Exhibit 99.2
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- ------------------------------------------------x
:
IN RE : Chapter 11
:
SOLUTIA INC., ET AL., : Case No. 03-17949 (PCB)
:
Debtors. : (Jointly Administered)
:
- ------------------------------------------------x
THIS PLAN APPLIES TO:
X All Debtors Axio Research Corporation
- --- ---
Solutia Inc. Solutia Investments, LLC
- --- ---
Solutia Business Enterprises Inc. Beamer Road Management Company
- --- ---
Solutia Systems, Inc. Monchem, Inc.
- --- ---
Solutia Overseas, Inc. Solutia Inter-America, Inc.
- --- ---
CPFilms Inc. Solutia International Holding, LLC
- --- ---
Solutia Management Company, Inc. Solutia Taiwan, Inc.
- --- ---
Monchem International, Inc. Solutia Greater China, Inc.
- --- ---
DEBTORS' FIFTH AMENDED 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)
Colin M. Adams (CA 2913)
Attorneys for the Debtors and
Debtors in Possession
Dated: October 15, 2007
TABLE OF CONTENTS
Page
----
INTRODUCTION......................................................................................................1
ARTICLE I DEFINED TERMS, RULES OF INTERPRETATION AND COMPUTATION OF TIME..........................................1
A. Defined Terms...................................................................................1
1. "2027 Notes"...........................................................................1
2. "2037 Notes"...........................................................................1
3. "Abernathy Settlement Agreement".......................................................1
4. "Ad Hoc Notes Committee"...............................................................1
5. "Ad Hoc Trade Committee"...............................................................1
6. "ACE Companies"........................................................................1
7. "ACE Insurance Program"................................................................2
8. "ACE Settlement Agreement".............................................................2
9. "Administrative Expense Claim".........................................................2
10. "Administrative Expense Claim Bar Date"................................................2
11. "Affiliate"............................................................................2
12. "Allowed Claim"........................................................................2
13. "Allowed . . . Claim"..................................................................3
14. "Anniston Consent Decree"..............................................................3
15. "Anniston Global Settlement Agreement".................................................3
16. "Anniston Litigation Settlement Agreements"............................................3
17. "Anniston Side Letter Agreement".......................................................3
18. "Avoidance Actions"....................................................................3
19. "Axio Claims"..........................................................................3
20. "Axio Liquidation Sale"................................................................3
21. "Backstop Approval Order"..............................................................3
22. "Backstop Commitment Agreement"........................................................3
23. "Backstop Group".......................................................................3
24. "Backstop Pool"........................................................................3
25. "Ballot"...............................................................................3
26. "Bankruptcy Code"......................................................................3
27. "Bankruptcy Court".....................................................................3
28. "Bankruptcy Rules".....................................................................4
29. "Bar Date".............................................................................4
30. "Bar Date Order".......................................................................4
31. "Business Day".........................................................................4
32. "Cash".................................................................................4
33. "Causes of Action".....................................................................4
34. "CERCLA"...............................................................................4
35. "Chapter 11 Cases".....................................................................4
36. "Chemicals Assets".....................................................................4
37. "Chemicals Liabilities"................................................................4
38. "Chocolate Bayou Agreements"...........................................................4
39. "Chocolate Bayou Settlement"...........................................................4
40. "Claim"................................................................................5
41. "Claim Transfer Option"................................................................5
42. "Claim Transfer Procedures"............................................................5
43. "Claim Transfer Rights"................................................................5
44. "Claims Objection Deadline"............................................................5
i
TABLE OF CONTENTS
(CONTINUED)
Page
----
45. "Class"................................................................................5
46. "Commercial and Operating Agreements"..................................................5
47. "Confirmation".........................................................................5
48. "Confirmation Date"....................................................................5
49. "Confirmation Hearing".................................................................5
50. "Confirmation Order"...................................................................5
51. "Consummation".........................................................................5
52. "Convenience Claims"...................................................................5
53. "CPFilms Claims".......................................................................5
54. "Creditors' Committee".................................................................6
55. "Debtor Intercompany Claim"............................................................6
56. "DIP Claims"...........................................................................6
57. "DIP Credit Facility"..................................................................6
58. "DIP Lender"...........................................................................6
59. "Directors' and Officer Indemnity Claims"..............................................6
60. "Disclosure Statement Hearing".........................................................6
61. "Disclosure Statement Order"...........................................................6
62. "Disputed Claim".......................................................................6
63. "Disputed Claims Reserve"..............................................................6
64. "Disputed General Unsecured Claims Reserve"............................................6
65. "Disputed General Unsecured Claim".....................................................6
66. "Distribution".........................................................................6
67. "Distribution Agreement"...............................................................6
68. "Distribution Date"....................................................................6
69. "Distribution Record Date".............................................................7
70. "Effective Date".......................................................................7
71. "Eligible Claim Transfer Shareholders".................................................7
72. "Eligible Holders".....................................................................7
73. "Eligible Claim Transfer Holders"......................................................7
74. "Eligible Shareholders"................................................................7
75. "Entity"...............................................................................7
76. "Environmental Liability"..............................................................7
77. "Environmental Liability Costs"........................................................7
78. "Equity Committee".....................................................................7
79. "Equity Committee Adversary Proceeding"................................................7
80. "Equity Interest"......................................................................7
81. "Equity Purchase"......................................................................7
82. "Equity Purchase Procedures"...........................................................7
83. "Equity Purchase Rights"...............................................................7
84. "ERISA"................................................................................8
85. "Estate" and, collectively, "Estates"..................................................8
86. "Exchange Act".........................................................................8
87. "Executory Contract and/or Unexpired Lease"............................................8
88. "Exit Financing Facility"..............................................................8
89. "Exit Financing Facility Agent Bank"...................................................8
90. "Exit Financing Facility Commitment Letter"............................................8
91. "Final Order"..........................................................................8
92. "Formalin Purchase Agreement"..........................................................8
93. "Funding Co"...........................................................................8
94. "General Unsecured Claims".............................................................8
95. "Global Settlement"....................................................................8
ii
TABLE OF CONTENTS
(CONTINUED)
Page
----
96. "HCN Purchase Agreement"...............................................................9
97. "HMD Purchase Agreement"...............................................................9
98. "HMTA Purchase Agreement"..............................................................9
99. "Holdback Amount"......................................................................9
100. "Holdback Escrow Account"..............................................................9
101. "Holder" and, collectively, "Holders"..................................................9
102. "HSR Act"..............................................................................9
103. "Impaired".............................................................................9
104. "Impaired Claim".......................................................................9
105. "Impaired Class".......................................................................9
106. "Incentive Plan".......................................................................9
107. "Insured Claims".......................................................................9
108. "Internal Revenue Code"................................................................9
109. "IRS"..................................................................................9
110. "Legacy Claims".......................................................................10
111. "Legacy Sites"........................................................................10
112. "Legacy Site Claims"..................................................................10
113. "Legacy Tort Claims"..................................................................10
114. "Lien"................................................................................11
115. "Master Operating Agreement"..........................................................11
116. "Monsanto"............................................................................11
117. "Monsanto Claim"......................................................................11
118. "Monsanto Contribution"...............................................................11
119. "Monsanto/Pharmacia Injunction".......................................................12
120. "Monsanto's Professionals"............................................................12
121. "Monsanto Settlement Agreement".......................................................12
122. "Monsanto Tort Management"............................................................12
123. "National Securities Exchange"........................................................12
124. "New By-laws".........................................................................12
125. "New Certificate of Incorporation"....................................................12
126. "New Common Stock"....................................................................12
127. "Nominee".............................................................................12
128. "Non-Debtor Intercompany Claim".......................................................12
129. "Noteholder Claims"...................................................................12
130. "NRD Claims"..........................................................................13
131. "NYSE"................................................................................13
132. "Ordinary Course Professionals Order".................................................13
133. "PBGC"................................................................................13
134. "PCBs"................................................................................13
135. "Pension Plan"........................................................................13
136. "Person"..............................................................................13
137. "Petition Date".......................................................................13
138. "Pharmacia"...........................................................................13
139. "Pharmacia Contribution"..............................................................13
140. "Pharmacia Claims"....................................................................13
141. "Plan Documents"......................................................................13
142. "Plan Support Agreement"..............................................................13
143. "Plan Supplement".....................................................................14
144. "Prepetition Indenture"...............................................................14
145. "Prepetition Indenture Charging Lien".................................................14
146. "Prepetition Indenture Trustee".......................................................14
iii
TABLE OF CONTENTS
(CONTINUED)
Page
----
147. "Prepetition Indenture Trustee Adversary Proceeding"..................................14
148. "Priority Non-Tax Claim"..............................................................14
149. "Priority Tax Claim"..................................................................14
150. "Pro Rata"............................................................................14
151. "Professional"........................................................................14
152. "Professional Fee Claims".............................................................14
153. "Professional Fee Order"..............................................................15
154. "Quarterly Distribution Date".........................................................15
155. "Registration Rights Agreement".......................................................15
156. "Reinstated" or "Reinstatement".......................................................15
157. "Reorganized . . ."...................................................................15
158. "Restructuring Transactions"..........................................................15
159. "Restructuring Transactions Agreement"................................................16
160. "Retained Sites"......................................................................16
161. "Retirees"............................................................................16
162. "Retiree Approval Order"..............................................................16
163. "Retiree Benefits"....................................................................16
164. "Retiree Claim".......................................................................16
165. "Retirees' Committee".................................................................16
166. "Retiree Settlement Agreement"........................................................16
167. "Retiree Trust".......................................................................16
168. "Rights"..............................................................................16
169. "Rights Offering".....................................................................16
170. "Rights Offering Procedures"..........................................................16
171. "Rights Subscription Exercise Form"...................................................16
172. "Sauget Administrative Orders"........................................................16
173. "Schedules"...........................................................................17
174. "Secured Claim".......................................................................17
175. "Securities Act"......................................................................17
176. "Security Claims".....................................................................17
177. "Senior Secured Notes"................................................................17
178. "Senior Secured Note Claims"..........................................................17
179. "Senior Secured Notes Indenture"......................................................17
180. "Senior Secured Notes Trustee"........................................................17
181. "Separation Agreement"................................................................17
182. "Settled Adversary Proceedings".......................................................17
183. "Shared Sites"........................................................................17
184. "SIP Plan"............................................................................17
185. "Solutia Tort Claims".................................................................17
186. "Spinoff".............................................................................18
187. "Spinoff Indemnity Claim".............................................................18
188. "Stipulation of Amount and Nature of Claim"...........................................18
189. "Stock Pool"..........................................................................18
190. "Subsidiary" or "Subsidiaries"........................................................18
191. "Tolbert Settlement Agreement"........................................................18
192. "Tort Claims".........................................................................18
193. "Treasury Regulations"................................................................18
194. "Undeliverable Distribution"..........................................................18
195. "Uniform Commercial Code".............................................................18
196. "Unimpaired"..........................................................................18
197. "Unimpaired Claim"....................................................................18
iv
TABLE OF CONTENTS
(CONTINUED)
Page
----
198. "Unimpaired Class"....................................................................18
199. "United States of America"............................................................19
200. "Unsecured Claim".....................................................................19
201. "Voting Agent"........................................................................19
202. "Voting Deadline".....................................................................19
203. "Voting Record Date"..................................................................19
204. "Warrants"............................................................................19
205. "Warrant Agreement"...................................................................19
B. Rules of Interpretation and Computation of Time................................................20
1. Rules of Interpretation...............................................................20
2. Computation of Time...................................................................20
ARTICLE II CLASSES OF CLAIMS AND EQUITY INTERESTS................................................................21
ARTICLE III TREATMENT OF CLAIMS AND EQUITY INTERESTS.............................................................22
A. Unclassified Claims............................................................................22
1. Payment of Administrative Expense Claims..............................................22
2. Payment of Priority Tax Claims........................................................24
B. Classes of Claims..............................................................................24
1. Priority Non-Tax Claims (Class 1).....................................................24
2. Secured Claims (Class 2)..............................................................24
3. Senior Secured Note Claims (Class 3)..................................................25
4. Convenience Claims (Class 4)..........................................................25
5. CPFilms Claims (Class 5)..............................................................25
6. NRD Claims (Class 6)..................................................................26
7. Insured Claims (Class 7)..............................................................26
8. Tort Claims (Class 8).................................................................26
9. Legacy Site Claims (Class 9)..........................................................27
10. Equity Interests in all Debtors other than Solutia (Class 10).........................27
11. Monsanto Claim (Class 11).............................................................28
12. Noteholder Claims (Class 12)..........................................................28
13. General Unsecured Claims (Class 13)...................................................28
14. Retiree Claim (Class 14)..............................................................29
15. Pharmacia Claims (Class 15)...........................................................29
16. Non-Debtor Intercompany Claims (Class 16).............................................29
17. Debtor Intercompany Claims (Class 17).................................................30
18. Axio Claims (Class 18)................................................................30
19. Security Claims (Class 19)............................................................30
20. Equity Interests in Solutia (Class 20)................................................30
ARTICLE IV ACCEPTANCE OR REJECTION OF THE PLAN...................................................................32
A. Special Provisions Governing Unimpaired Claims.................................................32
B. Classes Entitled to Vote.......................................................................32
C. Cramdown.......................................................................................32
ARTICLE V MEANS FOR IMPLEMENTATION OF THE PLAN...................................................................33
A. General Settlement of Claims...................................................................33
B. The Global Settlement..........................................................................33
1. The Distribution Agreement............................................................33
2. Monsanto Settlement Agreement.........................................................34
3. Commercial and Operating Agreements...................................................34
v
TABLE OF CONTENTS
(CONTINUED)
Page
----
4. Monsanto Tort Management..............................................................34
5. Monsanto's Settlement of Adversary Proceedings, Contested Matters, Disputes
and Monsanto Claims...................................................................34
6. Monsanto's Professionals..............................................................34
7. Monsanto Administrative Claim.........................................................35
8. Pharmacia Contribution................................................................35
9. Settlement With Retirees..............................................................35
10. Settled Adversary Proceedings.........................................................35
11. Settlement of the Prepetition Trustee Adversary Proceeding............................36
12. Settlement of the Equity Committee Adversary Proceeding...............................36
13. Payment of Professional Fees..........................................................36
14. Solutia's Assumption of Certain Environmental Liabilities.............................37
C. Restructuring Transactions.....................................................................38
D. Continued Corporate Existence and Vesting of Assets in the Reorganized Debtors.................38
E. Execution of Plan Documents....................................................................38
F. Corporate Governance, Directors and Officers and Corporate Action of the Reorganized
Debtors........................................................................................38
1. New Certificates of Incorporation and New By-Laws.....................................38
2. Directors and Officers of the Reorganized Debtors.....................................39
3. Corporate Action......................................................................39
4. The New Common Stock..................................................................40
G. Exit Financing Facility, Obtaining Cash for Distributions and Transfers of Funds Among
the Debtors....................................................................................40
H. The Rights Offering............................................................................40
1. Use of Rights Offering Proceeds.......................................................40
2. Rights Offering Procedures............................................................40
3. Rights Offering Backstop..............................................................40
I. Funding Co.....................................................................................41
J. Incentive Plan.................................................................................41
K. Release of Liens and Guarantee Claims..........................................................41
L. Cancellation of Existing Securities and Agreements.............................................41
M. Limitations on Transfers of Equity Interests in Solutia During the Chapter 11 Cases............42
N. Effectuating Documents.........................................................................42
O. Employment and Other Benefits Programs.........................................................42
ARTICLE VI TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.................................................44
A. Assumption and Rejection of Executory Contracts and Unexpired Leases...........................44
B. Claims Based on Rejection of Executory Contracts or Unexpired Leases...........................44
C. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed..........................44
D. Insurance Policies.............................................................................45
1. ACE Settlement........................................................................45
E. Anniston Settlement............................................................................45
F. Assumption of Pension Obligations..............................................................45
G. Contracts and Leases Entered Into After the Petition Date......................................46
ARTICLE VII PROVISIONS GOVERNING DISTRIBUTIONS...................................................................47
A. Allowed Noteholder Claims......................................................................47
B. Distributions for Claims Allowed as of the Effective Date......................................47
C. Distributions for Holders of Equity Interests in Solutia.......................................47
vi
TABLE OF CONTENTS
(CONTINUED)
Page
----
D. Delivery of Distributions......................................................................47
E. Delivery and Distributions and Undeliverable or Unclaimed Distributions........................47
1. Delivery of Distributions in General..................................................47
2. Undeliverable Distributions...........................................................48
F. Compliance with Tax Requirements/Allocations...................................................48
G. Record Date for Distribution to Holders of Claims..............................................48
H. Record Date for Distribution to Holders of Equity Interests in Solutia.........................49
I. Distributions of Whole Shares, Warrants, Equity Purchase Rights and Claim Transfer
Rights Only....................................................................................49
J. Set-offs and Recoupments.......................................................................49
K. Surrender of Cancelled Instruments or Securities...............................................49
L. Disputed Claims Reserve........................................................................50
1. Deposit of Cash on the Effective Date.................................................50
2. Distribution After Allowance..........................................................50
3. Distributions After Disallowance......................................................50
4. Property Held in the Disputed Claims Reserve..........................................50
M. Disputed General Unsecured Claims Reserve......................................................51
1. Deposit of New Common Stock on the Effective Date.....................................51
2. Distributions After Allowance.........................................................51
3. Distributions After Disallowance......................................................51
4. Property Held in Disputed General Unsecured Claims Reserve............................52
ARTICLE VIII PROCEDURES FOR TREATING DISPUTED GENERAL UNSECURED CLAIMS...........................................53
A. Objections to Claims...........................................................................53
B. General Unsecured Claims Monitor...............................................................53
C. No Distributions Pending Allowance.............................................................54
D. Estimation of Claims...........................................................................54
ARTICLE IX CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN.....................................55
A. Condition Precedent to Confirmation............................................................55
B. Conditions Precedent to Effective Date.........................................................56
C. Effect of Failure of Conditions................................................................57
D. Waiver of Conditions...........................................................................57
ARTICLE X INJUNCTIONS, RELEASES, EXCULPATION AND DISCHARGE.......................................................58
A. Injunctions....................................................................................58
1. DEBTORS' INJUNCTION...................................................................58
2. MONSANTO/PHARMACIA INJUNCTION.........................................................58
B. Releases.......................................................................................59
1. RELEASES BY THE DEBTORS...............................................................59
2. RELEASES BY HOLDERS OF CLAIMS AND EQUITY INTERESTS....................................60
3. RETIREE RELEASE AND INJUNCTION........................................................61
C. EXCULPATION AND LIMITATION OF LIABILITY........................................................62
D. DISCHARGE OF CLAIMS AND TERMINATION OF EQUITY INTERESTS........................................62
ARTICLE XI RETENTION OF JURISDICTION.............................................................................64
A. Retention of Jurisdiction......................................................................64
ARTICLE XII MISCELLANEOUS PROVISIONS.............................................................................66
A. Binding Effect.................................................................................66
vii
TABLE OF CONTENTS
(CONTINUED)
Page
----
B. Preservation of Avoidance Actions..............................................................66
C. Claims of the United States of America.........................................................66
D. Applicability of Section 1125(e) of the Bankruptcy Code........................................66
E. Dissolution of the Creditors' Committee, Retirees' Committee and Equity Committee..............66
F. Payment of Statutory Fees......................................................................67
G. Modification of the Plan.......................................................................67
H. Severability...................................................................................67
I. Revocation or Withdrawal of the Plan...........................................................68
J. Section 1145 Exemption.........................................................................68
K. Section 1146 Exemption.........................................................................68
L. Notices........................................................................................68
1. The Debtors and the Reorganized Debtors...............................................68
2. The Creditors' Committee..............................................................69
3. The Retirees' Committee...............................................................69
4. The Equity Committee..................................................................69
5. The DIP Lenders.......................................................................70
6. The United States Trustee.............................................................70
7. Monsanto..............................................................................70
8. Pharmacia.............................................................................71
M. Governing Law..................................................................................71
viii
TABLE OF EXHIBITS
Exhibit A Monsanto Settlement 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 Plan
Exhibit J Registration Rights Agreement
Exhibit K Plan Support Agreement
Exhibit L Claim Transfer Procedures
Exhibit M Restructuring Transactions Agreement
Exhibit N Warrant Agreement
Exhibit O Equity Purchase Procedures
Exhibit P Backstop Commitment Agreement
ix
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. ("CPFilms"), 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 amended
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 approved by the Bankruptcy Court on October
[__], 2007 (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. "2027 NOTES" means the $300 million in 7.375% unsecured public
notes due October 15, 2027, issued by Solutia.
2. "2037 NOTES" means the $150 million in 6.72% unsecured public
notes due October 15, 2037, issued by Solutia.
3. "ABERNATHY SETTLEMENT AGREEMENT" means that certain settlement
agreement, dated September 9, 2003, resolving the lawsuit captioned Sabrina
Abernathy v. Monsanto Company, Civil Action No. CY-01-832 (Etowah County).
4. "AD HOC NOTES COMMITTEE" means the ad hoc committee of Holders of
the 2027Notes and the 2037 Notes.
5. "AD HOC TRADE COMMITTEE" means the ad hoc committee of Holders of
trade claims in Solutia.
6. "ACE COMPANIES" means, collectively, ACE American Insurance
Company, Indemnity Insurance Company of North America, ACE Insurance Company
of Puerto Rico, Pacific Employers Insurance Company, Insurance Company of
North America, ESIS, Inc. ("ESIS") and their respective affiliates.
1
7. "ACE INSURANCE PROGRAM" means all insurance policies and all
agreements, documents or instruments relating thereto that have been issued or
entered into by the ACE Companies (or any of them) to or with one or more of
the Debtors, their respective predecessors and/or affiliates including, but
not limited to, Monsanto. The ACE Insurance Program includes, without
limitation: (i) Consent and Agreement regarding Assumption of Insurance
Obligations, effective September 1, 1997, by and among Monsanto, Solutia and
INA on behalf of the ACE Companies, (ii) that certain OCIP/Wrap-Up Casualty
Insurance Program Agreement effective August 1, 1998 between Solutia and
certain of the ACE Companies ("OCIP Agreement") and (iii) those certain
service agreements with ESIS ("ESIS Agreements") under which ESIS provides the
Debtors with certain claims administration services.
8. "ACE SETTLEMENT AGREEMENT" means the settlement agreement to be
executed by and among the ACE Companies and the Debtors pursuant to which the
Debtors will assume the ACE Insurance Program in its entirety and pay the cure
costs related thereto.
9. "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; (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; (e) the fees and expenses payable pursuant to Section V.B.13
hereof; and (f) the administrative claims and professional fees and expenses
payable to Monsanto pursuant to Sections V.B.6 and V.B.7 hereof.
10. "ADMINISTRATIVE EXPENSE CLAIM BAR DATE" means the date that is
the forty-fifth (45th) day after the Effective Date.
11. "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 of Monsanto, Solutia,
-------- -------
Reorganized Solutia or Pharmacia be considered to be Affiliates for purposes
of the Plan.
12. "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.
2
13. "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.
14. "ANNISTON CONSENT DECREE" means the Partial Consent Decree
entered by the District Court for the Northern District of Alabama on August
9, 2003, among the United States, Pharmacia and Solutia with respect to the
Anniston Superfund Site in Anniston, Alabama.
15. "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.
16. "ANNISTON LITIGATION SETTLEMENT AGREEMENTS" means the Abernathy
Settlement Agreement together with the Tolbert Settlement Agreement.
17. "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.
18. "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.
19. "AXIO CLAIMS" means all Claims against Axio Research Corporation.
20. "AXIO LIQUIDATION SALE" means that certain sale of the assets of
Axio Research Corporation authorized pursuant to that certain order of the
Bankruptcy Court dated December 16, 2004.
21. "BACKSTOP APPROVAL ORDER" means that certain order of the
Bankruptcy Court approving the Backstop Commitment Agreement.
22. "BACKSTOP COMMITMENT AGREEMENT" means that certain agreement,
dated October 15, 2007, among Solutia and the members of the Backstop Group,
annexed hereto as Exhibit P.
23. "BACKSTOP GROUP" means, collectively, Highland Capital
Management, L.P., Longacre Fund Management, L.L.C., Southpaw Asset Management,
Merrill Lynch Credit Products, LLC, Murray Capital Management and UBS Global
Distressed Debt and Special Situations, each of which has agreed to backstop
the Rights Offering pursuant to the terms of the Backstop Commitment
Agreement.
24. "BACKSTOP POOL" means 15% of the Rights.
25. "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.
26. "BANKRUPTCY CODE" means title 11 of the United States Code, as
applicable to the Chapter 11 Cases.
27. "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
3
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.
28. "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.
29. "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.
30. "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.
31. "BUSINESS DAY" means any day, other than a Saturday, Sunday or
"legal holiday" (as defined in Bankruptcy Rule 9006(a)).
32. "CASH" means legal tender of the United States of America.
33. "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.
34. "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Sections 9601, et seq.
-- ---
35. "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.
36. "CHEMICALS ASSETS" means the assets constituting "Chemicals
Assets" as defined and set forth in the Distribution Agreement.
37. "CHEMICALS LIABILITIES" means the liabilities constituting
"Chemicals Liabilities" as defined and set forth in the Distribution
Agreement.
38. "CHOCOLATE BAYOU AGREEMENTS" means the Master Operating
Agreement, the HMTA Purchase Agreement, and the HCN Purchase Agreement and the
Formalin Purchase Agreement, the agreements that define the relationship
between Monsanto and Solutia at the Alvin, Texas "Chocolate Bayou" facility.
39. "CHOCOLATE BAYOU SETTLEMENT" means the settlement between
Monsanto and Solutia to amend the Chocolate Bayou Agreements.
4
40. "CLAIM" means a "claim," as defined in section 101(5) of the
Bankruptcy Code, against any Debtor.
41. "CLAIM TRANSFER OPTION" means the right of an Eligible Claim
Transfer Holder to elect to transfer its Allowed General Unsecured Claim of
less than $100,000 but more than $2,500, pursuant to the Claim Transfer
Procedures, for Cash in an amount equal to 52.35% of the Allowed amount of
such General Unsecured Claim to Eligible Claim Transfer Shareholders.
42. "CLAIM TRANSFER PROCEDURES" means those certain Claim Transfer
Procedures setting forth the terms and conditions of the Claim Transfer Rights
and the Claim Transfer Option, in substantially the form annexed hereto as
Exhibit L.
43. "CLAIM TRANSFER RIGHTS" means the right, subject to the Claim
Transfer Option, of Eligible Claim Transfer Shareholders to purchase Allowed
General Unsecured Claims of less than $100,000 but greater than $2,500
(including the Rights related to such Allowed General Unsecured Claims) for
Cash pursuant to the Claim Transfer Procedures.
44. "CLAIMS OBJECTION DEADLINE" means, for each Claim, the later of
(a) 90 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.
45. "CLASS" means a class of Claims or Equity Interests, as described
in Article II herein.
46. "COMMERCIAL AND OPERATING AGREEMENTS" means the Master Operating
Agreement, the HMD Purchase Agreement, the HMTA Purchase Agreement, the HCN
Purchase Agreement and the Formalin Purchase Agreement.
47. "CONFIRMATION" means the entry of the Confirmation Order on the
docket of the Chapter 11 Cases.
48. "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.
49. "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.
50. "CONFIRMATION ORDER" means the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
51. "CONSUMMATION" means the occurrence of the Effective Date.
52. "CONVENIENCE CLAIMS" means a Claim that otherwise would be a
General Unsecured Claim included in Class 13, 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.
53. "CPFILMS CLAIMS" means all Claims, other than Non-Debtor
Intercompany Claims, Debtor Intercompany Claims and Legacy Claims, scheduled
by or filed against CPFilms.
5
54. "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.
55. "DEBTOR INTERCOMPANY CLAIM" means any Claim of one Debtor against
another Debtor.
56. "DIP CLAIMS" means all Claims arising under or pursuant to the
DIP Credit Facility.
57. "DIP CREDIT FACILITY" means that certain Financing Agreement,
dated as of January 16, 2004, as amended on March 1, 2004, July 20, 2004, June
1, 2005, March 17, 2006, and January 25, 2007, 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.
58. "DIP LENDER" means, collectively, (a) those entities identified
as "Lenders" in the DIP Credit Facility and their respective successors and
assigns and (b) Citibank, N.A. (as Issuer).
59. "DIRECTORS' AND OFFICER INDEMNITY CLAIMS" means all Claims filed
by the Debtors' current and former directors, officers and employees for
indemnification or contribution.
60. "DISCLOSURE STATEMENT HEARING" means the hearing held by the
Bankruptcy Court regarding the approval of the Disclosure Statement.
61. "DISCLOSURE STATEMENT ORDER" means that certain order of the
Bankruptcy Court entered on October [__], 2007, which is annexed as Exhibit B
to the Disclosure Statement.
62. "DISPUTED CLAIM" means any Claim which is not an Allowed Claim.
63. "DISPUTED CLAIMS RESERVE" means the reserve established and
maintained by the Reorganized Debtors to hold Cash to be distributed, as
applicable, to Holders of Allowed Claims other than Allowed General Unsecured
Claims and Allowed Noteholder Claims pending resolution of Disputed Claims
(other than Disputed General Unsecured Claims and Disputed Noteholder Claims)
in accordance with the terms of Section VII.L hereof.
64. "DISPUTED GENERAL UNSECURED CLAIMS RESERVE" means the reserve
established and maintained by the Reorganized Debtors to hold the shares of
New Common Stock to be Distributed, as applicable, to Holders of Allowed
General Unsecured Claims and Allowed Noteholder Claims pending the resolution
of Disputed General Unsecured Claims in accordance with the terms of Section
VII.L hereof.
65. "DISPUTED GENERAL UNSECURED CLAIM" means any General Unsecured
Claim that, as of the date of determination, is a Disputed Claim.
66. "DISTRIBUTION" means any distribution made under the Plan to a
Holder of an Allowed Claim.
67. "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.
68. "DISTRIBUTION DATE" means any date on which a Distribution is
made.
6
69. "DISTRIBUTION RECORD DATE" means the date that is five Business
Days after the Confirmation Date.
70. "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 hereof.
71. "ELIGIBLE CLAIM TRANSFER SHAREHOLDERS" means the Holders of
Equity Interests in Solutia who are eligible, pursuant to the Claim Transfer
Procedures, to receive Claim Transfer Rights.
72. "ELIGIBLE HOLDERS" means the Holders of General Unsecured Claims
(including Eligible Claim Transfer Shareholders who have purchased Allowed
General Unsecured Claims pursuant to the Claim Transfer Option) and the
Holders of Noteholder Claims who are eligible, pursuant to the Rights Offering
Procedures, to participate in the Rights Offering.
73. "ELIGIBLE CLAIM TRANSFER HOLDERS" means the Holders of Allowed
General Unsecured Claims who are eligible, pursuant to the Claim Transfer
Procedures, to participate in the Claim Transfer Option.
74. "ELIGIBLE SHAREHOLDERS" means the Holders of common stock of
Solutia who are eligible, pursuant to the Equity Purchase Procedures, to
participate in the Equity Purchase.
75. "ENTITY" shall have the meaning set forth in section 101(15) of
the Bankruptcy Code.
76. "ENVIRONMENTAL LIABILITY" means any liability constituting an
"Environmental Liability" as defined and set forth in the Monsanto Settlement
Agreement.
77. "ENVIRONMENTAL LIABILITY COSTS" means any costs constituting
"Environmental Liability Costs" as defined and set forth in the Monsanto
Settlement Agreement.
78. "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.
79. "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.
80. "EQUITY INTEREST" means any share of common stock, preferred
stock or other instrument evidencing an ownership interest in any of the
Debtors, including any and all shares of treasury stock, whether or not
transferable, and any option, warrant or right, contractual or otherwise, to
acquire any such interest.
81. "EQUITY PURCHASE" means the offering of up to 17% of the New
Common Stock by the Debtors to Eligible Shareholders pursuant to the terms and
conditions set forth in the Equity Purchase Procedures.
82. "EQUITY PURCHASE PROCEDURES" means those certain Equity Purchase
Procedures, setting forth the terms and conditions of the Equity Purchase, in
substantially the form annexed hereto as Exhibit O.
83. "EQUITY PURCHASE RIGHTS" means the rights of Eligible
Shareholders to participate in the Equity Purchase pursuant to the Equity
Purchase Procedures.
7
84. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
85. "ESTATE" and, collectively, "ESTATES" means the estate created
for that Debtor in its Chapter 11 Case pursuant to section 541 of the
Bankruptcy Code.
86. "EXCHANGE ACT" means the Securities Exchange Act of 1934, 15
U.S.C. Sections 78a-78jj, as now in effect or hereafter amended.
87. "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.
88. "EXIT FINANCING FACILITY" means one or more senior secured credit
facilities or arrangements that will be entered into by the Reorganized
Debtors, the Exit Financing Facility Agent Bank and the relevant lenders on
the Effective Date.
89. "EXIT FINANCING FACILITY AGENT BANK" means the agent bank under
the Exit Financing Facility.
90. "EXIT FINANCING FACILITY COMMITMENT LETTER" means one or more
binding commitment letters that set forth a commitment to fund the Exit
Financing Facility.
91. "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.
92. "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).
93. "FUNDING CO" means a newly created, special purpose,
tax-efficient, bankruptcy-remote subsidiary of Reorganized Solutia, funded
with certain proceeds of the Rights Offering.
94. "GENERAL UNSECURED CLAIMS" means Unsecured Claims, other than
Convenience Claims, Debtor Intercompany Claims, Insured Claims (only to the
extent that such Insured Claims are payable by any available insurance
coverage proceeds), the Noteholder Claims, the Monsanto Claim, Non-Debtor
Intercompany Claims, NRD Claims, the Pharmacia Claims, the Legacy Site Claims,
the Retiree Claim, Unsecured Claims against Axio Research Corporation, CPFilms
Claims, Senior Secured Note Claims and Tort Claims.
95. "GLOBAL SETTLEMENT" means, as described in more detail in Section
V.B hereof, the settlement between and among Monsanto, Solutia, the Creditors'
Committee, the Ad Hoc Trade Committee, the Retirees' Committee, the
Prepetition Indenture Trustee, the Ad Hoc Notes Committee and the Equity
Committee.
8
96. "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).
97. "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).
98. "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).
99. "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) hereof.
100. "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.
101. "HOLDER" and, collectively, "HOLDERS" means a Person or Entity
legally holding a Claim or Equity Interest.
102. "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
103. "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.
104. "IMPAIRED CLAIM" means a Claim classified in an Impaired Class.
105. "IMPAIRED CLASS" means each of Classes 3, 5, 11, 12, 13, 14, 15,
16, 17, 18, 19 and 20 as set forth in Article III hereof.
106. "INCENTIVE PLAN" means the employee incentive plan to be
implemented in accordance with Section V.K. hereof, in substantially the form
annexed hereto as Exhibit I.
107. "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.
108. "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.
109. "IRS" means the Internal Revenue Service of the United States of
America.
9
110. "LEGACY CLAIMS" means all Claims, including, but not limited to,
Legacy 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.
111. "LEGACY SITES" means the "Legacy Sites" as defined and set forth
in the Monsanto Settlement Agreement.
112. "LEGACY SITE CLAIMS" means all Environmental Liability Costs
with respect to the Legacy Sites.
113. "LEGACY 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 Legacy Tort Claim,
ii. such holder has filed a proof of claim in the
Chapter 11 Case, or
iii. the alleged exposure occurred before or after the
Spinoff.
"LEGACY TORT CLAIMS" also includes legal, equitable or other claims,
demands, costs, causes of action and/or other liabilities arising against
Solutia 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, in circumstances where:
(u) the claims in question reflect the description contained in
clause (c) of the first sentence of this definition;
(v) the property from which such chemical exposure or environmental
contamination arose was previously owned by Pharmacia and transferred to
Solutia in connection with the Spinoff;
(w) the claims arise from Solutia's conduct after the Spinoff;
10
(x) such conduct constituted the remediation, or non-remediation, of
conditions which existed as of the Spinoff and were subject to Solutia's
assumption of remediation obligations under the Distribution Agreement; and
(y) such conduct by Solutia was in accordance with federal or state
environmental law or orders or was a continuation of activities conducted, or
inactivity, by Pharmacia at the time of the Spinoff, provided, however, that
-------- -------
in the case of non-remediation, such non-remediation must not have been in
violation of federal or state environmental laws or orders,
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 Legacy Tort Claim, or
ii. such holder has filed a proof of claim in the
Chapter 11 Case.
"LEGACY 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 "Legacy Tort Claim" herein; antitrust claims;
commercial, business or contract claims; Environmental Liability Costs; any
other remediation obligations covered by the terms of the Monsanto Settlement
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 Walker v.
Monsanto Company Pension Plan, No. 04-cv-436-DRH, Scharringhausen v. Solutia
Inc. Employees' Pension Plan, No. 3:06CV00099, and the administrative charge
entitled Larry Probst 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 v. Pharmacia Corporation, No.
4:04CV981, or any similar litigation; or (other than as may be provided in the
second sentence of this definition) any claims, including claims for exposure
to chemicals or other substances, arising from Solutia's conduct after the
Spinoff.
114. "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.
115. "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).
116. "MONSANTO" means Monsanto Company, a Delaware corporation, and
its Affiliates.
117. "MONSANTO CLAIM" means any and all Claims of Monsanto, including
all Claims of Monsanto on account of Solutia's breach of the Distribution
Agreement.
118. "MONSANTO CONTRIBUTION" means, among other things, (a) the
Monsanto Tort Management, (b) Monsanto's settlement of adversary proceedings
(including the Settled Adversary Proceedings), contested matters, disputes and
the Monsanto Claim, (c) Monsanto's management, litigation and settlement of
various Legacy Claims, including Legacy Tort Claims, from the Petition Date
through the Effective Date, (d) 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
11
Sites, subject to the sharing mechanism set forth in the Monsanto Settlement
Agreement, and (e) Monsanto's agreement to (i) pay certain liabilities,
including certain environmental liabilities as set forth in Section V.B herein
and in the Monsanto Settlement 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 Monsanto Settlement 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 Monsanto Settlement
Agreement and amend the Master Operating Agreement, (iv) waive any right to
file surrogate Claims pursuant to Bankruptcy Rule 3005, (v) grant certain
indemnities to the Reorganized Debtors pursuant to the terms of the Monsanto
Settlement Agreement, and (vi) enter into the Chocolate Bayou Settlement.
119. "MONSANTO/PHARMACIA INJUNCTION" means the injunction in favor of
Monsanto and Pharmacia as set forth in Section X.A.2 hereof.
120. "MONSANTO'S PROFESSIONALS" means Willkie Farr & Gallagher LLP,
Bryan Cave LLP, Boies, Schiller & Flexner LLP, Greenhill & Co., LLC, Kramer
Capital Partners, Perella Weinberg Partners LP, Groom Law Group, ARCADIS, FTI
Consulting, Dickstein Shapiro Morin & Oshinky LLP and Sonnenschein Nath &
Rosenthal LLP, Environ, William Holder, The Weinberg Group, Inc., Navigant and
BDO Seidman, LLP.
121. "MONSANTO SETTLEMENT AGREEMENT" means that certain Settlement
Agreement, dated October 15, 2007, between and among Reorganized Solutia,
Monsanto and Funding Co, annexed hereto as Exhibit A.
122. "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 Legacy Tort Claims and to indemnify
Reorganized Solutia for the Legacy Tort Claims, pursuant to the terms of the
Monsanto Settlement Agreement.
123. "NATIONAL SECURITIES EXCHANGE" means any exchange registered
pursuant to Section 6(a) of the Exchange Act.
124. "NEW BY-LAWS" means the form of the by-laws of each of the
Reorganized Debtors, which form is annexed hereto as Exhibit D.
125. "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.
126. "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.
127. "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.
128. "NON-DEBTOR INTERCOMPANY CLAIM" means any Claim owed by a Debtor
to a non-Debtor Affiliate as of the Petition Date.
129. "NOTEHOLDER CLAIMS" means the Claims of the Holders of the 2027
Notes and/or 2037 Notes for principal and accrued but unpaid interest as of
the Petition Date.
12
130. "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.
131. "NYSE" means the New York Stock Exchange.
132. "ORDINARY COURSE PROFESSIONALS ORDER" means that certain order
of the Bankruptcy Court entered on January 16, 2004, as amended from time to
time, which authorized the employment and payment of Professionals by the
Debtors in the ordinary course of business.
133. "PBGC" means the Pension Benefit Guaranty Corporation.
134. "PCBS" means polychlorinated biphenyls.
135. "PENSION PLAN" means the Solutia Inc. Employees' Pension Plan,
dated September 1, 1997, as amended and restated from time to time.
136. "PERSON" shall have the meaning set forth in section 101(41) of
the Bankruptcy Code.
137. "PETITION DATE" means December 17, 2003, the date on which the
Debtors commenced the Chapter 11 Cases.
138. "PHARMACIA" means Pharmacia Corporation, formerly known as
Monsanto Company, a Delaware corporation.
139. "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 Monsanto
Settlement 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.
140. "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.
141. "PLAN DOCUMENTS" means (a) the Monsanto Settlement 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 Equity Purchase Procedures, (i) the Claim Transfer
Procedures, (j) the Commercial and Operating Agreements, (k) the Incentive
Plan, (l) the Registration Rights Agreement, (m) the Restructuring
Transactions Agreement, (n) the Retiree Settlement Agreement, (o) the Warrant
Agreement, (p) the Backstop Commitment Agreement and (q) 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.
142. "PLAN SUPPORT AGREEMENT" means the agreement annexed hereto as
Exhibit K.
13
143. "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 Plan; (f) the Restructuring Transactions
Agreement; and (g) 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; each in substantially
final form or final form, as applicable, each of which will be filed with the
Bankruptcy Court at least ten (10) days prior to the Confirmation Hearing.
144. "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 the 2027 Notes and the 2037 Notes.
145. "PREPETITION INDENTURE CHARGING LIEN" means any lien of the
Prepetition Indenture Trustee, arising under the Prepetition Indenture,
against Distributions on account of Noteholder Claims, securing payment of the
fees and expenses of the Prepetition Indenture Trustee, including fees and
expenses of counsel and other professionals engaged by or on behalf of or for
the benefit of the Prepetition Indenture Trustee.
146. "PREPETITION INDENTURE TRUSTEE" means Wilmington Trust Company,
or any predecessor (including JPMorgan Chase Bank) or successor thereto, as
indenture trustee under the Prepetition Indenture.
147. "PREPETITION INDENTURE TRUSTEE ADVERSARY PROCEEDING" means the
adversary proceeding commenced on May 27, 2005 by JPMorgan Chase Bank against
Solutia in the Bankruptcy Court, Case No. 05-01843.
148. "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.
149. "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.
150. "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.
151. "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.
152. "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 section 328, 330,
331, 363 or 503 of the Bankruptcy Code) through the Effective Date.
14
153. "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.
154. "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.
155. "REGISTRATION RIGHTS AGREEMENT" means the agreement 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.
156. "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:
iii. 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;
iv. the maturity of such Claim or Equity Interest,
as such maturity existed before such default, will be
reinstated;
v. 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
vi. 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.
157. "REORGANIZED . . ." means, when used in reference to a
particular Debtor, such Debtor on and after the Effective Date.
158. "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.
15
159. "RESTRUCTURING TRANSACTIONS AGREEMENT" means the agreement or
agreements that govern the Restructuring Transactions, annexed hereto as
Exhibit M.
160. "RETAINED SITES" means the "Retained Sites" as defined and set
forth in the Monsanto Settlement Agreement.
161. "RETIREES" has the meaning set forth in the preamble to the
Retiree Settlement Agreement.
162. "RETIREE APPROVAL ORDER" means that certain order of the
Bankruptcy Court approving the Retiree Settlement Agreement.
163. "RETIREE BENEFITS" means the benefits provided to the Retirees
as set forth in the Retiree Settlement Agreement.
164. "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, the Distribution
received on account of which, in accordance with the terms of the Retiree
Settlement Agreement and the Plan will be held in trust (or sold) for the
benefit of Retirees in accordance with the terms of the Retiree Settlement
Agreement.
165. "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.
166. "RETIREE SETTLEMENT AGREEMENT" means that certain agreement, as
amended, between the Debtors and the Retirees' Committee, effective as of the
Effective Date, in substantially the form of Exhibit B.
167. "RETIREE TRUST" has the meaning set forth in the Retiree
Settlement Agreement.
168. "RIGHTS" means the rights to subscribe for and to acquire on the
Effective Date an aggregate of 31.4% of the New 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 and the
Backstop Commitment Agreement.
169. "RIGHTS OFFERING" means the offering of the Rights by the
Debtors to Eligible Holders and members of the Backstop Group.
170. "RIGHTS OFFERING PROCEDURES" means those certain Rights Offering
Procedures, setting forth the terms and conditions of the Rights Offering, in
substantially the form annexed hereto as Exhibit H.
171. "RIGHTS SUBSCRIPTION EXERCISE FORM" means that certain form
distributed to each Eligible Holder, which form such Eligible Holder may use
to exercise Rights.
172. "SAUGET ADMINISTRATIVE ORDERS" means the Administrative Orders,
relating to the Sauget, Illinois Area 1 and Area 2 sites, V-W-99-C-554,
effective January 21, 1999; V-W-99-554, issued May 31, 2000; V-W-01-C-622,
effective November 24, 2000; and V-W-C-716, issued September 30, 2002.
16
173. "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.
174. "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.
175. "SECURITIES ACT" means the Securities Act of 1933, 15 U.S.C.
Sections 77a-77aa, as now in effect or hereafter amended.
176. "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.
177. "SENIOR SECURED NOTES" means those certain 11.25% Senior Secured
Notes, due on July 15, 2009, issued pursuant to the Senior Secured Notes
Indenture.
178. "SENIOR SECURED NOTE CLAIMS" means any and all Allowed Claims of
the Holders of the Senior Secured Notes arising under the Senior Secured Notes
Indenture, which claim amount will be determined by the Bankruptcy Court
(whether secured or unsecured).
179. "SENIOR SECURED NOTES INDENTURE" means that certain Indenture,
dated July 9, 2002, between Solutia and The Bank of New York, as successor
indenture trustee, as amended from time to time.
180. "SENIOR SECURED NOTES TRUSTEE" means The Bank of New York, or
any predecessor or successor thereto, as indenture trustee under the Senior
Secured Notes Indenture.
181. "SEPARATION AGREEMENT" means that certain agreement, dated as of
September 1, 2000, as amended, by and between Pharmacia and Monsanto.
182. "SETTLED ADVERSARY PROCEEDINGS" means the following adversary
proceedings commenced in the Bankruptcy Court: Solutia Inc. v. Pharmacia
Corp., Case No. 03-93700 (PCB), filed December 17, 2003; Solutia Inc. v.
Pharmacia Corp., Case. No. 04-2969 (PCB), filed April 20, 2004; Official
Committee of Retirees v. Solutia Inc., Case No. 04-3057 (PCB), filed May 7,
2004; and Solutia Inc. v. Monsanto Company and Pharmacia Corp., Case No. No.
05-03353 (PCB), filed on December 17, 2005.
183. "SHARED SITES" means the "Shared Sites" as defined and set forth
in the Monsanto Settlement Agreement.
184. "SIP PLAN" means the Solutia Inc. Savings and Investment Plan,
dated September 1, 1997, as amended and restated from time to time.
185. "SOLUTIA TORT CLAIMS" means all Tort Claims other than Legacy
Tort Claims.
17
186. "SPINOFF" means the transaction contemplated by the Distribution
Agreement, whereby Pharmacia spun-off its Chemicals Assets and Chemicals
Liabilities to Solutia.
187. "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.
188. "STIPULATION OF AMOUNT AND NATURE OF CLAIM" means a stipulation
or other agreement between a Debtor or Reorganized Debtor, subject to Section
VIII.B hereof, 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.
189. "STOCK POOL" means 46.6% of the New Common Stock to be
Distributed to the Holders of Allowed Noteholder Claims and Allowed General
Unsecured Claims, which pool may be decreased or increased from time to time
as set forth in Section VII.M hereof.
190. "SUBSIDIARY" or "SUBSIDIARIES" means the direct and indirect
subsidiaries of Solutia.
191. "TOLBERT SETTLEMENT AGREEMENT" means that certain settlement
agreement, dated September 9, 2003, resolving the lawsuit captioned Tolbert v.
Monsanto Company, Civil Action No. 01-C-1407-S.
192. "TORT CLAIMS" means all Claims, whether currently asserted or
asserted in the future, whether known or unknown, arising under tort law for
personal injury or property damage arising from exposure to chemicals or other
substances regardless of whether: (a) 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; (b) such holder has filed a proof of claim in the Chapter 11
Case; or (c) the alleged exposure occurred before or after the Spinoff.
193. "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.
194. "UNDELIVERABLE DISTRIBUTION" means a Distribution of New Common
Stock, Warrants 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.
195. "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).
196. "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.
197. "UNIMPAIRED CLAIM" means a Claim classified in an Unimpaired
Class.
198. "UNIMPAIRED CLASS" means each of Classes 1, 2, 4, 6, 7, 8, 9 and
10 as set forth in Article III of the Plan.
18
199. "UNITED STATES OF AMERICA" means the United States of America
and all of its agencies, subdivisions and instrumentalities.
200. "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.
201. "VOTING AGENT" means Financial Balloting Group LLC, 757 Third
Avenue, 3rd Floor, New York, New York 10017.
202. "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.
203. "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.
204. "WARRANTS" means the warrants to be issued on the Effective Date
pursuant to the terms of the Warrant Agreement to purchase up to 7.5% of the
New Common Stock at a strike price of $29.70.
205. "WARRANT AGREEMENT" means that certain warrant agreement, dated
as of the Effective Date, governing the Warrants to be issued by Reorganized
Solutia, in substantially the form annexed hereto as Exhibit N.
19
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.
20
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 hereof,
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 Note Claims Impaired Yes
Class 4 Convenience Claims Unimpaired No (deemed to accept)
Class 5 CPFilms Claims Impaired Yes
Class 6 NRD Claims Unimpaired No (deemed to accept)
Class 7 Insured Claims Unimpaired No (deemed to accept)
Class 8 Tort Claims Unimpaired No (deemed to accept)
Class 9 Legacy Site Claims Unimpaired No (deemed to accept)
Class 10 Equity Interests in all Debtors Unimpaired No (deemed to accept)
other than Solutia
Class 11 Monsanto Claim Impaired Yes
Class 12 Noteholder Claims Impaired Yes
Class 13 General Unsecured Claims Impaired Yes
Class 14 Retiree Claim Impaired Yes
Class 15 Pharmacia Claims Impaired Yes
Class 16 Non-Debtor Intercompany Claims Impaired No (deemed to accept)
Class 17 Debtor Intercompany Claims Impaired No (deemed to accept)
Class 18 Axio Claims Impaired No (deemed to reject)
Class 19 Security Claims Impaired Yes
Class 20 Equity Interests in Solutia Impaired Yes
21
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 or in
Sections V.B.6, V.B.7 or V.B.13 hereof, 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 Credit Facility, 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 or in Sections V.B.6, V.B.7 or V.B.13 hereof, 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 III.A 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.
22
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 hereof, 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 hereof.
23
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. 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.
24
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 CLAIMS (CLASS 3)
A. TREATMENT:
On the Effective Date or on the date that the
Allowed amount of the Senior Secured Notes Claims is determined pursuant to a
Final Order, whichever is later, Reorganized Solutia shall (i) pay the Allowed
secured amount of the Senior Secured Note Claims in Cash in full and (ii) at
Solutia's option, on account of the Allowed unsecured amount of the Senior
Secured Note Claims, if any, either (A) pay the Allowed Unsecured Claim in
Cash in full or (B) distribute New Common Stock on a Pro Rata basis, inclusive
of the General Unsecured Claims and the Noteholder Claims, to the Holders of
such unsecured Claims. To the extent that a Pro Rata distribution of New
Common Stock to the Senior Secured Noteholders on account of the Allowed
unsecured amount of the Senior Secured Note Claims results in a deficiency,
the deficiency will be paid by Solutia in Cash in full.
B. VOTING:
Class 3 is Impaired by the Plan. Pursuant to
section 1126(a) of the Bankruptcy Code, each Holder of an Allowed Senior
Secured Note Claim in Class 3 is 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. CPFILMS CLAIMS (CLASS 5)
A. TREATMENT:
On the Effective Date, or as soon thereafter as
reasonably practicable, each Holder of an Allowed CPFilms Claim shall receive
Cash in the amount of such Holder's Allowed CPFilms Claim plus simple interest
at a rate of 8% per annum, which interest shall accrue from the Petition Date
through the Effective Date.
25
B. VOTING:
Class 5 is Impaired by the Plan. Pursuant to
section 1126(a) of the Bankruptcy Code, each Holder of an Allowed CPFilms
Claim in Class 5 is entitled to vote to accept or reject the Plan.
6. NRD CLAIMS (CLASS 6)
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 Monsanto Settlement Agreement, provided,
--------
however, that such allocations are solely as between Solutia and Monsanto and
- -------
nothing in the Monsanto Settlement Agreement shall impair or adversely affect
the NRD Claims.
B. VOTING:
Class 6 is Unimpaired by the Plan. Pursuant to
section 1126(f) of the Bankruptcy Code, each Holder of an Allowed NRD 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. INSURED CLAIMS (CLASS 7)
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 7 is Unimpaired by the Plan. Pursuant to
section 1126(f) of the Bankruptcy Code, each Holder of an Allowed Insured
Claim in Class 7 is conclusively presumed to have accepted the Plan and is not
entitled to vote to accept or reject the Plan.
8. TORT CLAIMS (CLASS 8)
A. TREATMENT:
The Tort Claims shall be unaffected by the Chapter
11 Cases, this Plan or the Plan Documents. After the Effective Date, the Tort
Claims shall be resolved pursuant to applicable law and in the ordinary course
of business. Payment of the Tort Claims, in accordance with the Monsanto Tort
Management, will be allocated between Reorganized Solutia and Monsanto
pursuant to the terms of the Monsanto Settlement Agreement, provided, however,
-------- -------
that such allocations are solely as between Solutia and Monsanto and nothing
in the Monsanto Settlement Agreement shall impair or adversely affect the Tort
Claims. For the sake of clarity, pursuant to the Monsanto Settlement
Agreement, Monsanto shall
26
take financial responsibility, as between itself and Reorganized Solutia only,
for the management and payment of the Legacy Tort Claims, including all costs
related to the defense, mediation, arbitration, settlement, and any judgment
with respect to the Legacy Tort Claims and Reorganized Solutia shall be
financially responsible for the Solutia Tort Claims, if any.
B. VOTING:
Class 8 is Unimpaired by the Plan. Pursuant to
section 1126(f) of the Bankruptcy Code, each Holder of an Allowed Tort Claim
in Class 8 is conclusively presumed to have accepted the Plan and is not
entitled to vote to accept or reject the Plan.
9. LEGACY SITE CLAIMS (CLASS 9)
A. TREATMENT:
On the Effective Date, in accordance with the
Monsanto Settlement Agreement, Monsanto shall take financial responsibility,
as between itself and Reorganized Solutia only, for the management and payment
of the Legacy Site Claims. Reorganized Solutia shall use all reasonable
efforts to enforce against Monsanto the provisions of the Monsanto Settlement
Agreement and other Plan documents pertaining to the Legacy Sites.
Notwithstanding any other provision of the Plan, Monsanto Settlement
Agreement, Confirmation Order, or other Plan Documents, including but not
limited to Article X of the Plan, any governmental unit holding Claims related
to Environmental Liabilities with respect to Legacy Sites may apply to any
court of competent jurisdiction for an order to require Solutia to enforce
against Monsanto the provisions of the Monsanto Settlement Agreement
pertaining the Legacy Site Claims subject to all applicable defenses,
counterclaims, offsets and other rights of Monsanto; provided, however, that
-------- -------
Reorganized Solutia's financial situation or ability to pay shall not be a
defense to any such action.
B. VOTING:
Class 9 is Unimpaired by the Plan. Pursuant to
section 1126(f) of the Bankruptcy Code, each Holder of an Allowed Legacy Site
Claim in Class 9 is conclusively presumed to have accepted the Plan and is not
entitled to vote to accept or reject the Plan.
10. EQUITY INTERESTS IN ALL DEBTORS OTHER THAN SOLUTIA (CLASS 10)
A. TREATMENT:
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 10 is Unimpaired by the Plan. Pursuant to
section 1126(f) of the Bankruptcy Code, Holders of Equity Interests in all
Debtors other than Solutia are conclusively presumed to have accepted the Plan
and are not entitled to vote to accept or reject the Plan.
27
11. MONSANTO CLAIM (CLASS 11)
A. TREATMENT:
On the Effective Date, Monsanto shall receive $175
million in Cash from the Debtors; provided, however, that if the Cash proceeds
-------- -------
received by the Debtors from the Equity Purchase are less than $175 million,
then Monsanto shall receive, from the Debtors, on the Effective Date: (i) an
amount of Cash equal to the aggregate amount of Cash proceeds received by the
Debtors from the Equity Purchase; and (ii) a number of shares of New Common
Stock equal to the difference between (A) 17% of New Common Stock and (B) the
number of shares of New Common Stock issued to Holders of Equity Interests in
Solutia in connection with the Equity Purchase. In addition, Monsanto shall
have an Allowed Administrative Claim for all documented out of pocket
Environmental Liabilities spent by Monsanto related to the Retained Sites, and
to the Shared Sites in excess of $50 million during the Chapter 11 Cases.
B. VOTING:
Class 11 is Impaired by the Plan. Pursuant to
section 1126(a) of the Bankruptcy Code, the Holder of the Monsanto Claim in
Class 11 is entitled to vote to accept or reject the Plan.
12. NOTEHOLDER CLAIMS (CLASS 12)
A. TREATMENT:
On the Effective Date, and, subsequently, after
Disputed General Unsecured Claims are resolved, in accordance with Section
VII.E.1 hereof, each Holder of an Allowed Noteholder Claim shall receive its
Pro Rata share, inclusive of the General Unsecured Claims and the Allowed
unsecured amount of the Senior Secured Note Claims, if any, of the Stock Pool.
In addition, on the Effective Date, each Holder of an Allowed Noteholder Claim
shall receive its Pro Rata share of 2% of the New Common Stock. Each Holder of
a Noteholder Claim that is an Eligible Holder also shall be deemed entitled to
participate in the Rights Offering pursuant to the terms of the Rights
Offering Procedures. Any Distribution to Holders of Allowed Noteholder Claims
shall, however, be reduced, after transmission to the Prepetition Indenture
Trustee, on account of the Prepetition Indenture Charging Lien, because, and
to the extent that the fees and expenses of the Prepetition Indenture Trustee
will not be paid in full by the Debtors (as set forth in Section V.B.13
hereof), provided, however, that any such reduction by reason of the
-------- -------
Prepetition Indenture Charging Lien shall not be reflected in determining the
Pro Rata shares of the Stock Pool designated for Allowed General Unsecured
Claims and Allowed Noteholder Claims.
B. VOTING:
Class 12 is Impaired by the Plan. Pursuant to
section 1126(a) of the Bankruptcy Code, Holders of Noteholder Claims in Class
12 are entitled to vote to accept or reject the Plan.
13. GENERAL UNSECURED CLAIMS (CLASS 13)
A. TREATMENT:
On the Effective Date and, subsequently, after
Disputed General Unsecured Claims are resolved, each Holder of an Allowed
General Unsecured Claim shall receive its Pro Rata share, inclusive of the
Noteholder Claims and the Allowed unsecured amount of the Senior Secured Note
Claims, if any, of the Stock Pool. In addition, each Holder of an Allowed
General Unsecured Claim that
28
is an Eligible Holder shall be entitled to participate in the Rights Offering
pursuant to the terms of the Rights Offering Procedures. Furthermore, each
Holder of a General Unsecured Claim that is an Eligible Claim Transfer Holder
shall be entitled to elect the Claim Transfer Option pursuant to the terms of
the Claim Transfer Procedures.
B. VOTING:
Class 13 is Impaired by the Plan. Pursuant to
section 1126(a) of the Bankruptcy Code, Holders of General Unsecured Claims in
Class 13 are entitled to vote to accept or reject the Plan.
14. RETIREE CLAIM (CLASS 14)
A. TREATMENT:
Subject to the terms of the Retiree Settlement
Agreement, on the Effective Date Reorganized Solutia shall contribute the
number of shares of New Common Stock required to be contributed to a trust
established for the benefit of the Retirees pursuant to and in accordance with
the terms of the Retiree Settlement Agreement. 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 14 is Impaired by the Plan. Pursuant to section
1126(a) of the Bankruptcy Code and in accordance with the Retiree Settlement
Agreement and the Retiree Approval Order, the Retirees' Committee or its duly
authorized agent is entitled to vote to accept or reject the Plan.
15. PHARMACIA CLAIMS (CLASS 15)
A. TREATMENT:
Holders of Pharmacia Claims will receive
Distributions in the form of a limited indemnity and release under the Plan on
account of such Claims.
B. VOTING:
Class 15 is Impaired by the Plan. Pursuant to
section 1126(a) of the Bankruptcy Code, Holders of Pharmacia Claims in Class
15 shall be entitled to vote to accept or reject the Plan.
16. NON-DEBTOR INTERCOMPANY CLAIMS (CLASS 16)
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 each such Claim shall be
Reinstated by virtue of book entries without a Distribution of Cash or other
consideration on account of such Claim.
29
B. VOTING:
Class 16 is Impaired by the Plan. Notwithstanding
the foregoing, the Holders of Non-Debtor Intercompany Claims, by virtue of
their status as non-Debtor Affiliates of Solutia, are deemed to accept the
Plan.
17. DEBTOR INTERCOMPANY CLAIMS (CLASS 17)
A. TREATMENT:
On the Effective Date or as soon thereafter as
reasonably practicable, the Debtor Intercompany Claims will be (i) eliminated
or waived based on accounting entries in the Debtors' books and records and
other corporate activities by the Debtors in their discretion or (ii)
discharged with no Distributions thereon. There will be no Distributions on
account of any of the Debtor Intercompany Claims.
B. VOTING:
Class 17 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.
18. AXIO CLAIMS (CLASS 18)
A. TREATMENT:
Holders of Axio Claims will receive no
Distributions under the Plan on account of such Claims.
B. VOTING:
Class 18 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 18 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.
19. SECURITY CLAIMS (CLASS 19)
A. TREATMENT:
Holders of Security Claims will receive their Pro
Rata share of the Distributions provided to Holders of Equity Interests in
Solutia in Class 20.
B. VOTING:
Class 19 is Impaired by the Plan. Pursuant to
section 1126(a) of the Bankruptcy Code, Holders of Security Claims in Class 19
shall be entitled to vote to accept or reject the Plan.
20. EQUITY INTERESTS IN SOLUTIA (CLASS 20)
30
A. TREATMENT:
On the Effective Date or as soon thereafter as
reasonably practicable, each Holder of common stock of Solutia will receive
its Pro Rata share of: (i) 1% of New Common Stock, provided that such Holder
--------
owns at least 175 shares of common stock in Solutia, which would entitle the
Holder to receive one whole share of New Common Stock; (ii) Warrants, provided
--------
that such Holder owns at least 24 shares of common stock in Solutia, which
would entitle the Holder to receive a Warrant; (iii) Equity Purchase Rights,
provided that such Holder owns at least 11 shares of common stock in Solutia,
- --------
which would entitle the Holder to receive an Equity Purchase Right to acquire
one share of New Common Stock; and (iv) Claim Transfer Rights, provided that
--------
such Holder owns at least 107 shares of common stock in Solutia, which would
entitle the Holder to receive a Claim Transfer Right. Holders of Equity
Interests (other than Holders of common stock in Solutia) must convert their
Equity Interests into common stock to participate in the Distributions
provided hereunder. As of the Effective Date, all existing Equity Interests in
Solutia will be cancelled pursuant to the Plan.
B. VOTING:
Class 20 is Impaired by the Plan. Pursuant to
section 1126(a) of the Bankruptcy Code, Holders of common stock of Solutia,
whose ownership interest would entitle them to receive Distributions under
this subsection of the Plan, shall be entitled to vote to accept or reject the
Plan.
31
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 3, 5, 11, 12, 13, 14, 15, 19 and 20 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, 4, 6, 7, 8, 9 and
10 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. Class 18 is not entitled to receive or retain any
property of the Debtors, are not entitled to vote and are deemed to have
rejected the Plan. Classes 16 and 17 are Impaired Classes and deemed to have
accepted 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.
32
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. THE GLOBAL SETTLEMENT
As discussed in detail in Article VIII 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 the agreements set forth in the Plan Support Agreement, and as a result of
arm's-length negotiations with the Retirees' Committee, the Creditors'
Committee, the Ad Hoc Notes Committee, the Prepetition Indenture Trustee, the
Ad Hoc Trade Committee and the Equity 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
Claim 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, (c) the Retirees
including all Claims to post-employment and other benefits asserted by the
Retirees, (d) the Prepetition Indenture Trustee, including the Prepetition
Indenture Trustee Adversary Proceeding, (e) the Ad Hoc Notes Committee,
including the Prepetition Indenture Trustee Adversary Proceeding and the
Equity Committee Adversary Proceeding and (f) the Equity Committee, including
the Equity Committee Adversary Proceeding; provided, however, that the
-------- -------
provisions of the Plan 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. 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 other
liabilities or obligations of the Debtors arising thereunder or related
thereto shall be (a) discharged, (b) released and not survive the Chapter 11
Cases and (c) deemed to be included in the Monsanto Claim 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; notwithstanding the
foregoing, but subject to any rights under the Plan, the Monsanto Settlement
Agreement and the Plan Documents, neither Monsanto, Pharmacia nor any other
Person or Entity shall be entitled to assert any claim or Claim against any of
the Debtors or
33
Reorganized Debtors or their respective property with respect to any debts,
liabilities, guarantees, assurances, commitments or obligations assumed by
Solutia under the Distribution Agreement.
2. MONSANTO SETTLEMENT AGREEMENT
Subject to the conditions contained therein, the Monsanto
Settlement Agreement will become effective and binding on the Effective Date.
As an element of the Monsanto Contribution, Monsanto shall, pursuant to the
Monsanto Settlement Agreement, agree to (a) as between itself and Solutia
only, fund various environmental remediation projects and perform various
environmental remediation activities related to the Legacy Sites and the
Shared Sites, (b) take financial responsibility, as between itself and
Reorganized Solutia only, for the management and payment of the Legacy Tort
Claims, all as more fully set forth in the Monsanto Settlement Agreement, and
(c) 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 Monsanto Settlement Agreement. Subject to the terms of
the Monsanto Settlement Agreement, the Monsanto Settlement Agreement and the
Commercial and Operating Agreements (as modified by the Chocolate Bayou
Settlement) shall constitute an integrated and unitary executory contract. The
funding allocations in the Monsanto Settlement Agreement are solely as between
Solutia and Monsanto and do not impair or adversely affect any claim, cause of
action, or right of a government agency related to Environmental Liabilities
with respect to the Retained Sites or the Shared Sites.
3. COMMERCIAL AND OPERATING AGREEMENTS
On the Effective Date, the Commercial and Operating
Agreements (as modified by the Chocolate Bayou settlement) 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.
4. 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 Legacy 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 Legacy Tort
Claims and shall indemnify Reorganized Solutia, pursuant to the terms of the
Monsanto Settlement Agreement, with respect to such Legacy Tort Claims. In
addition, since the Petition Date, Monsanto has paid all costs arising in
connection with the Legacy Tort Claims.
5. MONSANTO'S SETTLEMENT OF ADVERSARY PROCEEDINGS, CONTESTED MATTERS,
DISPUTES AND MONSANTO CLAIMS
Subject to the terms of the Plan, the Monsanto Settlement
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 Claim.
6. MONSANTO'S PROFESSIONALS
34
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.
7. MONSANTO ADMINISTRATIVE CLAIM
Monsanto shall have an Allowed Administrative Claim for all
documented out of pocket Environmental Liabilities spent by Monsanto related
to the Retained Sites and to the Shared Sites in excess of $50 million during
the Chapter 11 Cases.
8. PHARMACIA CONTRIBUTION
Pursuant to the Confirmation Order, and except for the
limited indemnities in favor of Pharmacia expressly set forth in the Monsanto
Settlement 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; notwithstanding the foregoing, but
subject to any rights under the Plan, the Monsanto Settlement Agreement and
the Plan Documents, 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.
9. 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.
10. SETTLED ADVERSARY PROCEEDINGS
On the Effective Date, by agreement among the various
parties to the Settled Adversary Proceedings, all of the Settled Adversary
Proceedings shall be deemed dismissed or withdrawn with prejudice.
35
11. SETTLEMENT OF THE PREPETITION TRUSTEE ADVERSARY PROCEEDING
On the Effective Date, by agreement among the various
parties to the Prepetition Trustee Adversary Proceeding as reflected in the
Plan Support Agreement, the Prepetition Trustee Adversary Proceeding shall be
deemed dismissed or withdrawn with prejudice and the Prepetition Indenture
Trustee and the Ad Hoc Notes Committee shall be deemed to have waived and
released any and all adversary proceedings, suits, claims, objections or
causes of action, including any appeals related thereto, against Solutia,
Reorganized Solutia, Monsanto and Pharmacia.
12. SETTLEMENT OF THE EQUITY COMMITTEE ADVERSARY PROCEEDING
On the Effective Date, by agreement among the various
parties to the Equity Committee Adversary Proceeding as reflected in the Plan
Support Agreement, the Equity Committee Adversary Proceeding shall be deemed
dismissed or withdrawn with prejudice and the Equity Committee shall be deemed
to have waived and released any and all adversary proceedings, suits, claims,
objections or causes of action, including any appeals related thereto, against
Solutia, Reorganized Solutia, Monsanto and Pharmacia.
13. PAYMENT OF PROFESSIONAL FEES
Notwithstanding the requirements of Sections III.A.1.d,
V.B.6 and V.B.7 hereof, which shall not apply to payments made under this
Section, on the Effective Date, Reorganized Solutia shall pay, as Allowed
Administrative Expense Claims, upon the presentation of invoices to the
Debtors and the Creditors' Committee by no later than five (5) days after the
Confirmation Date, the reasonable fees and expenses incurred on or prior to
August 14, 2007 by (a) the professionals who provided services to the
Prepetition Indenture Trustee and to the Ad Hoc Notes Committee, in an amount
up to $8 million in the aggregate, (b) Brown Rudnick Berlack Israels LLP,
counsel to the Ad Hoc Trade Committee, in an amount up to $2 million and (c)
Haynes and Boone, LLP, counsel to Highland Capital Management, LP. Such
professionals shall not be required to file any fee applications or other
requests with the Bankruptcy Court for the payment of such fees; provided,
--------
however, that if any objection is raised by either the Debtors or the
- -------
Creditors' Committee (the only parties entitled to object) as to whether the
amount to be paid by the Estates on account of the fees and/or expenses is
reasonable in light of the services rendered that cannot be resolved within
twenty (20) days of service of the invoices, then the party objecting to the
payment of such fees and/or expenses shall file and serve upon the relevant
professional firm(s), within twenty (20) days of service of the invoices, an
objection with the Bankruptcy Court requesting that the Bankruptcy Court
determine whether the amount to be paid by the Estates on account of the fees
and/or expenses is reasonable in light of the services rendered; provided,
--------
further, however, that no fees shall be paid until the later of (i) the twenty
- ------- -------
(20) day period having lapsed with no objections having been filed with
respect to such fees and/or expenses and (ii) a Final Order resolving any such
objection filed with respect to such fees and/or expenses having been entered
by the Bankruptcy Court.
Notwithstanding the forgoing, nothing herein modifies or
limits the Prepetition Indenture Charging Lien. To the extent that
professional fees and expenses are paid by the Debtors under the Plan on
account of the fees and expenses of the Prepetition Indenture Trustee,
including but not limited to the fees and expenses of the professionals
engaged by or on behalf of the Prepetition Indenture Trustee under the
Prepetition Indenture, then such amount paid shall reduce any amount due under
or subject to the Prepetition Indenture Charging Lien. To the extent that the
professional fees and expenses allocated to be paid by the Debtors under the
Plan on account of the fees and expenses of the Prepetition Indenture Trustee,
including but not limited to the fees and expenses of the professionals
engaged by or on behalf of the Prepetition Indenture Trustee under the
Prepetition Indenture, are subject to an objection as authorized in the
preceding paragraph, then the Prepetition Indenture Trustee may withhold such
amounts from
36
Distributions to Holders of Noteholder Claims until such time as the objection
is resolved, thereby insuring that the Prepetition Indenture Charging Lien
claim is paid in full; provided, however, that any such reduction by reason of
-------- -------
the Prepetition Indenture Charging Lien shall not be reflected in determining
the Pro Rata shares of the Stock Pool designated for Allowed General Unsecured
Claims and Allowed Noteholder Claims.
As soon as reasonably practicable after the Effective Date,
and subject to the terms of this paragraph, Reorganized Solutia shall pay, as
Allowed Administrative Expense Claims upon the presentation of invoices to
Reorganized Solutia, Monsanto, the Creditors' Committee, the Retirees'
Committee, the Ad Hoc Notes Committee, the Ad Hoc Trade Committee, the Equity
Committee, the Prepetition Indenture Trustee and the Bankruptcy Court: (a) the
reasonable hourly and monthly fees and documented out of pocket expenses
incurred by the following professionals during the period from August 15, 2007
through the Effective Date: Hennigan, Bennett & Dorman LLP, counsel to the Ad
Hoc Notes Committee; The Blackstone Group, financial advisor to the Ad Hoc
Notes Committee; Reed Smith LLP, counsel to the Prepetition Indenture Trustee;
Haynes and Boone LLP, counsel to Highland Capital Management; and Brown
Rudnick Berlack Israels LLP, counsel to the Ad Hoc Trade Committee; and (b)
the documented out of pocket expenses incurred by the Prepetition Indenture
Trustee during the period from August 15, 2007 through the Effective Date. The
foregoing professionals shall not be required to file any fee applications or
other requests with the Bankruptcy Court in connection with the payment of
such fees and expenses; provided, however, that if any dispute between any of
-------- -------
Reorganized Solutia, Monsanto, the Creditors' Committee, the Retirees'
Committee, the Ad Hoc Notes Committee, the Ad Hoc Trade Committee, the Equity
Committee and the Prepetition Indenture Trustee and any of the foregoing
professionals regarding such professional fees cannot be resolved within
twenty (20) days of service of the statements, then the party objecting to the
payment of such fees and/or expenses shall, within twenty (20) days of service
of the statements, file an objection with the Bankruptcy Court requesting that
the Bankruptcy Court determine the reasonable amount of fees to be paid to
such professional. No fees shall be paid until the later of (i) the twenty
(20) day period having lapsed with no objections having been filed with
respect to such fees and/or expenses and (ii) a Final Order resolving any
objection filed with respect to such fees and/or expenses having been entered
by the Bankruptcy Court. Any such objection will be heard at the hearing
before the Bankruptcy Court to consider the final fee applications of the
Professionals.
14. SOLUTIA'S ASSUMPTION OF CERTAIN ENVIRONMENTAL LIABILITIES
Any Claim, cause of action, or right of a governmental
agency related to Environmental Liabilities with respect to the Shared Sites
and 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 13, shall be reinstated and unaffected by the
Chapter 11 Cases and shall be liquidated or adjudicated pursuant to applicable
law and in the ordinary course of business. 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 Monsanto Settlement 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 Monsanto Settlement 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 Monsanto Settlement
Agreement, be financially responsible, as between themselves, for
Environmental Liability Costs with respect to the Shared Sites. Nothing in the
Monsanto Settlement Agreement's provisions for the Retained Sites or Shared
Sites shall impair or adversely affect any claim, cause of action, or right of
a governmental agency related to Environmental Liabilities with respect to the
Retained Sites or the Shared Sites.
37
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, 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
38
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. The initial Board of Directors of Reorganized Solutia shall consist
of nine (9) members. One member shall be the Chief Executive Officer of
Reorganized Solutia, Jeffry N. Quinn. One member shall be designated by each
of the following: Monsanto; the Creditors' Committee; and the Ad Hoc Notes
Committee. One member shall be designated by Solutia from among the members of
the current Solutia Board. With respect to the remaining four members of the
initial Board of Directors of Reorganized Solutia, Solutia will work with SSI
(U.S.), Inc. d/b/a Spencer Stuart, a nationally recognized executive search
firm that will assist in the selection of these members. These members will be
selected by a majority vote of a five-member committee, subject to Monsanto's
consent, which shall not be unreasonably withheld, that consists of the
following: one representative of Solutia; one representative of the Creditors'
Committee; one representative of the Ad Hoc Trade Committee; and two
representatives of the Ad Hoc Notes Committee. In addition, for so long as
Monsanto continues to hold at least 5% of New Common Stock, Monsanto shall
have the right to nominate a candidate to be included on the slate of
directors to be submitted to shareholders for election to subsequent Boards of
Directors of Reorganized Solutia pursuant to the terms of the New Certificates
of Incorporation, New By-laws and other constituent documents of Reorganized
Solutia.
All members of the Reorganized Solutia Board of Directors
(other than the Chief Executive Officer) shall satisfy the independence
standards that are applicable for purposes of the securities exchange or
quotation system on which the shares of Reorganized Solutia will be listed.
Pursuant to section 1129(a)(5) of the Bankruptcy Code, the Debtors will
disclose in the Plan Supplement 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. 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
39
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 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. All
Persons receiving Distributions of New Common Stock or rights to purchase New
Common Stock in whatever form 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 or any other applicable
securities exchange or quotation system.
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, 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. THE RIGHTS OFFERING
1. USE OF RIGHTS OFFERING PROCEEDS
The proceeds of the Rights Offering will be used to provide
(a) $175 million in Cash funding for the Retiree Trust (as defined in the
Retiree Settlement Agreement) and (b) $75 million in funding to Funding Co.
2. RIGHTS OFFERING PROCEDURES
Eligible Holders will be entitled to subscribe for and to
acquire 85% of the Rights being offered pursuant to the Rights Offering plus
any of the Rights in the Backstop Pool not acquired by the members of the
Backstop Group, subject to the Backstop Commitment Agreement and in accordance
with the terms of the Rights Offering Procedures.
3. RIGHTS OFFERING BACKSTOP
The Backstop Group has agreed to backstop the Rights
Offering in accordance with the terms of the Backstop Commitment Agreement in
exchange for a $6.25 million backstop fee and the right
40
to subscribe for and to acquire up to 100% of the Backstop Pool, in accordance
with the terms of the Rights Offering Procedures and the Backstop Commitment
Agreement.
I. FUNDING CO
In accordance with the terms of the Monsanto Settlement Agreement, on
the Effective Date, Reorganized Solutia will establish Funding Co with $75
million in proceeds from the Rights Offering remaining after funding the
Retiree Trust (as defined in the Retiree Settlement Agreement). In accordance
with the terms of the Monsanto Settlement Agreement, $50 million of these
funds will be used to pay for Environmental Liabilities related to the Shared
Sites and $25 million will remain in an unallocated account to be used to
offset Reorganized Solutia's legacy environmental, OPEB liabilities and other
legacy liabilities.
J. INCENTIVE PLAN
As of the Effective Date, the Incentive Plan shall be adopted and
deemed adopted by Reorganized Solutia. The terms of the Incentive Plan will be
contained in the Plan Supplement.
K. 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 hereof, 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; provided, however, that nothing herein shall
-------- -------
release the charging Lien of the Senior Secured Notes Trustee against
Distributions to be made hereunder to Holders of Senior Secured Note Claims.
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.
L. 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 Noteholder Claims,
as permitted by section 1123(a)(5)(F) of the Bankruptcy Code, and (5) Equity
Interests in Solutia and those Debtors whose stock is to be canceled pursuant
to the Restructuring 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; provided, however, that any such agreement
-------- -------
that governs the rights of the Holder of a Noteholder Claim will continue in
effect solely for purposes of (a) allowing the Prepetition Indenture Trustee,
pursuant and
41
subject to the Prepetition Indenture, to make the Distributions to be made on
account of such Noteholder Claims under the Plan; (b) permitting the
Prepetition Indenture Trustee to maintain and enforce its Prepetition
Indenture Charging Lien against property distributed on account of Noteholder
Claims pursuant to the Plan or any property other than the Reorganized
Debtors' property for fees, costs, and expenses under such Prepetition
Indenture or any other agreement, and (c) governing the rights and obligations
of non-Reorganized Debtor parties to such agreements, vis-a-vis each other;
provided, further, however, that the Senior Secured Notes and the Senior
- -------- ------- -------
Secured Indenture shall continue in effect solely for the purposes of (x)
allowing the Holders of the Senior Secured Notes to receive their
Distributions hereunder, (y) allowing the Senior Secured Notes Trustee to make
the Distributions, if any, to be made on account of the Senior Secured Notes
and (z) permitting the Senior Secured Notes Trustee to assert its charging
Lien against such Distributions for payment of the Senior Secured Notes
Trustee's fees and expenses. Upon completion of all such Distributions under
this Plan and actions set forth pursuant to this Section IV.L, the 2027 Notes
and the 2037 Notes, the Prepetition Indenture, the Senior Secured Notes and
the Senior Secured Notes Indenture shall terminate completely.
M. LIMITATIONS ON TRANSFERS OF EQUITY INTERESTS IN SOLUTIA DURING THE CHAPTER
11 CASES
Nothing contained herein shall alter the terms of, or requirement
that Holders of Equity Interests in Solutia comply with, that certain Order
Pursuant to Sections 105(a), 362(a)(3) and 541 of the Bankruptcy Code (A)
Limiting Certain Transfers of Equity Interests in Solutia Inc. and (B)
Approving Related Notice Procedures, dated February 21, 2006.
N. EFFECTUATING DOCUMENTS
The Chief Executive Officer, President, Chief Financial Officer,
General Counsel, Senior Vice Presidents or any Vice Presidents 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.
O. EMPLOYMENT AND OTHER BENEFITS PROGRAMS
All employment, retirement, indemnification and other agreements, or
arrangements in place as of the Effective Date with the Debtors' 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, 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. On the Effective Date, Solutia will
be authorized to elect to exercise its existing options to purchase tail
coverage in connection with its (a) directors and officers liability and (b)
fiduciary liability insurance policies. Notwithstanding any provision of this
Plan to the contrary, the Debtors and Reorganized Solutia will indemnify the
current and former officers and members of Solutia's board of directors
against any liabilities arising out of or related to the offering or
registration of New Common Stock hereunder.
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.
42
As of the Effective Date, the Retiree Benefits shall be modified in
accordance with the Retiree Settlement Agreement.
43
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.3 hereof, (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
20 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 objection by a
counterparty to an Executory Contract or Unexpired Lease to a proposed
assumption or related cure amount must be
44
filed, served and actually received by the Debtors at least 10 days prior to
the Confirmation Hearing. Any counterparty to an Executory 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.
Notwithstanding any other provision contained herein, the Plan shall not
affect the rights, if any, to insurance coverage for breaches of fiduciary
duties related to the SIP Plan.
1. ACE SETTLEMENT
Notwithstanding anything to the contrary in the Plan or the
Confirmation Order: (a) on the Effective Date, the Debtors and the Reorganized
Debtors shall assume the ACE Insurance Program; and within 15 days of the
Effective Date, the Debtors and the Reorganized Debtors shall pay the cure
costs related to such assumption, as set forth in the ACE Settlement
Agreement; (b) subject to entry of an order by the Bankruptcy Court approving
the ACE Settlement Agreement, (i) the ACE Insurance Program will survive and
shall not be amended, modified, waived or impaired in any respect by the Plan,
the Confirmation Order, the Monsanto Settlement Agreement or otherwise without
the prior written agreement of the ACE Companies; (ii) the claims of the ACE
Companies arising under the ACE Insurance Program shall be Allowed
Administrative Expense Claims, which are payable in the ordinary course of
business, and shall not be discharged or released by the Plan or the
Confirmation Order; (iii) the ACE Companies shall not be required to file or
serve a request for payment of any Administrative Expense Claim and shall not
be subject to the Administrative Expense Claim Bar Date; and (iv) to the
extent of any inconsistency between the ACE Settlement Agreement and the Plan,
the Disclosure Statement, the Confirmation Order or any other document,
agreement or order, the terms of the ACE Settlement Agreement will control;
and (c) nothing in the Plan or the Confirmation Order shall be construed as,
or is, a determination as to coverage under the ACE Insurance Program.
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
Monsanto Settlement Agreement, the Monsanto Settlement Agreement shall
control. To the extent provided in the Monsanto Settlement 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'
45
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.
46
ARTICLE VII
PROVISIONS GOVERNING DISTRIBUTIONS
A. ALLOWED NOTEHOLDER CLAIMS
The Noteholder Claims shall be deemed Allowed in the aggregate amount
of $455.4 million, allocated as follows: (a) $303.7 million on account of the
2027 Notes; and (b) $151.7 million on account of the 2037 Notes.
B. 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.
C. DISTRIBUTIONS FOR HOLDERS OF EQUITY INTERESTS IN SOLUTIA
Except as otherwise provided herein or as may be ordered by the
Bankruptcy Court, Distributions to be made on account of Equity Interests in
Solutia shall be made on the Effective Date, or as soon as reasonably
practicable thereafter.
D. 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.
E. DELIVERY AND DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED DISTRIBUTIONS
1. DELIVERY OF DISTRIBUTIONS IN GENERAL
Distributions to Holders of Allowed Claims or Equity
Interests in Solutia shall be made at the address of the Holder of such Claim
or Equity Interest as indicated on the claims register maintained by the
Debtors' duly appointed claims agent or the stock register maintained by the
Debtors' stock transfer agent. Nonetheless, if such Holder holds such Claims
or Equity Interests through a Nominee, Distributions with respect to such
Claims or Equity Interests 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 Noteholder Claims shall be made to the Prepetition Indenture
Trustee for distribution to the Holders of such Claims, subject to the terms
and conditions of the Prepetition Indenture, including the Prepetition
Indenture Charging Lien, provided, further, however, that Distributions on
-------- ------- -------
account of the Senior Secured Note Claims shall be made to the Senior Secured
Notes Trustee for distribution to the Holders of such Claims, subject to the
terms and
47
conditions of the Senior Secured Notes Indenture, including the charging Lien
of the Senior Secured Notes Trustee.
To the extent that the Senior Secured Notes Trustee and/or
the Prepetition Indenture Trustee provides services to implement Distributions
pursuant to the Plan, the Senior Secured Notes Trustee and/or the Prepetition
Indenture Trustee will receive from the Reorganized Debtors, without further
Bankruptcy Court approval, reasonable compensation for such services and
reimbursement of reasonable expenses incurred in connection with such
services.
2. UNDELIVERABLE DISTRIBUTIONS
A. TREATMENT OF UNDELIVERABLE DISTRIBUTIONS
Reorganized Solutia shall distribute any
Undeliverable Distribution of New Common Stock required to be distributed to
Holders of Allowed General Unsecured Claims to the Disputed Claims Reserve.
Any Undeliverable Distribution of New Common Stock required to be distributed
to Holders of Equity Interests in Solutia shall become treasury stock of
Reorganized Solutia. Subject to Section VII.E.2.b hereof, 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 or Equity Interest
in Solutia that does not assert a claim pursuant to the Plan for an unclaimed
or Undeliverable Distribution within one year after the date such Distribution
is due shall be deemed to have forfeited its claim to such unclaimed or
Undeliverable Distribution and shall be forever 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 or Equity Interest in Solutia.
F. 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 with respect to dividends on or gains in respect of
shares held in the Disputed Claims Reserve 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.
G. RECORD DATE FOR DISTRIBUTION TO HOLDERS OF CLAIMS
At 4:30 p.m. (Eastern Time) 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 (other than
address changes). Moreover, Reorganized Solutia, the Prepetition Indenture
Trustee and the Senior Secured Notes Trustee shall have no obligation to
recognize the transfer of any of the 2027 Notes, the 2037 Notes or Senior
Secured Notes 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.
48
H. RECORD DATE FOR DISTRIBUTION TO HOLDERS OF EQUITY INTERESTS IN SOLUTIA
At 4:30 p.m. (Eastern Time) on the Distribution Record Date, the
stock register for the Holders of any Equity Interests in Solutia shall be
closed and there shall be no further changes in the record of Holders of any
Equity Interests in Solutia (other than address changes).
I. DISTRIBUTIONS OF WHOLE SHARES, WARRANTS, EQUITY PURCHASE RIGHTS AND CLAIM
TRANSFER RIGHTS ONLY
Notwithstanding any other provision of this Plan, only whole numbers
of shares of the New Common Stock, whole numbers of Warrants, whole numbers of
Equity Purchase Rights and whole numbers of Claim Transfer Rights will be
issued. When any Distribution on account of an Allowed Claim or Equity
Interests in Solutia would otherwise result in the issuance of a number of
shares of New Common Stock, Warrants, Equity Purchase Rights or Claim Transfer
Rights that is not a whole number, the actual Distribution of shares of such
stock, Warrants, Equity Purchase Rights or Claim Transfer Rights will be
rounded as follows: (1) fractions equal to or greater than one half will be
rounded to the next higher whole number and (2) fractions less than one half
will be rounded to the next lower number. The total number of shares of the
New Common Stock, Warrants, Equity Purchase Rights and Claim Transfer Rights
to be distributed to Holders of Allowed Claims or Equity Interests in Solutia
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,
Warrants, Equity Purchase Rights or Claim Transfer Rights totaling less than
the authorized number of shares of New Common Stock, Warrants or Equity
Purchase Rights, then any excess New Common Stock, Warrants, Equity Purchase
Rights or Claim Transfer Rights shall not be issued. No consideration shall be
provided in lieu of fractional shares, Warrants, Equity Purchase Rights or
Claim Transfer Rights that are rounded down pursuant to this Section.
J. 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 or Distributions 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.
K. 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, 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
Credit Facility, the agent under the DIP Credit Facility 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 Credit Facility. 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.E.2 hereof.
All payments to Holders of Senior Secured Note Claims shall only be
made to such Holders after the surrender by each such Holder of the Senior
Secured Notes certificates representing such Senior Secured Note Claims, or in
the event such certificate is lost, stolen, mutilated or destroyed, upon the
49
Holder's compliance with the requirements set forth below. Upon surrender of
such Senior Secured Notes certificates, the Senior Secured Notes Trustee shall
cancel and destroy such Senior Secured Notes. As soon as practicable after
surrender of the Senior Secured Notes certificates evidencing the Senior
Secured Notes Claims, the Senior Secured Notes Trustee shall distribute to the
Holder thereof such Holder's Pro Rata share of the Distribution, but subject
to the rights of the Senior Secured Notes Trustee to assert its charging Lien
against such Distribution. Any Holder of an Allowed Senior Secured Note Claim
evidenced by a certificate that has been lost, stolen, mutilated or destroyed
shall, in lieu of surrendering such certificate, deliver to the Senior Secured
Notes Trustee an affidavit of loss acceptable to the Senior Secured Notes
Trustee setting forth the unavailability of the certificate, and such
additional indemnity as may be required reasonably by the Senior Secured Notes
Trustee to hold the trustee harmless from any damages, liabilities or costs
incurred in treating such Holder as a Holder of an Allowed Claim. Upon
compliance with this procedure by a Holder of an Allowed Senior Secured Notes
Claim evidenced by such a lost, stolen, mutilated or destroyed certificate
such Holder shall, for purposes pursuant to the Plan, be deemed to have
surrendered such certificate.
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.
L. DISPUTED CLAIMS RESERVE
1. DEPOSIT OF CASH ON THE EFFECTIVE DATE
On the Effective Date (or as soon thereafter as is
reasonably practicable), Reorganized Solutia shall deposit Cash in the
Disputed Claim Reserve that would have been distributed to the Holders of
Disputed Claims (other than Disputed General Unsecured Claims and Noteholder
Claims) if such Disputed Claims had been Allowed Claims on the Effective Date.
This amount will be determined based on the lesser of (a) the asserted amount
of the Disputed Claim filed with the Bankruptcy Court (if no proof of such
Claim was filed) scheduled by the Debtors, (b) the amount, if any, estimated
by the Bankruptcy Court pursuant to Section 502(c) of the Bankruptcy Code or
(c) the amount otherwise agreed to by the Debtors and the Holder of such
Disputed Claims.
2. DISTRIBUTION AFTER ALLOWANCE
Reorganized Solutia shall distribute from the Disputed
Claims Reserve to the Holder of any Disputed Claim that has become an Allowed
Claim, no later than the fifth (5th) Business Day after the end of the
calendar month in which such Disputed Claim becomes an Allowed Claim in an
amount equal to the Allowed Claim if such Claim had been an Allowed Claim on
the Effective Date.
3. DISTRIBUTIONS AFTER DISALLOWANCE
If a Disputed Claim is disallowed, in whole or in part,
Reorganized Solutia shall on a quarterly basis (and in no event later than the
fifth (5th) Business Day after the end of each calendar quarter) distribute
the Cash reserved in respect of such disallowed Disputed Claim to Reorganized
Solutia for use in the ordinary course of business without further
restrictions or limitations.
4. PROPERTY HELD IN THE DISPUTED CLAIMS RESERVE
50
A. DISTRIBUTIONS
Cash held in the Disputed Claim Reserve as a result
of such Distributions will (i) be deposited and held in trust pending
distribution by Reorganized Solutia for the benefit of Holders of Allowed
Claims (other than Allowed General Unsecured Claims and Allowed Noteholder
Claims), (ii) be accounted for separately and (iii) not constitute property of
the Reorganized Debtors. Reorganized Solutia will also place in the Disputed
Claim Reserve, the proceeds, net of any applicable fees, from such investment
of Cash, and Distributions to Holders of Allowed Claims who had previously
held Disputed Claims will include a proportionate share from such investment
of Cash from the Disputed Claim Reserve.
B. RECOURSE
Each Holder of a Disputed Claim that ultimately
becomes an Allowed Claim will have recourse only to the Cash and their
proportionate share of the proceeds from the investment of Cash, if any, held
in the Disputed Claim Reserve for satisfaction of the Distributions to which
Holders of Allowed 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.
M. DISPUTED GENERAL UNSECURED CLAIMS RESERVE
1. DEPOSIT OF NEW COMMON STOCK ON THE EFFECTIVE DATE
On the Effective Date (or as soon thereafter as is
reasonably practicable), Reorganized Solutia shall deposit from the Stock Pool
in the Disputed General Unsecured Claims Reserve the number of shares of New
Common Stock that would have been distributed to the Holders of Disputed
General Unsecured Claims if such Disputed General Unsecured Claims had been
Allowed General Unsecured Claims on the Effective Date to ensure that the
Holders of Allowed Noteholder Claims and General Unsecured Claims receive the
same percentage recovery from the Stock Pool on account of their individual
Claims at all times (without giving effect to any reduction of the percentage
recovery on account of Allowed Noteholder Claims resulting from the imposition
of the Prepetition Indenture Charging Lien). The amount of New Common Stock to
be deposited in the Disputed General Unsecured Claims Reserve will be
determined based on the lesser of (a) the asserted amount of the Disputed
General Unsecured Claim filed with the Bankruptcy Court or (if no proof of
such Claim was filed) scheduled by the Debtors, (b) the amount, if any,
estimated by the Bankruptcy Court pursuant to section 502(c) of the Bankruptcy
Code or (c) the amount otherwise agreed to by the Debtors and the Holder of
such Disputed General Unsecured Claims.
2. DISTRIBUTIONS AFTER ALLOWANCE
Reorganized Solutia shall distribute from the Disputed
General Unsecured Claims Reserve to the Holder of any Disputed General
Unsecured Claim that has become an Allowed General Unsecured Claim, no later
than the fifth (5th) Business Day after the end of the calendar month in which
such Disputed General Unsecured Claim becomes an Allowed General Unsecured
Claim, New Common Stock (including any Cash dividends and other Distributions
earned on the New Common Stock) in an amount equal to the New Common Stock
that such Holder would have received an account of such Claim if such Claim
had been an Allowed General Unsecured Claim on the Effective Date.
3. DISTRIBUTIONS AFTER DISALLOWANCE.
51
If a Disputed General Unsecured Claim is disallowed, in
whole or in part, Reorganized Solutia shall on a quarterly basis (and in no
event later than the fifth (5th) Business Day after the end of each calendar
quarter) distribute the New Common Stock (including any Cash dividends and
other Distributions earned on account of the New Common Stock), reserved in
respect of such disallowed Disputed General Unsecured Claim from the Stock
Pool to Holders of Allowed Noteholder Claims and Allowed General Unsecured
Claims in a manner designed to ensure that the Holders of Allowed Noteholder
Claims and Allowed General Unsecured Claims receive the same Pro Rata share of
the Stock Pool without giving effect to any reduction of the percentage
recovery on account of Allowed Noteholder Claims resulting from the imposition
of the Prepetition Indenture Trustee Charging Lien.
4. PROPERTY HELD IN DISPUTED GENERAL UNSECURED CLAIMS RESERVE
A. DIVIDENDS AND DISTRIBUTIONS
Cash dividends and other Distributions earned on
account of the New Common Stock to be held in the Disputed General Unsecured
Claims Reserve will be transferred to the Disputed 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 Disputed
General Unsecured Claims Reserve as a result of such dividends and other
Distributions will (i) be deposited and held in trust pending distribution by
Reorganized Solutia for the benefit of Holders of Allowed General Unsecured
Claims and Noteholder Claims, (ii) be accounted for separately and (iii) not
constitute property of the Reorganized Debtors. Reorganized Solutia will
invest the Cash held in the Disputed General Unsecured Claims Reserve in a
manner consistent with the Reorganized Debtors' investment and deposit
guidelines. Reorganized Solutia also will place in the Disputed General
Unsecured Claims Reserve, the proceeds, net of any applicable fees, from such
investment of Cash, and Distributions to Holders of Allowed General Unsecured
Claims and Allowed Noteholder Claims will include a proportionate share from
such investment of Cash from the Disputed 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) or Noteholder Claim will have recourse only to the
undistributed New Common Stock and their proportionate share of the proceeds
from the investment of Cash and dividends, if any, held in the Disputed
General Unsecured Claims Reserve for satisfaction of the Distributions to
which Holders of Allowed General Unsecured Claims and Noteholder 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 shares of the New Common Stock held in the
Disputed 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.
52
ARTICLE VIII
PROCEDURES FOR TREATING DISPUTED GENERAL UNSECURED 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 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.
B. GENERAL UNSECURED CLAIMS MONITOR
Upon the Effective Date, an entity selected by 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 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 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 and the Creditors' Committee until it is dissolved in
accordance with the terms hereof 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, and, if it has not been dissolved in accordance with
the terms hereof, the Creditors' Committee.
53
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 the General Unsecured
Claims Monitor, if the Creditors' Committee has been dissolved at the time,
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 the
General Unsecured Claims Monitor, if the Creditors' Committee has been
dissolved at the time, 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.
54
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 hereof:
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), the Prepetition Indenture Trustee (solely with
respect to provisions directly affecting the Prepetition
Indenture Trustee, the 2027 Notes or the 2037 Notes) and the
Creditors' Committee.
2. The Confirmation Order shall:
a. authorize 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, the Rights and the Warrants pursuant to the exemption from
"Registration" under the Securities Act provided by section 1145 of the
Bankruptcy Code or pursuant to one or more registration statements 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.
55
4. The Retiree Approval Order shall have been entered by the
Bankruptcy Court.
5. The Bankruptcy Court shall have approved the Global
Settlement, and the order of the Bankruptcy Court approving
the Global Settlement, which may be included in the
Confirmation Order, shall provide, among other things, that
the Settled Adversary Proceedings, the Prepetition Adversary
Proceeding and the Equity Committee Adversary Proceeding
shall be withdrawn or dismissed with prejudice.
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 hereof:
1. The Confirmation Order shall (a) be in form and substance
reasonably acceptable to the Debtors, Monsanto, Pharmacia
(solely with respect to provisions directly affecting
Pharmacia), the Prepetition Indenture Trustee and the Ad Hoc
Notes Committee (solely with respect to provisions directly
affecting the Prepetition Indenture Trustee, the 2027 Notes
or the 2037 Notes), the Equity Committee (solely with
respect to provisions directly affecting Holders of Equity
Interests) and the Creditors' Committee, (b) be consistent
with the terms described in Section IX.A hereof, and (c)
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 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 reasonably acceptable to the Creditors' Committee
and Monsanto.
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. The Disputed General Unsecured Claims Reserve shall have
been established and all unliquidated General Unsecured
Claims shall have been estimated for Distribution purposes
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, which
agreement shall have been approved by the Bankruptcy Court.
9. The Confirmation Order shall have become a Final Order.
56
10. The Chocolate Bayou Settlement shall have been executed and
shall have received all necessary approvals.
11. The Monsanto Settlement Agreement shall have received all
necessary approvals.
12. The Rights Offering shall have been fully funded, and from
the proceeds of the Rights Offering, $175 million shall have
been used to fund the Retiree Trust (as defined in the
Retiree Settlement Agreement) and $75 million shall have
been used to fund Funding Co.
13. The order of the Bankruptcy Court, which may be included in
the Confirmation Order, approving the Global Settlement
shall have become a Final Order.
14. The Equity Committee Adversary Proceeding, including any
appeals related thereto, shall have been dismissed or
withdrawn with prejudice.
15. The Prepetition Indenture Trustee Adversary Proceeding,
including any appeals related thereto, shall have been
dismissed or withdrawn with prejudice.
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.
D. WAIVER OF CONDITIONS
Each of the Debtors, Monsanto, Pharmacia (solely with respect to
provisions directly affecting Pharmacia), the Prepetition Indenture Trustee
(solely with respect to provisions directly affecting the Prepetition
Indenture Trustee, the 2027 Notes or the 2037 Notes), the Creditors'
Committee, and the Retirees' Committee (solely with respect to Section IX.B.12
hereof), 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 hereof.
57
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 EFFECTIVE DATE. 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 MONSANTO SETTLEMENT 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, THE PREPETITION INDENTURE TRUSTEE, HOLDERS OF
ALLOWED CLAIMS, OR, UNTIL DISSOLVED, THE CREDITORS' COMMITTEE, THE RETIREES'
COMMITTEE AND THE EQUITY COMMITTEE FROM ENFORCING THE TERMS OF THIS PLAN AND
TO THE EXTENT THAT SUCH PARTIES ARE PARTIES TO, OR ARE BENEFICIARIES OF, THE
PLAN DOCUMENTS, THE PLAN DOCUMENTS (OTHER THAN WITH RESPECT TO THE MONSANTO
SETTLEMENT AGREEMENT), NOTWITHSTANDING THE FOREGOING, THE REORGANIZED DEBTORS,
MONSANTO AND PHARMACIA SHALL NOT BE ENJOINED FROM ENFORCING THE TERMS OF THE
MONSANTO SETTLEMENT AGREEMENT; PROVIDED, FURTHER, HOWEVER, THAT TERMS OF THE
-------- ------- -------
INJUNCTION SHALL NOT PREVENT THE HOLDERS OF TORT CLAIMS, NRD CLAIMS OR CLAIMS,
CAUSES OF ACTION, OR RIGHTS RELATING TO 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
WALKER V. MONSANTO COMPANY PENSION PLAN, NO. 04-CV-436-DRH, SCHARRINGHAUSEN V.
SOLUTIA INC. EMPLOYEES' PENSION PLAN, NO. 3:06CV00099 AND COMPLAINANTS IN
LARRY PROBST 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
58
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 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, THE PREPETITION INDENTURE TRUSTEE, HOLDERS OF ALLOWED
CLAIMS, OR, UNTIL DISSOLVED, THE CREDITORS' COMMITTEE, THE RETIREES' COMMITTEE
AND THE EQUITY COMMITTEE FROM ENFORCING THE TERMS OF THIS PLAN AND TO THE
EXTENT THAT SUCH PARTIES ARE PARTIES TO, OR ARE BENEFICIARIES OF, THE PLAN
DOCUMENTS, THE PLAN DOCUMENTS (OTHER THAN WITH RESPECT TO THE MONSANTO
SETTLEMENT AGREEMENT), NOTWITHSTANDING THE FOREGOING, THE REORGANIZED DEBTORS,
MONSANTO AND PHARMACIA SHALL NOT BE ENJOINED FROM ENFORCING THE TERMS OF THE
MONSANTO SETTLEMENT AGREEMENT; PROVIDED, FURTHER, HOWEVER, THAT TERMS OF THIS
-------- ------- -------
INJUNCTION SHALL NOT PREVENT (X) THE HOLDERS OF TORT CLAIMS, NRD CLAIMS,
CLAIMS, CAUSES OF ACTION, OR RIGHTS RELATING TO ENVIRONMENTAL LIABILITY FROM
EXERCISING THEIR RIGHTS AGAINST MONSANTO, PHARMACIA OR ANY OF THEIR RESPECTIVE
AFFILIATES WITH RESPECT THERETO, OR (Y) ANY PARTY FROM ASSERTING ANY CAUSE OF
ACTION AGAINST MONSANTO OR PHARMACIA OR ANY OF THEIR RESPECTIVE AFFILIATES
ARISING IN TORT FOR PERSONAL INJURY OR PROPERTY DAMAGE ARISING FROM THE
EXPOSURE TO CHEMICALS OR OTHER SUBSTANCES.
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
59
FUTURE BY OR ON BEHALF OF THE DEBTORS, OR THEIR ESTATES AGAINST (A) THE
CURRENT OR FORMER REPRESENTATIVES, DIRECTORS, AND OFFICERS 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 AND THE ADVISORS AND ATTORNEYS FOR THE CREDITORS' COMMITTEE, IN EACH
CASE IN THEIR CAPACITY AS SUCH, (C) THE CURRENT AND FORMER MEMBERS OF THE AD
HOC TRADE COMMITTEE AND THE ADVISORS AND ATTORNEYS FOR THE AD HOC TRADE
COMMITTEE, IN EACH CASE IN THEIR CAPACITY AS SUCH, (D) THE CURRENT AND FORMER
MEMBERS OF THE AD HOC NOTES COMMITTEE AND THE ADVISORS AND ATTORNEYS FOR THE
AD HOC NOTES COMMITTEE, IN EACH CASE IN THEIR CAPACITY AS SUCH, (E) THE
CURRENT AND FORMER MEMBERS OF THE EQUITY COMMITTEE AND THE ADVISORS AND
ATTORNEYS FOR THE EQUITY COMMITTEE, IN EACH CASE IN THEIR CAPACITY AS SUCH,
(F) THE CURRENT AND FORMER MEMBERS OF THE RETIREES' COMMITTEE AND THE ADVISORS
AND ATTORNEYS FOR THE RETIREES' COMMITTEE, IN EACH CASE IN THEIR CAPACITY AS
SUCH, (G) THE PREPETITION INDENTURE TRUSTEE AND THE ADVISORS AND ATTORNEYS FOR
THE PREPETITION INDENTURE TRUSTEE, IN EACH CASE IN THEIR CAPACITY AS SUCH, (H)
MONSANTO, (I) PHARMACIA, (J) ANY EMPLOYEE BENEFIT PLANS OF MONSANTO OR
PHARMACIA, AND (K) 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 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 AND THE ADVISORS AND ATTORNEYS FOR THE CREDITORS' COMMITTEE, IN EACH
CASE IN THEIR CAPACITY AS SUCH, (D) THE CURRENT AND FORMER MEMBERS OF THE AD
HOC TRADE COMMITTEE AND THE ADVISORS AND ATTORNEYS FOR THE AD HOC TRADE
COMMITTEE, IN EACH CASE IN THEIR CAPACITY AS SUCH, (E) THE CURRENT AND FORMER
MEMBERS OF THE AD HOC NOTES COMMITTEE AND THE ADVISORS AND ATTORNEYS FOR THE
AD HOC NOTES COMMITTEE, IN EACH CASE IN THEIR CAPACITY AS SUCH, (F) THE
CURRENT AND FORMER MEMBERS OF THE EQUITY COMMITTEE AND THE ADVISORS AND
ATTORNEYS FOR THE EQUITY COMMITTEE, IN EACH CASE IN THEIR CAPACITY AS SUCH,
(G) THE CURRENT AND FORMER MEMBERS OF THE RETIREES' COMMITTEE AND THE ADVISORS
AND ATTORNEYS FOR THE RETIREES' COMMITTEE, IN EACH CASE IN THEIR CAPACITY AS
SUCH, (H) THE PREPETITION INDENTURE TRUSTEE AND THE ADVISORS AND ATTORNEYS FOR
THE PREPETITION INDENTURE TRUSTEE, IN EACH CASE IN THEIR CAPACITY AS SUCH, (I)
MONSANTO, (J) PHARMACIA, AND (K) THE RESPECTIVE AFFILIATES AND CURRENT OR
FORMER REPRESENTATIVES,
60
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, (I) THE HOLDERS OF TORT CLAIMS SHALL NOT BE DEEMED TO RELEASE THE
DEBTORS OR ANY OF THEIR RESPECTIVE AFFILIATES ON ACCOUNT OF ANY LIABILITY
ARISING FROM OR RELATED TO THE TORT CLAIMS AND (II) THE HOLDERS OF TORT CLAIMS
AND THE HOLDERS OF LEGACY SITE CLAIMS, AS A RESULT OF THE MONSANTO SETTLEMENT
AGREEMENT, SHALL NOT BE DEEMED TO RELEASE MONSANTO OR PHARMACIA OR ANY OF
THEIR RESPECTIVE AFFILIATES 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, AS PROVIDED IN SECTION XII.C.
HERETO, GOVERNMENTAL ENTITIES SHALL NOT BE DEEMED TO RELEASE MONSANTO OR
PHARMACIA ON ACCOUNT OF ANY CLAIMS, CAUSES OF ACTION, OR RIGHTS; PROVIDED,
--------
HOWEVER, THAT THE TERMS OF THIS RELEASE SHALL NOT PREVENT MONSANTO OR
- -------
PHARMACIA FROM ENFORCING THE TERMS OF 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; AND PROVIDED, EVEN FURTHER
-------- ---- -------
STILL, HOWEVER, THAT THE TERMS OF THIS RELEASE SHALL NOT APPLY TO CLAIMS FOR
- ----- -------
BREACHES OF FIDUCIARY DUTY, AS SUCH TERM IS DEFINED UNDER ERISA, WITH RESPECT
TO THE SIP PLAN AGAINST ANY ERISA FIDUCIARIES IF SUCH RELEASE WOULD BE
PROHIBITED BY ERISA.
3. RETIREE RELEASE AND INJUNCTION
61
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, 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, THE RETIREES' COMMITTEE NOR THE CURRENT
INDIVIDUAL MEMBERS THEREOF, THE AD HOC TRADE COMMITTEE NOR THE CURRENT
INDIVIDUAL MEMBERS THEREOF, THE AD HOC NOTES COMMITTEE NOR THE CURRENT
INDIVIDUAL MEMBERS THEREOF, THE PREPETITION INDENTURE TRUSTEE, THE EQUITY
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, 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; PROVIDED,
--------
HOWEVER, THAT NOTHING IN THIS PARAGRAPH SHALL AFFECT THE RIGHTS, DEFENSES,
- -------
OBLIGATIONS OR CLAIMS ARISING BETWEEN MONSANTO AND PHARMACIA; AND PROVIDED,
--------
FURTHER, HOWEVER, THAT THE TERMS OF THIS EXCULPATION SHALL NOT APPLY TO CLAIMS
- ------- -------
FOR BREACHES OF FIDUCIARY DUTY, AS SUCH TERM IS DEFINED UNDER ERISA, WITH
RESPECT TO THE SIP PLAN AGAINST ANY ERISA FIDUCIARIES IF SUCH EXCULPATION
WOULD BE PROHIBITED BY ERISA.
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
62
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 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, RELEASE
- -------
OR SATISFACTION FROM TORT CLAIMS, NRD CLAIMS OR ANY ENVIRONMENTAL LIABILITY OR
ENVIRONMENTAL LIABILITY COSTS RELATED TO THE RETAINED SITES OR THE SHARED
SITES; PROVIDED, FURTHER, HOWEVER, THAT NOTHING IN THE PLAN SHALL DISCHARGE,
-------- ------- -------
RELEASE OR SATISFY ANY LIABILITIES TO A GOVERNMENTAL ENTITY OF THE DEBTORS, OR
REORGANIZED DEBTORS, AS THE CASE MAY BE, ARISING AFTER THE CONFIRMATION DATE
OR THAT IS NOT OTHERWISE A CLAIM WITHIN THE MEANING OF SECTION 101(5) OF THE
BANKRUPTCY CODE, NOR SHALL THE PLAN PRECLUDE A GOVERNMENTAL ENTITY FROM
ASSERTING ANY SUCH LIABILITIES AGAINST THE REORGANIZED DEBTORS AND NOTHING IN
THE PLAN SHALL DISCHARGE, RELEASE OR SATISFY ANY LIABILITY TO A GOVERNMENTAL
ENTITY UNDER APPLICABLE ENVIRONMENTAL LAWS THAT A REORGANIZED DEBTOR OR ANY
OTHER PERSON OR ENTITY MAY HAVE AS THE OWNER OR OPERATOR OF REAL PROPERTY ON
AND AFTER THE CONFIRMATION DATE; PROVIDED, FURTHER STILL, HOWEVER, THAT
-------- ------- ----- -------
NOTHING IN THE PLAN SHALL ADVERSELY AFFECT IN ANY WAY THE RIGHTS AND REMEDIES
OF THE UNITED STATES WITH RESPECT TO THE ANNISTON PARTIAL CONSENT DECREE (C.V.
- -01-PT-0749-E, EFFECTIVE AUGUST 4, 2003), NOR SHALL ANYTHING IN THE PLAN
DIVEST OR LIMIT THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ALABAMA OVER SUCH ANNISTON PARTIAL CONSENT DECREE, WHICH
SHALL SURVIVE THE CHAPTER 11 CASES AND MAY BE ENFORCED IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA AND NOTHING IN THE PLAN
SHALL ADVERSELY AFFECT IN ANY WAY THE RIGHTS AND REMEDIES OF THE UNITED STATES
WITH RESPECT TO THE ADMINISTRATIVE ORDERS RELATING TO THE SAUGET, ILLINOIS
AREA 1 AND AREA 2 SITES, V-W-99-C-554, EFFECTIVE JANUARY 21, 1999;
V-W-99-C-554, ISSUED MAY 31, 2000; V-W-01-C-622, EFFECTIVE NOVEMBER 24, 2000;
AND V-W-02-C-716, ISSUED SEPTEMBER 30, 2002), WHICH SHALL SURVIVE THE CHAPTER
11 CASES AND MAY BE ENFORCED IN ANY TRIBUNAL WITH JURISDICTION.
63
ARTICLE XI
RETENTION OF JURISDICTION
A. RETENTION OF JURISDICTION
The Bankruptcy Court shall have 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 Monsanto
Settlement 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 hereof;
64
13. To hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505 and 1146
of the Bankruptcy Code;
14. To examine, pursuant to Bankruptcy Rule 2004, any party
whose contribution is necessary to effectuate the Plan;
15. To hear any other matter not inconsistent with the
Bankruptcy Code; and
16. To enter a final decree or decrees closing the Chapter 11
Cases.
65
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 and all 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 terms of the settlement among Solutia, Monsanto and
Pharmacia) 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, if still in
existence, 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 or Distribution 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, including all federal
agencies, or any states thereof; 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 or any states thereof 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, the
Retirees' Committee, the Prepetition Indenture Trustee, the Equity Committee,
the Ad Hoc Trade Committee and the Ad Hoc Notes 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
66
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, the Retirees' Committee and
- -------- -------
the Equity 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; provided, further that (1) the Creditors' Committee shall
-------- -------
continue to exist after the Effective Date so long as there is (a) an appeal
or other litigation pending in connection with the Prepetition Indenture
Trustee Adversary Proceeding, the Equity Committee Adversary Proceeding, the
Plan, the Confirmation Order or any proceeding that may materially affect
recoveries to unsecured creditors or (b) any objection pending in connection
with the payment of the professional fees and/or expenses in accordance with
Section V.B.13 of Hennigan, Bennett & Dorman LLP, counsel to the Ad Hoc Notes
Committee; The Blackstone Group, financial advisor to the Ad Hoc Notes
Committee; Reed Smith LLP, counsel to the Prepetition Indenture Trustee;
Haynes and Boone LLP, counsel to Highland Capital Management; or Brown Rudnick
Berlack Israels LLP, counsel to the Ad Hoc Trade Committee; or the expenses
incurred by the Prepetition Indenture Trustee; and (2) the professional fees
and expenses of the Creditors' Committee in connection with (1) above shall be
reimbursed by the Debtors or Reorganized Debtors without application to the
Bankruptcy Court consistent with Section V.D hereof.
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), the Prepetition
Indenture Trustee (if such provision directly affects the Prepetition
Indenture Trustee, the 2027 Notes or the 2037 Notes) 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 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, the
Prepetition Indenture Trustee (if such provision directly affects the
67
Prepetition Indenture Trustee, the 2027 Notes or the 2037 Notes), the Equity
Committee (if such provision directly affects the Holders of Equity Interests)
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 offered or sold
under a plan of reorganization. The New Common Stock, the Rights and the
Warrants issued pursuant to the Plan on account of Allowed Claims and common
stock in Solutia may 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 such 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
68
Rosemary L. Klein, Esq. (General Counsel)
Solutia Inc.
575 Maryville Centre Dr.
St. Louis, MO 63141
Richard M. Cieri, Esq.
Jonathan S. Henes, Esq.
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, NY 10022
Fax: (212) 872-1002
James R. Savin, Esq.
Akin Gump Strauss Hauer & Feld LLP
1333 New Hampshire Avenue N.W.
Washington, D.C. 20036
Fax: (202) 887-4288
(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, AL 35203
Fax: (205) 324-1133
(Counsel to the Retirees' Committee)
4. THE EQUITY COMMITTEE
69
David A. Crichlow, Esq.
Karen B. Dine, Esq.
Pillsbury Winthrop Shaw Pittman LLP
1540 Broadway
New York, NY 10036
Fax: (212) 858-1500
(Counsel to the Equity Committee)
5. THE DIP LENDERS
David Jaffe
Citicorp USA, Inc.
390 Greenwich Street
New York, NY 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)
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
David Snively, Esq. (General Counsel)
Monsanto Company
800 North Lindbergh Boulevard
St. Louis, MO 63167
John C. Longmire, Esq.
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Fax: (212) 728-8111
George T. Frampton, Jr., Esq.
Boies, Schiller & Flexner LLP
570 Lexington Avenue, 16th Floor
New York, NY 10022
Fax: 212-446-2350
70
Lloyd A. Palans, Esq.
Bryan Cave LLP
One Metropolitan Square
211 N. Broadway
St. Louis, MO 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, the 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.
71
Dated: New York, New York Respectfully submitted,
October 15, 2007 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
72
Exhibit 99.2.A
SETTLEMENT AGREEMENT
October 15, 2007
by and among
Solutia Inc.,
Monsanto Company,
and
SFC LLC
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................................2
Section 1.01 General....................................................2
Section 1.02 Interpretation............................................12
ARTICLE II FUNDING CO................................................................13
Section 2.01 Funding Co................................................13
Section 2.02 Establishment of Accounts.................................13
Section 2.03 Deposit of Funds..........................................14
Section 2.04 Investment of the Funds...................................14
ARTICLE III ENVIRONMENTAL REMEDIATION................................................14
Section 3.01 Retained Sites............................................14
Section 3.02 Legacy Sites..............................................14
Section 3.03 Certain Waste Sites.......................................15
Section 3.04 Shared Sites..............................................15
Section 3.05 Third Party Recoveries....................................21
Section 3.06 No Admission of Liability to Other Persons................22
Section 3.07 Cooperation...............................................22
ARTICLE IV DISBURSEMENTS.............................................................23
Section 4.01 Disbursements.............................................23
ARTICLE V INDEMNIFICATION............................................................24
Section 5.01 Indemnification Obligations of Solutia....................24
Section 5.02 Indemnification Obligations of Monsanto...................25
Section 5.03 Manner of Payment.........................................25
Section 5.04 Indemnification Claims....................................25
Section 5.05 Third Party Claims........................................26
Section 5.06 Subrogation...............................................27
Section 5.07 Subsidiary Guarantees.....................................27
ARTICLE VI CERTAIN TAX MATTERS.......................................................27
Section 6.01 Net Operating Loss Carryforwards..........................27
Section 6.02 Treatment of Funding Co...................................28
Section 6.03 Treatment of Earnings of Funding Co.......................28
Section 6.04 Distributions by Funding Co...............................28
Section 6.05 Contribution to the Retiree Trust.........................28
Section 6.06 Treatment of Environmental Remediation....................28
Section 6.07 Effect of the Agreement...................................28
Section 6.08 Cooperation...............................................29
ARTICLE VII COVENANTS................................................................29
Section 7.01 Further Assurances........................................29
Section 7.02 Business Combinations; Transfers of Covered Sites.........29
Section 7.03 Cooperation and Access....................................29
i
Section 7.04 Confidentiality...........................................30
Section 7.05 Power of Attorney.........................................31
Section 7.06 Insurance.................................................31
Section 7.07 Funding Co As Party Hereto................................31
ARTICLE VIII REPRESENTATIONS AND WARRANTIES..........................................32
Section 8.01 Representations and Warranties of Monsanto................32
Section 8.02 Representations and Warranties of Solutia.................32
Section 8.03 Representations and Warranties of Funding Co..............33
Section 8.04 No Additional Representations or Warranties...............33
ARTICLE IX DISPUTE RESOLUTION........................................................33
Section 9.01 Agreement to Arbitrate....................................33
Section 9.02 Bankruptcy Court Jurisdiction.............................34
Section 9.03 Procedures................................................34
ARTICLE X MISCELLANEOUS..............................................................35
Section 10.01 Effectiveness.............................................35
Section 10.02 Expenses..................................................35
Section 10.03 Governing Law.............................................35
Section 10.04 Notices...................................................35
Section 10.05 Amendment and Modification................................37
Section 10.06 Successors and Assigns; No Third Party Beneficiaries......37
Section 10.07 Counterparts..............................................37
Section 10.08 Legal Enforceability......................................37
Section 10.09 Complete Agreement........................................37
ii
APPENDICES:
Appendix A - Retained Sites
- ----------
Appendix B - Legacy Sites
- ----------
Appendix C - Shared Sites
- ----------
iii
SCHEDULES:
Schedule 8.01(d)
iv
EXHIBITS:
Exhibit A - Not Used
- ---------
Exhibit B - Anniston Consent Decree
- ---------
Exhibit C - Anniston Settlement Agreement
- ---------
Exhibit D - Anniston Side Letter
- ---------
Exhibit E - Plan
- ---------
Exhibit F - Form of Services Agreement
- ---------
Exhibit G1 - Form of Solutia Deferred Payment Note
- ----------
Exhibit G2 - Form of Solutia Deferred NRD Note
- ----------
Exhibit H - Not Used
- ---------
Exhibit I - Environmental Committee Charter
- ---------
Exhibit J - Form of Solutia Subsidiary Guaranties
- ---------
Exhibit K - Krummrich Restricted Properties
- ---------
Exhibit L - Not Used
- ---------
Exhibit M - Form of Power of Attorney
- ---------
Exhibit N - Form of Pharmacia Indemnity Agreement
- ---------
Exhibit O1 - Form of SFC LLC Charter
- ----------
Exhibit O2 - Form of SFC LLC Operating Agreement
- ----------
Exhibit P - Form of Retiree Trust Agreement
- ---------
Exhibit Q1 - Anniston Plant
- ----------
Exhibit Q2 - Krummrich Plant
- ----------
Exhibit R - Form of Registration Rights Agreement
- ---------
Exhibit S - Distribution Agreement
- ---------
v
SETTLEMENT AGREEMENT
--------------------
This SETTLEMENT AGREEMENT (this "Agreement") is made as of October
---------
15, 2007 by and among Solutia Inc., a Delaware corporation ("Solutia")
---------
Monsanto Company ("Monsanto") and SFC LLC, 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 February 14, 2006, Solutia originally filed a plan of
reorganization with the Bankruptcy Court.
WHEREAS, on May 16, 2007, Solutia filed its First Amended Joint Plan
of Reorganization with the Bankruptcy Court.
WHEREAS, on July 9, 2007, Solutia filed its Second Amended Joint Plan
of Reorganization with the Bankruptcy Court.
WHEREAS, on July 25, 2007, submitted its Third Amended Joint Plan of
Reorganization to the Bankruptcy Court.
WHEREAS, on August 10, 2007, Solutia submitted its Fourth Amended
Joint Plan of Reorganization to the Bankruptcy Court.
WHEREAS, on October 15, 2007, Solutia submitted its Fifth Amended
Joint Plan of Reorganization to the Bankruptcy Court.
WHEREAS, Monsanto has paid in excess of $50 million in Environmental
Liability Costs with respect to the Shared Sites (as defined herein) since the
Petition Date (such $50 million amount, the "Monsanto Payment").
----------------
WHEREAS, this Agreement, the Plan and the Retiree Settlement
Agreement constitute a single integrated settlement agreement, and together
set forth the terms of a settlement (the "Settlement") between and among
----------
Solutia, Monsanto, Pharmacia, the Retirees' Committee, the Creditors'
Committee and the Ad Hoc Trade Committee.
WHEREAS, in connection with the Settlement, Monsanto will receive, as
set forth in the Plan, up to one hundred seventy five million dollars ($175
million) in cash and/or up to seventeen percent (17%) of Solutia's New Common
Stock in exchange for, among other things, Monsanto's agreement to be
financially responsible for (i) the Legacy Tort Claims (as defined herein),
(ii) all Environmental Liabilities related to the Legacy Sites (as defined
herein), and (iii) Monsanto's share of the Shared Payments (as defined
herein).
WHEREAS, in accordance with the Plan and the terms of this Agreement,
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 superseded and, on the Effective Date, of no further
force and effect.
WHEREAS, this Agreement, the Plan and the Plan Documents supersede
the Distribution Agreement and the Settlement Agreement dated August 10, 2007
and set out the relationship among the parties hereto.
WHEREAS, on the Effective Date, Solutia and Monsanto will enter into
a registration rights agreement (the "Registration Rights Agreement")
-----------------------------
substantially in the form annexed hereto as Exhibit R.
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.
--- ------------
2
"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.
"Ad Hoc Trade Committee" has the meaning assigned to it in the Plan.
----------------------
"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 Restricted Properties" means all properties situated in
------------------------------
Calhoun County, Alabama and owned by Solutia as of the date hereof.
"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).
--------------- ------------------
"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
3
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 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.
4
"Cost Recovery Cases" has the meaning set forth in Section 3.05(a).
------------------- ---------------
"Covered Site" means any Retained Site, Legacy Site or Shared Site.
------------
"Creditors' Committee" has the meaning assigned to it in the Plan.
--------------------
"Debtors" has the meaning assigned to it in the Plan.
-------
"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, a copy of which is annexed
hereto as Exhibit S.
---------
"Effective Date" has the meaning assigned to it in the Plan.
--------------
"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 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,
5
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 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"), 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.
"Final Order" has the meaning assigned to it in the Plan.
-----------
"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.
----- ------------
6
"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 7.06(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.
"Krummrich Restricted Properties" means the properties described in
-------------------------------
Exhibit K hereto.
"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.
------------ ------------
"Legacy 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 Legacy Tort Claim,
ii. such holder has filed a proof of claim in the
Solutia Chapter 11 Case, or
7
iii. the alleged exposure occurred before or after the
Solutia Spinoff.
"Legacy Tort Claims" also includes legal, equitable or other claims,
demands, costs, causes of action and/or other liabilities arising against
Solutia 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, in circumstances where:
(u) the claims in question reflect the description contained
in clause (c) of the first sentence of this definition;
(v) the property from which such chemical exposure or
environmental contamination arose was previously owned by Pharmacia
and transferred to Solutia in connection with the Spinoff;
(w) the claims arise from Solutia's conduct after the
Solutia Spinoff;
(x) such conduct constituted the remediation, or
non-remediation, of conditions which existed as of the Spinoff and
were subject to Solutia's assumption of remediation obligations
under the Distribution Agreement; and
(y) such conduct by Solutia was in accordance with federal
or state environmental law or orders or was a continuation of
activities conducted, or inactivity, by Pharmacia at the time of the
Spinoff, provided, however, that in the case of non-remediation,
such non-remediation must not have been in violation of federal or
state environmental laws or orders,
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 Legacy Tort Claim, or
ii. such holder has filed a proof of claim in the
Solutia Chapter 11 Case.
"Legacy 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 "Legacy Tort Claim" herein; antitrust claims;
commercial, business or contract claims; Environmental Liability Costs; any
other remediation obligations covered by the terms of this 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 Walker v. Monsanto
Company Pension Plan, No. 04-cv-436-DRH, Scharringhausen v. Solutia Inc.
Employees' Pension Plan, No. 3:06CV00099, and the administrative charge
entitled Larry Probst 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 v. Pharmacia Corporation, No.
4:04CV981, or any similar
8
litigation; or (other than as may be provided in the second sentence of this
definition) any claims, including claims for exposure to chemicals or other
substances, arising from Solutia's conduct after the Spinoff.
"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 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(d)(v).
- ----------
"Monsanto Indemnified Party" has the meaning set forth in Section
-------------------------- -------
5.01.
- ----
"Monsanto Payment" has the meaning set forth in the recitals.
----------------
"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).
- ---------------
"New Common Stock" has the meaning assigned to it in the Plan.
----------------
"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.
9
"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.
- ---------
"Plan" means the Debtors' Fifth Amended Joint Plan of Reorganization
----
submitted to the Bankruptcy Court on October [O], 2007, 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.
"Registration Rights Agreement" has the meaning set forth in the
-----------------------------
recitals.
"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.
-------------- ------------
"Retirees' Committee" has the meaning assigned to it in the Plan.
-------------------
"Retiree Settlement Agreement" means that certain First Amended and
----------------------------
Restated Retiree Settlement Agreement, dated as of July 10, 2007, by and among
Solutia, the Retirees' Committee, the Creditors' Committee and Monsanto.
"Retiree Trust" has the meaning set forth in Section 2.02.
------------- ------------
10
"Retiree Trust Agreement" means the trust agreement that is attached
-----------------------
hereto as Exhibit P.
"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.
------------------ ------------
"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.
------------ ------------
"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.
---------------
11
"Solutia Spinoff Date" has the meaning set forth in the recitals.
--------------------
"Solutia Tort Claims" means claims, other than Legacy Tort Claims,
-------------------
arising in tort law from exposure to chemicals or other substances arising
from Solutia's conduct after the Solutia Spinoff.
"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).
- -------
"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 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.
(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
12
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, to the extent necessary,
----------
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, 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, 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
13
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 effectiveness of this Agreement, Solutia shall deliver cash proceeds
from the Rights Offering to Funding Co in a total aggregate amount equal to
$75,000,000, upon the terms and subject to the conditions of the Plan and this
Agreement. Funding Co shall allocate (i) $50,000,000 of such Funds to the
Environmental Account and (ii) $25,000,000 of such Funds to the Unallocated
Account. In addition, on the Effective Date and, in conjunction with the
effectiveness of this Agreement, Solutia shall deliver to a voluntary
employees' beneficiary association trust account established pursuant to the
Retiree Settlement Agreement and the Retiree Trust Agreement (the "Retiree
-------
Trust"), $175,000,000 of the cash proceeds of the Rights Offering.
- -----
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.
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
14
never owned, operated or (subject to Section 3.03) to which it never sent
------------
waste, and (c) for which 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:
15
(i) The Environmental Committee shall at all times consist
of five (5) members.
(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) The parties acknowledge that Monsanto has paid
Environmental Liabilities with respect to the Shared Sites since the
Petition Date and may continue to do so until the Effective Date. For
all documented out of pocket Shared Site Environmental Liabilities
paid by Monsanto during the Solutia Chapter 11 Case in excess of the
Monsanto Payment amount, Monsanto will receive an Allowed
Administrative Expense Claim (as defined in the Plan) in the Solutia
Chapter 11 Case.
(ii) Funding Co shall make payments (the "Funding Co
----------
Payment") to Solutia for all Environmental Liabilities related to the
-------
Shared Sites from the
16
Environmental Account in accordance with clause (v) below until the
funds in the Environmental Account (including any interest thereon)
are reduced to zero.
(iii) 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 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 Solutia 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 Environmental Liability Costs contained
in the relevant Environmental
17
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 Solutia 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 within one (1) Business Day following the
expiration of the Monsanto ELC Review Period. During 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 Solutia
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 such amount becomes a Payable Amount.
During 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 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
18
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 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
19
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 150 basis
points.
(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 note in the form of Exhibit G2
----------
attached hereto (the "Solutia Deferred NRD Note"), which
-------------------------
shall contain the following provisions:
20
(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 150 basis
points.
(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
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
21
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 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.
22
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) 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
23
Unallocated Amount, as promptly as practicable but in any event within one (1)
Business Day following the expiration of the Monsanto ELC 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 date upon which such amount
becomes an Unallocated Payment Amount, 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) Solutia Tort Claims;
(d) 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;
(e) 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 (e) to the
extent the aggregate amount of all such Losses exceeds $20 million; and
(f) 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 described in this clause
(f) 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
24
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 Legacy 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 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
25
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 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
26
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 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
----
27
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.
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.
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 to be paid following the Effective Date, 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 or 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 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.
28
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 all or any portion of any
property Solutia owns (other than the Anniston Restricted Properties or the
Krummrich Restricted Properties), 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 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 Restricted Properties or the
Krummrich Restricted Properties 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
29
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 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.
30
(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 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 all Insurance Recoveries related to
Legacy Tort Claims and Solutia shall receive and be entitled to all Insurance
Recoveries related to Solutia Tort Claims. Notwithstanding anything to the
contrary in this Section 7.06(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.
Section 7.07 Funding Co As Party Hereto. On the Effective Date
--------------------------
Funding Co shall execute this Agreement and shall become a party hereto for
all purposes.
31
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. Subject to Section 10.01
hereof, 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. Subject to
Bankruptcy Court approval of the terms hereof, Solutia 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 Solutia. Subject to Section 10.01
hereof, 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
32
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) subject to approval of the terms hereof by the
Bankruptcy Court, 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.
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
----------
33
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 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.
34
(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 Effectiveness. This Agreement shall not be effective or
-------------
binding upon the parties hereto until (a) the Exhibits hereto are in form and
substance acceptable to Solutia and Monsanto, (b) the Agreement and its terms
have been approved by Final Order of the Bankruptcy Court, (c) the Retiree
Settlement and its terms have been approved by Final Order of the Bankruptcy
Court, (d) the Plan has been confirmed by Final Order of the Bankruptcy Court,
(e) the conditions precedent to the Effective Date set forth in the Plan shall
have been satisfied or duly waived pursuant to the terms of the Plan and (f)
Solutia's counsel has issued an opinion, in form and substance reasonably
acceptable to Monsanto, regarding Funding Co.
Section 10.02 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 10.03 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 10.04 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:
35
If to Solutia: General Counsel
Solutia, Inc.
575 Maryville Centre
St. Louis, MO 63141
Telephone: (314) 674-1000
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: David Snively, Esq. (General Counsel)
Monsanto Company
800 North Lindbergh Boulevard
St. Louis, MO 63167
with a copy (which shall not constitute notice) to:
John C. Longmire, Esq.
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Fax: (212) 728-8111
George T. Frampton, Jr., Esq.
Boies, Schiller & Flexner LLP
570 Lexington Avenue, 16th Floor
New York, NY 10022
Fax: 212-446-2350
Lloyd A. Palans, Esq.
Bryan Cave LLP
One Metropolitan Square
211 N. Broadway
St. Louis, MO 63102-2750
Fax: 314-259-2020
(Counsel to Monsanto)
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 10.04.
-------------
36
Section 10.05 Amendment and Modification. This Agreement may be
--------------------------
amended, modified or supplemented only by a written agreement signed by all of
the parties hereto.
Section 10.06 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 10.07 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 10.08 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 10.09 Complete Agreement. This Agreement, the Commercial and
------------------
Operating Agreements, the Plan and the Retiree Settlement Agreement 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 and
Monsanto hereby waive any claims, rights or arguments they may be able to
assert on the basis that this Agreement, the Commercial and Operating
Agreements, the Plan and the Retiree Settlement Agreement 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. The Plan and its terms and the Retiree Settlement
Agreement and its terms are incorporated herein by reference. For all
purposes, this Agreement the Plan and the Retiree Settlement Agreement are an
integrated and unitary contract not subject to severability.
* * * *
37
IN WITNESS WHEREOF, the parties hereto have executed this
Settlement Agreement on the day and year first above written.
SOLUTIA INC.
By: /s/Jeffry N. Quinn
--------------------------------------------
Name: Jeffry N. Quinn
Title: Chairman, President and CEO
MONSANTO COMPANY
By: /s/David F. Snively
--------------------------------------------
Name: David F. Snively
Title: Sr. V.P., Secretary & General Counsel
SFC LLC
By:
--------------------------------------------
Name:
Title:
Dated:
All notices to be provided to SFC LLC
in accordance with Section 10.04 of this
Agreement shall be addressed as follows:
--------------------
--------------------
--------------------
--------------------
--------------------
APPENDIX A
----------
Anniston Plant (as described in Exhibit Q1 hereto)(1)
----------
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)(2)
----------
LaSalle Plant
Newport Plant
Nitro Armour Creek Landfill
Nitro Plant(3)
Pensacola Plant
Queeny Plant
Ruabon Plant
Rhosymedre Quarry
Texas City (N80/S20 only)
Trenton Plant
Westport Plant
Augusta Landfills
<FN>
- -----------------------
(1) Excluded from the Environmental Liability Costs for the Anniston Plant
shall be (a) the operation and maintenance costs for the Staging and
Soils Management Area (a.k.a. the Miller Property) and (b) the design,
construction, operation and maintenance costs of the Supplemental Staging
and Soils Management Area (both areas shown on Exhibit Q1), but only to
-----------
the extent that such areas are used for disposal of contaminated
materials from properties never owned or operated by Solutia. If these
staging and soil management areas are used for disposal of materials from
properties owned or operated by Solutia after the Solutia Spinoff, the
above described Environmental Liability Costs shall be allocated based on
the volume of such materials disposed, with the Anniston Shared Site
allocated the volume of contaminated materials from properties never
owned or operated by Solutia and the Anniston Plant allocated the volume
of contaminated materials from properties owned or operated by Solutia
after the Solutia Spinoff.
(2) Excluded from the Environmental Liability Costs for the Krummrich Plant
shall be the operation and maintenance costs for the Containment Cell
(Lot M shown on Exhibit Q2), but only to the extent that such cell is
used for disposal of contaminated materials from properties never owned
or operated by Solutia. If the cell is used for disposal of materials
from properties owned or operated by Solutia after the Solutia Spinoff,
the above described Environmental Liability Costs shall be allocated
based on the volume of such materials disposed, with the Sauget Shared
Site allocated the volume of contaminated materials from properties never
owned or operated by Solutia and the Krummrich Plant allocated the volume
of contaminated materials from properties owned or operated by Solutia
after the Solutia Spinoff.
(3) For purposes of this Agreement, the Nitro Plant Retained Site extends to
the property line as defined by West Virginia law.
APPENDIX A CONT'D.
------------------
Carondelet Plant
Beamer Road Property
Camden Plant
Carson Plant
Phosphate mining and processing facilities of P4 Production L.L.C. (to the
extent operated by Solutia)(4)
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).
<FN>
- -----------------------
(4) Environmental Liability Costs associated with P4 Production L.L.C. sites
are the responsibility of Monsanto pursuant to the indemnification
contained in the LLC Interest Purchase Agreement dated as of May 31, 2000
between Solutia, Pharmacia (which subsequently spun-off its interest in
P4 Production L.L.C. to the new Monsanto Company) and P4 Production,
L.L.C. Including these sites on Appendix A shall in no way affect
Monsanto's obligation to indemnify Solutia, its subsidiaries and
Affiliates under the LLC Interest Purchase Agreement.
2
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
Brofiscin Quarry, Wales (UK)
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(5)
Hayford Bridge / Findett
Hexagon Labs Superfund
Iron Horse Billerica
Jonas Transport
<FN>
- -----------------------
(5) 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.
APPENDIX B CONT'D.
-----------------
Kanawha River(6)
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>
- -----------------------
(6) 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.
2
APPENDIX C
----------
1. All areas outside of the Anniston Plant (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 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.(7) 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 (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 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 (Lot M shown on Exhibit Q2) and Sites G, H, I, L, M and
N), the Sauget Area 2 Sites (inclusive of Sites O, P, Q (including Lot G shown
on Exhibit Q2, but only to the extent that any contamination discovered
thereon is similar to that discovered on Site Q), R (including the Site R
groundwater migration control system - the barrier wall and pump treat system)
and Lot H and Addition to Lot H shown on Exhibit Q2 and S), and the Sauget -
Metro East Sanitary District site.(8) 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.
<FN>
- -----------------------
(7) To the best of their knowledge and belief without inquiry, neither
Monsanto's nor Solutia's current environmental, health and safety staffs
are aware of any such proximate disposal sites related to the operations
of the Anniston Plant.
(8) To the best of their knowledge and belief without inquiry, neither
Monsanto's nor Solutia's current environmental, health and safety staffs
are aware of any other such proximate disposal sites related to the
operations of the Krummrich Plant.
SCHEDULE 8.01(d)
----------------
Facts and circumstances at the Kanawha River site set forth in the following
documents are deemed disclosed for purposes of this Schedule 8.01(d):
Interim Report, Phase I Extent of Contamination (EOC) Sampling Results and
Updated Phase II EOC Sampling Work Plan, dated December 9, 2005, prepared by
Conestoga-Rovers and Associates and the documents referenced therein
Engineering Evaluation/Cost Analysis (EE/CA) Work Plan (CRA, April 6, 2004)
and the documents referenced therein
In re Pharmacia Corporation and Monsanto Company, Administrative Order on
Consent, EPA Docket No. 03-2003-0265-DC (2004)
Kanawha River fish consumption advisory for mercury (West Virginia Department
of Health and Human Resources)
Kanawha River fish consumption advisory for PCBs (West Virginia Department of
Health and Human Resources)
Notwithstanding the above, Monsanto does not currently know of any constituent
other than dioxin, including all congeners of dioxin and furans, that the
regulators are using, or, based on currently available information, are
expected to use, to drive Environmental Remediation by Monsanto and/or
Pharmacia in the Kanawha River.
Exhibit 99.2.B
EXECUTION COPY
FIRST AMENDED & RESTATED RETIREE SETTLEMENT AGREEMENT
-----------------------------------------------------
This first amended and restated retiree settlement 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")(2); (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.
(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.
SETTLEMENT OVERVIEW
RETIREE TRUST & FUNDING CO. On the effective date (the "Effective
CONTRIBUTIONS 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), through 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"), Solutia will
raise $250 million, which will be
distributed as follows: (a) $175
million in cash will be contributed
to 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"); and
(b) $75 million in cash will be
contributed to fund a new entity
("Funding Co."), which will be a
special purpose, tax-efficient,
bankruptcy-remote affiliate of
Reorganized Solutia.(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 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>
- ----------
(3) It is a condition precedent to the Effective Date that from the proceeds
of the Rights Offering, $175 million shall fund the Retiree Trust and
$75 million shall fund Funding Co.
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 Following the Effective Date and
POST-EMPLOYMENT 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 In consideration for the reduction in
POST-EMPLOYMENT BENEFITS(4) 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 "2007 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) or the
2007 Retiree Welfare Plan.
(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
Medicare Eligible Retirees due to
age:
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 Participant pays 20% per prescription
PRESCRIPTION DRUGS or refill.
(UP TO 90 DAY SUPPLY) CO-PAYMENT
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 (Group VI in
the 2007 Retiree Welfare Plan)(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
<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 or the 2007 Retiree
Welfare Plan.
5
not then a Medicare Eligible
Participant. Reorganized Solutia
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.(10)
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
2007 Retiree Welfare Plan, subject to
the terms and conditions set forth in
the Forsberg Plan.
<FN>
- ----------
(10) Pursuant to the terms of that certain Stipulation And Order Between
Solutia Inc. And the Official Committee Of Retirees of Solutia Inc.
Pursuant to Section 1114 of the Bankruptcy Code, dated November 28, 2006
(Docket No. 3541) (the "Stipulation"), the Company was authorized,
effective January 1, 2007, to terminate medical benefits for Retirees or
participants in groups IIB and V of the Forsberg Plan and all
Post-Settlement Plan participants who were Medicare Eligible. For such
persons who were not Medicare Eligible as of this date, the Stipulation
authorized the Company to terminate medical benefits on the earlier of
(a) the date such Retirees or participants become Medicare Eligible if
such date is on or after January 1, 2007, or (b) October 19, 2016. The
treatment of these classes of Retirees was pursuant to Solutia's
prepetition rights under the Forsberg Plan.
6
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
2007 Retiree Welfare Plan.
NOTIFICATION OF MAXIMUM Medicare Eligible Retirees who exceed
AGGREGATE BENEFIT 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.
2007 RETIREE WELFARE PLAN The 2007 Retiree Welfare Plan will
modify, amend and supersede the terms
of the Forsberg and Post-Settlement
Plans as provided in this Agreement.
The 2007 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.
7
LIFE INSURANCE The 2007 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.
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 2007 Retiree Welfare Plan or any
subsequent retiree medical benefit
plans.
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 2007 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
8
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
2007 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
2007 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.
3. In the event that no Pre-Spin
Retirees are participating in the
2007 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 2007 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(11)
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
<FN>
- ----------
(11) "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
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 all General
Unsecured Creditors (as defined in
the Plan) who do not participate in
the Rights Offering. The recovery on
account of the Retiree Claim (the
"Retiree Recovery") shall be computed
based on (i) the aggregate equity
value in Reorganized Solutia
distributable to General Unsecured
Creditors 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, as set forth in the
disclosure statement filed in
connection with the Plan and approved
by the Bankruptcy Court, after
accounting for the discount in the
Rights Offering and prior to any
dilution in General Unsecured
Creditor recoveries resulting from
the resolution of Disputed General
Unsecured Claims (as defined in the
Plan), 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 Plan (as
defined in the Plan).
Notwithstanding anything contained in
the preceding paragraph to the
contrary, in the event that the
consents and approvals described
above have not been obtained within
30 days from the Effective Date
(which period may be extended upon
the mutual written consent of
Reorganized Solutia and the Retiree
Liaison Committee), 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 and
all proceeds (net of sales
commissions and other transaction
fees) from the sale of the balance of
the Retiree Shares that would have
been deposited on account of the
Retiree Claim had the consents and
approvals been received; provided
--------
that the total number of shares of
New Common Stock deposited in the
Retiree Trust or sold in accordance
with the foregoing shall not exceed
the number of Retiree Shares
distributed on account of the Retiree
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 (net of sales
commissions and other transaction
10
fees) 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 2007 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.
The Retiree Claim and all rights and
obligations associated therewith
shall be held and managed by the
Retirees' Committee as the authorized
representative for the Retirees. The
Retirees' Committee may authorize its
counsel to act as the agent for the
Retirees' Committee with respect to
the Retiree Claim.
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,
enter into the Monsanto Settlement
(as defined in the Plan) 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
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
11
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 AND The Plan and Confirmation Order shall
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 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.
12
STAY OF APPEAL On or about February 16, 2006, the
Company and the Retirees' Committee
jointly sought 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 PROCEEDINGS On the Effective Date, that certain
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.
13
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.
14
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 10th day of July, 2007.
SOLUTIA INC.
/s/Jeffry N. Quinn
-----------------------------------------
By: Jeffry N. Quinn
Its: President & Chief Executive Officer
[Signatures Continue on the Next Page]
15
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]
16
THE OFFICIAL COMMITTEE OF RETIREES
OF SOLUTIA INC.
/s/Kenneth M. Kettler
-----------------------------------------
By: Kenneth M. Kettler
Its: Chairman
[Signatures Continue on the Next Page]
17
MONSANTO COMPANY
/s/David F. Snively
-----------------------------------------
By: David F. Snively
Its: Senior Vice President, Secretary and
General Counsel
18
THE OFFICIAL COMMITTEE OF UNSECURED
CREDITORS OF SOLUTIA INC.
/s/James R. Savin
-----------------------------------------
By: Akin Gump Strauss Hauer & Feld LLP
Its: Counsel
19
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(12) as
determined by the following table:
- ----------------------------------------------------------------------------------------------------------------------
SOLUTIA DEFINED DOLLAR LIMIT
- ----------------------------------------------------------------------------------------------------------------------
RETIREE (OR SURVIVING SPOUSE) RETIREE (OR SURVIVING SPOUSE)
COVERED GROUP BEFORE AGE 65 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 SPOUSE) RETIREE (OR SURVIVING SPOUSE)
COVERED GROUP BEFORE AGE 65 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>
- ----------
(12) 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(13) as determined by the following
table:
- ----------------------------------------------------------------------------------------------------------------------
SOLUTIA DEFINED DOLLAR LIMIT
- ----------------------------------------------------------------------------------------------------------------------
RETIREE (OR SURVIVING SPOUSE) RETIREE (OR SURVIVING SPOUSE)
COVERED GROUP BEFORE AGE 65 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>
- ----------
(13) 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-
Exhibit 99.2.K
EXECUTION DRAFT
SETTLEMENT COMMUNICATION GOVERNED BY FEDERAL RULE OF
EVIDENCE 408 AND ANY APPLICABLE STATE RULES OF EVIDENCE
In re Solutia Inc., et al.
August 17, 2007
To the Holders of the Notes Referred to Below:
Ladies and Gentlemen:
This letter agreement (the "Agreement") sets forth certain terms and
----------
conditions pursuant to which Solutia Inc. ("Solutia"), and certain of its
-------
affiliates (collectively with Solutia, the "Debtors") will propose an
-------
amendment to the proposed Debtors' Fourth Amended Joint Plan of Reorganization
submitted to the United States Bankruptcy Court for the Southern District of
New York (the "Bankruptcy Court") on August 10, 2007, on a consensual basis
----------------
with Monsanto Company ("Monsanto"), the Official Committee of Unsecured
--------
Creditors of Solutia Inc., et al. (the "Creditors' Committee"), the Ad Hoc
--------------------
Solutia Trade Claims Committee (the "Trade Claims Committee"), the Ad Hoc
----------------------
Committee of Solutia Noteholders (the "Noteholders' Committee"), the Official
----------------------
Committee of Equity Holders of Solutia Inc. (the "Equity Committee"), and the
----------------
undersigned holders (the "Consenting Noteholders" and, together with the
----------------------
Debtors, the Creditors' Committee, the Trade Claims Committee, the
Noteholders' Committee, the Equity Committee and Monsanto, the "Parties") of:
-------
(i) the 6.72% notes due October 15, 2037; and (ii) the 7.375% notes due
October 15, 2027 (collectively, the "Notes"), all issued under an indenture
-----
dated October 1, 1997 (the "Prepetition Indenture"), between Solutia and The
---------------------
Chase Manhattan Bank, as Trustee (the "Indenture Trustee"). The claims of the
-----------------
holders of the Notes (the "Noteholders") are referred to herein as "Noteholder
----------- ----------
Claims." For purposes of this Agreement, "Non-Noteholder Parties" shall refer
- ------ ----------------------
to the Parties, other than the Consenting Noteholders. All capitalized terms
not otherwise defined herein have the meanings given to such terms in the Term
Sheet (as defined below).
Proposed Amended Plan of Reorganization
---------------------------------------
On December 17, 2003, the Debtors commenced voluntary cases (the
"Chapter 11 Cases") under chapter 11 of title 11 of the United States Code
----------------
(the "Bankruptcy Code") in the Bankruptcy Court. On February 14, 2006, the
---------------
Debtors filed the Debtors' Joint Plan of Reorganization (as amended, the
"Solutia Plan"), which, among other things, embodied a global settlement among
Solutia, Monsanto, Pharmacia Corporation ("Pharmacia"), the official committee
---------
of unsecured creditors appointed in the Chapter 11 Cases and the official
committee of retirees appointed in the Chapter 11 Cases. On May 16, 2007, the
Debtors filed their First Amended Joint Plan of Reorganization and, on July 9,
2007, the Debtors filed their Second Amended Joint Plan of Reorganization.
Subsequently, the Debtors submitted a Third Amended Joint Plan of
Reorganization and, on August 10, 2007, a Fourth Amended Joint Plan of
Reorganization, to the Bankruptcy Court.
The Parties desire to further amend the Solutia Plan (the "Fifth
-----
Amended Solutia Plan") on terms, among others, substantially in accordance
- --------------------
with those contained in the term sheet annexed hereto as Exhibit A and
---------
incorporated herein in its entirety (the "Term Sheet"). The Debtors will
----------
propose and pursue confirmation of the Fifth Amended Solutia Plan on a timely
basis and, prior to confirmation of the Fifth Amended Solutia Plan, will take
no action inconsistent with the Fifth Amended Solutia Plan or the Term Sheet
unless so required by their fiduciary duties.
Due Authority
-------------
Each Consenting Noteholder represents that, as of the date hereof,
(i) such Consenting Noteholder either (A) is the beneficial owner of the
unpaid principal amount of Noteholder Claim set forth opposite its name on the
signature page hereof (for each such Consenting Noteholder, the "Consenting
----------
Noteholder Claims"), or (B) has investment authority with respect to the
- -----------------
Consenting Noteholder Claims and has the power and authority to vote in the
solicitation of acceptances to the Fifth Amended Solutia Plan on behalf of the
beneficial owner(s) of such Consenting Noteholder Claims, and (ii) such
Consenting Noteholder has full power and authority to vote on and consent to
matters concerning such Consenting Noteholder Claims in this Agreement,
subject to the terms and conditions of the Prepetition Indenture, if any,
relating to the exchange, assignment and transfer of the Consenting Noteholder
Claims.
Transfer of Noteholder Claims
-----------------------------
Each of the Consenting Noteholders hereby agrees that, so long as
this Agreement has not been terminated, it shall not (i) grant proxies to any
person in connection with its Notes to vote on the Fifth Amended Solutia Plan
except in a manner consistent with the terms of this Agreement, or (ii) sell,
transfer or assign any of the Consenting Noteholder Claims or any option
thereon or any right or interest therein, unless the transferee thereof either
(a) is a Consenting Noteholder; or (b) agrees in writing for the benefit of
the other Parties hereto to be bound by all of the terms of this Agreement and
executes a counterpart signature page of this Agreement and the transferor
provides the Debtors with a copy thereof, in which event each Non-Noteholder
Party shall be deemed to have acknowledged that its obligations to the
Consenting Noteholders hereunder shall be deemed to constitute obligations in
favor of such transferee.
Further Acquisition of Notes
----------------------------
This Agreement shall in no way be construed to preclude the
Consenting Noteholders or any of their respective subsidiaries from acquiring
additional Notes. Any such additional Notes acquired by a Consenting
Noteholder shall automatically be deemed to be Consenting Noteholders Claims
and to be subject to the terms of this Agreement.
-2-
Support for the Fifth Amended Solutia Plan
------------------------------------------
Each of the Consenting Noteholders agrees that, subject to the
condition that the Fifth Amended Solutia Plan (including any amendments
thereto) provides for the treatment of Consenting Noteholder Claims consistent
with or more beneficial to the holders of such claims than that contemplated
in the Term Sheet, and subject to the Parties' continued support of the Fifth
Amended Solutia Plan in accordance with the treatment of the Noteholder Claims
as set forth in the Term Sheet, it shall support the Fifth Amended Solutia
Plan. Such support shall include the following: each Consenting Noteholder
(together with its affiliates, officers, directors, stockholders, members,
employees, partners, employees, representatives and agents) shall not: (v)
object to the Fifth Amended Solutia Plan or to any efforts to obtain
acceptance of, and to confirm and implement, the Fifth Amended Solutia Plan;
(w) vote for, consent to, support or participate in the formulation of any
plan other than the Fifth Amended Solutia Plan; (x) solicit, encourage,
entertain or engage in any inquiries, discussions, offers or proposals, or
enter into any agreements, relating to any disposition of the Debtors or their
assets out of the ordinary course of business or any plan of reorganization or
liquidation for the Debtors other than the Fifth Amended Solutia Plan or any
amendment thereto, this Agreement and any documents in support hereof; (y)
encourage or support in any fashion any person or entity to vote against the
Fifth Amended Solutia Plan or to take any other action prohibited to the
Consenting Noteholders in this Agreement; or (z) take any other action
directly or indirectly for the purpose of delaying, preventing, frustrating or
impeding acceptance, confirmation or implementation of the Fifth Amended
Solutia Plan. As additional elements of such support, the Consenting
Noteholders who are members of Noteholders Committee shall cause the
Noteholders Committee, upon the effectiveness, and subject to the terms of,
this Agreement, to (a) withdraw all objections to Solutia's Plan, disclosure
statement and/or settlements with Monsanto and the Official Committee of
Solutia Retirees (the "Plan Materials") and (b) support approval of the Plan
--------------
Materials.
Non-Noteholder Party Agreement
------------------------------
Each of the Non-Noteholder Parties hereby agrees to use its
reasonable best efforts to have the disclosure statement with respect to the
Fifth Amended Solutia Plan approved by the Bankruptcy Court, and thereafter to
use its reasonable best efforts to obtain an order of the Bankruptcy Court
confirming the Fifth Amended Solutia Plan, in each case as expeditiously as
commercially reasonable under the Bankruptcy Code and Bankruptcy Rules, and
incorporating the terms and conditions of this Agreement and the Term Sheet
and otherwise consistent in all material respects with this Agreement and the
Term Sheet (including with respect to the treatment of claims and interests
and the form of distribution therein contemplated).
Termination of Obligations
--------------------------
Each Consenting Noteholder under this Agreement may terminate its
obligations under this Agreement by notice to counsel to the Non-Noteholder
Parties, in which case its agreement hereto shall terminate and be of no
further force and effect, if any of the following occurs: (a) the Debtors (i)
publicly announce their intention not to
-3-
pursue the confirmation of the Fifth Amended Solutia Plan in accordance with
the Term Sheet; or (ii) file or support a chapter 11 plan, or the Bankruptcy
Court confirms a plan or enters a final order, providing for treatment of the
Consenting Noteholder Claims that is inconsistent with or less favorable than
the terms and conditions set forth in the Term Sheet, including without
limitation, the Debtors' agreement to pay the reasonable fees and expenses of
the legal and financial, as applicable, advisors for the Noteholders'
Committee and the trustees respecting the Prepetition Indenture in accordance
with the Term Sheet; (b) any Non-Noteholder Party materially breaches this
Agreement; (c) confirmation of the Fifth Amended Solutia Plan is denied; (d)
any other plan is confirmed in the Chapter 11 Cases; (e) the Fifth Amended
Solutia Plan is either (i) not confirmed within 90 days from the day on which
the order approving the disclosure statement with respect to the Fifth Amended
Solutia Plan (the "Disclosure Statement") is entered by the Bankruptcy Court;
--------------------
or (ii) not consummated within 120 days from the day on which the order
approving the Disclosure Statement is entered by the Bankruptcy Court; (f) the
Chapter 11 Cases are converted to a case under Chapter 7 of the Bankruptcy
Code or a trustee is appointed for the Debtors under any Chapter of the
Bankruptcy Code; and (g) any written representation or warranty made by any
Non-Noteholder Party or their agents or representatives to the Consenting
Noteholders in this Agreement or the Term Sheet is false or misleading in any
material respect when made. No Party shall have any liability to the other or
any other person as a result of the termination of such Party's obligations
hereunder in accordance with this paragraph. Notwithstanding the foregoing,
upon the occurrence of the effective date of the Fifth Amended Solutia Plan,
all obligations under this Agreement shall terminate automatically without
further action by any Party.
All notices under this Section to be served to the counsel of the
Non-Noteholder Parties shall be deemed given if in writing and delivered or
sent by telecopy, courier or by registered or certified mail (return receipt
requested) to the following addresses or facsimile numbers (or at such other
addresses or facsimile numbers as shall be specified by like notice):
Counsel to the Debtors
Kirkland & Ellis LLP
153 East 53rd Street
New York, NY 10022
Attn: Jonathan Henes, Esq.
Facsimile: (212) 446-4900
Counsel to Monsanto
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, N.Y. 10019-6099
Attn: John C. Longmire, Esq.
Facsimile: (212) 728-9574
-4-
Counsel to the Creditors' Committee
Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, NY 10022-2524
Attn: Daniel H. Golden, Esq.
Facsimile: (212) 872-1002
Counsel to the Trade Claims Committee
Brown Rudnick Berlack Israels LLP
Seven Times Square
New York, NY 10036
Attn: Edward S. Weisfelner, Esq.
Facsimile: (212) 209-4801
Counsel to the Noteholders' Committee
Hennigan, Bennett & Dorman LLP
856 S. Figueroa Street, Suite 2900
Los Angeles, CA 90017
Attn: Bennett J. Murphy, Esq.
Facsimile: (213) 694-1234
Counsel to the Equity Committee
Pillsbury Winthrop Shaw Pittman LLP
1540 Broadway
New York, NY 10036-4039
Attn: David A. Crichlow, Esq.
Facsimile: (212) 858-1500
Release of Claims
-----------------
Subject to the condition that the Fifth Amended Solutia Plan is
consummated, in addition to, and in no way limiting or expanding the releases
in the Fifth Amended Solutia Plan, each Consenting Noteholder hereby releases
and covenants not to: (a) sue or otherwise seek recovery from the Debtors, any
reorganized successors of the Debtors, Monsanto, Pharmacia, any current or
former officer, director, shareholder, employee, agent, representative or
professional of the Debtors, or any officer, affiliate, director, employee,
agent, representative, partner, limited partner, member, trustee, manager or
professional of any of the foregoing or any person controlling or controlled
by any of the foregoing (collectively, the "Released Parties"), on account of
----------------
any claim (as defined in 11 U.S.C. Section 101), including but not limited to
any claim sounding in law or equity or asserting a tort, breach of duty or
contract, violations of federal or state securities laws or otherwise, based
upon any act, occurrence or failure to act from the beginning of time through
the consummation of the Fifth Amended Solutia Plan, in any way related to the
Debtors or their business or affairs; or (b) assert against any of the
Released Parties any claim, obligation, right, cause of action or liability
which such Consenting Noteholder may be entitled to assert, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, based in whole
or in part on any act, omission,
-5-
transaction or occurrence from the beginning of time through the consummation
of the Fifth Amended Solutia Plan and in any way relating to the Debtors, the
Chapter 11 Cases or the Fifth Amended Solutia Plan, including, without
limitation, any pleading filed with respect thereto.
Reservation of Rights
---------------------
This Agreement and the Term Sheet are part of a proposed settlement
of a dispute among the parties hereto. Except as expressly provided in this
Agreement and the Term Sheet: (a) nothing herein is intended to, or does, in
any manner waive, limit, impair or restrict the ability of the Parties to
protect and preserve their rights, remedies and interests; and (b) nothing
contained herein effects a modification of the rights of the Parties, unless
and until the Fifth Amended Solutia Plan is confirmed and becomes effective.
If the transactions contemplated herein are not consummated, or if this
Agreement is terminated for any reason, the parties hereto fully reserve any
and all of their rights. Pursuant to Federal Rule of Evidence 408 and any
applicable state rules of evidence, this Agreement and all negotiations
relating thereto shall not be admissible into evidence in any proceeding
involving the Parties other than (y) in connection with the confirmation of
the Fifth Amended Solutia Plan, including the solicitation of acceptances
thereof; and (z) in a proceeding to enforce the terms of this Agreement.
Representations and Warranties
------------------------------
Each of the Non-Noteholder Parties severally (but not jointly)
represent and warrant to each other that the following statements are true,
correct and complete as of the date hereof: (a) it has all requisite
corporate, partnership, or limited liability company power and authority to
enter into this Agreement and to carry out the transactions contemplated
hereby, and to perform its obligations hereunder; (b) with the exception of
the Creditors' Committee, the Trade Claims Committee, the Noteholders'
Committee and the Equity Committee, it is duly organized, validly existing and
in good standing under the laws of its state of organization and it has the
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; (c) the execution and delivery of this
Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary corporate, partnership or limited liability
company action on its part; (d) the execution, delivery and performance of
this Agreement does not and shall not: (i) violate any provision of law, rule
or regulation applicable to it or any of its subsidiaries, (ii) violate its
certificate of incorporation, bylaws or other organizational documents or
those of any of its subsidiaries; or (iii) conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under
any material contractual obligation to which it or any of its subsidiaries is
a party; (e) with the exception of the Creditors' Committee, the Trade Claims
Committee, the Noteholders' Committee and the Equity Committee, the execution,
delivery and performance by it of this Agreement do not and shall not require
any registration or filing with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental
authority or regulatory body (other than the approval of the Bankruptcy Court
in the case of Debtors); (f) subject to the provision of Sections 1125 and
1126 of the Bankruptcy Code, this Agreement is a legally valid and
-6-
binding obligation of such party, enforceable against such party in accordance
with its terms.
Prior Negotiations
------------------
This Agreement constitutes the entire understanding of the parties
with respect to the subject matter hereof. No representations, oral or
written, other than those set forth herein may be relied on by any party in
connection with the subject matter hereof.
No Oral Amendments
------------------
No modification or amendment of the terms of this Agreement shall be
valid unless such modification or amendment is in writing and has been signed
by the Debtors and the Consenting Noteholders.
Assignment
----------
Except as set forth in the Section of this Agreement entitled
"Transfer of Noteholder Claims" above, no rights or obligations of any party
under this Agreement may be assigned or transferred to any other person or
entity.
Governing Law
-------------
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to such state's choice
of law provisions which would require the application of the law of any other
jurisdiction. By its execution and delivery of this Agreement, each of the
Parties hereby irrevocably and unconditionally agrees for itself that any legal
action, suit or proceeding against it with respect to any matter arising under
or arising out of or in connection with this Agreement or for recognition or
enforcement of any judgment rendered in any such action, suit or proceeding,
may be brought in the Bankruptcy Court, and by execution and delivery of this
Agreement, each of the Parties hereby irrevocably accepts and submits itself
to the exclusive jurisdiction of such Bankruptcy Court, generally and
unconditionally, with respect to any such action, suit or proceeding.
Specific Performance
--------------------
It is understood and agreed by the Parties that money damages would
not be a sufficient remedy for any breach of this Agreement by any Party and
each non-breaching Party shall be entitled to specific performance and
injunctive or other equitable relief as a remedy of any such breach,
including, without limitation, an order of the Bankruptcy Court requiring any
Party to comply promptly with any of its obligations hereunder.
-7-
Effective Date
--------------
This Agreement shall not become effective and binding on the Parties
hereto unless and until counterpart signature pages shall have been executed
and delivered by holders of at least $300.1 million in principal amount of the
Notes; provided, however, that the Debtors, with the written consent of each
-------- -------
of the other Non-Noteholder Parties, shall have the right to waive such
condition to the effectiveness of this Agreement.
Headings
--------
The section headings of this Agreement are for convenience of
reference only and shall not, for any purpose, be deemed a part of this
Agreement.
Successors and Assigns, Several Obligations
-------------------------------------------
This Agreement is intended to bind and inure to the benefit of the
Parties and their respective successors, permitted assigns, heirs, executors,
administrators and representatives. The invalidity or unenforceability at any
time of any provision hereof shall not affect or diminish in any way the
continuing validity and enforceability of the remaining provisions hereof. The
agreements, representations and obligations of the Consenting Noteholders
under this Agreement are several and not joint in all respects.
Third-Party Beneficiaries
-------------------------
Unless expressly stated herein, this Agreement shall be solely for
the benefit of the Parties hereto and no other person or entity, other than
the Parties, shall be a third party beneficiary hereof.
Counterparts
------------
This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same agreement. Execution copies of this agreement
may be delivered by facsimile which shall be deemed to be an original for the
purposes of this paragraph.
Consideration
-------------
It is hereby acknowledged by the Parties that no consideration shall
be due or paid to the Consenting Noteholders in exchange for their support of
the Fifth Amended Solutia Plan, in accordance with the terms and conditions of
this Agreement, other than the obligations imposed upon the Debtors and
Monsanto pursuant to the terms of this Agreement, including, without
limitation, the Debtors' and Monsanto's obligations to use reasonable best
efforts to confirm the Fifth Amended Solutia Plan in accordance with the terms
and conditions of this Agreement.
-8-
Acknowledgement
---------------
This Agreement is not, and shall not be deemed to be, a solicitation
for consents to the Fifth Amended Solutia Plan. Each Consenting Noteholder's
acceptance of the Fifth Amended Solutia Plan shall not be solicited until it
has received the disclosure statement for the Fifth Amended Solutia Plan
approved by the Bankruptcy Court pursuant to applicable provisions of the
Bankruptcy Code.
-9-
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed and delivered by their respective duly authorized officers, solely
in their respective capacity as officers of the undersigned and not in any
other capacity, as of the date first set forth above.
Solutia Inc.
By: /s/ Jeffry N. Quinn
-----------------------------
Name: Jeffry N. Quinn
Title: Chairman, President & CEO
Monsanto Company
By: /s/ David F. Snively /s/ Robert A. Paley
----------------------------- ---------------------------------
Name: David T. Snively Robert A. Paley
Title: Sr. Vice President, Vice President & Treasurer
Secretary & General Counsel
Official Committee of Unsecured
Creditors of Solutia Inc., et al.
By: /s/ Daniel H. Golden
-----------------------------
Name: Daniel H. Golden
Title: Partner, Akin Gump Strauss Haver & Feld LLP,
Counsel to Official Creditors of Solutia Inc., et al.
Ad Hoc Solutia Trade Claims Committee
By: /s/ Steven D. Pohl
-----------------------------
Name: Steven D. Pohl as counsel for, and authorized by,
Title: Ad Hoc Solutia Trade Claims Committee
Member, Brown Rudnick Berlack Israels, LLP
Ad Hoc Committee of Solutia Noteholders
By: /s/ Bennett T. Murphy
-----------------------------
Name: Bennett T. Murphy
Title: Attorney in Fact
Official Committee of Equity Security
Holders of Solutia Inc.
By: /s/ Karen Dine
-----------------------------
Name: Karen Dine, Pillsbury Winthrop, Shaw, Rittman LLP
Title: Counsel to the Official Committee of Equity
Security Holders of Solutia, Inc.
-10-
EXHIBIT 99.2.P
EXECUTION COPY
COMMITMENT AGREEMENT
BY AND AMONG
SOLUTIA, INC.
AND
THE INVESTORS SET FORTH HEREIN
DATED AS OF OCTOBER 15, 2007
TABLE OF CONTENTS
Page
----
Section 1. The Rights Offering.............................................................................2
(a) Rights Offering Procedures; Amended Plan........................................................2
(b) Rights Exercise Period; Expiration Time.........................................................2
(c) Over-Allotment Right............................................................................2
(d) Issuance of Shares..............................................................................3
(e) Commitment Notice; Satisfaction Notice; Payment Notice..........................................3
Section 2. The Backstop Commitment.........................................................................3
(a) Backstop Commitment.............................................................................3
(b) Direct Purchase Right...........................................................................4
(c) Backstop Fee....................................................................................4
(d) Transaction Fees and Expenses...................................................................5
(e) Delivery of Investor Shares.....................................................................6
(f) Taxes...........................................................................................6
(g) Document Delivery...............................................................................6
(h) Investor Affiliates.............................................................................6
Section 3. Representations and Warranties of the Company...................................................7
(a) Incorporation and Qualification.................................................................7
(b) Corporate Power and Authority...................................................................7
(c) Execution and Delivery; Enforceability..........................................................8
(d) Authorized Capital Stock........................................................................8
(e) Issuance........................................................................................9
(f) No Conflict.....................................................................................9
(g) Consents and Approvals..........................................................................9
(h) Arm's Length...................................................................................10
(i) Financial Statements...........................................................................10
(j) Disclosure Statement and Exchange Act Documents................................................11
(k) Preliminary Prospectus.........................................................................11
(l) Registration Statement and Prospectus..........................................................11
(m) Absence of Certain Changes.....................................................................12
(n) Descriptions of the Transaction Documents......................................................12
(o) No Violation or Default........................................................................12
(p) Legal Proceedings..............................................................................13
(q) Independent Accountants........................................................................13
(r) Title to Intellectual Property.................................................................13
(s) No Undisclosed Relationships...................................................................13
(t) Investment Company Act.........................................................................14
(u) Licenses and Permits...........................................................................14
-i-
(v) Compliance With Environmental Laws.............................................................14
(w) Compliance With ERISA..........................................................................14
(x) Accounting Controls............................................................................15
(y) Insurance......................................................................................15
(z) No Unlawful Payments...........................................................................15
(aa) No Restrictions on Subsidiaries................................................................15
(bb) No Broker's Fees...............................................................................16
(cc) No Registration Rights.........................................................................16
(dd) No Stabilization...............................................................................16
(ee) Margin Rules...................................................................................16
(ff) Forward-Looking Statements.....................................................................16
(gg) Statistical and Market Data....................................................................16
Section 4. Representations and Warranties of the Investors................................................16
(a) Organization...................................................................................16
(b) Power and Authority............................................................................16
(c) Execution and Delivery.........................................................................17
(d) Securities Laws Compliance.....................................................................17
(e) Accredited Investor............................................................................17
(f) Resale.........................................................................................17
(g) Information....................................................................................17
(h) No Broker's Fees...............................................................................17
(i) No Conflict....................................................................................17
(j) Consents and Approvals.........................................................................18
(k) Arm's Length...................................................................................18
(l) Legal Proceedings..............................................................................18
(m) Sufficiency of Funds...........................................................................19
Section 5. Additional Covenants of the Company............................................................19
(a) Agreement Motion and Agreement Order...........................................................19
(b) Amended Plan and Disclosure Statement..........................................................19
(c) Rights Offering................................................................................19
(d) Listing........................................................................................20
(e) Notification...................................................................................20
(f) Unsubscribed Shares............................................................................20
(g) Stock Splits, Dividends, etc...................................................................20
(h) HSR............................................................................................20
(i) Effectiveness of the Registration Statement....................................................20
(j) Clear Market...................................................................................21
(k) No Stabilization...............................................................................21
-ii-
(l) Reports........................................................................................21
(m) Registration Rights Agreement..................................................................22
(n) Access and Information.........................................................................22
(o) Non-Solicitation...............................................................................22
(p) Opinion of Counsel For The Company.............................................................23
Section 6. Additional Covenants of the Investors..........................................................23
(a) Information....................................................................................23
(b) HSR Act........................................................................................23
(c) Agreement Order................................................................................23
(d) Inconsistent Transaction.......................................................................23
Section 7. Conditions to the Obligations of the Parties...................................................23
(a) Conditions to the Obligations of the Investors.................................................23
(i) Agreement Order................................................................................23
(ii) Material Adverse Effect........................................................................23
(iii) Inconsistent Transaction.......................................................................24
(iv) Confirmation Order.............................................................................24
(v) Amended Plan and Confirmation Order............................................................24
(vi) Conditions to Confirmation.....................................................................24
(vii) Rights Offering................................................................................24
(viii) Commitment Notice..............................................................................24
(ix) Valid Issuance.................................................................................25
(x) No Restraint...................................................................................25
(xi) HSR Act........................................................................................25
(xii) Consents and Approvals.........................................................................25
(xiii) Enforceability.................................................................................25
(xiv) NYSE/Nasdaq....................................................................................25
(xv) Comfort Letters................................................................................25
(xvii) Execution of Documents.........................................................................25
(xviii) No Legal Impediment to Issuance................................................................25
(xix) Good Standing..................................................................................25
(xx) Representations and Warranties and Covenants...................................................26
(xxi) Officer's Certificate..........................................................................26
(xxii) Bankruptcy Court Approval......................................................................26
(xxiii) Exit Facility..................................................................................26
(xxiv) Financial Projections..........................................................................26
(xxv) Extension Fees.................................................................................27
(b) Conditions to the Obligations of the Company...................................................27
(i) Aggregate Purchase Price.......................................................................27
(ii) Agreement Order................................................................................27
(iii) Confirmation Order.............................................................................27
(iv) Amended Plan and Confirmation Order............................................................27
(v) Conditions to Confirmation.....................................................................27
(vi) Rights Offering................................................................................27
-iii-
(vii) No Restraint...................................................................................27
(viii) HSR Act........................................................................................27
(ix) Enforceability.................................................................................28
(x) Representations and Warranties and Covenants...................................................28
Section 8. Indemnification................................................................................28
(a) Indemnification Generally......................................................................28
(b) Certain Procedures.............................................................................29
(c) Limitations....................................................................................30
Section 9. Survival of Representations and Warranties, Etc................................................30
Section 10. Termination....................................................................................31
(a) Termination by Investors.......................................................................31
(b) Effect of Termination..........................................................................31
Section 11. Notices........................................................................................31
Section 12. Assignment; Third Party Beneficiaries..........................................................32
Section 13. Prior Negotiations; Entire Agreement...........................................................33
Section 14. GOVERNING LAW; VENUE...........................................................................33
Section 15. Counterparts...................................................................................33
Section 16. Waivers and Amendments.........................................................................33
Section 17. Headings.......................................................................................34
Section 18. Specific Performance...........................................................................34
Section 19. Voting Restriction.............................................................................34
Schedule I Index of Defined Terms
Exhibit A Rights Offering Procedures
Exhibit B Settlement Term Sheet
Exhibit C Registration Rights Agreement Terms
Exhibit D Exit Facility Terms
-iv-
COMMITMENT AGREEMENT
This Commitment Agreement (this "Agreement"), dated as of
---------
October 15, 2007, is made by and among, (i) Solutia Inc., a Delaware
corporation (as a debtor-in-possession and a reorganized debtor, as
applicable, the "Company") and (ii) Highland Crusader Holding Corporation, a
-------
Delaware corporation, Longacre Fund Management, L.L.C., a Delaware limited
liability company, Merrill Lynch, Pierce, Fenner & Smith Incorporated, a
Delaware corporation, GMAM Investment Funds Trust II, a trust organized under
the laws of New Hampshire, ReCap International (Master) Ltd., a company
organized under the laws of the British Virgin Islands, Institutional Benchmarks
Series (Master Feeder) Ltd., a Bermuda segregated accounts company, solely
with respect to the Muscida series, Southpaw Asset Management LP, a Delaware
limited partnership and UBS Securities LLC, a Delaware limited liability
company (the entities referred to in this clause (ii), collectively, the
"Investors"). Each capitalized term used herein but not defined herein shall
---------
have the meaning given to it in the Fourth Amended Plan of Reorganization (the
"Existing Plan") of the Company and the other debtors therein submitted to the
-------------
United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court") on July 9, 2007.
----------------
WHEREAS, the Company proposes to conduct a rights offering
(the "Rights Offering") whereby each Eligible Holder (including any Equity
---------------
Holder who has purchased General Unsecured Claims of less than $100,000 from
General Unsecured Creditors pursuant to such Equity Holder's election) of a
Noteholder Claim or a General Unsecured Claim (each an "Eligible Holder"),
---------------
pursuant to the Rights Offering Procedures filed with the Bankruptcy Court in
connection with the Disclosure Statement relating to the Amended Plan (as
defined herein) and attached hereto as Exhibit A (the "Rights Offering
--------- ---------------
Procedures") shall be offered the right (each, a "Right") to purchase, on a
- ---------- -----
pro rata basis, based upon the amount of their respective pre-petition claims,
up to 15,936,703 shares (each a "Share") of New Common Stock at a purchase
-----
price of $13.33 per Share (the "Purchase Price"); provided, that the number of
-------------- --------
Shares available for purchase pursuant to the Rights will be increased by the
number of Direct Purchase Shares (as defined below) that the Investors do not
purchase pursuant to the Direct Purchase Right (as defined below);
WHEREAS, each holder of Rights who exercises in full its
Rights will be entitled, on a pro rata basis, to subscribe for additional
Shares at a price per share equal to the Purchase Price, to the extent that
other holders of Rights do not exercise all of their respective Rights; and
WHEREAS, in order to facilitate the Rights Offering,
pursuant to this Agreement, and subject to the terms, conditions and
limitations set forth herein, the Investors have agreed to purchase, and the
Company agrees to sell, for a price per share equal to the Purchase Price, a
number of Shares equal to (i) the number of shares of New Common Stock offered
pursuant to the Rights Offering and the Direct Purchase Right and not validly
subscribed for and purchased pursuant to the Rights Offering Procedures (such
Shares in the aggregate, the "Unsubscribed Shares") and (ii) at the option of
-------------------
each Investor, the Direct Purchase Shares.
In consideration of the foregoing, and the representations,
warranties and covenants set forth herein, and other good and valuable
consideration, the Company and the Investors agree as follows:
Section 1. The Rights Offering.
-------------------
(a) Rights Offering Procedures; Amended Plan. The Company will
----------------------------------------
conduct the Rights Offering pursuant to the Rights Offering Procedures, as
such may be amended from time to time provided that any such amendment is
reasonably satisfactory to the Investors, and an amended plan of
reorganization (the "Amended Plan") which shall be in form and substance
------------
reasonably satisfactory to the Investors and include only those revisions,
modifications and amendments to the Existing Plan as necessary to incorporate
the transactions contemplated by this Agreement and the other proposed
transactions described in the term sheet attached hereto as Exhibit B (the
---------
"Settlement Term Sheet") and such other revisions, modifications and
---------------------
amendments that the Company deems necessary or appropriate and that shall not
(i) materially adversely affect the obligations or rights of the Investors
hereunder, (ii) cause any representation or warranty contained herein to be
incorrect in any material respect or (iii) be inconsistent with the terms of
the Settlement Term Sheet. To the extent that the Investors object to any
amendments or modifications to the Rights Offering Procedures or the Amended
Plan, then they shall provide the Company and the Creditors' Committee with
written notice of such objections within two (2) Business Days after the filing
of such amended or modified Rights Offering or Amended Plan, which shall be
delivered by the Company to the Investors by email promptly upon filing.
(b) Rights Exercise Period; Expiration Time. In connection with the
---------------------------------------
Amended Plan, the Company shall issue Rights to purchase up to 15,936,703
Shares in the aggregate, subject to increase by the number of Direct Purchase
Shares not purchased by the Investors pursuant to the Direct Purchase Right.
The Rights Offering shall be conducted in accordance with the terms of the
Rights Offering Procedures. The Rights may be exercised during a period (the
"Rights Exercise Period") commencing on the date that the Rights Exercise
----------------------
Forms (as defined in the Rights Offering Procedures) are mailed to the
Eligible Holders and ending on the deadline specified in the Rights Offering
Procedures (the "Expiration Time"). In accordance with the Rights Offering
---------------
Procedures, after the Expiration Time, the Company shall deliver to each
Eligible Holder a notice (a "Purchase Notice") setting forth the number of
---------------
shares of New Common Stock such Eligible Holder is entitled to purchase, such
Holders' Total Exercise Price (as defined in the Rights Offering Procedures)
and instructions for payment of the Total Exercise Price. Eligible Holders who
receive the Purchase Notice shall be required to pay their Total Exercise
Price on or prior to the deadline for payment set forth in the Purchase Notice
(the "Payment Date"), which amount shall be held in escrow by the Company
------------
until the Effective Date.
(c) Over-Allotment Right. Each Eligible Holder who exercises in full
--------------------
its Rights will have the right (an "Over-Allotment Right") to subscribe for
--------------------
additional Shares at a price per share equal to the Purchase Price pursuant to
the instructions set forth in the Rights Offering Procedures to the extent
that other Eligible Holders elect not to exercise all of their respective
Rights in full. If the number of Shares remaining after the exercise of all
Rights is not sufficient to satisfy all requests for Shares under the
Over-Allotment Rights, the Eligible Holders who
-2-
exercised their Over-Allotment Rights will be allocated such remaining Shares
on a pro rata basis as set forth in the Rights Offering Procedures.
(d) Issuance of Shares. Upon the effective date of the Amended Plan
------------------
(the "Effective Date"), the Company will issue the Shares to the Eligible
--------------
Holders with respect to which Rights and Over-Allotment Rights were validly
exercised by such holder. If the exercise of a Right or Over-Allotment Right
would result in the issuance of a fractional share of New Common Stock, then
the number of shares of New Common Stock to be issued in respect of such Right
will be rounded down to the next whole share.
(e) Commitment Notice; Satisfaction Notice; Payment Notice. The
------------------------------------------------------
Company will give the Investors by electronic facsimile transmission the
certification by an officer of the Company conforming to the requirements
specified herein for such certification of either (i) the number of
Unsubscribed Shares and the aggregate purchase price therefor (a "Commitment
----------
Notice") or (ii) in the absence of any Unsubscribed Shares, the fact that
- ------
there are no Unsubscribed Shares and that the Backstop Commitment (as defined
in Section 2) is terminated (a "Satisfaction Notice") as soon as practicable
--------- -------------------
and, in any event, within 3 Business Days after the Payment Date (the date of
transmission of confirmation of a Commitment Notice or a Satisfaction Notice,
the "Determination Date"). If the number of Unsubscribed Shares specified in
------------------
the Commitment Notice increases following the Payment Date as a result of
non-payment on the Payment Date by an Eligible Holder that exercised Rights or
Over-Allotment Rights, as promptly as practicable following the Payment Date
and in any event within 7 Business Days following the Payment Date, the
Company give the Investors by electronic facsimile transmission a revised
Commitment Notice specifying the correct number of Unsubscribed Shares and the
aggregate Purchaser Price therefor.
Section 2. The Backstop Commitment.
-----------------------
(a) Backstop Commitment. On the basis of the representations and
-------------------
warranties contained herein, but subject to the conditions set forth in
Section 7:
- ---------
(i) Backstop Commitment; Commitment Percentage. Each
------------------------------------------
Investor agrees, severally and not jointly, to subscribe for and purchase on
the Effective Date, and the Company agrees to sell and issue, at a price per
share equal to the Purchase Price, a number of Shares equal to the product of
(i) such Investor's Commitment Percentage (as defined below) and (ii) all
Unsubscribed Shares (the "Backstop Commitment"). For purposes of this
-------------------
Agreement, an Investor's "Commitment Percentage" shall mean the percentage
---------------------
next to such Investor's name set forth on Schedule II which percentage
-----------
represents such Investor's purchase obligations hereunder, subject to any
adjustment pursuant to Section 2(a)(ii) below.
----------------
(ii) Default Purchase Right. If and to the extent that any
----------------------
one Investor or multiple Investors do not fully and timely satisfy its or
their obligations in respect of the Backstop Commitment as required under
Section (2)(a)(i) (an "Investor Default", and each such Investor, a
- ----------------- ----------------
"Defaulting Investor"), then each of the remaining Investors (the
-------------------
"Non-Defaulting Investors") shall have the right (the "Default Purchase
------------------------ ----------------
Right"), but not the obligation, to purchase at a price per share equal to the
- -----
Purchase Price, up to a number of Shares equal to the product of (A) the
quotient determined by dividing the Commitment Percentage of such
Non-
-3-
Defaulting Investor by the aggregate Commitment Percentage owned by all
Non-Defaulting Investors electing to exercise their Default Purchase Right and
(B) the number of Shares not purchased by all Defaulting Investors ("Default
-------
Shares"). As soon as practicable after an Investor Default, the Company will
- ------
send a notice to each Non-Defaulting Investor, specifying the number of Shares
subject to the Default Purchase Right. Each Non-Defaulting Investor will have
2 Business Days from receipt of such notice to elect to exercise the Default
Purchase Right by notifying the Company in writing of its election and
specifying the maximum number of Default Shares (up to the 100% of the Default
Shares) that it is electing to purchase. If any Non-Defaulting Investor wishes
to purchase less than all the Default Shares such Non-Defaulting Investor is
entitled to purchase in accordance with the preceding sentence, the Default
Shares shall be allocated among the Non-Defaulting Investors who wish to
purchase such available Default Shares on a pro rata basis according to each
Non-Defaulting Investor's Commitment Percentage. If any Non-Defaulting
Investors exercise the Default Right, the Commitment Percentage for the
Defaulting Investor shall be reduced by the portion of the Backstop Commitment
that such Defaulting Investor has failed to fully satisfy and the Commitment
Percentage for the Non-Defaulting Investors participating in the Default Right
shall be adjusted accordingly to reflect their respective portion of the
Default Shares.
(b) Direct Purchase Right. Each Investor shall have the right (the
---------------------
"Direct Purchase Right"), but not the obligation, to subscribe for and
---------------------
purchase on the Effective Date, and the Company agrees to issue and sell on
the Effective Date, a number of Shares equal to up to the product of (A) the
quotient determined by dividing the Commitment Percentage of each such
Investor exercising its Direct Purchase Right by the aggregate Commitment
Percentage owned by all Investors electing to exercise their Direct Purchase
Right and (B) 2,812,359 shares of New Common Stock, at a price per share equal
to the Purchase Price (the shares subscribed for by the Investors, (the
"Direct Purchase Shares"). Each Investor may elect to exercise its Direct
----------------------
Purchase Right by notifying the Company in writing of its election on or prior
to the 4th Business Day after the Expiration Time and specifying the maximum
number of Direct Purchase Shares (up to 100% of the Direct Purchase Shares)
that it is electing to purchase. If any Investor wishes to purchase less than
all the Direct Purchase Shares such Investor is entitled to purchase in
accordance with the preceding sentence, the Direct Purchase Shares shall be
allocated among the Investors who wish to purchase such available Direct
Purchase Shares on a pro rata basis according to each Investor's Commitment
Percentage. In the event that any Investors do not exercise the Direct
Purchase Right, the number of Shares subject to purchase pursuant to exercise
of Rights and/or Over-Allotment Rights in the Rights Offering shall be
increased by the number of Direct Purchase Shares not purchased by the
Investors. The Unsubscribed Shares and the Direct Purchase Shares are herein
collectively referred to as the "Investor Shares."
---------------
(c) Backstop Fee. On the basis of the representations and warranties
------------
herein contained, but subject to the entry of an order of the Bankruptcy Court
approving this Agreement and the exhibits attached hereto, the payment of the
fees and expenses provided for herein, and the release and exculpation of the
Investors, their affiliates, representatives and advisors from any liability
for participation in the transactions contemplated hereby, by the Registration
Rights Agreement and the Amended Plan to the fullest extent permitted under
applicable law (the "Agreement Order"), the Company shall pay to the
---------------
Investors, and each Investor shall have earned as of the date of the payment,
a backstop fee (the "Backstop Fee") to compensate the Investors for the risk
------------
of their undertaking herein. The Backstop Fee shall be paid in U.S. dollars,
-4-
by wire transfer of federal (same day) funds to the accounts specified by the
Investors to the Company at least 24 hours in advance as follows: (1)
$4,375,000 shall be paid, on the first Business Day following the date of the
entry of the Agreement Order by the Bankruptcy Court, and (2) $1,875,000 shall
be paid on the date that the Company enters into a definitive agreement for
Exit Financing on terms consistent with or more favorable than the terms set
forth on Exhibit D hereto (the "Exit Financing Condition") in the event that
--------- ------------------------
such date occurs prior to December 31, 2007. As provided in Section 10(a)(ii)
hereto, in the event that the Company satisfies the Exit Financing Condition,
each Investor shall have the right to terminate its Commitment unless the
Effective Date has occurred prior to February 28, 2008. As provided in Section
10(a)(iii) hereto, if the Company fails to satisfy the Exit Financing
Condition, prior to 3:00 p.m. on December 31, 2007, each Investor shall have
the right to terminate its Commitment unless the Company pays the Extension
Fee, in which case (i) the Exit Financing Condition shall be waived by each
Investor and (ii) each Investor shall have the right to terminate its
Commitment unless the Effective Date has occurred prior to March 31, 2008. It
is understood that in the event the Agreement Order is appealed, and the
highest court to which the Agreement Order was appealed issues a final order
vacating or reversing in whole or in part the Agreement Order and further
orders disgorgement of all or a portion of the Backstop Fee, each of the
Investors shall promptly return to the Company its share (based on its
Commitment Percentage) of the portion of the Backstop Fee required to be so
disgorged. The Backstop Fee shall be allocated among the Investors in the same
proportion as their respective Commitment Percentages. If the Investors
receive the Backstop Fee, the Investors shall waive any rights to receive
punitive damages in connection with this Agreement and the transactions
contemplated hereby. If any Investor votes against confirmation of the Amended
Plan in respect of such Investor's Noteholder Claims and at the time of such
vote this Agreement has not been terminated pursuant to Section 10, such
----------
Investor shall promptly after submitting its ballot to the Company, return the
portion of the Backstop Fee, and any Extension Fee (as defined below), paid to
such Investor. Except as set forth herein, the Backstop Fee and any Extension
Fee will be nonrefundable when paid. Each Investor who is entitled to cast a
ballot on the Amended Plan shall provide copies of such ballots to the Company
and the Committee within 5 days after the Voting Deadline.
(d) Transaction Fees and Expenses.
-----------------------------
(i) Transaction Expenses. Upon the entry of the Agreement
--------------------
Order, the Company will reimburse or pay, as the case may be, the fees and
out-of-pocket expenses reasonably incurred by the Investors with respect to
the negotiation, documentation and execution of the transactions contemplated
hereby and the enforcement, attempted enforcement or preservation of any
rights or remedies contemplated hereunder, including the filing fee, if any,
required by the HSR Act (as defined in Section 5) and expenses related thereto
---------
and all Bankruptcy Court and other judicial and regulatory proceedings related
to such transactions, and including all reasonable fees and expenses of
Stroock & Stroock & Lavan LLP, counsel to the Investors, and separate counsel
to each Investor that is a broker-dealer or affiliate thereof (collectively,
the "Broker/Dealer Counsel"), together with the reasonable fees and expenses
---------------------
of any other professionals to be retained by the Investors with the prior
approval of the Company (which approval shall not be unreasonably withheld) in
connection with the transactions contemplated by herein (collectively,
"Transaction Expenses"), within 10 days of presentation of an invoice approved
--------------------
by the Investors, without Bankruptcy Court review or further Bankruptcy Court
order, whether or not the transactions contemplated hereby are consummated;
provided,
- --------
-5-
that (1) the aggregate amount of such Transaction Expenses payable to
Broker/Dealer Counsel shall not exceed $300,000 and (2) the aggregate amount
of such Transaction Expenses payable to Stroock & Stroock & Lavan LLP
("Stroock") by the Company shall not exceed $1 million unless there are
-------
Proceedings (as defined below) in which case such Transaction Expenses
relating to such Proceedings payable to Stroock (the "Litigation Expenses")
-------------------
shall be governed by Section 2(d)(ii). The Company acknowledges and agrees
that Haynes and Boone, LLP, counsel to Highland Capital Management, L.P. and
its affiliates, is also to be paid Transaction Expenses, and that such
Transaction Expenses payable to Haynes and Boone shall be fully paid and are
governed by the provisions for payment of Haynes and Boone's fees in the
Settlement Term Sheet and are not included in the calculation of any payments
made on behalf of the other Investors hereunder. These obligations are in
addition to, and do not limit, the Company's obligations under Section 8.
---------
(ii) Litigation Expenses. The Company will provide payment
-------------------
within 10 days of presentation of an invoice of any Litigation Expenses;
provided, that the aggregate amount of Litigation Expenses payable to Stroock
- --------
shall not exceed $1 million exclusive of any Transaction Expenses otherwise
payable to Stroock pursuant to Section 2(d)(i). In the event that Stroock is
paid Litigation Expenses and a final nonappealable order shall have been
entered by the court having jurisdiction over the Proceedings that the
Investors involved in such Proceedings are not the prevailing party with
respect to the Proceedings (taking into account all claims and recoveries
related to the Proceedings), then the Investors involved in the Proceedings
shall promptly following such judgment cause to be returned to the Company an
amount equal to all Litigation Expenses paid to Stroock. In the event that the
Investors are the prevailing party with respect to certain issues in the
Proceedings and not others, the court having jurisdiction over the Proceedings
shall apportion the Litigation Expenses applicable to the various issues and
will direct repayment of such fees as are apportioned to the issues on which
the Investors are not the prevailing party and will order that the Litigation
Expenses paid to the Investors with respect to the issues on which they are
the prevailing party are not subject to disgorgement.
(e) Delivery of Investor Shares. Delivery of the Investor Shares, if
---------------------------
any, will be made by the Company to the account of the Investors (or to such
other accounts as the Investors may designate) in book entry form at 9:00
a.m., New York City time, on the Effective Date against payment of the
aggregate purchase price for the Shares by wire transfer of federal (same day)
funds to the account specified by the Company to the Investors at least 24
hours in advance.
(f) Taxes. All Investor Shares, if any, will be delivered with any
-----
and all issue, stamp, transfer or similar taxes or duties payable in
connection with such delivery duly paid by the Company to the extent required
under the Confirmation Order or applicable law.
(g) Document Delivery. The documents to be delivered on the Effective
-----------------
Date by or on behalf of the parties hereto and the Unsubscribed Shares will be
delivered at the offices of Kirkland & Ellis LLP, 153 East 53rd Street, New
York, New York 10022-4611.
(h) Investor Affiliates. Notwithstanding anything to the contrary in
-------------------
this Agreement, the Investors, in their sole discretion, may designate that
some or all of the Investor Shares be issued in the name of, and delivered to,
one or more of their Affiliates or to any other Person.
-6-
Section 3. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, the Investors as set forth below.
Each representation, warranty and agreement is made as of the date hereof and
as of the Effective Date.
(a) Incorporation and Qualification. The Company and each of its
-------------------------------
Subsidiaries is a legal entity duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of organization,
with the requisite power and authority to own its properties and conduct its
business as currently conducted, and is duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, except to the
extent the failure to be so organized, validly existing, qualified or in good
standing has not had or would not reasonably be expected to have, a Material
Adverse Effect. For purposes of this Agreement, a "Material Adverse Effect"
-----------------------
shall mean any circumstance, change in or effect on the Company and the
Company's Subsidiaries, taken as a whole, that individually or in the
aggregate with all other circumstances, changes in or effects on the Company
and the Company's Subsidiaries, taken as a whole, is or is reasonably likely
to be materially adverse to the business, operations, assets or liabilities
(including without limitation contingent liabilities), results of operations
or the conditions (financial or otherwise) of the Company and the Company's
Subsidiaries taken as a whole; provided, however, that none of the following
-------- -------
shall be deemed, either alone or in combination, to constitute a Material
Adverse Effect: (i) changes in any statute, rule or regulation after the date
hereof, (ii) changes generally affecting the industries in which the Company
and its Subsidiaries operate, (iii) changes in laws, GAAP or accounting
principles, and (iv) changes after the date hereof resulting from the
announcement or the existence of, or compliance with, this Agreement or the
Settlement Term Sheet, or the announcement of the Rights Offering, the Amended
Plan or any of the other transactions contemplated hereby or thereby;
provided, further, that any circumstance, change or effect described in
- -------- -------
clauses (i), (ii), (iii) or (iv) shall not, either alone or in combination,
constitute a "Material Adverse Effect" only if the impact of such
circumstance, change or effect on the Company and its Subsidiaries, taken as a
whole, is not materially disproportionate as compared to its impact on other
participants in the industries in which the Company and its Subsidiaries
operate.
(b) Corporate Power and Authority.
-----------------------------
(i) The Company has the requisite corporate power and
authority to enter into, execute and deliver this Agreement and, subject to
entry of the Agreement Order and the Confirmation Order (together, the "Court
-----
Orders") and the expiration, or waiver by the Bankruptcy Court, of the 10-day
- ------
period set forth in Rules 6004(g) and 3020(e) of the Federal Rules of
Bankruptcy Procedure (the "Bankruptcy Rules") respectively, to perform its
----------------
obligations hereunder, including the issuance of the Rights and Shares. The
Company has taken all necessary corporate action required for the due
authorization, execution, delivery and performance by it of this Agreement,
including the issuance of the Rights and Shares, other than board of
directors' approval of, or other board action to be taken with respect to, the
documents to implement the Rights Offering.
(ii) When executed and delivered, the Company will have the
requisite corporate power and authority to enter into, execute and deliver the
Registration Rights
-7-
Agreement (as defined in Section 5(m) hereof) and all necessary corporate
------------
action required for the due authorization, execution, delivery and, subject to
entry of the Court Orders and the expiration, or waiver by the Bankruptcy
Court, of the 10-day period set forth in Bankruptcy Rules 6004(g) and 3020(e),
respectively, performance of the Registration Rights Agreement will have been
taken by the Company by the Effective Date.
(iii) The Company will have the requisite corporate power
and authority to execute the Amended Plan and to file the Amended Plan with
the Bankruptcy Court and, subject to entry of the Confirmation Order and the
expiration, or waiver by the Bankruptcy Court, of the 10-day period set forth
in Bankruptcy Rule 3020(e), to perform its obligations thereunder, and will
have taken all necessary corporate actions required for the due authorization,
execution, delivery and performance by it of the Amended Plan by the Effective
Date.
(c) Execution and Delivery; Enforceability.
--------------------------------------
(i) This Agreement has been and the Registration Rights
Agreement will be duly and validly executed and delivered by the Company, and,
upon the entry of the Agreement Order and the expiration, or waiver by the
Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rule 6004(g),
and assuming this Agreement and the Registration Rights Agreement will
constitute valid and binding agreements of the other parties hereto and
thereto, each such document will constitute the valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms.
(ii) The Amended Plan will be duly and validly filed with
the Bankruptcy Court by the Company and, upon the entry of the Confirmation
Order and the expiration, or waiver by the Bankruptcy Court, of the 10-day
period set forth in Bankruptcy Rule 3020(e), will constitute the valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(d) Authorized Capital Stock. On the Effective Date, the authorized
------------------------
capital stock of the Company will consist of 500,000,000 shares of New Common
Stock, par value $0.01 per share and 100,000,000 shares of preferred stock,
par value $0.01 per share and the issued and outstanding capital stock of the
Company will consist of 59,750,000 shares of New Common Stock. Except as will
be provided by the Amended Plan, neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by or subject to any outstanding
option, warrant, call, subscription or other right (including any preemptive
right), agreement or commitment which (w) obligates the Company or any of its
Subsidiaries to issue, deliver, sell or transfer or repurchase, redeem or
otherwise acquire, or cause to be issued, delivered, sold or transferred or
repurchased, redeemed or otherwise acquired, any shares of the capital stock
of, or other equity or voting interests in, the Company or any security
convertible or exercisable for or exchangeable into any capital stock of, or
other equity or voting interest in the Company, (x) obligates the Company or
any of its Subsidiaries to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, contract, arrangement or
undertaking, (y) restricts the transfer of any shares of capital stock of the
Company or (z) relates to the voting of any shares of capital stock of the
Company.
-8-
(e) Issuance. Subject to the approval of this Agreement by the
--------
Bankruptcy Court, the distribution of the Rights and issuance of the Shares,
including the Investor Shares to be issued and sold by the Company to the
Investors hereunder, have been duly and validly authorized and, when the
Shares are issued and delivered against payment therefor in the Rights
Offering or to the Investors hereunder, will be duly and validly issued, fully
paid and non-assessable, and free and clear of all taxes, liens, pre-emptive
rights, rights of first refusal, subscription and similar rights.
(f) No Conflict. Subject to the entry of the Court Orders and the
-----------
expiration, or waiver by the Bankruptcy Court, of the 10-day period set forth
in Bankruptcy Rules 6004(g) and 3020(e), as applicable, the distribution of
the Rights, the sale, issuance and delivery of the Shares upon exercise of the
Rights and the consummation of the Rights Offering by the Company, the sale,
issuance and delivery of the Investor Shares and the execution and delivery
(or, with respect to the Amended Plan, the filing) by the Company of this
Agreement and the Amended Plan and compliance by the Company with all of the
provisions hereof and thereof and the consummation of the transactions
contemplated herein and therein (including compliance by the Investors with
their obligations hereunder and thereunder) (i) will not conflict with or
result in a breach or violation of, any of the terms or provisions of, or
constitute a default under (with or without notice or lapse of time, or both),
or result in the acceleration of, or the creation of any lien under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound or to which any of the
property or assets of the Company or any of its Subsidiaries is subject, (ii)
will not result in any violation of the provisions of the Certificate of
Incorporation or Bylaws of the Company included in the Amended Plan and as
applicable to the Company from and after the Effective Date and (iii) will not
result in any material violation of, or any termination or material impairment
of any rights under, any statute or any license, authorization, injunction,
judgment, order, decree, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its Subsidiaries
or any of their properties, except in any such case described in subclause (i)
or (iii) as will not have or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(g) Consents and Approvals. No consent, approval, authorization,
----------------------
order, registration or qualification of or with any court or governmental
agency or body having jurisdiction over the Company or any of its Subsidiaries
or any of their properties is required for the distribution of the Rights, the
sale, issuance and delivery of the Shares upon exercise of the Rights or to
Investors hereunder and the consummation of the Rights Offering by the Company
and the execution and delivery by the Company of this Agreement, the
Registration Rights Agreement or the Amended Plan or the performance of and
compliance by the Company with all of the provisions hereof and thereof and
the consummation of the transactions contemplated herein and therein, except
(i) the entry of the Court Orders and the expiration, or waiver by the
Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rules 6004(g)
and 3020(e), as applicable, (ii) the registration under the Securities Act of
1933 and the rules and regulations of the Securities and Exchange Commission
(the "Commission") thereunder (the "Securities Act") of resales of the
---------- --------------
Investor Shares, (iii) filings with respect to and the expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust Act
(the "HSR Act") relating to the placement of Shares with the Investors, (iv)
-------
the filing with the Secretary of State of the State of Delaware of
-9-
the Certificate of Incorporation to be applicable to the Company from and
after the Effective Date and (v) such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase of the Shares by the Investors
or (vi) such consents, approvals, authorizations, registrations or
qualifications the absence of which will not have or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(h) Arm's Length. The Company acknowledges and agrees that the
------------
Investors are acting solely in the capacity of arm's length contractual
counterparties to the Company with respect to the transactions contemplated
hereby (including in connection with determining the terms of the offering)
and not as financial advisors or fiduciaries to, or agents of, the Company or
any other person. Additionally, the Investors are not advising the Company or
any other person as to any legal, tax, investment, accounting or regulatory
matters in any jurisdiction. The Company shall consult with its own advisors
concerning such matters and shall be responsible for making its own
independent investigation and appraisal of the transactions contemplated
hereby, and the Investors shall have no responsibility or liability to the
Company with respect thereto. Any review by the Investors of the Company, the
transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of the Investors and
shall not be on behalf of the Company.
(i) Financial Statements. The financial statements and the related
--------------------
notes thereto of the Company and its consolidated Subsidiaries included or
incorporated by reference in the disclosure statement relating to the Amended
Plan (the disclosure statement, as it may be so filed, revised, modified,
supplemented or amended from time to time, the "Disclosure Statement"), the
--------------------
documents filed under the Securities Exchange Act of 1934 and the rules and
regulation of the Commission thereunder (the "Exchange Act") with the
------------
Commission since December 31, 2004 (the "Exchange Act Documents"), and to be
----------------------
included or incorporated by reference in the Registration Statement (as
defined in Section 5(i)) and the Prospectus, comply or will comply in all
------------
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the Bankruptcy Code, as applicable, and present fairly or
will present fairly in all material respects the financial position of the
Company and its Subsidiaries as of the dates indicated and the results of
their operations and the changes in their cash flows for the periods
specified; such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby (except as disclosed in the Exchange
Act Documents), and the supporting schedules included or incorporated by
reference in the Disclosure Statement and the Exchange Act Documents, and to
be included or incorporated by reference in the Registration Statement and the
Prospectus, present fairly or will present fairly the information required to
be stated therein; and the other financial information included or
incorporated by reference in the Disclosure Statement and the Exchange Act
Documents, and to be included or incorporated by reference in the Registration
Statement and the Prospectus, has been derived or will be derived from the
accounting records of the Company and its Subsidiaries and presents fairly or
will present fairly the information shown thereby; and the pro forma financial
information and the related notes thereto included or incorporated by
reference in the Disclosure Statement and the Exchange Act Documents, and to
be included in the Registration Statement and the Prospectus, has been
prepared or will be prepared in accordance with the applicable requirements of
the Securities Act and the Exchange Act, as applicable, and the assumptions
underlying such pro forma financial information are
-10-
reasonable and are set forth in the Disclosure Statement and the Exchange Act
Documents and will be set forth in the Registration Statement and the
Prospectus when they become effective. Notwithstanding the foregoing, the
Investors acknowledge that the financial position of the Company reflected in
the financial information included or incorporated by reference in the
Disclosure Statement and the Exchange Act Documents, to be included or
incorporated by reference in the Registration Statement and the Prospectus,
does not reflect implementation of "fresh start" accounting pursuant to
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" by the American Institute of Certified Public
Accountants.
(j) Disclosure Statement and Exchange Act Documents. The Disclosure
-----------------------------------------------
Statement, when it was filed with the Bankruptcy Court, and the Exchange Act
Documents filed prior to the date of this Agreement, when they became
effective or were filed with the Commission, as the case may be, or, if
amended prior to the date hereof, when they were so amended, conformed in all
material respects, in the case of the Disclosure Statement, to the Bankruptcy
Code, and in the case of the Exchange Act Documents, to the requirements of
the Securities Act or the Exchange Act, as applicable, and none of such
Disclosure Statement or Exchange Act Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Disclosure Statement
or the Prospectus, as the case may be, or any future amendments thereto, when
such documents become effective or are filed with the Bankruptcy Court or the
Commission, as the case may be, will conform in all material respects to, in
the case of the Disclosure Statement, the requirements of the Bankruptcy Code,
and in the case of documents filed under the Exchange Act, the requirements of
the Exchange Act, as applicable, and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(k) Preliminary Prospectus. Each Preliminary Prospectus, at the time
----------------------
of filing thereof, will comply in all material respects with the Securities
Act and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes no
representation and warranty with respect to any statements or omissions made
in reliance upon and in conformity with information relating to the Investors
furnished to the Company in writing by the Investors expressly for use in any
Preliminary Prospectus. For purposes of this Agreement, the term "Preliminary
-----------
Prospectus" shall mean each prospectus included in such registration statement
- ----------
(and any amendments thereto) before it becomes effective, any prospectus filed
with the Commission pursuant to Rule 424(a) under the Securities Act and the
prospectus included in the Registration Statement, at the time of their
respective effectiveness that omits Rule 430A Information, and the term
"Prospectus" means the prospectus in the form first used to confirm sales of
----------
the Shares.
(l) Registration Statement and Prospectus. As of the effective date
-------------------------------------
of the Registration Statement (as defined in Section 5(i)), the Registration
------------
Statement will comply in all material respects with the Securities Act, and
will not contain any untrue statement of a material
-11-
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and as of
the applicable filing date of the Prospectus and any amendment or supplement
thereto and as of the Effective Date, the Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that the Company makes no representation and warranty with respect to
any statements or omissions made in reliance upon and in conformity with
information relating to the Investors furnished to the Company in writing by
the Investors expressly for use in the Registration Statement and the
Prospectus and any amendment or supplement thereto.
(m) Absence of Certain Changes. Since March 6, 2007, other than as
--------------------------
disclosed in the Exchange Act Documents or the Disclosure Statement, and
except for the transactions contemplated hereby or by the Settlement Term
Sheet:
(i) no event, fact or circumstance has occurred which has or
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;
(ii) there has not been any material change in the capital
stock or long-term debt of the Company or any of its Subsidiaries, or any
dividend or distribution of any kind declared, set aside for payment, paid or
made by the Company on any class of capital stock;
(iii) neither the Company nor any of its Subsidiaries has
entered into any transaction or agreement that is material to the Company and
its Subsidiaries taken as a whole or incurred any liability or obligation,
direct or contingent, that is material to the Company and its Subsidiaries
taken as a whole; and
(iv) neither the Company nor any of its Subsidiaries has
sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor disturbance or dispute or any action, order or decree of any
court or arbitrator or governmental or regulatory authority,
(n) Descriptions of the Transaction Documents. The statements in the
-----------------------------------------
Registration Statement and the Prospectus insofar as they purport to
constitute summaries of each of this Agreement, the Registration Rights
Agreement, the Amended Plan, the Agreement Order and the Confirmation Order
(collectively, the "Transaction Documents"), will constitute accurate
---------------------
statements in all material respects.
(o) No Violation or Default. The Company is in compliance with its
-----------------------
charter and bylaws and each Subsidiary of the Company is in compliance in all
material respects with its charter and bylaws or similar organizational
documents. Neither the Company nor any of its Subsidiaries is: (i) except as a
result of the Chapter 11 Proceedings (as defined below), in default, and no
event has occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound or to which any of the property or assets of the Company or any of
its
-12-
Subsidiaries is subject; or (ii) in violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority, except, in the case of clauses (i) and (ii) above,
for any such default or violation that would not, individually or in the
aggregate, have a Material Adverse Effect. For purposes of this Agreement,
"Chapter 11 Proceedings" shall mean the chapter 11 cases jointly administered
----------------------
as Case No. 03-17949 (PCB) in the Bankruptcy Court, In re Solutia Inc., et
al., Debtors.
(p) Legal Proceedings. Except as described in the Disclosure
-----------------
Statement or the Exchange Act Documents, there are no legal, governmental or
regulatory investigations, actions, suits or proceedings pending to which the
Company or any of its Subsidiaries is or may be a party or to which any
property of the Company or any of its Subsidiaries is or may be the subject
that, individually or in the aggregate, if determined adversely to the Company
or any of its Subsidiaries, would reasonably be expected to have a Material
Adverse Effect or materially and adversely affect the ability of the Company
to perform its obligations under the Transaction Documents; no such
investigations, actions, suits or proceedings are threatened or, to the best
knowledge of the Company, contemplated by any governmental or regulatory
authority or threatened by others; and as of the date hereof, (i) there are no
current or pending legal, governmental or regulatory actions, suits or
proceedings that are required under the Exchange Act to be described in the
Exchange Act Documents that are not so described and (ii) there are no
statutes, regulations or contracts or other documents that are required under
the Exchange Act to be filed as exhibits to the Exchange Act Documents or
described in the Exchange Act Documents that are not so filed or described.
(q) Independent Accountants. Deloitte & Touche LLP (the "Independent
----------------------- -----------
Accountants"), who have certified certain financial statements of the Company
- -----------
and its Subsidiaries are independent public accountants with respect to the
Company and its Subsidiaries as required by the Securities Act.
(r) Title to Intellectual Property. The Company and its Subsidiaries
------------------------------
own or possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their
respective businesses, except where the failure to own or possess any such
rights would not reasonably be expected to have a Material Adverse Effect;
and, except as would not reasonably be expected to have a Material Adverse
Effect, the conduct of their respective businesses will not conflict in any
material respect with any such rights of others, and the Company and its
Subsidiaries have not received any notice of any material claim of
infringement or conflict with any such material rights of others.
(s) No Undisclosed Relationships. No relationship, direct or
----------------------------
indirect, exists between or among the Company or any of its Subsidiaries, on
the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company or any of its Subsidiaries, on the other, that is
required by the Exchange Act to be described in the Exchange Act Documents and
that are not described, except for the relationships contemplated by this
Agreement, the Settlement Term Sheet and the Amended Plan.
-13-
(t) Investment Company Act. As of the date hereof, the Company is not
----------------------
and, after giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus, will not
be required to register as an "investment company" or an entity "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission thereunder.
(u) Licenses and Permits. The Company and its Subsidiaries possess
--------------------
all licenses, certificates, permits and other authorizations issued by, and
have made all declarations and filings with, the appropriate federal, state,
local or foreign governmental or regulatory authorities that are necessary for
the ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Disclosure Statement and the
Exchange Act Documents, except where the failure to possess or make the same
would not, individually or in the aggregate, have a Material Adverse Effect;
and, except as described in the Disclosure Statement and the Exchange Act
Documents and except as would not reasonably be expected to have a Material
Adverse Effect, neither the Company nor any of its Subsidiaries has received
notice of any revocation or modification of any such license, certificate,
permit or authorization or has any reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary
course.
(v) Compliance With Environmental Laws. The Company and its
----------------------------------
Subsidiaries (i) are in compliance with any and all applicable federal, state,
local and foreign laws, rules, regulations, decisions and orders relating to
the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (collectively,
"Environmental Laws"); (ii) have received and are in compliance with all
------------------
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iii) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except, in the case of each of the clauses
(i), (ii) and (iii), as would not, individually or in the aggregate, have a
Material Adverse Effect.
(w) Compliance With ERISA. Each employee benefit plan, within the
---------------------
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), that is maintained, administered or contributed to
-----
by the Company or any of its affiliates for employees or former employees of
the Company and its affiliates has been maintained in compliance with its
terms and the requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Internal Revenue Code
of 1986, as amended (the "Code"), except where the failure to comply with such
----
applicable statutes, orders, rules and regulations would not, individually or
in the aggregate, have a Material Adverse Effect, no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption, except such transactions
that would not, individually or in the aggregate, have a Material Adverse
Effect; and for each such plan that is subject to the funding rules of Section
412 of the Code or Section 302 of ERISA, no "accumulated funding deficiency"
as defined in Section 412 of the Code has been incurred, whether or not
waived, and the fair market value of the assets of each such plan (excluding
for these purposes accrued but unpaid contributions) exceeds the present value
of all benefits accrued under such plan determined using reasonable actuarial
assumptions.
-14-
(x) Accounting Controls. The Company and its Subsidiaries maintain
-------------------
systems of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) Insurance. The Company and its Subsidiaries have insurance
---------
covering their respective properties, operations, personnel and businesses,
including business interruption insurance, which insurance is in amounts and
insures against such losses and risks as are customary for companies whose
businesses are similar to the Company and its Subsidiaries; and, as of the
date hereof, neither the Company nor any of its Subsidiaries has (i) received
notice from any insurer or agent of such insurer that capital improvements or
other expenditures are required or necessary to be made in order to continue
such insurance or (ii) any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage at reasonable cost from similar insurers as may be necessary
to continue its business.
(z) No Unlawful Payments. Neither the Company nor any of its
--------------------
Subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or
(iv) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment, in each case (other than clause (iii)) as would reasonably
be expected to have a Material Adverse Effect.
(aa) No Restrictions on Subsidiaries. Except as (i) described in the
-------------------------------
Disclosure Statement, (ii) otherwise set forth in the record of the Chapter 11
Proceedings or (iii) as provided in (A) that certain Financing Agreement,
dated as of January 16, 2004, as amended on March 1, 2004, July 20, 2004, June
1, 2005, March 14, 2006 and January 25, 2007, among the Company and Solutia
Business Enterprises, as borrowers, all of the Debtors, as guarantors,
Citicorp USA Inc., as administrative, collateral and documentation agent, and
Citibank, N.A., as Issuer and the lenders party thereto, (B) the Exit
Facility, (C) that certain (Euro)200,000,000 Facility Agreement, amended and
restated as of September, 2006, between Solutia Europe S.A./N.V., Solutia
Services International S.C.A./Comm. V.A., the guarantors listed therein,
Citigroup Global Markets Limited, as mandated lead arranger, the financial
institutions listed therein, as the original lenders, KBC Bank N.V. as agent
for the finance parties and Citibank N.A. as security agent for the secured
parties and (D) that certain $225,000,000 Syndication and Amendment and
Restatement Agreement dated May 23, 2007 for Flexsys Holding B.V., arranged by
KBC Bank N.V. and Citigroup Global Markets Limited with KBC Bank N.V. acting
as Agent, and subject to the Bankruptcy Code, no Subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or is subject, from paying any dividends to
the Company, from making any other distribution on such Subsidiary's capital
stock, from repaying to the Company any loans or advances to such
-15-
Subsidiary from the Company or from transferring any of such Subsidiary's
properties or assets to the Company or any other Subsidiary of the Company.
(bb) No Broker's Fees. Neither the Company nor any of its
----------------
Subsidiaries is a party to any contract, agreement or understanding with any
person (other than this Agreement) that would give rise to a valid claim
against the Company or any of its Subsidiaries or the Investors for a
brokerage commission, finder's fee or like payment in connection with the
transactions contemplated by this Agreement
(cc) No Registration Rights. Except as will be expressly provided in
----------------------
the Registration Rights Agreement or the Disclosure Statement, no person has
the right to require the Company or any of its Subsidiaries to register any
securities for sale under the Securities Act by reason of the filing of the
Registration Statement with the Commission or the issuance and sale of the
Rights and the Shares.
(dd) No Stabilization. The Company has not taken, directly or
----------------
indirectly, any action designed to or that would reasonably be expected to
cause or result in any stabilization or manipulation of the price of the
Shares.
(ee) Margin Rules. Neither the issuance, sale and delivery of the
------------
Rights or the Shares nor the application of the proceeds thereof by the
Company as to be described in the Registration Statement and the Prospectus
will violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System or any other regulation of such Board of Governors
(ff) Forward-Looking Statements. No forward-looking statement (within
--------------------------
the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in the case of the Disclosure Statement and the
Exchange Act Documents, has been made or reaffirmed, and in the case of the
Registration Statement and the Prospectus, will be made or reaffirmed, without
a reasonable basis or has been disclosed other than in good faith.
(gg) Statistical and Market Data. Nothing has come to the attention
---------------------------
of the Company that has caused the Company to believe that the statistical and
market-related data to be included in the Disclosure Statement, Registration
Statement and the Prospectus is not based on or derived from sources that are
reliable and accurate in all material respects.
Section 4. Representations and Warranties of the Investors. Each of the
-----------------------------------------------
Investors, severally and not jointly, represents and warrants to, and agrees
with, the Company as set forth below. Each representation, warranty and
agreement is made as of the date hereof and as of the Effective Date.
(a) Organization. It has been duly organized and is validly existing
------------
and in good standing under the laws of the jurisdiction of its organization.
(b) Power and Authority. It has the requisite corporate, limited
-------------------
liability company or similar power and authority to enter into, execute and
deliver this Agreement and to perform its obligations hereunder and has taken
all necessary action required for the due authorization, execution, delivery
and performance by it of this Agreement.
-16-
(c) Execution and Delivery. This Agreement has been duly and validly
----------------------
executed and delivered by it and constitutes its valid and binding obligation,
enforceable against it in accordance with its terms.
(d) Securities Laws Compliance. The Investor Shares will not be
--------------------------
offered for sale, sold or otherwise transferred by it except pursuant to a
registration statement or in a transaction exempt from or not subject to
registration under the Securities Act and any applicable state securities
laws. Each Investor understands that (i) the Investor Shares are being offered
and sold to such Investor in reliance upon specific exemptions from the
registration requirements of the U.S. federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and such
Investor's compliance with, the representations, warranties and covenants of
such Investor set forth herein in order to determine the availability of such
exemptions and the eligibility of such Investor to acquire its Shares and (ii)
the Investor Shares to be purchased by it pursuant to the terms of this
Agreement have not been registered under the Securities Act or any state
securities law, and except as provided in the Registration Rights Agreement,
the Company shall not be required to effect any registration under any U.S.
federal or state securities law.
(e) Accredited Investor. It has such knowledge and experience in
-------------------
financial and business matters that they are capable of evaluating the merits
and risks of their investment in the Investor Shares being acquired hereunder.
It is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act. It understands and is able to bear any economic risks
associated with such investment (including, without limitation, the necessity
of holding the Shares for an indefinite period of time).
(f) Resale. The Investor Shares are being acquired under this
------
Agreement by the Investor in good faith solely for its own account and will
not be offered for sale, sold or otherwise transferred by the Investor except
pursuant to a registration statement or in a transaction exempt from or not
subject to registration under the Securities Act and any applicable state
securities laws.
(g) Information. It acknowledges that it has been afforded the
-----------
opportunity to ask questions and receive answers concerning the Company and
its Subsidiaries and their respective financial conditions, results of
operations, business properties, management and prospects and to obtain
additional information that it has requested to verify the accuracy of the
information contained herein. Notwithstanding the foregoing, nothing contained
herein will operate to modify or limit in any respect the representations and
warranties of the Company or to relieve it from any obligations to the
Investors for breach thereof or the making of misleading statements or the
omission of material facts in connection with the transactions contemplated
herein.
(h) No Broker's Fees. It is not a party to any contract, agreement or
----------------
understanding with any person (other than this Agreement) that would give rise
to a valid claim against it for a brokerage commission, finder's fee or like
payment in connection with the transactions contemplated by this Agreement.
(i) No Conflict. The execution and delivery by the Investor of this
-----------
Agreement and compliance by the Investor with all of the provisions hereof and
the consummation of the transactions contemplated herein (i) will not conflict
with or result in a breach or violation of,
-17-
any of the terms or provisions of, or constitute a default under (with or
without notice or lapse of time, or both), or result in the acceleration of,
or the creation of any lien under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Investor is a
party or by which the Investor is bound or to which any of the property or
assets of the Investor is subject, (ii) will not result in any violation of
the provisions of the certificate of incorporation or bylaws or similar
governance documents of the Investor and (iii) will not result in any material
violation of, or any termination or material impairment of any rights under,
any statute or any license, authorization, injunction, judgment, order,
decree, rule or regulation of any court or governmental agency or body having
jurisdiction over the Investor or any of its properties, except in any such
case described in subclause (i) or (iii) as will not have or would not
reasonably be expected to prohibit, materially delay or materially and
adversely impact the Investor's performance of its obligations under this
Agreement.
(j) Consents and Approvals. No consent, approval, authorization,
----------------------
order, registration or qualification of or with any court or governmental
agency or body having jurisdiction over the Investor or any of its properties
is required for the purchase of the Investor Shares, the execution and
delivery by the Investor of this Agreement or the Registration Rights
Agreement and the performance of and compliance by the Investor with all of
the provisions hereof and thereof or the consummation of the transactions
contemplated herein and therein, except (i) the registration under the
Securities Act of resales of the Investor Shares, (ii) filings with respect to
and the expiration or termination of the waiting period under the HSR Act
relating to the placement of Shares with the Investors, (iii) such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase of the
Shares by the Investors or (iv) such consents, approvals, authorizations,
registrations or qualifications the absence of which will not have or would
not reasonably be expected to prohibit, materially delay or materially and
adversely impact the Investor's performance of its obligations under this
Agreement.
(k) Arm's Length. The Investor acknowledges and agrees that the
------------
Company is acting solely in the capacity of an arm's length contractual
counterparty to the Investor with respect to the transactions contemplated
hereby (including in connection with determining the terms of the offering).
Additionally, the Investor is not relying on the Company for any legal, tax,
investment, accounting or regulatory advice in any jurisdiction, except as
specifically set forth in this Agreement. The Investor shall consult with its
own advisors concerning such matters and shall be responsible for making its
own independent investigation and appraisal of the transactions contemplated
hereby, and the Company shall have no responsibility or liability to the
Investor with respect thereto.
(l) Legal Proceedings. There are no legal, governmental or regulatory
-----------------
investigations, actions, suits or proceedings pending to which the Investor is
a party or to which any property of the Investor is the subject that,
individually or in the aggregate, if determined adversely to the Investor,
would reasonably be expected to prohibit, materially delay or materially and
adversely impact the Investor's performance of its obligations under this
Agreement; no such investigations, actions, suits or proceedings are
threatened or, to the best knowledge of the Investor, contemplated by any
governmental or regulatory authority or threatened by others.
-18-
(m) Sufficiency of Funds. On the Effective Date, each Investor will
--------------------
have available funds sufficient to pay the aggregate purchase price for its
share of the Backstop Commitment, as adjusted pursuant to Sections 2(a)(ii)
-----------------
(to the extent applicable).
Section 5. Additional Covenants of the Company. The Company agrees with the
-----------------------------------
Investors:
(a) Agreement Motion and Agreement Order. To file a motion and
------------------------------------
supporting papers (the "Agreement Motion") (including an order in form and
----------------
substance reasonably satisfactory to each of the Investors and providing that
the schedules and exhibits be redacted as the Investors reasonably determine
to be necessary and appropriate including, without limitation, the names of
the Backstop Purchasers and the Commitment Percentages of each) seeking the
entry of the Agreement Order. The Agreement Motion shall be filed within 10
Business Days following the signing of this Agreement. The Company agrees that
it shall use its reasonable best efforts, subject to any applicable fiduciary
duties, to (i) obtain a waiver of Bankruptcy Rule 6004(g) and request that the
Agreement Order be effective immediately upon its entry by the Bankruptcy
Court, which Agreement Order shall not be revised, modified, or amended by the
Confirmation Order for the Amended Plan or any other further order of this
Bankruptcy Court, (ii) fully support the Agreement Motion, and any application
seeking Bankruptcy Court approval and authorization to pay the fees and
expenses hereunder as an administrative expense of the estate, including, but
not limited to, filing supporting affidavits on behalf of the Company and/or
its financial advisor and providing the testimony of the affiants if needed,
and (iii) use its reasonable best efforts to obtain approval of the Agreement
Order as soon as practicable following the filing of the motion therefor.
(b) Amended Plan and Disclosure Statement. To file the Amended Plan
-------------------------------------
and Disclosure Statement in a form that is reasonably satisfactory to each of
the Investors, and that is consistent in all material respects with the
Settlement Term Sheet, and to use its reasonable best efforts to obtain the
entry of the Confirmation Order by the Bankruptcy Court. The Company will
authorize, execute, file with the Bankruptcy Court and seek confirmation of,
an Amended Plan that (i) is consistent in all respects with this Agreement,
(ii) provides for the release and exculpation of the Investors, their
affiliates, representatives and advisors to the fullest extent permitted under
applicable law (provided, that such release and exculpation shall not prohibit
or impede the Company's ability to assert defenses or counterclaims in
connection with or relating to this Agreement), and (iii) has conditions to
confirmation and the effective date of the Amended Plan (and to what extent
any such conditions can be waived and by whom) that are reasonably consistent
with this Agreement. The Company will provide to the Investors and their
counsel a copy of the Amended Plan and the Disclosure Statement by email and a
reasonable opportunity to review and comment on such documents. In addition,
the Company will provide to the Investors and their counsel a copy of the
Confirmation Order and a reasonable opportunity to review and comment on such
order prior to such order being filed with the Bankruptcy Court.
(c) Rights Offering. To effectuate the Rights Offering as provided
---------------
herein and to use reasonable best efforts to seek entry of an order of the
Bankruptcy Court, prior to the commencement of the Rights Offering,
authorizing the Company to conduct the Rights Offering pursuant to the terms
of the Rights Offering Procedures.
-19-
(d) Listing. To use reasonable best efforts to list and maintain the
-------
listing of the New Common Stock (and any applicable associated share purchase
rights) on the NYSE or Nasdaq Global Select Market.
(e) Notification. To notify, or to cause Financial Balloting Group,
------------
LLC, the Subscription Agent for the Rights Offering (the "Subscription Agent")
------------------
to notify the Investors, (i) on each Friday during the Rights Exercise Period
and, to the extent reasonably requested by the Investors, on each Business Day
during the 5 Business Days prior to the Expiration Time (and any extensions
thereto), of the aggregate number of Rights known by the Company or the
Subscription Agent to have been exercised pursuant to the Rights Offering as
of the close of business on the preceding Business Day or the most recent
practicable time before such request, as the case may be and (ii) as soon as
practicable after the Expiration Time, and in no event later than 1 Business
Day following the day of the Expiration Time, the aggregate number of Rights
exercised pursuant to the Rights Offering.
(f) Unsubscribed Shares. To determine the number of Unsubscribed
-------------------
Shares, if any, in good faith, to provide a Commitment Notice or a
Satisfaction Notice that accurately reflects the number of Unsubscribed Shares
as so determined and to provide to the Investors a certification by the
Subscription Agent of the Unsubscribed Shares or, if such certification is not
available, such written backup to the determination of the Unsubscribed Shares
as Investors may reasonably request.
(g) Stock Splits, Dividends, etc. In the event of any stock split,
----------------------------
stock dividend, stock combination or similar transaction affecting the number
of issued and outstanding shares of New Common Stock, the Purchase Price and
the number of Unsubscribed Shares to be purchased hereunder will be
proportionally adjusted to reflect the increase or decrease in the number of
issued and outstanding shares of New Common Stock.
(h) HSR. To use its reasonable best efforts to promptly prepare and
---
file all necessary documentation and to effect all applications that are
necessary or advisable under the HSR Act so that the applicable waiting period
shall have expired or been terminated thereunder with respect to the purchase
of Shares hereunder, and not to take any action that is intended or reasonably
likely to materially impede or delay the ability of the parties to obtain any
necessary approvals required for the transactions contemplated by this
Agreement.
(i) Effectiveness of the Registration Statement. To use its
-------------------------------------------
reasonable best efforts to prepare and file, on or prior to the first Business
Day following the date of the entry of the Agreement Order by the Bankruptcy
Court and in any event no later than November 20, 2007, in cooperation with
the Investors, a shelf registration statement on the appropriate form (the
"Registration Statement") covering resales of New Common Stock held by the
----------------------
Investors, and provide the Investors with a reasonable opportunity to review
and propose changes to the Registration Statement before the filing with the
Commission; to advise the Investors, promptly after it receives notice
thereof, of the time when the Registration Statement has been filed or has
become effective or any prospectus or prospectus supplement has been filed and
to furnish the Investors with copies thereof; to advise the Investors promptly
after it receives notice thereof of any comments or inquiries by the
Commission (and to furnish the Investors with copies of any correspondence
related thereto), of the issuance by the Commission of any stop order or of
any
-20-
order preventing or suspending the use of any prospectus, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
prospectus or for additional information; and to use reasonable best efforts
to have the Registration Statement effective on or prior to the Effective
Date. The foregoing provisions shall be set forth in the Registration Rights
Agreement.
(j) Clear Market. For a period of 180 days after the Effective Date
------------
(the "Restricted Period"), the Company will not (i) offer, pledge, announce
-----------------
the intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for capital stock of the
Company or (ii) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the capital
stock of the Company, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of capital stock of the Company or
such other securities, in cash or otherwise, without the prior written consent
of the Investors, except for (A) Rights and New Common Stock issuable upon
exercise of Rights, (B) shares of New Common Stock issued upon the exercise of
any stock options outstanding as of the Effective Date, (C) the issuance of
New Common Stock and other equity interests as set forth in the Settlement
Term Sheet and pursuant to the Amended Plan, (D) the grant or issuance of any
shares of New Common Stock or other equity securities of the Company or any
other securities convertible into or exchangeable for shares of New Common
Stock or other equity securities of the Company, including options and
warrants in respect of shares of New Common Stock and restricted shares of New
Common Stock, in any case, not to exceed, together with any shares of new
Common Stock issued pursuant to Section 5(j)(E), 5% of the outstanding New
---------------
Common Stock and (E) the issuance in the aggregate, together with any shares
of new Common Stock issued pursuant to Section 5(j)(D), of up to 5% of the
---------------
outstanding New Common Stock as of the Effective Date. Notwithstanding the
foregoing, if (1) during the last 17 days of the Restricted Period, the
Company issues an earnings release or material news or a material event
relating to the Company occurs; or (2) prior to the expiration of the
Restricted Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the Restricted Period,
the restrictions imposed by this Agreement (subject to the exceptions set
forth in clauses (A) through (E) of the preceding sentence) shall continue to
apply until the expiration of the 18-day period beginning on the issuance of
the earnings release or the occurrence of the material news or material event.
(k) No Stabilization. The Company will not take, directly or
----------------
indirectly, any action designed to or that would reasonably be expected to
cause or result in any stabilization or manipulation of the price of the
Shares.
(l) Reports. So long as the Investors hold Shares, the Company will
-------
furnish to the Investors, as soon as they are available, copies of all reports
or other communications (financial or other) furnished to holders of the
Rights or the Shares, as the case may be, and copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange to the extent not then available on either the Company's
own website or the website of the Commission.
-21-
(m) Registration Rights Agreement. The Company and the Investors
-----------------------------
shall use their respective reasonable best efforts to negotiate and execute,
as soon as practicable after the date hereof, a registration rights agreement
in form and substance reasonably satisfactory to such parties and which shall
include the terms set forth in Exhibit C hereto (the "Registration Rights
--------- -------------------
Agreement"). Within five (5) Business Days after execution of the Registration
- ---------
Rights Agreement by the Company and each of the Investors, the Company shall
file with the Bankruptcy Court a motion (attaching thereto a copy of the
Registration Rights Agreement) seeking Bankruptcy Court approval of the
Registration Rights Agreement as promptly as practicable thereafter, it being
understood and agreed that the Company may satisfy its obligations under this
sentence by seeking Bankruptcy Court approval of the Registration Rights
Agreement as part of the process and at the hearing to confirm the Amended
Plan (the "Confirmation Hearing").
--------------------
(n) Access and Information. From the date hereof until the Effective
----------------------
Date, subject to any applicable laws, provided that the Investor has executed
a confidentiality agreement mutually agreeable to the Company and the
Investor, the Company shall at the Investor's expense, (i) afford any Investor
and its representatives access, during regular business hours, upon reasonable
advance notice and in a manner as would not be unreasonably disruptive to the
business or operations of the Company or any of its Subsidiaries, to the
assets, books and records of the Company and its Subsidiaries, (ii) furnish,
or cause to be furnished, to the Investor any financial and operating data and
other information that is available with respect to the Company and its
Subsidiaries as the Investor from time to time reasonably requests and (iii)
instruct the employees and the Company's legal and financial advisors to
cooperate with the Investor in its investigation of the Company and its
Subsidiaries.
(o) Non-Solicitation. The Company will not, and will not cause or
----------------
permit any officer, director, employee or affiliate of the Company to, and
will not cause or authorize any advisor or other agent or representative of
the Company to, and the Creditors' Committee and any agent or representative,
including its professional advisors will not, directly or indirectly, (i)
solicit, encourage or initiate any inquiries, discussions, proposals or offers
regarding, (ii) continue, propose or enter into negotiations or discussions
with respect to, or (iii) enter into any agreement, letter of intent,
memorandum of understanding, agreement in principle, commitment or other
understanding providing for, any Inconsistent Transaction, and will not
respond to any proposal, offer or inquiry made by any person concerning any
Inconsistent Transaction (including persons with whom the Company may have had
discussions prior to the date hereof), except to advise such person that the
Investors have been granted an exclusive right to negotiate concerning the
transactions contemplated by this Agreement. The Company and the Creditors'
Committee and any agent or representative, including its professional its
advisors further agree to advise the Investors promptly, but in no event more
than 48 hours upon receiving any inquiry from any such person (including the
identity of any such person, the terms of any proposal and any other relevant
information that the Investors reasonably may request), and to supply
Investors with a copy of any written offer, proposal or other indication of
interest received from any such person. The term "Inconsistent Transaction"
means any transaction inconsistent with the Amended Plan or this Agreement,
including on terms identical with this Agreement with parties other than those
to this Agreement.
-22-
(p) Opinion of Counsel For The Company. Once the Registration
----------------------------------
Statement has been declared effective, the Company shall cause Kirkland &
Ellis LLP, counsel for the Company, to furnish to the Investors, their written
(i) opinion that the Registration Statement has been declared effective and
complies as to form in all material respects (other than with respect to
financial statements and other financial information) and (ii) negative
assurance statement customarily received by underwriters in underwritten
offerings relating to the Registration Statement and Prospectus, in each case
which opinion and negative assurance letter shall state that it is being
delivered at the request of the Company and solely in order to assist the
Investors in establishing a "due diligence" defense.
Section 6. Additional Covenants of the Investors. Each Investor agrees,
-------------------------------------
severally and not jointly, with the Company:
(a) Information. To provide the Company with such information as the
-----------
Company reasonably requests regarding the Investors for inclusion in the
Registration Statement and the Disclosure Statement.
(b) HSR Act. To use reasonable best efforts to promptly prepare and
-------
file all necessary documentation and to effect all applications that are
necessary or advisable under the HSR Act so that the applicable waiting period
shall have expired or been terminated thereunder with respect to the purchase
of Shares hereunder, and not to take any action that is intended or reasonably
likely to materially impede or delay the ability of the parties to obtain any
necessary approvals required for the transactions contemplated by this
Agreement. Notwithstanding the foregoing, in no event shall this Section 6(b)
------------
obligate any Investor to dispose or hold separate any of its assets.
(c) Agreement Order. To use reasonable efforts to facilitate the
---------------
entry of the Agreement Order.
(d) Inconsistent Transaction. To not file any pleading or take any
------------------------
other action in the Bankruptcy Court with respect to this Agreement, the
Amended Plan, the Disclosure Statement or the Confirmation Order of the
consummation of the transactions contemplated hereby or thereby that is
inconsistent in any material respect with this Agreement or the Company's
efforts to obtain the entry of court orders consistent with this Agreement.
Section 7. Conditions to the Obligations of the Parties.
--------------------------------------------
(a) Conditions to the Obligations of the Investors. The obligation of
----------------------------------------------
each of the Investors to purchase the Investor Shares pursuant to the Backstop
Commitment on the Effective Date are subject to the following conditions:
(i) Agreement Order. The Agreement Order shall have been
---------------
entered by the Bankruptcy Court in the form reasonably satisfactory to each of
the Company and the Investors, and the Agreement Order shall have become a
Final Order.
(ii) Material Adverse Effect. Since the date hereof, there
-----------------------
shall not have occurred any changes or events that, individually or in the
aggregate, would reasonably be expected to result in a Material Adverse
Effect.
-23-
(iii) Inconsistent Transaction. The Company shall not have
------------------------
made a public announcement, entered into an agreement, or filed any pleading
or document with the Bankruptcy Court, evidencing its intention to support, or
otherwise supported, any Inconsistent Transaction.
(iv) Confirmation Order. The Confirmation Order shall have
------------------
been entered by the Bankruptcy Court and such order shall be in form and
substance reasonably satisfactory to the Investors and shall be
non-appealable, shall not have been appealed within 10 days of entry or, if
such order is appealed, shall not have been stayed pending appeal, and there
shall not have been entered by any court of competent jurisdiction any
reversal, modification or vacatur, in whole or in part, of the Confirmation
Order
(v) Amended Plan and Confirmation Order. The Amended Plan,
-----------------------------------
as approved, and the Confirmation Order, as entered, in each case by the
Bankruptcy Court shall be consistent with the requirements for the Amended
Plan and the Confirmation Order set forth in Section 5(b) of this Agreement.
Any amendment, modification or change to the Amended Plan or the Confirmation
Order after the date of their initial filing with the Bankruptcy Court shall
(A) be consistent in all material respects with the Settlement Term Sheet, (B)
be consistent in all respects with this Agreement, (C) provide for the release
and exculpation of the Investors, their affiliates, representatives and
advisors as provided herein and (D) to the extent any amendment, modification
or change adversely impacts the Investors, otherwise be in a form that is
reasonably satisfactory to each of the Investors. The Company agrees to
provide the Investors by email (i) a draft of any proposed amendment,
modification or change to the Amended Plan or the Confirmation Order at least
three (3) Business Days prior to it being filed with the Bankruptcy Court and
(ii) a copy of such amendment, modification or change to the Amended Plan or
the Confirmation Order promptly after it is filed with the Bankruptcy Court.
The Investors hereby agree to provide the Company and the Creditors' Committee
with written notice of any term of the Amended Plan or the Confirmation Order
that does not comply with the foregoing conditions (A) through (D) within two
(2) Business Days of receipt of such amendment, modification or change to the
Amended Plan or the Confirmation Order being delivered to the Investors
pursuant to clause (ii) of the preceding sentence.
(vi) Conditions to Confirmation. The conditions to
--------------------------
confirmation and the conditions to the effective date of the Amended Plan
shall have been satisfied or waived, with the consent of the Investors (with
such consent not to be unreasonably withheld), by the Company in accordance
with the Amended Plan.
(vii) Rights Offering. The Company shall have commenced the
---------------
Rights Offering, the Rights Offering shall have been conducted in accordance
with the Rights Offering Procedures and in all material respects in accordance
with this Agreement and the Expiration Time shall have occurred.
(viii) Commitment Notice. The Investors shall have received
-----------------
a Commitment Notice in accordance with Section 1(e) from the Company, dated as
------------
of the Determination Date, certifying as to the number of Unsubscribed Shares
to be purchased pursuant to the Backstop Commitment.
-24-
(ix) Valid Issuance. The New Common Stock shall be, upon
--------------
payment of the aggregate purchase price as provided herein, validly issued,
fully paid, non-assessable and free and clear of all taxes, liens, pre-emptive
rights, rights of first refusal, subscription and similar rights.
(x) No Restraint. No judgment, injunction, decree or other
------------
legal restraint shall prohibit the consummation of the Amended Plan, the
Rights Offering or the transactions contemplated by this Agreement.
(xi) HSR Act. If the purchase of Shares by the Investors
-------
pursuant to this Agreement is subject to the terms of the HSR Act, the
applicable waiting period shall have expired or been terminated thereunder
with respect to such purchase.
(xii) Consents and Approvals. All other governmental and
----------------------
third party notifications, filings, consents, waivers and approvals required
for the consummation of the transactions contemplated by this Agreement, the
Settlement Term Sheet and the Amended Plan shall have been made or received
and shall remain in full force and effect.
(xiii) Enforceability. This Agreement shall be valid and
--------------
enforceable against the Company and the Company shall not be in breach of this
Agreement in any material respect.
(xiv) NYSE/Nasdaq. The New Common Stock issuable upon
-----------
exercise of the Rights shall be approved for trading on the NYSE or Nasdaq
Global Select Market, subject to official notice of issuance.
(xv) Comfort Letters. On the Effective Date, the Independent
---------------
Accountants shall have furnished to the Investors, at the request of the
Company, letters, dated the respective dates of delivery thereof and addressed
to the Investors, in form and substance reasonably satisfactory to the
Investors, containing statements and information of the type customarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained or
incorporated by reference in the Registration Statement and the Prospectus;
provided, that the letter delivered on the Effective Date shall use a
"cut-off" date no more than 3 Business Days prior to such Effective Date.
(xvi) Execution of Documents. All documents set forth on
----------------------
Schedule 7(a) shall have been executed in form and substance reasonably
- -------------
satisfactory to the Company and the Investors.
(xvii) No Legal Impediment to Issuance. No action shall have
-------------------------------
been taken and no statute, rule, regulation or order shall have been enacted,
adopted or issued in each by any federal, state or foreign governmental or
regulatory authority that, as of the Effective Date, prohibits the issuance or
sale of the Rights or the Shares; and no injunction or order of any federal,
state or foreign court shall have been issued that, as of the Effective Date,
prohibits the issuance or sale of the Rights or the Shares.
(xviii) Good Standing. The Investors shall have received on
-------------
and as of the Effective Date satisfactory evidence of the good standing of the
Company and its Significant Subsidiaries (as such term is defined in Article
1, Rule 1-02 of Regulation S-X promulgated
-25-
pursuant to the Securities Act) in their respective jurisdictions of
organization, in each case in writing or any standard form of
telecommunication from the appropriate governmental authorities of such
jurisdictions.
(xix) Representations and Warranties and Covenants. The
--------------------------------------------
representations and warranties of the Company in this Agreement that are not
qualified as to materiality or Material Adverse Effect shall be true and
correct in all material respects and the representations and warranties that
are qualified as to materiality or Material Adverse Effect shall be true and
correct, in each case, at and as of the Effective Date as if made at and as of
the Effective Date (except for representations and warranties made as of a
specified date, which shall be true and correct only as of the specified date)
and the Company shall have complied in all material respects with all
covenants in this Agreement and the Registration Rights Agreement applicable
to it.
(xx) Officer's Certificate. The Investors shall have
---------------------
received on and as of the Effective Date a certificate of the chief financial
officer or chief accounting officer of the Company (i) confirming that the
Company has satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Effective Date and (ii) to the effect set forth
in Section 7(a)(xx) above.
----------------
(xxi) Bankruptcy Court Approval. The Registration Rights
-------------------------
Agreement shall have been approved by the Bankruptcy Court and shall have been
executed by the parties thereto in substantially the same form as the form
thereof filed with the Bankruptcy Court.
(xxii) Exit Facility. The Company shall have obtained
-------------
secured and unsecured or other exit financing upon terms and conditions
consistent with, or more favorable than, the terms set forth on Exhibit D
hereto (the "Exit Facility") and which shall be consummated on or prior to the
-------------
Effective Date. In addition, the material terms of the Exit Facility, other
than those set forth on Exhibit D, shall be such that the Investors providing
a majority of the Backstop Commitment do not have a reasonable basis for
believing that such terms negatively and materially impact the commitment of
the Investors provided for in this Agreement, by among other things,
negatively and materially impacting the operating or financial performance of
Reorganized Solutia. The Company will promptly provide copies of all term
sheets, drafts and final execution copies of the documentation for the Exit
Facility (the "Exit Facility Documentation") to counsel for the Investors and,
---------------------------
in the event that counsel to the Investors does not notify the Company that
any material provision contained in the Exit Facility Documentation, other
than those terms set forth on Exhibit D, is not reasonably satisfactory to a
majority of the Investors within five (5) business days from the receipt
thereof, such Exit Facility Documentation shall be deemed to be reasonably
satisfactory to the Investors. For purposes of clarity, any change to any
subsequent version of Exit Facility Documentation that impacts provisions
contained in earlier versions of the Exit Facility Documentation shall renew
the opportunity for counsel to the Investors to provide notice to the Company
of such provision being not reasonably satisfactory to each Investor.
(xxiii) Financial Projections. The financial projections of
---------------------
the Company set forth in the Disclosure Statement shall be consistent in all
material respects with the financial projections provided to the ratings
agencies on September 17, 2007, as updated by materials provided to the
Investors on September 26, 2007.
-26-
(xxiv) Extension Fees. If required by Section 10(a)(iii),
-------------- ------------------
the Investors shall have received payment of any Extension Fees; the Extension
Fees, if any, shall not have been required to be repaid, by the Bankruptcy
Court or otherwise, to the Company.
(b) Conditions to the Obligations of the Company. The obligation of
--------------------------------------------
the Company to issue and sell the Investor Shares to the Investors on the
Effective Date are subject to the following conditions:
(i) Aggregate Purchase Price. The Investors shall have
------------------------
delivered to the Company, as the total aggregate purchase price for the
Investor Shares, an amount of readily available (same day) funds denominated
in United States Dollars equal to the product obtained by multiplying (A) the
Purchase Price (as it may be adjusted in accordance with the terms hereof) and
(B) the number of Investor Shares (as it may be adjusted in accordance with
the terms hereof).
(ii) Agreement Order. The Agreement Order shall have been
---------------
entered by the Bankruptcy Court in the form reasonably satisfactory to each of
the Company and the Investors, and the Agreement Order shall have become a
Final Order.
(iii) Confirmation Order. The Confirmation Order shall have
------------------
been entered by the Bankruptcy Court and such order shall be non-appealable,
shall not have been appealed within 10 days of entry or, if such order is
appealed, shall not have been stayed pending appeal, and there shall not have
been entered by any court of competent jurisdiction any reversal, modification
or vacatur, in whole or in part, of the Confirmation Order.
(iv) Amended Plan and Confirmation Order. The Amended Plan,
-----------------------------------
as approved, and the Confirmation Order as entered, by the Bankruptcy Court,
and all amendments, modifications or changes thereto shall (A) be consistent
in all respects with this Agreement, (B) provide for the release and
exculpation of the Investors, their affiliates, representatives and advisors
as provided herein and (C) otherwise consistent in all material respects with
the Settlement Term Sheet.
(v) Conditions to Confirmation. The conditions to
--------------------------
confirmation and the conditions to the Effective Date of the Amended Plan
shall have been satisfied or waived, with the consent of the Investors, by the
Company in accordance with the Amended Plan.
(vi) Rights Offering. The Rights Offering shall have been
---------------
conducted in accordance with the Rights Offering Procedures and in all
material respects in accordance with this Agreement and the Expiration Time
shall have occurred.
(vii) No Restraint. No judgment, injunction, decree or other
------------
legal restraint shall prohibit the consummation of the Amended Plan, the
Rights Offering or the transactions contemplated by this Agreement.
(viii) HSR Act. If the purchase of Shares by the Investors
-------
pursuant to this Agreement is subject to the terms of the HSR Act, the
applicable waiting period shall have expired or been terminated thereunder
with respect to such purchase.
-27-
(ix) Enforceability. This Agreement shall be valid and
--------------
enforceable against each Investor and no Investor shall be in breach of this
Agreement in any material respect, except to the extent that Non-Defaulting
Investors purchase any Default Shares as a result of any breach by a
Defaulting Investor pursuant to Sections 2(a)(ii).
-----------------
(x) Representations and Warranties and Covenants. The
--------------------------------------------
representations and warranties of each Investor in this Agreement that are not
qualified as to materiality or material adverse effect on the Investor's
performance of its obligations hereunder or similar qualifications shall be
true and correct in all material respects, and the representations and
warranties that are qualified as to materiality or material adverse effect on
the Investor's performance of its obligations hereunder or similar
qualifications shall be true and correct, in each case, at and as of the
Effective Date as if made at and as of the Effective Date (except for
representations and warranties made as of a specified date, which shall be
true and correct only as of the specified date) and each Investor shall have
complied in all material respects with all covenants in this Agreement
applicable to it, except, in each case, to the extent that Non-Defaulting
Investors or purchase any Default Shares as a result of any breach of
representations, warranties or covenants by a Defaulting Investor pursuant to
Sections 2(a)(ii).
- -----------------
Section 8. Indemnification.
---------------
(a) Indemnification Generally. Subject to the approval of this
-------------------------
Agreement by the Bankruptcy Court, whether or not the Rights Offering is
consummated or this Agreement or the Backstop Commitment is terminated, the
Company (in such capacity, the "Indemnifying Party") shall indemnify and hold
------------------
harmless the Investors and their respective officers, directors, employees,
agents, controlling persons and affiliates (each an "Indemnified Person") from
------------------
and against any and all losses, claims, damages, liabilities and reasonable
expenses, joint or several, to which any such Indemnified Person may become
subject arising out of or in connection with any claim, challenge, litigation,
investigation or proceeding with respect to the Rights Offering, the Backstop
Commitment, the Transaction Documents, the Registration Statement, the
Prospectus or the transactions contemplated thereby, including without
limitation, payment of the Backstop Fee or the Extension Fees, if any,
distribution of Rights, purchase and sale of Shares in the Rights Offering and
purchase and sale of Shares pursuant to the Backstop Commitment or the
Registration Rights Agreement, or any breach of the Company of this Agreement
or the Registration Rights Agreement, regardless of whether any of such
Indemnified Persons is a party thereto, and to reimburse such Indemnified
Persons for any reasonable legal or other reasonable out-of-pocket expenses as
they are incurred in connection with investigating, responding to or defending
any of the foregoing, provided that the foregoing indemnification will not, as
to any Indemnified Person, apply to losses, claims, damages, liabilities or
expenses to the extent that they are finally judicially determined to have
resulted from (i) any breach of this Agreement by such Indemnified Person,
(ii) bad faith, gross negligence or willful misconduct on the part of such
Indemnified Person or (iii) statements or omissions in the Registration
Statement or Prospectus or any amendment or supplement thereto made in
reliance upon or in conformity with information relating to the Investors
furnished to the Company in writing by or on behalf of the Investors expressly
for use in the Registration Statement or Prospectus or any amendment or
supplement thereto. If for any reason the foregoing indemnification is
unavailable to any Indemnified Person or insufficient to hold it harmless,
then the Indemnifying Party shall contribute to the amount paid or payable by
such Indemnified Person as a result of such loss,
-28-
claim, damage, liability or expense in such proportion as is appropriate to
reflect not only the relative benefits received by the Indemnifying Party on
the one hand and such Indemnified Person on the other hand but also the
relative fault of the Indemnifying Party, on the one hand, and such
Indemnified Person, on the other hand, as well as any relevant equitable
considerations. It is hereby agreed that the relative benefits to the
Indemnifying Party on the one hand and all Indemnified Persons on the other
hand shall be deemed to be in the same proportion as (i) the total value
received or proposed to be received by the Company pursuant to the sale of
Shares contemplated by this Agreement bears to (ii) the Backstop Fee and
Extension Fees paid or proposed to be paid to the Investors. The Indemnifying
Party also agrees that no Indemnified Person shall have any liability based on
their exclusive or contributory negligence or otherwise to the Indemnifying
Party, any person asserting claims on behalf of or in right of any of the
Indemnifying Party, or any other person in connection with or as a result of
the Rights Offering, the Backstop Commitment, the Transaction Documents, the
Registration Statement, the Prospectus or the transactions contemplated
thereby, except as to any Indemnified Person to the extent that any losses,
claims, damages, liability or expenses incurred by the Company are finally
judicially determined to have resulted from (i) bad faith, gross negligence or
willful misconduct of such Indemnified Person in performing the services that
are the subject of this Agreement or the Registration Rights Agreement or (ii)
statements or omissions in the Registration Statement or Prospectus or any
amendment or supplement thereto made in reliance upon or in conformity with
information relating to the Investors furnished to the Company in writing by
or on behalf of the Investors expressly for use in the Registration Statement
or Prospectus or any amendment or supplement thereto; provided, however, that
-------- -------
in no event shall an Indemnified Person or such other parties have any
liability for any indirect, consequential or punitive damages in connection
with or as a result of any of their activities related to the foregoing.
Notwithstanding the foregoing, each of the parties hereto may enforce the
terms of this Agreement and may seek indirect, consequential and other damages
as a result of any breach of the terms hereof. The indemnity, reimbursement
and contribution obligations of the Indemnifying Party under this Section 8
---------
shall be in addition to any liability that the Indemnifying Party may
otherwise have to an Indemnified Person and shall be binding upon and inure to
the benefit of any successors, assigns, heirs and personal representatives of
the Indemnifying Party and any Indemnified Person.
(b) Certain Procedures. Promptly after receipt by an Indemnified
------------------
Person of notice of the commencement of any claim, litigation, investigation
or proceeding relating to the Transaction Documents, the Registration
Statement, the Prospectus or any of the transactions contemplated thereby
("Proceedings"), such Indemnified Person will, if a claim is to be made
-----------
hereunder against the Indemnifying Party in respect thereof, promptly (and in
any event within 10 Business Days) notify the Indemnifying Party in writing of
the commencement thereof; provided that (i) the omission so to notify the
Indemnifying Party will not relieve it from any liability that it may have
hereunder except to the extent it has been materially prejudiced by such
failure and (ii) the omission so to notify the Indemnifying Party will not
relieve it from any liability that it may have to an Indemnified Person
otherwise than on account of this Section 8. In case any such Proceedings are
---------
brought against any Indemnified Person and it notifies the Indemnifying Party
of the commencement thereof, the Indemnifying Party will be entitled to
participate therein, and, to the extent that it may elect by written notice
delivered to such Indemnified Person, to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Person, provided that if
the defendants in any such Proceedings include both such
-29-
Indemnified Person and the Indemnifying Party and such Indemnified Person
shall have reasonably concluded that there may be legal defenses available to
it that are different from or additional to those available to the
Indemnifying Party, such Indemnified Person shall have the right to select
separate counsel to assert such legal defenses and to otherwise participate
(but not control) in the defense of such Proceedings on behalf of such
Indemnified Person. Upon receipt of notice from the Indemnifying Party to such
Indemnified Person of its election so to assume the defense of such
Proceedings and approval by such Indemnified Person of counsel, the
Indemnifying Party shall not be liable to such Indemnified Person for expenses
incurred by such Indemnified Person in connection with the defense thereof
(other than reasonable costs of investigation) unless (i) such Indemnified
Person shall have employed separate counsel in connection with the assertion
of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the Indemnifying Party shall not
be liable for the expenses of more than one separate counsel, approved by
Investors, representing the Indemnified Persons who are parties to such
Proceedings), (ii) the Indemnifying Party shall not have employed counsel
reasonably satisfactory to such Indemnified Person to represent such
Indemnified Person within a reasonable time after notice of commencement of
the Proceedings or (iii) the Indemnifying Party shall have authorized in
writing the employment of counsel for such Indemnified Person.
(c) Limitations. The Indemnifying Party shall not be liable for any
-----------
settlement of any Proceedings effected without its written consent (which
consent shall not be unreasonably withheld). If any settlement of any
Proceeding is consummated with the written consent of the Indemnifying Party
or if there is a final judgment for the plaintiff in any such Proceedings, the
Indemnifying Party agrees to indemnify and hold harmless each Indemnified
Person from and against any and all losses, claims, damages, liabilities and
expenses by reason of such settlement or judgment in accordance with, and
subject to the limitations of, the provisions of this Section 8.
---------
Notwithstanding anything in this Section 8 to the contrary, if at any time an
---------
Indemnified Person shall have requested the Indemnifying Party to reimburse
such Indemnified Person for legal or other expenses in connection with
investigating, responding to or defending any Proceedings as contemplated by
this Section 8, the Indemnifying Party shall be liable for any settlement of
---------
any Proceedings effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by the Indemnifying Party of such
request for reimbursement and (ii) the Indemnifying Party shall not have
reimbursed such Indemnified Person in accordance with such request prior to
the date of such settlement. The Indemnifying Party shall not, without the
prior written consent of an Indemnified Person (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
Proceedings in respect of which indemnity has been sought hereunder by such
Indemnified Person unless (a) such settlement includes an unconditional
release of such Indemnified Person in form and substance satisfactory to such
Indemnified Person from all liability on the claims that are the subject
matter of such Proceedings and (b) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.
Section 9. Survival of Representations and Warranties, Etc. Notwithstanding
-----------------------------------------------
any investigation at any time made by or on behalf of any party hereto, all
representations and warranties made in this Agreement shall survive the
execution and delivery of this Agreement and the Effective Date, except that
the representations and warranties made in Sections 3(f)
-------------
-30-
through (s), and (u) through (gg) shall only survive for a period of 2 years
- ----------- ----------------
after the Effective Date.
Section 10. Termination.
-----------
(a) Termination by Investors. Each of the Investors may terminate
------------------------
this Agreement as to itself:
(i) upon (A) any material breach by the Company of any of
its representations, warranties, covenants or agreements contained in this
Agreement, including Section 3 and Section 7, (B) the failure of any of the
--------- ---------
conditions set forth in this Agreement, or (C) any of the conditions set forth
in this Agreement becoming incapable of fulfillment (other than through the
failure of the Investors to comply with their obligations), in the case of
(A), (B) or (C), that is not curable or, if curable, is not cured within 15
days after written notice of such breach or failure is given to the Company by
any Investor; provided, that the right to terminate this Agreement under this
--------
Section 10(a)(i) shall not be available to any Investor whose breach is the
- ----------------
cause of the failure of the condition in Section 7 to be satisfied.
---------
(ii) if the Exit Financing Condition has been satisfied and
the Effective Date has not occurred, on or after February 28, 2007.
(iii) if the Exit Financing Condition has not been satisfied
and the Effective Date has not occurred, on or after February 28, 2007, on or
after 3:01 p.m. New York City time on December 31, 2007 if the Effective Date
has not occurred prior to that time; provided that if the Company has paid to
the Investors by wire transfer of immediately available funds not later than
3:00 p.m. New York City time on December 31, 2007, a fee in the amount of
$3,125,000 (the "Extension Fee"), which shall be earned by each Investor upon
-------------
payment, then the Investors may not terminate this Agreement pursuant to this
Section 10(a)(iii) until March 31, 2008.
- ------------------
(b) Effect of Termination. Upon termination under this Section 10,
--------------------- ----------
all rights and obligations of the parties under this Agreement shall terminate
without any liability of any party to any other party except that (i) nothing
contained herein shall release any party hereto from liability from any breach
and (y) the covenants and agreements made by the parties herein under Section
-------
2(d) Sections 8, 9 and 11 through 19 shall survive indefinitely in accordance
- ---- ---------- - -- --
with their terms.
Section 11. Notices. All notices and other communications in connection
-------
with this Agreement will be in writing and will be deemed given (and will be
deemed to have been duly given upon receipt) if delivered personally, sent via
electronic facsimile (with confirmation), mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as will be specified by like notice):
-31-
(a) If to the Investors, to the addresses set forth below each Investor's
signature on the signature pages hereto.
with copies to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: Kris Hansen
Brett Lawrence
Fax: (212) 806-6006
and to:
Haynes and Boone, LLP
901 Main St., Suite 3100
Dallas, TX 75202
Attention: Lenard M. Parkins
Fax: (713) 236-5405
(b) If to the Company, to:
Solutia Inc.
575 Maryville Centre Drive
P.O. Box 66760
St Louis, Missouri
Attention: General Counsel
Fax: (314) 674-8703
with a copy to:
Kirkland & Ellis LLP
153 East 53rd Street,
New York, New York 10022-4611
Attention: Thomas W. Christopher
Jonathan S. Henes
Fax: (212) 446-4900
Section 12. Assignment; Third Party Beneficiaries. Neither this
-------------------------------------
Agreement nor any of the rights, interests or obligations under this Agreement
will be assigned by any of the parties (whether by operation of law or
otherwise) without the prior written consent of the other party.
Notwithstanding the previous sentence, this Agreement, or the Investors'
obligations hereunder, may be assigned, delegated or transferred, in whole or
in part, by the Investors to any Affiliate (as defined in Rule 12b-2 under
the Exchange Act) of the Investors over which the Investors or any of their
Affiliates exercise investment authority, including, without limitation, with
respect to voting and dispositive rights; provided, that any such assignee
assumes the obligations of the
-32-
Investors hereunder and agree in writing to be bound by the terms of this
Agreement in the same manner as the Investors. Notwithstanding the foregoing
or any other provisions herein, no such assignment will relieve the Investors
of their obligations hereunder if such assignee fails to perform such
obligations. Except as provided in Section 8 with respect to the Indemnified
---------
Parties, this Agreement (including the documents and instruments referred to
in this Agreement) is not intended to and does not confer upon any person
other than the parties hereto any rights or remedies under this Agreement.
Section 13. Prior Negotiations; Entire Agreement. This Agreement
------------------------------------
(including the agreements attached as exhibits to and the documents and
instruments referred to in this Agreement) constitutes the entire agreement of
the parties and supersedes all prior agreements, arrangements or
understandings, whether written or oral, between the parties with respect to
the subject matter of this Agreement, except that the parties hereto
acknowledge that any confidentiality agreements heretofore executed among the
parties will continue in full force and effect.
Section 14. GOVERNING LAW; VENUE. THIS AGREEMENT WILL BE GOVERNED AND
--------------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THE
INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF, AND VENUE IN, THE
UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
Section 15. Counterparts. This Agreement may be executed in any number
------------
of counterparts, all of which will be considered one and the same agreement
and will become effective when counterparts have been signed by each of the
parties and delivered to the other party (including via facsimile or other
electronic transmission), it being understood that each party need not sign
the same counterpart.
Section 16. Waivers and Amendments. This Agreement may be amended,
----------------------
modified, superseded, cancelled, renewed or extended, and the terms and
conditions of this Agreement may be waived, only by a written instrument
signed by the Company and those Investors providing two-thirds of the Backstop
Commitment, and, to the extent required, the approval of the Bankruptcy Court;
provided, however, that no such amendment, modification, supersession,
- -------- -------
cancellation, renewal, extension or waiver shall materially alter the rights
or obligations of any Investor without such Investor's individual prior
written consent; provided, further, that the amendment, modification,
-------- -------
supersession, cancellation, renewal extension or waiver of any of the
following provisions shall require the express written consent of each
Investor: the definition of "Material Adverse Effect", Section 2, Section
--------- -------
5(m), Section 7(a)(ii), Section 7(a)(iv), Section 7(a)(v), Section
- ---- ---------------- ---------------- --------------- -------
7(a)(xxiii), Section 10 and Section 16. Notwithstanding the foregoing, (i) no
- ----------- ---------- ----------
amendment, modification, supersession, cancellation, renewal extension or
waiver of any provision shall adversely affect any Investor, or such
Investor's broker-dealer affiliates, in connection with such Investor's or
affiliate's activities as a broker-dealer, in such Investor's sole discretion,
without such Investor's consent. and (ii) any amendment waiver of Section 19
----------
with respect to any Investor and its affiliates shall not require the consent
of any other Investor. No delay on the part of any party in exercising any
right, power or privilege pursuant to this Agreement will operate as a waiver
thereof, nor will any waiver on the part of any party of any right, power or
privilege pursuant to this Agreement, nor will any single or partial exercise
of
-33-
any right, power or privilege pursuant to this Agreement, preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege pursuant to this Agreement. The rights and remedies provided
pursuant to this Agreement are cumulative and are not exclusive of any rights
or remedies which any party otherwise may have at law or in equity.
Section 17. Headings. The headings in this Agreement are for reference
--------
purposes only and will not in any way affect the meaning or interpretation of
this Agreement.
Section 18. Specific Performance. The parties acknowledge and agree that
--------------------
any breach of the terms of this Agreement would give rise to irreparable harm
for which money damages would not be an adequate remedy, and, accordingly, the
parties agree that, in addition to any other remedies, each will be entitled
to enforce the terms of this Agreement by a decree of specific performance
without the necessity of proving the inadequacy of money damages as a remedy
and without the necessity of posting bond.
Section 19. Voting Restriction. Subject to the last sentence of this
------------------
Section 19, the shares of New Common Stock acquired by the Investors
hereunder, as well as any other shares of New Common Stock received by the
Investors and their respective affiliates under or in connection with the
Amended Plan and any shares of such stock that may be acquired by the
Investors and their respective affiliates during the Restriction Period, as
defined below, shall not be entitled to vote for the election of directors of
the Company at any time during the Restriction Period while held by or for the
benefit of any of the Investors or their respective affiliates. This
restriction shall apply to the Investors, together with their respective
affiliates, on a several and not joint basis, and shall terminate at 12:01 am
on the day following the last day of the Restriction Period. This restriction
shall not apply to any share of New Common Stock after sale or other transfer
of such share by the Investors or their affiliates to a party not affiliated
with any Investor or affiliate. For purposes of this provision, the
"Restriction Period" shall begin on the Effective Date and shall terminate on
------------------
the date that is eight months and one day after the Effective Date.
Notwithstanding anything contained herein to the contrary, (i) none of the
provisions of this Section 19 shall apply to any shares of New Common Stock
----------
acquired or received by Highland Capital Management, L.P. or its affiliates,
(ii) the provisions of this Section 19 shall apply to shares of New Common
----------
Stock acquired or received by UBS Securities LLC or its affiliates only to the
extent they are held as part of proprietary trading or investment for the
account of UBS Securities LLC or an affiliate, excluding any claims or
interests in respect of which UBS Securities LLC or an affiliate exercises
voting authority due to a financing, custodial, advisory or fiduciary
relationship and (iii) the provisions of this Section 19 shall apply to shares
----------
of New Common Stock acquired or received by Merrill Lynch, Pierce, Fenner &
Smith Incorporated or its affiliates only to the extent they are held as part
of proprietary trading or investment for the account of Merrill Lynch, Pierce,
Fenner & Smith Incorporated or an affiliate, excluding any claims or interests
in respect of which Merrill Lynch, Pierce, Fenner & Smith Incorporated or an
affiliate exercises voting authority due to a financing, custodial, advisory
of fiduciary relationship.
[Signature Page Follows]
-34-
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of the date first written above.
SOLUTIA INC.
By: /s/ Jeffry N. Quinn
-------------------
Name: Jeffry N. Quinn
Title: President and Chief Executive Officer
AGREED AND ACCEPTED:
OFFICIAL COMMITTEE OF UNSECURED
CREDITORS OF SOLUTIA INC., ET AL
By: /s/ James R. Savin
------------------
Name: James R. Savin
Title: Partner, Akin Gump Strauss Hauer & Feld LLP
Counsel to the Official Committee of Unsecured Creditors of
Solutia Inc., et. al
INVESTORS
---------
HIGHLAND CRUSADER HOLDING
CORPORATION
By: /s/ Michael Colvin
------------------
Name: Michael Colvin
Title: Secretary
Address:
Two Galleria Tower
13455 Noel Road, Suite 1300
Dallas, TX 75240-6620
Attention: Patrick Conner
Fax: (972) 628-4100
[Signature Page of Equity Commitment Agreement]
LONGACRE FUND MANAGEMENT, L.L.C. *
By: /s/ Steven Weisman
------------------
Name: Steven Weisman
Title: Member
Address:
810 Seventh Avenue, 22nd Floor
New York, NY 10019
Attention: John Brecker
Fax: (212) 259-4304
<FN>
*As Investment Manager, on behalf of Longacre Master Fund, Ltd. and Longacre
Capital Partners (GP), L.P.
[Signature Page of Equity Commitment Agreement]
MERRILL LYNCH PIERCE, FENNER &
SMITH INCORPORATED
By: /s/ Ronald Torok
-----------------
Name: Ronald Torok
Title: Director
Address:
4 World Financial Center
250 Vesey Street
New York, NY 10080
Attention: Chris Moon / Ron Torok
Fax: (212) 449-0769
[Signature Page of Equity Commitment Agreement]
GMAM INVESTMENT FUNDS TRUST II
BY: MURRAY CAPITAL MANAGEMENT, INC., ITS AGENT
By: /s/ Scott V. Beechert
---------------------
Name: Scott V. Beechert
Title: General Counsel & Chief Compliance
Officer
RECAP INTERNATIONAL (MASTER) LTD.
BY: MURRAY CAPITAL MANAGEMENT, INC., ITS AGENT
By: /s/ Scott V. Beechert
---------------------
Name: Scott V. Beechert
Title: General Counsel & Chief Compliance
Officer
INSTITUTIONAL BENCHMARK SERIES
(MASTER FEEDER) LTD., A SEGREGATED
ACCOUNTS COMPANY, SOLELY WITH RESPECT TO THE
MUSCIDA SERIES.
BY: MURRAY CAPITAL MANAGEMENT, INC., ITS AGENT
By: /s/ Scott V. Beechert
---------------------
Name: Scott V. Beechert
Title: General Counsel & Chief Compliance
Officer
Address (for the above four entities):
c/o Murray Capital Management, Inc.
680 Fifth Avenue
New York, NY 10019
Attention: General Counsel
Fax: (212) 582-5525
[Signature Page of Equity Commitment Agreement]
SOUTHPAW ASSET MANAGEMENT
By: /s/ Kevin Wyman
---------------
Name: Kevin Wyman
Title: Managing Member of General Partner -
Southpaw Holdings LLC
Address:
Southpaw Asset Management LP
4 Greenwich Office Park, 1st Floor
Greenwich, CT 06831
Attention: Arif Y Ganghat
Fax: (203) 862-6201
[Signature Page of Equity Commitment Agreement]
UBS SECURITIES LLC
By: /s/ Mark Lane
-------------
Name: Mark Lane
Title: Managing Director
By: /s/ Thomas Tormey
-----------------
Name: Thomas Tormey
Title: Director
Address:
677 Washington Boulevard
Stamford, CT 06901
Attention: Thomas Tormey
Fax: (203) 719-0207
W/Copy To:
Fixed Income Legal
Fax: (203) 719-0680
[Signature Page of Equity Commitment Agreement]
SCHEDULE I
INDEX OF DEFINED TERMS
TERM SECTION
------------------------------------------------ ----------------------------------------------------
Agreement Preamble
Agreement Motion Section 5(a)
Agreement Order Section 2(c)
Amended Plan Section 1(a)
Backstop Commitment Section 2(a)(i)
Backstop Fee Section 2(c)
Bankruptcy Court Preamble
Bankruptcy Rules Section 3(b)(i)
Chapter 11 Proceedings Section 3(o)
Code Section 3(w)
Commission Section 3(g)
Commitment Notice Section 1(e)
Commitment Percentage Section 2(a)(i)
Company Preamble
Confirmation Hearing Section 2(c)
Court Orders Section 3(b)(i)
Defaulting Investor Section 2(a)(i)
Default Purchase Right Section 2(a)(ii)
Default Shares Section 2(a)(ii)
Determination Date Section 1(e)
Direct Purchase Right Section 2(b)
Direct Purchase Shares Section 2(b)
Disclosure Statement Section 3(j)
Effective Date Section 1(d)
Eligible Holder Recitals
Environmental Laws Section 3(v)
ERISA Section 3(w)
Exchange Act Section 3(i)
Exchange Act Documents Section 3(i)
Existing Plan Preamble
Exit Extension Fee Section 10(a)(ii)
Exit Facility Section 7(a)(xxiii)
Exit Financing Condition Section 2(c)
Expiration Time Section 1(b)
TERM SECTION
------------------------------------------------ ----------------------------------------------------
Extension Fee Section 10(a)(iii)
HSR Act Section 3(g)
Inconsistent Transaction Section 5(o)
Indemnified Person Section 8(a)
Indemnifying Party Section 8(a)
Independent Accountants Section 3(q)
Investor Agreement Section 2(a)(i)
Investor Default Section 2(a)(ii)
Investor Shares Section 2(b)
Investors Preamble
Material Adverse Effect Section 3(a)
Non-Defaulting Investors Section 2(a)(ii)
Over-Allotment Right Section 1(c)
Payment Date Section 1(b)
Preliminary Prospectus Section 3(k)
Proceedings Section 8(b)
Prospectus Section 3(k)
Purchase Price Recitals
Registration Rights Agreement Section 5(m)
Registration Statement Section 5(i)
Restricted Period Section 5(j)
Right Recitals
Rights Exercise Period Section 1(b)
Rights Offering Recitals
Rights Offering Procedures Recitals
Satisfaction Notice Section 1(e)
Securities Act Section 3(g)
Settlement Term Sheet Section 1(a)
Share Recitals
Subscription Agent Section 5(e)
Transaction Documents Section 3(n)
Transaction Expenses Section 2(d)
Unsubscribed Shares Recitals
SCHEDULE II
COMMITMENT PERCENTAGES