EXHIBIT 99.1
PROTOCOL AGREEMENT
THIS PROTOCOL AGREEMENT, dated as of November 15, 2002 (this "Protocol
Agreement"), by and among Pharmacia Corporation, a Delaware corporation, Solutia
Inc., a Delaware corporation ("Solutia"), and Monsanto Company, a Delaware
corporation.
W I T N E S S E T H:
WHEREAS, Former Monsanto (as defined below) and Solutia are parties to that
certain Distribution Agreement, dated as of September 1, 1997 (the "Distribution
Agreement"), which was entered into in connection with the distribution of the
common stock of Solutia to the stockholders of Former Monsanto (the "Solutia
Distribution");
WHEREAS, pursuant to the Distribution Agreement, among other things, Former
Monsanto assigned and transferred the Chemicals Assets (as defined in the
Distribution Agreement) to Solutia and Solutia assumed all of the Chemicals
Liabilities (as defined in the Distribution Agreement) of Former Monsanto;
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of
December 19, 1999 (the "Merger Agreement"), by and among the former Monsanto
Company (which is the Delaware corporation identified in the introductory
paragraph of this Protocol Agreement as "Pharmacia Corporation" and which is
referred to herein as either "Former Monsanto" or "Pharmacia," as the context
requires), MP Sub, Incorporated ("Merger Sub") and Pharmacia & Upjohn, Inc.
("PNU"), the parties agreed that Merger Sub would be merged with and into PNU
with PNU surviving as a wholly-owned subsidiary of Former Monsanto in the merger
(the "Merger");
WHEREAS, on February 9, 2000, the new Monsanto Company (which is the
Delaware corporation identified in the introductory paragraph of this Protocol
Agreement as "Monsanto Company" and which is referred to herein as either "New
Monsanto" or "Monsanto," as the context requires) was incorporated as a wholly
owned subsidiary of Former Monsanto under the name "Monsanto Ag Company";
WHEREAS, on March 31, 2000, (i) the Merger was effective, (ii) Former
Monsanto changed its name from "Monsanto Company" to "Pharmacia Corporation,"
and (iii) New Monsanto changed its name from "Monsanto Ag Company" to "Monsanto
Company";
WHEREAS, on September 1, 2000, New Monsanto and Pharmacia entered into
certain agreements, including that certain Separation Agreement, dated as of
September 1, 2000 (the "Separation Agreement"), pursuant to which, among other
things, Pharmacia assigned and transferred certain assets related to its
agricultural products business and certain other assets to New Monsanto and New
Monsanto assumed certain liabilities relating thereto and all liabilities that
were assumed by Solutia or any of its subsidiaries in connection with the
Solutia Distribution to the extent that Solutia fails to pay, perform or
discharge such liabilities;
WHEREAS, on July 1, 2002, (i) the parties hereto entered into a certain
Amendment to the Distribution Agreement (the "Distribution Agreement Amendment")
pursuant to which the assignment from Pharmacia to New Monsanto of certain
assets and liabilities contemplated pursuant to the Separation Agreement
(including certain of Pharmacia's rights and obligations under the Distribution
Agreement) was effectuated and the relationship among the parties was preserved
as nearly as possible with the original intent and terms of the Distribution
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Agreement, (ii) the parties hereto entered into that certain Protocol
Agreement (the "Anniston Protocol Agreement") related to Sabarina Abernathy, et
al. v. Monsanto Company, et al., Case No. CV01832 (the "Anniston Litigation")
and pursuant to which the parties agreed on certain matters pertaining to the
posting of an appeal bond with respect to, and control of decisions regarding
settlement of, the Anniston Litigation; and (iii) Pharmacia and Monsanto entered
into that certain First Amendment to Separation Agreement (the Separation
Agreement, as so amended, being referred to as the "Amended Separation
Agreement") pursuant to which those parties clarified their respective rights
and obligations relating to Monsanto's indemnification obligations under the
Separation Agreement;
WHEREAS, pursuant to the Distribution Agreement, as amended by the
Distribution Agreement Amendment (the "Amended Distribution Agreement"), Solutia
agreed, among other things, to indemnify, defend and hold harmless the Monsanto
Group (as defined in the Amended Distribution Agreement) from and against all
Chemicals Liabilities;
WHEREAS, on August 13, 2002, Pharmacia distributed its entire ownership
interest in Monsanto to the stockholders of Pharmacia;
WHEREAS, pursuant to its obligations under the Amended Distribution
Agreement, Solutia has agreed to and has been defending Pharmacia in connection
with Commonwealth of Pennsylvania et al. v. United States Mineral Products et
al., Nos. 284 M.D., 244 M.D. (Penn. Comm. Ct.) (the "Pennsylvania Litigation");
WHEREAS, a jury verdict has been returned in the Pennsylvania Litigation
with respect to the liability of Solutia and Pharmacia and judgment in the
Pennsylvania Litigation has been entered in the amount of $59.5 million (the
"Judgment");
WHEREAS, under Pennsylvania law a bond in the amount of 120% of the
Judgment, or approximately $71.4 million, must be posted in order to stay
execution of the Judgment pending appeal of the Judgment (the "Appeal");
WHEREAS, pursuant to the Amended Distribution Agreement, Solutia is
obligated, among other things, to post a bond in the Pennsylvania Litigation in
order to stay execution of the Judgment pending appeal of the Judgment;
WHEREAS, Solutia has informed Pharmacia and Monsanto that Solutia has
determined not to post a bond in order to stay execution of the Judgment pending
the Appeal, but that Solutia is willing to contribute $20 million to assist in
securing a bond; and
WHEREAS, Monsanto, pursuant to its obligations to Pharmacia under the
Amended Separation Agreement, has agreed to post a bond sufficient to stay
execution of the Judgment pending the Appeal upon the terms set forth herein.
NOW, THEREFORE, in order to avoid any dispute among the parties with
respect to Solutia's rights and obligations to Pharmacia and Monsanto under the
Amended Distribution Agreement and Monsanto's rights and obligations to
Pharmacia under the Amended Separation Agreement, and in consideration of the
premises and the mutual covenants herein contained and intending to be legally
bound hereby, the parties hereto agree as follows:
Section 1. Defined Terms. Each capitalized term used in this Protocol
Agreement and not otherwise defined herein shall have the meaning ascribed
thereto in the Amended Distribution Agreement. The parties hereto affirm the
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factual accuracy of each of the recitals set forth above to the extent that they
relate to such party.
Section 2. Effect of Protocol Agreement. This Protocol Agreement is a
written, signed amendment and modification of (i) the Amended Distribution
Agreement, in satisfaction of the requirements of Section 10.06 of the Amended
Distribution Agreement, and (ii) solely with respect to Pharmacia and Monsanto,
the Amended Separation Agreement, in satisfaction of the requirements of Section
11.07 of the Amended Separation Agreement.
Section 3. Monsanto's Commitment to Obtain Pennsylvania Litigation Appeal
Bond. Monsanto shall obtain a bond sufficient to stay execution of the Judgment
pending the Appeal (the "Pennsylvania Litigation Appeal Bond").
Section 4. Pennsylvania Litigation Protocol. In connection with Monsanto's
commitment to obtain the Pennsylvania Litigation Appeal Bond pursuant to Section
3 above, the parties hereto agree that the following shall apply:
(a) Solutia's Obligation to Contribute Funds. Solutia shall provide to
Monsanto, or to the surety or bonding company of Monsanto's choosing (the
"Monsanto Surety"), on or before November 15, 2002, with a letter of credit in
the form attached hereto as Exhibit C (the "Solutia LOC") as collateral
necessary to secure the Pennsylvania Litigation Appeal Bond that has a present
cash value of no less than $20 million (the "Solutia Funds").
(b) Solutia's Reimbursement Obligations. Solutia shall reimburse or pay
directly, and in no event later than thirty (30) days after receipt of an
invoice or bill, all of Monsanto's Expenses. "Expenses" means all of Monsanto's
out-of-pocket expenses reasonably incurred in connection with obtaining the
Pennsylvania Litigation Appeal Bond, including, without limitation: (i) the
premium due on the Pennsylvania Litigation Appeal Bond, and /or the fees charged
by the Monsanto Surety in connection therewith; (ii) the fees and expenses
relating to any third-party credit enhancement related to the Pennsylvania
Litigation Appeal Bond; (iii) all costs and expenses of securing Monsanto's
obligations with respect to the Pennsylvania Litigation Appeal Bond; and (iv)
fees and expenses of financial advisors and attorneys retained by Monsanto in
connection with the foregoing.
(c) Settlement Control Conditions.
(i) Monsanto Does Not Provide Collateral. If the Pennsylvania Appeal Bond
is obtained by Monsanto pursuant to Section 3 above without Monsanto having to
provide or post any cash, property, security, collateral or a third-party credit
enhancement (the "Collateral"), then (A) Solutia and Monsanto shall have shared
control over decisions to compromise or settle, on a commercially reasonable
basis, any and all claims at issue, or arguably at issue, in the Appeal and/or
the Pennsylvania Litigation; (B) Monsanto may utilize the Solutia Funds in
accordance with the conditions and procedures contained in the Solutia LOC for
drawing thereon; and (C) Solutia and Monsanto need not receive the consent or
approval of Pharmacia to settle any or all of the claims at issue, or arguably
at issue, in the Appeal and/or the Pennsylvania Litigation, provided that the
settlement includes as a term thereof delivery by the claimant(s) or
plaintiff(s) to Pharmacia and Monsanto of a written release of Pharmacia,
Monsanto and Solutia from all liability with respect to the Pennsylvania
Litigation once payment of the settlement and fulfillment of any other
obligations of the settlement have been effectuated. To the extent that Solutia
and Monsanto do not unanimously agree with respect to settlement strategies or
decision to compromise or settle any claim, they shall consult with Pharmacia in
an attempt to reach a unanimous decision. If a unanimous decision of Monsanto,
Solutia and Pharmacia is not reached, the agreement of any two of the parties
(Solutia, Monsanto and Pharmacia) shall be binding upon all parties hereto.
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(ii) Monsanto Provides Collateral. If Monsanto provides or posts any
Collateral in order to obtain the Pennsylvania Appeal Bond pursuant to Section
3, the parties hereto agree that (A) Monsanto shall have sole and exclusive
right to compromise or settle, on a commercially reasonable basis, all claims at
issue, or arguably at issue, in the Appeal and/or the Pennsylvania Litigation;
(B) Monsanto may utilize the Solutia Funds in accordance with the conditions and
procedures contained in the Solutia LOC for drawing thereon; (C) Monsanto need
not receive the consent or approval of Pharmacia or Solutia to settle any or all
claims at issue, or arguably at issue, in the Appeal and/or the Pennsylvania
Litigation, provided that such settlement includes as a term thereof delivery by
the claimant(s) or plaintiff(s) to Pharmacia, Monsanto and Solutia of a written
release of Pharmacia, Monsanto and Solutia from all liability in respect to the
Pennsylvania Litigation once payment of the settlement and fulfillment of any
other obligations of the settlement have been effectuated; and (D) Monsanto
shall nevertheless have a duty of prior consultation with Solutia and Pharmacia
concerning settlement strategies and decisions (subparts (A), (B), (C) and (D)
of this Section 4(c)(ii) being referred to herein collectively as the
"Settlement Control Rights").
(d) Solutia's Disposition of Assets. In the event that at anytime during
the period during which Monsanto shall continue to have any obligation
whatsoever with respect to the Pennsylvania Appeal Bond Solutia shall convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) any portion of its assets (whether now owned or
hereafter acquired) having an aggregate value of $100 million or greater to any
Person, or permit any subsidiary of Solutia to do so (a "Transaction"), Solutia
shall have fifteen (15) business days following the consummation of a
Transaction to obtain and deliver to Monsanto (i) the Monsanto Surety's complete
and unconditional written release of Monsanto from all of its commitments and
obligations with respect to the Pennsylvania Appeal Bond; and (ii) evidence
satisfactory to Monsanto in its sole discretion that Solutia has either (A)
secured a replacement bond that is sufficient to stay execution of the Judgment
pending Appeal or (B) settled all of the claim(s) at issue, or arguably at
issue, in the Appeal and/or the Pennsylvania Litigation, provided that the
settlement includes as a term thereof delivery by the claimant(s) or
plaintiff(s) to Pharmacia and Monsanto of a written release of Pharmacia,
Monsanto and Solutia from all liability with respect to the Pennsylvania
Litigation once payment of the settlement and fulfillment of any other
obligations of the settlement have been effectuated (subparts (i) and (ii) of
this Section 4(d) referred to collectively as the "Release Conditions"). If
Solutia fails to satisfy the Release Conditions within the time period
prescribed by this Section 4(d), then the Settlement Control Rights shall
immediately vest in favor of Monsanto. "Person" means an individual,
partnership, association, corporation, limited liability company, organization,
government or governmental subdivision or agency, business trust, estate, trust,
or any other legal or commercial entity.
Section 5. Obligation to Pay Settlement or Judgment Amounts.
(a) Solutia's Obligations. In the event that any claims at issue, or
arguably at issue, in the Appeal and/or the Pennsylvania Litigation are settled,
Solutia shall pay the full settlement amount and perform any obligations of
Solutia, Pharmacia and any other members of the Monsanto Group set forth in the
settlement agreement. In the event that any claims at issue are not settled and
a final, non-appealable judgment is entered against Solutia, Pharmacia or any
other member of the Monsanto Group, Solutia shall pay directly and otherwise
fulfill all of Solutia's, Pharmacia's and all other Monsanto Group members'
obligations pursuant to such judgment. To the extent that Solutia fails to
promptly and fully meet such obligations with respect to the payment of any
judgment or settlement or with respect to other obligations arising out of any
settlement or judgment in the Appeal and/or the Pennsylvania Litigation, Solutia
shall enter into a consent judgment in favor of Pharmacia and Monsanto against
Solutia in an amount equal to the amount specified in the judgment or settlement
minus any amount paid by Solutia in satisfaction of the judgment or settlement.
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(b) Monsanto's Obligations. To the extent that Solutia fails to promptly
and fully meet its obligations with respect to the payment of any judgment or
settlement or with respect to other obligations arising out of any settlement or
judgment in the Appeal and/or the Pennsylvania Litigation, Monsanto agrees to
pay, perform or discharge such liabilities and obligations in accordance with
its obligations under the Amended Separation Agreement. To the extent that
Monsanto fails to promptly and fully meet its obligations under the Amended
Separation Agreement with respect to the payment of any judgment or settlement
or with respect to other obligations arising out of any settlement or judgment
in the Appeal and/or the Pennsylvania Litigation, Monsanto shall enter into a
consent judgment in favor of Pharmacia and against Monsanto in an amount equal
to the amount specified in the judgment or settlement minus any aggregate amount
paid by Solutia and Monsanto in satisfaction of the judgment or settlement.
Section 6. Powers of Attorney.
(a) Revocation and Replacement by Pharmacia.
(i) The power of attorney attached as Exhibit A to the Anniston Protocol
Agreement is hereby revoked and is of no further force or effect and is replaced
by the power of attorney attached hereto as Exhibit A (the "Pharmacia POA"),
which shall be executed by Pharmacia. Pursuant to the Pharmacia POA and except
as otherwise provided for in such power of attorney, the prosecution and defense
of (A) the Pennsylvania Litigation and the Appeal, (B) the Anniston Litigation
and any appeal of the Anniston Litigation ("Anniston Litigation Appeal"); and
(C) any other Claims (as defined in the Pharmacia POA) shall be prosecuted and
defended by Solutia at Solutia's expense. Solutia shall report to Monsanto and
Pharmacia all material developments concerning the Pennsylvania Litigation, the
Appeal, the Anniston Litigation and the Anniston Litigation Appeal and shall
provide all information and documents with respect thereto reasonably requested
by either Monsanto or Pharmacia (the "Solutia Reporting Obligations"). With
respect to any Claims (as defined in the Pharmacia POA) other than the
Pennsylvania Litigation, the Appeal, the Anniston Litigation and the Anniston
Litigation Appeal, the Solutia Reporting Obligations will only arise in the
event that Monsanto or Pharmacia requests Solutia to report any such information
with respect to any such Claim. At their expense, Monsanto and Pharmacia may
associate with and advise Solutia in the prosecution or defense of the
Pennsylvania Litigation, the Appeal, the Anniston Litigation, the Anniston
Litigation Appeal or any other Claim (as defined in the Pharmacia POA) and
Solutia shall allow Pharmacia and Monsanto to consult with and advise Solutia in
connection with any decision or strategy with respect thereto. Solutia shall
also fully inform Pharmacia and Monsanto on an immediate basis and in writing of
any settlement discussions regarding the Pennsylvania Litigation, the Appeal,
the Anniston Litigation, the Anniston Litigation Appeal or any other Claim (as
defined in the Pharmacia POA) and shall, subject to (X) Section 4(c) of this
Protocol Agreement with respect to the Pennsylvania Litigation or the Appeal;
(Y) Section 5(b) of the Anniston Protocol Agreement with respect to the Anniston
Litigation and the Anniston Litigation Appeal; and (Z) Section 7 of this
Protocol Agreement with respect to all other matters, consult fully with
Pharmacia and Monsanto concerning any settlement strategies or decision.
(ii) Solutia hereby acknowledges and accepts the appointment as Pharmacia's
agent and attorney as provided in the Pharmacia POA and agrees to undertake and
perform in a commercially reasonable manner on behalf of Pharmacia and in
Pharmacia's name, place and stead, for all purposes with respect to all Claims
(as defined in the Pharmacia POA) and to fully enforce all of Pharmacia's
rights, interests and remedies with respect thereto, in each case with the same
duty of care and prudence that it applies to the management of Solutia's own
affairs, in accordance with the terms of the Amended Distribution Agreement and
the Pharmacia POA.
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(iii) Monsanto hereby acknowledges and consents to Pharmacia's appointment
of Solutia as Pharmacia's agent and attorney as provided in the Pharmacia POA.
(b) Revocation and Replacement of Distribution Agreement Amendment Power of
Attorney.
(i) The power of attorney attached as Exhibit B to the Distribution
Agreement Amendment is hereby revoked and is of no further force or effect and
is replaced by the power of attorney attached hereto as Exhibit B (the "Monsanto
POA"), which shall be executed by Monsanto. Pursuant to the Monsanto POA and
except as otherwise provided for in such power of attorney, the prosecution and
defense of (A) the Pennsylvania Litigation and the Appeal, (B) the Anniston
Litigation and the Anniston Litigation Appeal; and (C) any other Claims (as
defined in the Monsanto POA) shall be prosecuted and defended by Solutia at
Solutia's expense. Solutia shall comply with the Solutia Reporting Obligations.
With respect to any Claims (as defined in the Monsanto POA) other than the
Pennsylvania Litigation, the Appeal, the Anniston Litigation and the Anniston
Litigation Appeal, the Solutia Reporting Obligations will only arise in the
event that Monsanto or Pharmacia requests Solutia to report any such information
with respect to any such Claim. At their expense, Monsanto and Pharmacia may
associate with and advise Solutia in the prosecution or defense of the
Pennsylvania Litigation, the Appeal, the Anniston Litigation, the Anniston
Litigation Appeal or any other Claim (as defined in the Monsanto POA) and
Solutia shall allow Pharmacia and Monsanto to consult with and advise Solutia in
connection with any decision or strategy in respect thereto. Solutia shall also
fully inform Pharmacia and Monsanto on an immediate basis and in writing of any
settlement discussions regarding the Pennsylvania Litigation, the Appeal, the
Anniston Litigation, the Anniston Litigation Appeal or any other Claim (as
defined in the Monsanto POA) and shall, subject to (X) Section 4(c) of this
Protocol Agreement with respect to the Pennsylvania Litigation or the Appeal;
(Y) Section 5(b) of the Anniston Protocol Agreement with respect to the Anniston
Litigation and the Anniston Litigation Appeal; and (Z) Section 7 of this
Protocol Agreement with respect to all other matters, consult fully with
Pharmacia and Monsanto concerning any settlement strategies or decision.
(ii) Solutia hereby acknowledges and accepts the appointment as Monsanto's
agent and attorney as provided in the Monsanto POA and agrees to undertake and
perform in a commercially reasonable manner on behalf of Monsanto and in
Monsanto's name, place and stead, all of Monsanto's commitments, duties,
liabilities and obligations with respect to all Claims (as defined in the
Monsanto POA) and to fully enforce all of Monsanto's rights, interests and
remedies under the Amended Distribution Agreement, in each case with the same
duty of care and prudence that it applies to the management of Solutia's own
affairs, in accordance with the terms of the Amended Distribution Agreement and
the Monsanto POA.
(iii) Pharmacia hereby acknowledges and consents to Monsanto's appointment
of Solutia as Monsanto's agent and attorney as provided in the Monsanto POA.
Section 7. Clarification of Amended Distribution Agreement. The parties
hereby agree, for purposes of clarification, that in the event that Solutia
breaches any of its commitments, duties or obligations under the Amended
Distribution Agreement nothing contained in Article IV thereof shall be
construed as providing Solutia with the right to consent to the compromise or
settlement of any Third Party Claim (including, without limitation, the
Pennsylvania Litigation and the Anniston Litigation) by either of Pharmacia or
Monsanto. The parties agree that Solutia's right to consent to an Indemnitee's
compromise or settlement of a Third Party Claim pursuant to Section 4.04(b) of
the Amended Distribution Agreement shall only arise in the event that, pursuant
to said Section 4.04(b), Solutia has the right to elect to defend a Third Party
Claim and elects not to so defend.
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Section 8. Conflicts with Existing Agreements. For purposes of the defense
and prosecution of the Pennsylvania Litigation and the Appeal and of any Third
Party Claims, to the extent the rights, duties, commitments and obligations set
forth in this Protocol Agreement, the Pharmacia POA or the Monsanto POA differ
from or conflict with the rights, duties, commitments and obligations of the
parties as set forth in the Amended Distribution Agreement or in the Amended
Separation Agreement, the rights, duties, commitments and obligations in this
Protocol Agreement, the Pharmacia POA or the Monsanto POA shall supercede and
take precedence over the rights, duties, commitments and obligations set forth
in the Amended Distribution Agreement or the Amended Separation Agreement, as
the case may be; provided, however, that parties hereto acknowledge and agree
that for all purposes with respect to the Anniston Litigation and the Anniston
Litigation Appeal, the rights, duties, commitments and obligations set forth in
the Anniston Protocol Agreement shall control and shall not be superceded or
replaced by the rights, duties, commitments and obligations set forth in this
Protocol Agreement other than with respect to Pharmacia's revocation of the
power of attorney attached as Exhibit A to the Anniston Protocol Agreement and
replacement thereof with the Pharmacia POA as set forth in Section 6(a) of this
Protocol Agreement.
Section 9. Bankruptcy. In the event that Solutia files or is subject to any
voluntary or involuntary bankruptcy proceeding, Solutia's rights hereunder and
Solutia's right to defend Pharmacia and/or Monsanto with respect to (i) the
Pennsylvania Litigation and the Appeal, (ii) the Anniston Litigation and the
Anniston Litigation Appeal; and (iii) any other Third Party Claims, as well as
the Pharmacia POA and the Monsanto POA are automatically and immediately
revoked. The parties further agree that consent from relief from any automatic
stay under section 362 of the Untied States Bankruptcy Code is not necessary,
but that should a court rule otherwise, Solutia hereby consents to the entry of
an order granting relief from the stay in order to effectuate this paragraph and
agrees to provide all necessary cooperation.
Section 10. Miscellaneous.
(a) No Waiver; Statute of Limitations.
(i) Amended Distribution Agreement and Anniston Protocol Agreement. Other
than as specifically provided herein, none of Pharmacia, Monsanto or Solutia has
waived or compromised any of their respective rights under the Amended
Distribution Agreement or the Anniston Protocol Agreement. In addition, the
running of any limitations on the time for Pharmacia, Monsanto or Solutia to
assert any claims related to the Pennsylvania Litigation under the Amended
Distribution Agreement is tolled until 120 days after final resolution of the
Appeal.
(ii) Amended Separation Agreement. Other than as specifically provided
herein, neither Pharmacia nor Monsanto has waived or compromised any of their
respective rights under the Amended Separation Agreement. In addition, the
running of any limitations on the time for Pharmacia or Monsanto to assert any
claims related to the Pennsylvania Litigation under the Amended Separation
Agreement is tolled until 120 days after final resolution of the Appeal. The
parties acknowledge and agree that nothing contained in this Protocol Agreement
makes Solutia a party to the Amended Separation Agreement nor gives it any
rights thereunder.
(b) Commitments and Obligations Continue. Nothing herein is intended to nor
shall be construed to waive or limit any of the commitments and obligations of
Solutia to Pharmacia, Monsanto or the Monsanto Group (and each of their
Representatives and Affiliates) set forth in the Amended Distribution Agreement
or the Anniston Protocol Agreement, or to waive or limit any commitments and
obligations of Monsanto to Pharmacia or the Pharmacia Group (and each of their
Representatives and Affiliates) set forth in the Amended Separation Agreement.
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(c) Expenses. Each party hereto will pay its own costs and expenses
incident to its negotiation and preparation of this Protocol Agreement,
including the fees, expenses and disbursement of its counsel.
(d) Governing Law. This Protocol Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware as to all
matters, including matters of validity, construction, effect, performance and
remedies (other than the laws regarding choice of laws and conflicts of laws).
(e) Amendments and Modifications. This Protocol Agreement may be amended,
modified or supplemented only by a written agreement signed by all of the
parties hereto.
(f) Binding Effect; Assignment. This Protocol Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their successors, but neither this Protocol Agreement nor any of the
rights, interests and obligations hereunder shall be assigned by any party
hereto.
(g) Agreement as to Solutia's Breach. Provided that Solutia promptly and
fully complies with, as conditions precedent, the commitments, obligations and
duties set forth in this Protocol Agreement, Pharmacia and Monsanto each agree
that Solutia's determination not to post the Pennsylvania Litigation Appeal Bond
will not be deemed to be a breach of Solutia's commitments and obligations to
Pharmacia or Monsanto under the Amended Distribution Agreement; provided,
however, to the extent that such agreement by Pharmacia and Monsanto may be
deemed to be a waiver of a breach by Solutia of the Amended Distribution
Agreement, such waiver shall not operate or be construed as a waiver of any
subsequent breach by Solutia.
(h) Counterparts. This Protocol 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.
(i) Blue Penciling; Specific Performance. Any provision of this Protocol
Agreement that 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 Protocol Agreement and agrees that the obligations of the
parties hereunder shall be specifically enforceable.
(k) Acknowledgement as to Pharmacia's Attorney in Fact. Notwithstanding
anything contained herein to the contrary, the parties acknowledge and agree
that Monsanto has been appointed as Pharmacia's agent and attorney as provided
in the power of attorney attached as Exhibit A to the Amended Distribution
Agreement. The parties further acknowledge and agree that to the extent that
such power of attorney has not been revoked by Pharmacia, in the event that
Solutia is required pursuant to this Protocol Agreement to provide information,
or otherwise report, to Pharmacia, Solutia's obligations with respect thereto
shall be satisfied to the extent that Solutia provides such information, or
otherwise reports, to Monsanto.
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IN WITNESS WHEREOF, the parties hereto have caused this Protocol Agreement
to be duly executed as of the date first above written.
PHARMACIA CORPORATION,
a Delaware corporation
By:
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Name:
Title:
MONSANTO COMPANY,
a Delaware corporation
By:
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Name:
Title:
SOLUTIA INC.,
a Delaware corporation
By:
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Name:
Title:
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EXHIBIT A
FORM OF
POWER OF ATTORNEY: LITIGATION/CLAIMS
KNOW ALL MEN BY THESE PRESENTS:
That Pharmacia Corporation, a corporation organized and existing under the
laws of the State of Delaware or the applicable member of the Monsanto Group
("Pharmacia") has made, constituted and appointed and by these presents does
make, constitute and appoint, Solutia Inc., a corporation organized and existing
under the laws of the State of Delaware or the applicable member of the
Chemicals Group ("Solutia") its true and lawful agent and attorney, for
Pharmacia and in Pharmacia's name, place and stead, for all purposes with
respect to Third Party Claims (including, without limitation, the Pennsylvania
Litigation and the Anniston Litigation) as to which Solutia has agreed to
indemnify Pharmacia, and such claims against Third Parties which continue to be
held by Pharmacia in trust for Solutia, such Third Party Claims and claims
against Third Parties being collectively referred to herein as "Claims"; and its
attorney shall have, subject to (i) the provisions of the Protocol Agreement,
dated November 15, 2002 (the "Protocol Agreement"), to which this power of
attorney is entered, and (ii) the Protocol Agreement dated as of July 1, 2002,
by and among Pharmacia, Solutia and Monsanto Company (the "Anniston Protocol
Agreement"), full power and authorization to take all action with respect to
such Claims as Pharmacia can take and which said attorney, acting through its
officers or their delegates, who in each case, acting alone, in his or her sole
discretion, think best, including without limitation, (i) to represent Pharmacia
with respect to such Claims for so long as such Claims are unresolved; (ii) to
appear in Pharmacia's name and to execute, deliver and file all pleadings,
motions and other filings, at trial, on appeal, or in a proceeding, through
counsel retained by Solutia or by officers of Solutia or their delegates, acting
alone, or otherwise; (iii) to assert or waive any or all rights with respect to
such Claims; (iv) to engage in all phases of discovery with respect to such
Claims, including without limitation, to take depositions, defend depositions
and propound or respond to other discovery requests, such as interrogatories or
requests for production of documents; (v) to direct and accept service of
process with respect to such Claims; (vi) to execute and deliver affidavits as
may be necessary or desirable with respect to such Claims; (vii) to agree to and
to represent Pharmacia in alternative resolution proceedings, including
arbitration or mediation of Claims; (viii) to discuss or negotiate settlement
agreements and releases with Third Parties with respect to such Claims on such
terms and conditions as Solutia thinks best; (ix) to execute, deliver and, if
needed, file any and all settlement agreements, releases and other agreements,
documents and instruments as may be required and any and all modifications
thereof; and (x) to obtain and post bonds pending appeal; hereby giving and
granting to Pharmacia's said attorney full power and authority to do and perform
all and every act and thing whatsoever necessary to be done in the premises as
fully to all intents and purposes as Pharmacia might or could do, hereby
ratifying and confirming all that its said attorney may do pursuant to this
power.
Subject to the Protocol Agreement and the Anniston Protocol Agreement,
Pharmacia hereby gives and grants to its said attorney full power and authority
to do and perform all and every act and thing whatsoever necessary to be done in
the premises, in order fully to carry out and effectuate the authority herein
granted, as fully to all intents and purposes as Pharmacia might or could do if
acting through its own officers or delegates, and Pharmacia hereby ratifies and
confirms all that its said attorney may do pursuant to this power.
Pharmacia hereby further authorizes and empowers its said attorney to
substitute and appoint in the place and stead of its said attorney, or to employ
agents or sub-agents as Solutia thinks best, one or more attorney or attorneys
to exercise for Pharmacia as its attorney or attorneys any and all of the powers
and authorities hereby conferred; and to revoke such appointment
10
or appointments from time to time, and to substitute or appoint any other or
others in the place of such attorney or attorneys as Solutia shall from time to
time think fit.
Unless specifically defined herein, capitalized terms shall have the
meaning defined in the Amended Distribution Agreement.
The term "Amended Distribution Agreement" when used herein means that
certain Distribution Agreement, dated as of September 1, 1997, between Solutia
and Pharmacia Corporation as amended by that certain Amendment to the
Distribution Agreement, dated as of July 1, 2002, among Solutia, Pharmacia and
Monsanto.
The term "Anniston Litigation" when used herein means Sabarina Abernathy,
et al. v. Monsanto Company, et al., Case No. CV01832 and any appeals taken in
that matter.
The term "Distribution Date" when used herein means September 1, 1997.
The term "Governmental Authority" when used herein means any federal,
state, local, foreign or international court, government, department,
commission, board, bureau, agency, the NYSE, or other regulatory, administrative
or governmental authority.
The term "Pennsylvania Litigation" when used herein means Commonwealth of
Pennsylvania et al. v. United States Mineral Products et al., Nos. 284 M.D., 244
M.D. (Penn. Comm. Ct.) and any appeals taken in that matter.
The term "Third Party" when used herein means any individual, partnership,
joint venture, corporation, trust, limited liability company, unincorporated
organization or a government or any department or agency thereof other than
Pharmacia or Solutia or their wholly owned direct or indirect subsidiaries or
affiliates.
The term "Third Party Claims" when used herein means any claim, suit,
arbitration, inquiry, proceeding or investigation by or before any court, any
governmental or other regulatory or administrative agency or commission or any
arbitration tribunal asserted by a Third Party.
All references in this document to "its attorney" or "its said attorney" or
"its true and lawful attorney," or similar designations shall refer to Solutia
Inc. and each and every person to whom Solutia delegates such power and also to
each and every substitute or successor attorney-in-fact appointed under the
terms of this instrument as herein provided.
All references in this document to "its attorney" or "its said attorney" or
"its true and lawful attorney," or similar designations shall refer not only to
Solutia or its delegates but also to each and every substitute or successor
attorney-in-fact appointed under the terms of this instrument as herein
provided.
Pharmacia hereby acknowledges that this power is coupled with an interest
and hereby directs that, to the extent authorized or permitted by applicable
law, this power or attorney shall not be affected by any merger, reverse merger,
split off, spin or consolidation of Pharmacia or Solutia. It is Pharmacia's
intent that the authority conferred hereby shall be exercisable notwithstanding
such corporate changes and that this power of attorney shall, if permitted by
applicable law or applicable contract, be irrevocable; provided, however,
Pharmacia shall have the right, in its sole discretion, to revoke this Power of
Attorney in whole or in part, by delivering written notice to Solutia in the
event that Pharmacia posts a bond as contemplated in the Anniston Protocol
Agreement or upon any breach by Solutia of its commitments, duties or
obligations under either (i) this Power of Attorney or (ii) the Amended
11
Distribution Agreement including, without limitation, any failure to post any
appeal bond required thereunder and, provided further, that this power of
attorney shall be automatically and immediately revoked in accordance with the
provisions of Section 9 of the Protocol Agreement. In the event applicable law
in effect at or any time after the execution of this instrument does not
authorize or permit the foregoing direction to be effective, and if at any later
date, applicable law changes (whether by amendment, court decision, or
otherwise), then Pharmacia directs that the foregoing provisions shall
thereafter become applicable. Notwithstanding anything contained in this power
of attorney to the contrary, (i) this power of attorney may be renewed for
additional thirty (30) day periods at the written request of Pharmacia; and (ii)
should this power of attorney be revoked in part by Pharmacia, Solutia's
obligations hereunder to perform on behalf of Pharmacia and in Pharmacia's name,
place and stead all of Pharmacia's commitments, duties, liabilities and
obligations for all purposes with respect to all other Claims shall continue.
All persons dealing with Pharmacia's said attorney shall be protected in
relying upon a copy of this instrument and shall be protected in relying upon
the written certificate of Solutia as to the Claims which are the subject of
this power of attorney, the identity and authority or its officers, their
delegates and any substitute or successor appointed pursuant to the terms
hereof, and/or as to whether any of the persons authorized to act hereunder is
unavailable so to act, so as to authorize some other person to act hereunder,
and Pharmacia hereby declares that as against it and all persons claiming under
it everything which its attorney shall do or cause to be done pursuant hereto
shall be valid and effectual in favor of any person claiming the benefit hereof
who at the time of the doing thereof shall have relied upon any such
certification made by Solutia. If required by applicable law or if Solutia
desires for any reason to do so, an executed copy of this Power of Attorney
shall be filed for record with the Governmental Authority wherein the Claim is
pending or such other place as required by law or whether Solutia thinks best.
Pharmacia authorizes Solutia to make all such filings.
This instrument may be executed in any number of counterparts, and all of
said counterparts shall constitute but one and the same instrument.
[SIGNATURE AND NOTARY PAGE IS NEXT PAGE]
12
IN WITNESS WHEREOF, I have hereunto set my hand and seal this _____ day of
____________________, 2002.
PHARMACIA CORPORATION
-----------------------------------
By:
Title:
ATTEST:
- ------------------------------------
STATE OF NEW JERSEY )
)
COUNTY OF ___________ )
On this _____ day of _________________, 2002, before me the undersigned, a
Notary Public, in and for the County and State aforesaid, personally appeared
_______________________________, to me known to be the person described in and
who executed the foregoing instrument, and acknowledged that he/she executed the
same as his/her free act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official
seal in __________________, the day and year last above written.
----------------------------------------------
Notary Public in and for said County and State
My Commission expires:
- -----------------------------
13
EXHIBIT B
MONSANTO COMPANY
POWER OF ATTORNEY: LITIGATION/CLAIMS
KNOW ALL MEN BY THESE PRESENTS:
That from and after the date hereof ("Effective Date"), Monsanto Company, a
corporation organized and existing under the laws of the State of Delaware
("Monsanto") has made, constituted and appointed, and by these presents does
make, constitute and appoint, Solutia Inc., a corporation organized and existing
under the laws of the State of Delaware ("Solutia"), its true and lawful agent
and attorney, for Monsanto and in Monsanto's name, place and stead, for all
purposes with respect to Third Party Claims (including, without limitation, the
Pennsylvania Litigation and the Anniston Litigation) as to which Solutia has
agreed to indemnify Monsanto, and such claims against Third Parties which
continue to be held by Monsanto in trust for Solutia, such Third Party Claims
and claims against Third Parties being collectively referred to herein as
"Claims"; and its attorney shall have, subject to (i) the provisions of the
Protocol Agreement, dated November 15, 2002 (the "Protocol Agreement"), to which
this power of attorney is entered, and (ii) the Protocol Agreement dated as of
July 1, 2002, by and among Pharmacia, Solutia and Monsanto Company (the
"Anniston Protocol Agreement"), full power and authorization to take all action
with respect to such Claims as Monsanto can take and which said attorney, acting
through its officers or their delegates, who in each case, acting alone, in his
or her sole discretion, think best, including without limitation, (i) to
represent Monsanto with respect to such Claims for so long as such Claims are
unresolved; (ii) to appear in Monsanto's name and to execute, deliver and file
all pleadings, motions and other filings, at trial, on appeal, or in a
proceeding, through counsel retained by Solutia or by officers of Solutia or
their delegates, acting alone, or otherwise; (iii) to assert or waive any or all
rights with respect to such Claims; (iv) to engage in all phases of discovery
with respect to such Claims, including without limitation, to take depositions,
defend depositions and propound or respond to other discover requests, such as
interrogatories or requests for production of documents; (v) to direct and
accept service of process with respect to such claims; (vi) to execute and
deliver affidavits as may be necessary or desirable with respect to such Claims;
(vii) to agree to and to represent Monsanto in alternative resolution
proceedings, including arbitration or mediation of Claims; (viii) to discuss or
negotiate settlement agreements and releases with Third Parties with respect to
such Claims on such terms and conditions as Solutia thinks best; (ix) to
execute, deliver and if needed, file any and all settlement agreements, releases
and other agreements, documents and instruments as may be required and any and
all modifications thereto; and (x) to obtain and post bonds pending appeal;
hereby giving and granting to Monsanto's said attorney full power and authority
to do and perform all and every act and thing whatsoever necessary to be done in
the premises as fully to all intents and purposes as Monsanto might or could do,
hereby ratifying and confirming all that its said attorney may do pursuant to
this power.
Subject to the Protocol Agreement and the Anniston Protocol Agreement,
Monsanto hereby gives and grants to its said attorney from and after the
Effective Date, full power and authority to do and perform all and every act and
thing whatsoever necessary to be done in the premises, in order fully to carry
out and effectuate the authority herein granted, as fully to all intents and
purposes as Monsanto might or could do if acting through its own officers or
delegates, and Monsanto hereby ratifies and confirms all that its said attorney
may be pursuant to this power.
Monsanto hereby further authorizes and empowers its said attorney from and
after Effective Date to substitute and appoint in the place
14
and stead of its said attorney, or to employ agents or sub-agents as Solutia
thinks best, one or more attorney or attorneys to exercise for Monsanto as its
attorney or attorneys any or all of the powers and authorities hereby conferred;
and to revoke such appointment or appointments from time to time, and to
substitute or appoint any other or others in the place of such attorney or
attorneys as Solutia shall from time to time think fit.
Unless specifically defined herein, capitalized terms shall have the
meaning defined in the Amended Distribution Agreement.
The term "Amended Distribution Agreement" when used herein means that
certain Distribution Agreement, dated as of September 1, 1997, between Solutia
and Pharmacia Corporation as amended by that certain Amendment to the
Distribution Agreement, dated as of July 1, 2002, among Solutia, Pharmacia and
Monsanto.
The term "Anniston Litigation" when used herein means Sabarina Abernathy,
et al. v. Monsanto Company, et al., Case No. CV01832 and any appeals taken in
that matter.
The term "Governmental Authority" when used herein means any federal,
state, local, foreign or international court, government department, commission,
board, bureau, agency, the New York Stock Exchange, or other regulatory,
administrative or governmental authority.
The term "Pennsylvania Litigation" when used herein means Commonwealth of
Pennsylvania et al. v. United States Mineral Products et al., Nos. 284 M.D., 244
M.D. (Penn. Comm. Ct.) and any appeals taken in that matter.
The term "Third Party" when used hereby means any individual, partnership,
joint venture, corporation, trust, limited liability company, unincorporated
organization or a Governmental Authority or any department or agency thereof
other than Monsanto or Solutia and their respective wholly-owned direct or
indirect subsidiaries.
The term "Third Party Claims" when used herein means any claim, suit,
arbitration, inquiry, proceeding or investigation by or before any court, any
governmental or other regulatory or administrative agency or commission or any
arbitration tribunal asserted by a Third Party.
All references in this document to "its attorney" or "its said attorney" or
"its true and lawful attorney," or similar designations shall refer to Solutia
Inc. and each and every person to whom Solutia delegates such power and also to
each and every substitute or successor attorney-in-fact appointed under the
terms of this instrument as herein provided.
All references in this documents to "its attorney" or "its said attorney"
or "its true and lawful attorney," or similar designations shall refer not only
to Solutia or its delegates but also to each and every substitute or successor
attorney-in-fact appointed under the terms of this instrument as herein
provided.
Monsanto hereby acknowledges that this power is coupled with an interest
and hereby directs that, to the extent authorized or permitted by applicable
law, this power or attorney shall not be affected by any merger, reverse merger,
split off, spin or consolidation of Monsanto or Solutia. It is Monsanto's intent
that the authority conferred hereby shall be exercisable notwithstanding such
corporate changes and that this power of attorney shall, if permitted by
applicable law or applicable contract, be irrevocable, provided, however, that
Monsanto shall have the right, in its sole discretion, to revoke this Power of
Attorney in whole or in part, by delivering written notice to Solutia upon any
breach by Solutia of its commitments, duties or obligations under either (i)
this Power of Attorney or (ii) the Amended Distribution Agreement including,
without limitation, any failure to post any appeal bond
15
required thereunder and, provided further, that this power of attorney shall be
automatically and immediately revoked in accordance with the provisions of
Section 9 of the Protocol Agreement. In the event applicable law in effect at or
any time after the execution of this instrument does not authorize or permit the
foregoing direction to be effective, and if at any later date, applicable law
changes (whether by amendment, court decision, or otherwise), then Monsanto
directs that the foregoing provisions shall thereafter become applicable.
Notwithstanding anything contained in this power of attorney to the contrary,
(i) this power of attorney may be renewed for additional thirty (30) day periods
at the written request of Monsanto; and (ii) should this power of attorney be
revoked in part by Monsanto, Solutia's obligations hereunder to perform on
behalf of Monsanto and in Monsanto's name, place and stead all of Monsanto's
commitments, duties, liabilities and obligations for all purposes with respect
to all other Claims shall continue.
All persons dealing with Monsanto's said attorney shall be protected in
relying upon a copy of this instrument and shall be protected in relying upon
the written certificate of Solutia as to the Claims which are the subject of
this power of attorney, the identity and authority of its officers, their
delegates and any substitute or successor appointed pursuant to the terms
hereof, and/or as to whether any of the persons authorized to act hereunder is
unavailable so to act, so as to authorize some other person to act hereunder,
and Monsanto hereby declares that as against it and all persons claiming under
it everything which its attorney shall do or cause to be done pursuant hereto
shall be valid and effectual in favor of any person claiming the benefit hereof
who at the time of the doing thereof shall have relied upon any such
certification made by Solutia. If required by applicable law or if Solutia
desires for any reason to do so, an executed copy of this Power of Attorney
shall be filed for record with the Governmental Authority wherein the Claim is
pending or such other place as required by law or whether Solutia thinks best.
Monsanto authorizes Solutia to make all such filings.
This instrument may be executed in any number of counterparts, and all of
said counterparts shall constitute but one and the same instrument.
[SIGNATURE AND NOTARY PAGE IS NEXT PAGE]
16
IN WITNESS WHEREOF, I have hereunto set my hand and seal as of this day of
November 15, 2002.
MONSANTO COMPANY
----------------------------------------
By: Terrell K. Crews
Title: Executive Vice President and
Chief Financial Officer
ATTEST:
- --------------------------------
STATE OF MISSOURI )
)
COUNTY OF ST. LOUIS )
On this 15th day of November, 2002, before me the undersigned, a Notary
Public, in and for the County and State aforesaid, personally appeared Terrell
K. Crews, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he/she executed the same as his/her
free act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official
seal in St. Louis, the day and year last above written.
----------------------------------------------
Notary Public in and for said County and State
My Commission Expires:
- --------------------------
17
EXHIBIT C
FORM OF
SOLUTIA LETTER OF CREDIT
IRREVOCABLE LETTER OF CREDIT NO.____________________
DATE_____________________
Monsanto Company
Attn: General Counsel
800 North Lindbergh Boulevard
St. Louis, MO 63167
To Whom It May Concern:
At the request of Solutia, Inc. ("Solutia") we, (Name and Address of Bank), have
opened an IRREVOCABLE LETTER OF CREDIT in your favor for $ 20,000,000.00 U.S.
Dollars, available by your drafts at sight.
We warrant to you that all your drafts under this IRREVOCABLE LETTER OF CREDIT
will be duly honored upon presentation of your draft on us at (Address of Bank)
on or before the expiration date or on or before any automatically extended date
as set forth below.
Any draft(s) drawn by you under this Letter of Credit shall be accompanied by
your written certification that you have procured the execution of a bond in the
amount of $71,433,900.00 at the request of Solutia and that any one or more of
the following exists: (i) Claims have been made by SAFECO Insurance Company of
America ("Safeco") against you with respect to the bond posted by Safeco
("Safeco Bond") in favor of Monsanto Company relating to the Commonwealth of
Pennsylvania, Department of General Services et. al., v. United States Mineral
Products et. al., No. 284 M.D. 244 M.D. (Pennsylvania Commonwealth Court)
("Pennsylvania Litigation"); (ii) Claims have been made by Safeco against any
letter of credit or other collateral posted by you in order to secure your
performance of the Safeco Bond; (iii) An agreement has been duly executed by the
parties to the Pennsylvania Litigation settling any claims at issue, or arguably
at issue, in the Pennsylvania Litigation and Solutia has not paid the required
settlement amount within five (5) business days after such agreement has been
fully executed; or (iv) A final, non-appealable judgment in the Pennsylvania
Litigation has been entered by a court of competent jurisdiction against Solutia
or Pharmacia Corporation (a/k/a Monsanto Company) and Solutia has not paid the
required settlement amount within five (5) business days after such agreement
has been fully executed.
Except as stated herein, this IRREVOCABLE LETTER OF CREDIT is effective November
15, 2002, and expires on August 1, 2004, but will be automatically extended
without amendment for successive one-year periods from the current expiration
date and any future expiration date unless at least 90 days prior to expiration
date we notify you by registered letter that we elect not to renew for such
additional one-year periods.
This credit is subject to the Uniform Customs and Practices for Documentary
Credits (1993 Revision), International Chamber of Commerce, publication no. 500.
Very truly yours,
(Authorized Signature)
------------------------------------------------
(Title)
------------------------------------------------
(To be prepared on Bank Letterhead)
18