan
filed by Solutia with the Bankruptcy
Court.
The Company, the Retirees'
Committee, Monsanto and the
Creditors' Committee agree to
support the Retiree Settlement
consistent with the terms set forth
herein, including by, among other
things, seeking Bankruptcy Court
approval of the Retiree Settlement,
pursuant to Bankruptcy Rule 9019. In
addition, the Retirees' Committee
will assist the Company and Monsanto
in ensuring proper service of such
motion and the terms of this
Agreement is made on all Retirees.
CHANGED CIRCUMSTANCES Notwithstanding anything contained
herein to the contrary, this
Agreement shall terminate and be of
no further force or effect if, and
only if, prior to the Effective
Date: (i) that certain adversary
proceeding, captioned Official
Committee of Equity Security
Holders of Solutia, Inc., v.
Monsanto Company, and Pharmacia
Corporation (Case Nos. 03-17949
(PCB)) results in a final, binding
and non-appealable determination by
a court of competent jurisdiction
that Monsanto and/or Pharmacia are
solely responsible for liabilities
in connection with Pre-Spin OPEB
benefits, and the Company is fully
and unconditionally discharged from
any and all direct or indirect
obligations with respect to the
OPEB benefits or the Pre-Spin
Retirees; (ii) Solutia's chapter 11
cases currently pending before the
Bankruptcy Court are converted to a
case under chapter 7 of the
Bankruptcy Code; or (iii) the Plan
is modified such that the holders
of General Unsecured Claims against
the Company, other than the holders
of Convenience Claims (as defined
in the Plan), are to receive cash
from Reorganized Solutia totaling
more than 2% of the aggregate
Allowed amount of General Unsecured
Claims on account of such
claims and the Retirees do not.
13
IN WITNESS WHEREOF, the undersigned, intending to be bound by the
terms of this Agreement, have caused this Agreement to be executed by its
duly authorized officer, in each case as of this 13th day of February, 2006.
SOLUTIA INC.
/s/Jeffry N. Quinn
----------------------------------------
By: Jeffry N. Quinn
Its: President & Chief Executive Officer
[Signatures Continue on the Next Page]
14
THE OFFICIAL COMMITTEE OF RETIREES OF
SOLUTIA INC.
/s/Daniel D. Doyle
-------------------------------------
By: Spencer Fane Britt Browne LLP
Its: Co-counsel
/s/R. Scott Williams
-------------------------------------
By: Haskell Slaughter Young & Rediker
Its: Co-counsel
[Signatures Continue on the Next Page]
15
THE OFFICIAL COMMITTEE OF RETIREES
OF SOLUTIA INC.
/s/Kenneth M. Kettler
----------------------------------
By: Kenneth M. Kettler
Its: Chairman
[Signatures Continue on the Next Page]
16
MONSANTO COMPANY
/s/Charles W. Burson
----------------------------------
By: Charles W. Burson
Its: Secretary and General Counsel
[Signatures Continue on the Next Page]
17
THE OFFICIAL COMMITTEE OF UNSECURED
CREDITORS OF SOLUTIA INC.
/s/James R. Savin
--------------------------------------
By: Akin Gump Strauss Hauer & Feld LLP
Its: Counsel
18
EXECUTION COPY
Exhibit A
---------
For each Plan Year, each Participant of Groups IA and IIIA shall pay an
annual Medical Expense Contribution equal to the greater of 20% of the
Annual Cost Per Covered Group, or the applicable Defined Dollar Limit
Amount(11) as determined by the following table:
- ---------------------------------------------------------------------------------------------------------------------
SOLUTIA DEFINED DOLLAR LIMIT
- --------------------------------------------------------------------------------------------------------------------
RETIREE (OR SURVIVING RETIREE (OR SURVIVING
COVERED GROUP SPOUSE) BEFORE AGE 65 SPOUSE) AFTER AGE 65
- --------------------------------------------------------------------------------------------------------------------
Retiree Only $6,600 $2,000
- --------------------------------------------------------------------------------------------------------------------
Surviving Spouse Only $5,100 $1,650
- --------------------------------------------------------------------------------------------------------------------
Retiree and Spouse (under 65) $11,700 $7,100
- --------------------------------------------------------------------------------------------------------------------
Retiree and Spouse (over 65) $7,950 $3,650
- --------------------------------------------------------------------------------------------------------------------
Retiree and Child(ren) $9,000 $4,400
- --------------------------------------------------------------------------------------------------------------------
Retiree, Spouse (under 65) and
Child(ren) $14,100 $9,500
- --------------------------------------------------------------------------------------------------------------------
Retiree, Spouse (over 65) and
Child(ren) $10,350 $6,050
- --------------------------------------------------------------------------------------------------------------------
For each Plan Year, each Participant of Groups IB and IIIB shall pay an
annual Medical Expense Contribution equal to the greater of 20% of the
Annual Cost Per Covered Group, or the applicable Defined Dollar Limit Amount
as determined by the following table:
- ---------------------------------------------------------------------------------------------------------------------
SOLUTIA DEFINED DOLLAR LIMIT
- --------------------------------------------------------------------------------------------------------------------
RETIREE (OR SURVIVING RETIREE (OR SURVIVING
COVERED GROUP SPOUSE) BEFORE AGE 65 SPOUSE) AFTER AGE 65
- --------------------------------------------------------------------------------------------------------------------
Retiree Only $6,600 $1,800
- --------------------------------------------------------------------------------------------------------------------
Surviving Spouse Only $5,100 $1,475
- --------------------------------------------------------------------------------------------------------------------
Retiree and Spouse (under 65) $11,700 $6,900
- --------------------------------------------------------------------------------------------------------------------
Retiree and Spouse (over 65) $7,950 $3,275
- --------------------------------------------------------------------------------------------------------------------
Retiree and Child(ren) $9,000 $4,200
- --------------------------------------------------------------------------------------------------------------------
Retiree, Spouse (under 65) and
Child(ren) $14,100 $9,300
- --------------------------------------------------------------------------------------------------------------------
Retiree, Spouse (over 65) and
Child(ren) $10,350 $5,675
- --------------------------------------------------------------------------------------------------------------------
<FN>
- --------
(11) The Defined Dollar Limit Amount shall be the difference between the
Annual Cost Per Covered Group and the Solutia Defined Dollar Limit
applicable to a Covered Group as delineated in this Exhibit A.
---------
-1-
For each Plan Year, each Participant of Groups IIA, IIB, IV and V and
Post-Settlement Participants shall pay an annual Medical Expense
Contribution equal to the greater of 20% of the Annual Cost Per Covered
Group, or the applicable Defined Dollar Limit Amount(12) as determined by
the following table:
- ---------------------------------------------------------------------------------------------------------------------
SOLUTIA DEFINED DOLLAR LIMIT
- --------------------------------------------------------------------------------------------------------------------
RETIREE (OR SURVIVING RETIREE (OR SURVIVING
COVERED GROUP SPOUSE) BEFORE AGE 65 SPOUSE) AFTER AGE 65
- --------------------------------------------------------------------------------------------------------------------
Retiree Only $6,600 $1,650
- --------------------------------------------------------------------------------------------------------------------
Surviving Spouse Only $5,100 $1,350
- --------------------------------------------------------------------------------------------------------------------
Retiree and Spouse (under 65) $11,700 $6,750
- --------------------------------------------------------------------------------------------------------------------
Retiree and Spouse (over 65) $7,950 $3,000
- --------------------------------------------------------------------------------------------------------------------
Retiree and Child(ren) $9,000 $4,050
- --------------------------------------------------------------------------------------------------------------------
Retiree, Spouse (under 65) and
Child(ren) $14,100 $9,150
- --------------------------------------------------------------------------------------------------------------------
Retiree, Spouse (over 65) and
Child(ren) $10,350 $5,400
- --------------------------------------------------------------------------------------------------------------------
<FN>
- --------
(12) Solutia is not waiving any of its rights pursuant to the
Post-Settlement Plan to make changes to the Participant Medical Expense
Contribution or other provisions therein.
-2-