Exhibit 4.2
WARRANT
REGISTRATION RIGHTS AGREEMENT
By and Between
SOLUTIA INC.
and
XXXXXXX XXXXX XXXXXX INC.
and
BANC OF AMERICA SECURITIES LLC
as representatives of the Initial Purchasers
223,000 Warrants to Purchase Shares of Common Stock
Dated as of July 9, 2002
This Warrant Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of July 9, 2002, between Solutia Inc., a Delaware
corporation (the "COMPANY"), and Xxxxxxx Xxxxx Barney Inc. and Banc of America
Securities LLC as representatives of the Initial Purchasers.
The Company, SOI Funding Corp., a Delaware corporation ("FUNDING
CORP."), the guarantors named therein and the Initial Purchasers have entered
into a Purchase Agreement, dated July 2, 2002 (the "PURCHASE AGREEMENT"). The
Purchase Agreement provides for the offering by Funding Corp. of 223,000 Units,
each consisting of $1,000 principal amount of Funding Corp.'s 11.25% Senior
Secured Notes due 2009 (the "NOTES") and one warrant initially representing the
right to purchase 24.814 shares of common stock, par value $0.01 per share, of
the Company (the "WARRANT SHARES").
Pursuant to the Purchase Agreement, the Company has entered into a
Warrant Agreement (the "WARRANT AGREEMENT") with HSBC Bank USA, as warrant agent
(the "WARRANT AGENT"), providing for the issuance of 223,000 warrants (the
"WARRANTS"), each initially representing the right to purchase 24.814 Warrant
Shares.
In order to induce the Initial Purchasers to purchase the Warrants, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 6 of the Purchase
Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Warrant Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
"ACT": The Securities Act of 1933, as amended.
"ADVICE": As defined in Section 4(b) hereof.
"AFFILIATE": As defined in Rule 144.
"ASSUMPTION DATE": As defined in the Warrant Agreement.
"BLACK OUT NOTICE": As defined in Section 4(b) hereof.
"BLACK OUT PERIOD": As defined in Section 3(a) hereof.
"CLOSING DATE": The date hereof.
"COMMISSION": The Securities and Exchange Commission.
-2-
"DEADLINE": August 9, 2002, or such earlier date as the Company
determines not to pursue its refinancing plan (as described in the Final
Memorandum).
"EXCHANGE ACT": The Securities Exchange Act of 1934, as amended.
"EXPIRATION DATE": The earlier of (1) the Deadline if the Solutia
Assumption does not occur on or before then or (2) 5:00 p.m. New York City time
on July 15, 2009.
"FINAL MEMORANDUM": As defined in the Purchase Agreement.
"HOLDERS": As defined in Section 2 hereof.
"INITIAL PURCHASERS": Xxxxxxx Xxxxx Xxxxxx Inc., Banc of America
Securities LLC, X.X. Xxxxxx Securities Inc., Banc One Capital Markets, Inc.,
HSBC Securities (USA), Inc. and XX Xxxxx Securities Corporation.
"NASD": National Association of Securities Dealers, Inc.
"PROSPECTUS": The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
"REGISTRATION STATEMENT": Any registration statement of the Company
relating to the registration for resale of Transfer Restricted Securities that
is filed pursuant to the provisions of this Agreement and including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"RULE 144": Rule 144 promulgated under the Act.
"SOLUTIA ASSUMPTION": As defined in the Indenture, of even date
herewith, between Funding Corp. and HSBC Bank USA, as trustee.
"TRANSFER RESTRICTED SECURITIES": (a) Each Warrant and Warrant Share
held by an Affiliate of the Company and (b) each other Warrant and Warrant Share
until the earlier to occur of (i) the date on which such Warrant or Warrant
Share (other than any Warrant Share issued upon exercise of a Warrant in
accordance with a Registration Statement) has been disposed of in accordance
with a Registration Statement and (ii) the date on which such Warrant or Warrant
Share (or the related Warrant) is distributed to the public pursuant to Rule 144
under the Act.
2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person is the holder of record of Transfer
Restricted Securities.
-3-
3. SHELF REGISTRATION
(a) SHELF REGISTRATION. The Company shall prepare and cause to be
filed with the Commission on or before 60 days from the Assumption Date
pursuant to Rule 415 under the Act a Registration Statement on the
appropriate form relating to resales of Transfer Restricted Securities by the
Holders thereof and the issuance of Warrant Shares upon the exercise of the
Warrants sold pursuant to such Registration Statement. The Company shall use
its reasonable best efforts to cause the Registration Statement to be
declared effective by the Commission on or before 120 days after the
Assumption Date.
To the extent necessary to ensure that the Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 3(a), the Company shall use its
reasonable best efforts to keep any Registration Statement required by this
Section 3(a) continuously effective, supplemented, amended and current as
required by and subject to the provisions of Section 4(a) hereof and in
conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, until
the later of (i) the second anniversary of the effective date of the
Registration Statement and (ii) the earlier of (A) the Expiration Date and (B)
the first date as of which all Warrants have been exercised by the Holders
thereof; PROVIDED, HOWEVER, that such obligation shall expire before such date
if the Company delivered to the Warrant Agent a written opinion of counsel to
the Company (which opinion of counsel shall be reasonably satisfactory to the
Initial Purchasers) that all Holders (other than Affiliates of the Company) of
Warrants and Warrant Shares may resell the Warrants and the Warrant Shares
without registration under the Act and without restriction as to the manner,
timing or volume of any such sale. Notwithstanding the foregoing, the Company
shall not be required to amend or supplement the Registration Statement, any
related prospectus or any document incorporated therein by reference, for a
period (a "BLACK OUT PERIOD") not to exceed, for so long as this Agreement is in
effect, an aggregate of 90 days in any calendar year, in the event that (i) an
event occurs and is continuing as a result of which the Registration Statement,
any related prospectus or any document incorporated therein by reference as then
amended or supplemented would, in the Company's good faith judgment, contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (ii)(A) the Company determines in its
good faith judgment that the disclosure of such event at such time would have a
material adverse effect on the business, operations or prospects of the Company
or (B) the disclosure otherwise relates to a material business transaction which
has not yet been publicly disclosed; PROVIDED, HOWEVER, that such Black Out
Period shall be extended for any period, not to exceed an aggregate of 30 days
in any calendar year, during which the Commission is reviewing any proposed
amendment or supplement to the Registration Statement, any related prospectus or
any document incorporated therein by reference which has been filed by the
Company; and PROVIDED, FURTHER, that no Black Out Period may be in effect during
the three months prior to the Expiration Date.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Registration
Statement pursuant to this Agreement unless and until such Holder furnishes
to the Company in writing, within 20 days after receipt of a request
therefor, the information
-4-
specified in Item 507 or 508 of Regulation S-K, as applicable, or such other
information as the Company may reasonably request under the Act for use in
connection with any Registration Statement or Prospectus or preliminary
prospectus included therein or in any application to the NASD; the Company shall
be under no further obligations to such Holder to include such Holder in a
Registration Statement. Each selling Holder agrees to promptly furnish
additional information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
4. REGISTRATION PROCEDURES
(a) In connection with the Registration Statement and any related
Prospectus required by this Agreement, the Company shall:
(i) Comply with all the provisions of this Section 4(a) and
use its reasonable best efforts to effect such registration to permit
the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to
Section 3(b) hereof), and pursuant thereto the Company will prepare and
file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof
within the time periods and otherwise in accordance with the provisions
hereof;
(ii) use its reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 of this Agreement.
Upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain an untrue
statement of material fact or omit to state any material fact necessary
to make the statement therein, in the light of the circumstances under
which they were made, not misleading or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company shall, subject to Section 3(a),
file promptly an appropriate amendment to such Registration Statement
or a supplement to the Prospectus, as applicable, curing such defect,
and, in the case of an amendment, use its reasonable best efforts to
cause such amendment to be declared effective as soon as practicable
thereafter;
(iii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as
may be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the Act
in a timely manner; and comply with the provisions of the Act with
respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof
set forth in such Registration Statement or supplement to the
Prospectus;
-5-
(iv) promptly advise each Holder whose Transfer Restricted
Securities have been included in the Registration Statement (each, a
"RELEVANT HOLDER") and the Initial Purchasers and, if requested by such
Person, confirm such advice in writing, (A) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to any applicable Registration Statement or any
post-effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes, and (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making
of any additions or changes in the Registration Statement in order to
make the statements therein not misleading, or that requires the making
of any additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue
any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(v) subject to Section 4(a)(ii), if any fact or event
contemplated by Section 4(a)(iv)(D) hereof shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(vi) furnish to the Initial Purchasers, before filing with the
Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such
Registration Statement or Prospectus, which documents will be subject
to the review and comment of such Persons in connection with such sale,
if any, for a period of at least five Business Days, and the Company
will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or
Prospectus (including all such documents incorporated by reference) to
which such Person shall reasonably object within five Business Days
after the receipt thereof. Such Person shall be deemed to have
reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains an untrue statement of a material fact or omits to
state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading or fails to comply with the applicable requirements of the
Act;
-6-
(vii) subject to execution of a confidentiality agreement in
form and substance reasonably acceptable to the Company and the
Holders, make available, at reasonable times, for inspection by each
Relevant Holder and the Initial Purchasers and any attorney or
accountant retained by such Persons, all financial and other records
and pertinent corporate documents of the Company and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such Person, attorney or accountant in
connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness; PROVIDED, HOWEVER, that any information that is subject
to the aforementioned confidentiality agreement shall be kept
confidential by such Persons, unless (i) disclosure of such information
by such Person is required by court or administrative order or is
necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any
disclosure requirements pursuant to federal securities laws in
connection with the filing of such Registration Statement or the use of
any Prospectus, except if the Company obtains "confidential treatment"
for any document or information in accordance with the rules of the
Commission), (iii) such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard
such information by such Person or (iv) such information becomes
available to such Person from a source other than the Company and its
subsidiaries and such source is not known, after due inquiry, by such
Person to be bound by an obligation of confidentiality;
(viii) if requested by any Relevant Holder or by the Initial
Purchasers, promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as any such Person reasonably requests to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities and the use of the Registration Statement or Prospectus for
market-making activities; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be included
in such Prospectus supplement or post-effective amendment;
(ix) furnish to the Initial Purchasers and each Relevant
Holder upon request, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all exhibits;
(x) deliver to the Initial Purchasers and each Relevant
Holder, without charge, as many copies of the Prospectus (including
each preliminary prospectus) and any amendment or supplement thereto as
such Persons reasonably may request; the Company hereby consents to the
use (in accordance with law) of the Prospectus and any amendment or
supplement thereto by each Person in connection with the offering and
the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(xi) upon the request of any Relevant Holder or the Initial
Purchasers, enter into such agreements (including underwriting
agreements) as are customary in comparable offerings and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any applicable
Registration Statement contemplated by this Agreement as may be
-7-
reasonably requested by any Person in connection with any sale or
resale pursuant to any applicable Registration Statement. In such
connection the Company shall:
(A) upon the reasonable request of any Holder or
Initial Purchaser made in connection with an underwritten
sale, furnish (or in the case of paragraphs (2) and (3), use
its reasonable best efforts to cause to be furnished) to each
Person, upon the effectiveness of the Registration Statement:
(1) a certificate, dated such date, signed
on behalf of the Company by (x) the President or any
Vice President and (y) a principal financial or
accounting officer of the Company, covering, as of
the date thereof, matters substantially similar to
those set forth in paragraph (d) of Section 6 of the
Purchase Agreement and such other similar matters as
such Person may reasonably request;
(2) an opinion, dated the date of
effectiveness of the Registration Statement, of
counsel for the Company covering matters similar to
those set forth in paragraph (a)(1) of Section 6 of
the Purchase Agreement and such other matters as such
Person may reasonably request, and in any event
including a statement to the effect that such counsel
has participated in conferences with officers and
other representatives of the Company and
representatives of the independent public accountants
for the Company and has considered the matters
required to be stated therein and the statements
contained therein, although such counsel has not
independently verified the accuracy, completeness or
fairness of such statements; and that such counsel
advises that, on the basis of the foregoing, no facts
came to such counsel's attention that caused such
counsel to believe that the Registration Statement,
at the time such Registration Statement or any
post-effective amendment thereto became effective,
contained an 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 not misleading, or that the Prospectus
contained in such Registration Statement as of its
date contained an untrue statement of a material fact
or omitted to state a material fact necessary in
order to make the statements therein, in the light of
the circumstances under which they were made, not
misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes
no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and
other financial data included in any Registration
Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated the
date of effectiveness of the Registration Statement,
from the Company's independent accountants, in the
customary form and covering matters of the type
customarily covered in comfort letters to
underwriters in connection with underwritten
offerings, and covering matters substantially similar
to those set forth in the comfort letters
-8-
delivered pursuant to paragraph (e) of Section 6 of
the Purchase Agreement; and
(B) deliver such other documents and certificates as
may be reasonably requested by such Holder or Initial
Purchaser to evidence compliance with the matters covered in
clause (A) above and with any customary conditions contained
in any agreement entered into by the Company pursuant to this
clause;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may reasonably request and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the applicable Registration Statement; PROVIDED, HOWEVER,
that the Company shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any
action that would subject it to the service of process in suits or to
taxation, in any jurisdiction where it is not so subject;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders to facilitate
the timely preparation and delivery of certificates, if any,
representing Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and to register such Transfer Registered
Securities in such denominations and such names as the selling Holders
may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiv) use its reasonable best efforts to cause the disposition
of the Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xii)
above;
(xv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Warrant Agent with certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with The Depository Trust
Company; and
(xvi) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission so long as any
provision of this Agreement shall be applicable, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable and in accordance with
the Company's customary practice, a consolidated earnings statement
meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of
the Registration Statement (as such term is defined in Rule 158(c)
under the Act).
-9-
(b) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security and the Initial Purchasers agree that, upon receipt
of notice from the Company of the commencement of a Black Out Period (in each
case, a "BLACK OUT NOTICE"), such Person will forthwith discontinue disposition
of Transfer Restricted Securities pursuant to the applicable Registration
Statement until (i) such Person has received copies of the supplemented or
amended Prospectus referred to in Section 4(a)(v) hereof, or (ii) such Person is
advised in writing that the use of the Prospectus may be resumed (the "ADVICE").
Each Person receiving a Black Out Notice hereby agrees that it will either (i)
destroy any Prospectuses, other than permanent file copies, then in such
Person's possession which have been replaced by the Company with more recently
dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Person's possession of
the Prospectus covering such Transfer Restricted Securities that was current at
the time of receipt of the Black Out Notice. The time period regarding the
effectiveness of such Registration Statement set forth in Section 3 hereof shall
be extended by a number of days equal to the number of days in the period from
and including the date of delivery of the Black Out Notice to and including the
date when each Person that received a Black Out Notice shall have received the
copies of the supplemented or amended Prospectus contemplated by Section 4(a)(v)
hereof or shall have received the Advice.
5. REGISTRATION EXPENSES
All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including, without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing Prospectuses (whether for sales,
market-making or otherwise)), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company; (v) all applications
and filing fees in connection with listing the Warrant Shares on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and (vi) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special audit and
comfort letters required by or incident to such performances).
Notwithstanding the foregoing, the Holders will be responsible for any
underwriting discounts and commissions, brokers fees and any transfer taxes
relating to Warrants disposed of by the Holders. The Company will, in any event,
bear its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company.
6. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder
(including each Initial Purchaser and each Affiliate thereof), the directors,
officers, employees and agents of each such Holder and each Person who controls
any such Holder within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory
-10-
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or the Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and jointly and
severally agree to reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the Company will not be liable in any case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such Holder
specifically for inclusion therein; PROVIDED, FURTHER, that with respect to any
untrue statement or omission of material fact made in any Preliminary
Prospectus, the indemnity agreement contained in this Section 6(a) shall not
inure to the benefit of any Holder from whom the person asserting any such loss,
claim, damage or liability purchased the securities concerned, to the extent
that any such loss, claim, damage or liability of such Holder occurs under the
circumstance where it shall have been determined by a court of competent
jurisdiction by final and nonappealable judgment that (w) the Company had
previously furnished copies of the Prospectus to the Holders, (x) delivery of
the Prospectus was required by the Act to be made to such person, (y) the untrue
statement of omission of a material fact contained in the Preliminary Prospectus
was corrected in the Prospectus and (z) there was not sent or given to such
person , at or prior to the written confirmation of the sale of such securities
to such person, a copy of the Prospectus.
The Company also agrees to indemnify or contribute as provided in
Section 6(d) to Losses of each underwriter of Transfer Restricted Securities
their directors, officers, employees or agents and each Person who controls such
underwriter on substantially the same basis as that of the indemnification of
the Initial Purchasers and the selling Holders provided in this Section 6(a) and
shall, if requested by any Holder, enter into an underwriting agreement
reflecting such agreement.
(b) Each Holder of securities covered by a Registration Statement
(including each Initial Purchaser and each Affiliate thereof) severally agrees
to indemnify and hold harmless the Company, each of its directors, each of its
officers who signs such Registration Statement, and each Person who controls the
Company within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each such Holder, but only
with reference to written information relating to such Holder furnished to the
Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 6
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and de-
-11-
fenses; and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ one separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such one separate counsel if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest; (ii) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party; (iii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action; or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party shall have a joint
and several obligation to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "LOSSES") to
which such indemnified party may be subject in such proportion as is appropriate
to reflect the relative benefits received by such indemnifying party, on the one
hand, and such indemnified party, on the other hand, from the Initial Placement
and the Registration Statement which resulted in such Losses; PROVIDED, HOWEVER,
that in no case shall any Initial Purchaser be responsible, in the aggregate,
for any amount in excess of the purchase discount or commission applicable to
such Transfer Restricted Security as set forth on the cover page of the Final
Memorandum, nor shall any underwriter be responsible for any amount in excess of
the underwriting discount or commission applicable to the securities purchased
by such underwriter under the Registration Statement which resulted in such
Losses. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the indemnifying party and the indemnified party
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the sum of the total net proceeds from the Initial
Placement (before deducting expenses) as
-12-
set forth on the cover page of the Final Memorandum. Benefits received by the
Initial Purchasers shall be deemed to be equal to the total purchase discounts
and commissions as set forth on the cover page of the Final Memorandum, and
benefits received by any other Holders shall be deemed to be equal to the value
of receiving Transfer Restricted Securities registered under the Act. Benefits
received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. Relative fault shall be determined by reference to, among other things,
whether any alleged untrue statement or omission relates to information provided
by the indemnifying party, on the one hand, or by the indemnified party, on the
other hand, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 6, each Person who
controls a Holder within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each Person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section 6 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling Persons referred to
in this Section 6 hereof, and will survive the sale by a Holder of securities
covered by a Registration Statement.
7. RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
8. MISCELLANEOUS
(a) REMEDIES. The Company acknowledges and agrees that any failure by
the Company to comply with its obligations under Section 3 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be pos-
-13-
sible to measure damages for such injuries precisely and that, in the event of
any such failure, the Initial Purchasers or any Holder may obtain such relief as
may be required to specifically enforce the Company's obligations under Section
3 hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as described in the Final
Memorandum, the Company has not previously entered into any agreement granting
any registration rights with respect to its securities to any Person that is
currently effective. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement in effect on the date
hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless (i) in the case of this Section
8(c)(i), the Company has obtained the written consent of Holders of all
outstanding Transfer Restricted Securities, and (ii) in the case of all other
provisions hereof, the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities
(excluding Transfer Restricted Securities held by the Company or its
Affiliates); PROVIDED, HOWEVER, that this Agreement may be amended without the
consent of any Holder to the same extent as permitted pursuant to Section 17 of
the Warrant Agreement.
(d) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect the rights of Holders hereunder.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Warrant Agent, with a copy to the Warrant Agent at the address set
forth in the Warrant Agreement; and
(ii) if to the Company:
Solutia Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx
X.X. Xxx 00000
Xx. Xxxxx, XX 00000-0000 (if by courier, 63141)
Attention: General Counsel
Facsimile: (000) 000-0000
-14-
With a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: R. Xxxxxx Xxxxxx
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Warrant Agent at the
address specified in the Warrant Agreement. Upon the date of filing a Shelf
Registration Statement, notice shall be delivered to the Initial Purchasers and
shall be addressed to: Attention: General Counsel, Xxxxxxx Xxxxx Barney Inc.,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without limitation, and without the need for an express assignment,
subsequent Holders; PROVIDED, HOWEVER, that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Transfer Restricted
Securities in violation of the terms hereof or of the Purchase Agreement or the
Warrant Agreement. If any transferee of any Holder shall acquire Transfer
Restricted Securities in any manner, whether by operation of law or otherwise,
such Transfer Restricted Securities shall be held subject to all of the terms of
this Agreement, and by taking and holding such Transfer Restricted Securities
such Person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement, including the
restrictions on resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such Person shall be entitled to receive the benefits
hereof.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
-15-
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SOLUTIA INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: X.X. Xxxxxx
Title: Vice President and Treasurer
XXXXXXX XXXXX XXXXXX INC.
By /s/ Xxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice President
BANC OF AMERICA SECURITIES LLC
By /s/ Xxxx Xxxx Xxxxx
--------------------------------
Name: Xxxx Xxxx Xxxxx
Title: Vice President
For themselves and the other several Initial Purchasers.
