Exhibit 10(a)
AMENDED AND RESTATED SOLUTIA INC.
SEPARATION AGREEMENT AND RELEASE OF CLAIMS
This Amended and Restated Separation Agreement including a General
and Special Release of Claims (this "Agreement") is made as of the 19th day
of May, 2004, by and between SOLUTIA INC., a Delaware corporation (the
"Company") and John C. Hunter III (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Executive entered into the Solutia Inc.
Separation Agreement and Release of Claims, dated May 5, 2004 (the "Prior
Agreement"); and
WHEREAS, the Company and Executive have agreed to amend the Prior
Agreement as it relates to Section 10(a), Release and Waiver of Claims
----------------------------
Against the Executive; and
- ---------------------
WHEREAS, with the exception of Section 10(a), none of the other
mutual covenants, conditions and obligations set forth in the Prior
Agreement have been amended and, therefore, have remained identical in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
conditions and obligations set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereby agree as follows:
1. Resignation.
-----------
The Executive hereby resigns from his position as Chairman of the
Board, President and Chief Executive Officer of the Company and also resigns
as an officer and director of all subsidiaries and affiliates of the Company
effective as of May 4, 2004. From May 4, 2004 through May 31, 2004, or
through the last day of the month in which the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court")
approves this Agreement, whichever is later (the "Resignation Date"),
Executive shall continue to be an employee of the Company and his cash
compensation will be limited solely to his base salary. During this
transition period, Executive will be relieved of further duties, with the
exception that Executive agrees to give the Company and its new chief
executive officer his business cooperation and assistance in facilitating
the transition of the Company's leadership from Executive to the new chief
executive officer.
2. Effectiveness Of Agreement.
--------------------------
Except for Section 1 hereof, this Agreement shall not be effective
until both (i) it shall have been approved by the Bankruptcy Court and such
approval has become final for purposes of appeal and no timely appeal has
been taken and (ii) the seven day revocation period provided by Section 12,
which shall commence upon the date of such approval, shall have expired
without the Agreement having been revoked ("Effective Date").
3. Payment To Executive.
--------------------
(a) In consideration for the Executive's compliance with all of his
obligations hereunder, including without limitation, his provision of
consulting services pursuant to Section 5, his waiver of his claim to
various benefits and payments pursuant to Section 3, and his execution of
the release and waiver of claims pursuant to Section 9, the Company shall
pay or cause to be paid to Executive on the Effective Date (or, if not a
business day, the first business day thereafter), in a lump sum, a severance
benefit of one million eight hundred forty thousand dollars ($1,840,000)
less applicable withholding taxes in the manner prescribed in the following
sentence. The parties shall cooperate in taking appropriate actions to
authorize The Business Bank of St. Louis (the "Business Bank") to honor
Executive's draft for an amount equal to one million eight hundred forty
thousand dollars ($1,840,000) less applicable withholding taxes delivered to
the Business Bank under Irrevocable Standby Letter Of Credit # 113, dated
July 18, 2003, issued by the Business Bank to Executive, and Executive and
the Company shall cooperate to authorize and cause the Business Bank either
to (i) remit the appropriate withholding taxes directly to the appropriate
Federal, state and local tax authorities for the benefit of Executive, or
(ii) pay such amounts over to the Company which agrees to remit such amounts
to the appropriate Federal, state and local tax authorities for the benefit
of Executive. The parties shall further cooperate to cause the balance of
the Letter of Credit, $160,000, to be repaid to the Company or its designee.
Such severance payment shall be in complete satisfaction and discharge of
any and all obligations of the Company to the Executive with respect to, and
Executive hereby waives any and all claims it may have against the Company
and/or Pharmacia Corporation, Monsanto Corporation, and Pfizer Inc. for,
salary, bonus, long or short term incentives, accrued vacation pay, employee
benefits, perquisites, deferred compensation, severance or separation pay,
and any and all other payments or benefits of any type pursuant to any
employment agreement, retention agreement, change in control agreement or
program or plan now, previously or hereafter maintained by the Company,
including, without limitation, the Employment Agreement dated February 28,
1998, the Retention Agreement dated June 30, 2003, the Solutia Inc. ERISA
Parity Pension Plan, the Solutia Inc. ERISA Parity Savings and Investment
Plan, and the Solutia Inc. Deferred Compensation Plan, except as otherwise
set forth in this Agreement; provided, however, that Executive shall retain
his rights under the Solutia Inc. Savings and Investment Plan and the
Solutia Inc. Employees' Pension Plan, and provided further that the
severance payment shall not be treated as compensation of the Executive or
otherwise taken into account for purposes of calculating contributions to be
made for his benefit or benefits to be received by him under the Solutia
Inc. Savings and Investment Plan and the Solutia Inc. Employees' Pension
Plan.
(b) Split-Dollar Insurance. The Company has given notice to
----------------------
Executive of its election to terminate the Split-Dollar Agreement -
Collateral Assignment By Executive/Owner, entered into on August 11, 1989
between the Executive and Monsanto Company, to which agreement the Company
is successor-in-interest (the "Collateral Assignment Agreement"), pursuant
to Article XIII, Section 2 thereof. Executive shall surrender to Connecticut
General Life Insurance Company ("Connecticut General") life insurance
policies number CUL002164Z and CUL021761Z with the request that Connecticut
General pay to the Company from the proceeds of such surrender an amount
equal to the sum of the Company's Interest in each such Policy (as defined
in the Collateral Assignment Agreement). Upon its receipt from Connecticut
General of such amount, the Company will release its interest in both of the
policies referenced
2
in the preceding sentence. Its release of its interest in the policies shall
constitute a discharge and satisfaction in full of any and all obligations
to the Company under the Collateral Assignment Agreement.
(c) Non-disparagement. The Executive and the Company agree that,
-----------------
before and after his termination of employment with the Company, neither of
them will make any statement or communication of information by whatever
means relating to his employment with the Company that may be reasonably
interpreted to be critical of or derogatory to the other party to this
Agreement, including, in the case of the Company, its officers, directors
and employees, provided, however, that nothing in this paragraph is intended
to keep either party from testifying truthfully under subpoena or other
legal process before any court or administrative agency of competent
jurisdiction.
(d) Election to Continue or Convert Welfare Benefits. This
------------------------------------------------
Agreement shall not adversely affect the rights of the Executive and/or his
eligible spouse and dependents to elect to (i) continue (or convert to
individual coverage), after the Resignation Date and at such individual's
own expense, any of the group health, life insurance and/or disability
income insurance benefits provided to him by the Company as of the
Resignation Date, but only to the extent any such individual is entitled to
such rights under applicable state or federal law, including COBRA, or the
terms of the applicable Company plan or insurance contract, and (ii)
participate in the Solutia Inc. Medical Benefits Plan for Retirees (Post
Settlement) pursuant to the terms of such plan.
(e) Restricted Stock. The Company agrees that nothing in this
----------------
Agreement shall serve as a waiver of Executive's rights to the Restricted
Stock awarded to him pursuant to the terms of the Solutia Inc. 1997
Stock-Based Incentive Plan and the Solutia Inc. 1998-1999 Long-Term
Incentive Plan.
4. Exclusive Separation Payments And Benefits.
------------------------------------------
The Executive and the Company acknowledge and agree that this
Agreement is intended to be the exclusive separation arrangement between the
Company and the Executive. Accordingly, unless otherwise agreed to in
writing signed by the Executive and the Company, the Executive and the
Company agree that the Executive shall not be entitled to any remuneration,
payments or other benefits under any other severance or separation plan or
arrangement of the Company (other than the payments provided to the
Executive pursuant to this Agreement). The payments and other benefits
provided by this Agreement include any severance or termination benefits
that may be required by applicable law.
5. Consulting Services.
-------------------
The Company shall engage the Executive as a consultant from the
Resignation Date through the date at which both (x) the Bankruptcy Court
shall have confirmed a plan of reorganization of the Company under Chapter
11 of the United States Bankruptcy Code and (y) such confirmation shall have
become non-appealable, but such period shall not extend beyond December 31,
2005 (the "Consulting Period"). During the Consulting Period, Executive
shall provide the Company with advisory services from time to time as
reasonably requested by the
3
Company subject to Executive's reasonable availability, not to exceed a
maximum of two hundred (200) hours per calendar year, including travel time
associated with the provision of such advisory services. In his role as a
consultant, the Executive shall work directly for the Company's Chief
Executive Officer or his designee. The Executive shall not be entitled to
any additional consideration for his services as a consultant for the first
forty (40) hours of advisory services, including travel time associated with
the provision of such advisory services, that the Executive provides the
Company. Thereafter, the Executive shall be compensated at the rate of four
hundred dollars ($400) per hour for each hour of advisory services and
associated travel that the Executive provides to the Company. The
Executive's reasonable travel and other business expenses shall be
reimbursed upon presentation of supporting documentation.
6. Cooperation with Litigation.
---------------------------
Executive agrees to make himself available upon notice from the
Company or its attorneys, to be deposed, to testify at a hearing or trial,
to assist in any current litigation or potential litigation, or to comply
with any other reasonable request by the Company in conjunction with any
lawsuit, potential lawsuit, or claim that involves issues relating to
Executive's job responsibilities or to decisions made during his employment
with the Company. Additionally, should Executive receive any contact to be
interviewed, subpoena or notice of deposition to testify to any
investigation or action, he will notify the Company's General Counsel within
three (3) days of contact for interview, subpoena or deposition, or as soon
as reasonably practicable. Should the Company file a motion to quash, a
protective order or any other similar filing with the court, Executive
agrees to refrain from being interviewed, testifying at trial or by
deposition until the court has ruled on such motion. The Executive shall not
be entitled to any additional consideration for his services provided
pursuant to this Section 6, provided, however, that the Company agrees to
reimburse Executive for any reasonable out-of-pocket expenses incurred by
Executive as a result of such assistance, including the cost of travel or
lost compensation. Should the Executive provide a significant amount of time
performing such service, Executive may request that the Company reimburse
him for his time, and such request may be honored at the Company's
discretion. Nothing in this Section 6 shall be construed in any way as
limiting or otherwise influencing Executive's testimony in any such
proceeding or to discourage Executive in any way from providing testimony
that is honest and truthful.
7. Confidential Information.
------------------------
As used herein, "Confidential Information" means all technical and
------------------------
business information of the Company and its subsidiaries, whether patentable
or not, which is of a confidential, trade secret and/or proprietary
character and which was either developed by the Executive (alone or with
others) or to which the Executive has had access during the Executive's
employment. "Confidential Information" shall also include confidential
------------------------
evaluations of, and the confidential use or non-use by the Company or any
subsidiary of, technical or business information in the public domain. The
Executive shall use the Executive's best efforts and diligence to protect
the confidential, trade secret and/or proprietary character of all
Confidential Information. The Executive shall not, directly or indirectly,
use (for the Executive or another) or disclose any Confidential Information,
for so long as it shall remain proprietary or protectible as confidential or
trade secret information, except as may be necessary for the performance of
the Executive's
4
consulting duties with the Company. The Executive shall deliver promptly to
the Company, at the termination of the Consulting Period, or at any other
time at the Company's request, without retaining any copies, all documents
and other material in the Executive's possession relating, directly or
indirectly, to any Confidential Information. Each of the Executive's
obligations in this Section 7 shall also apply to the confidential, trade
secret and proprietary information learned or acquired by the Executive
during the Executive's employment from others with whom the Company or any
subsidiary has a business relationship. The Executive understands that the
Executive is not to disclose to the Company or any subsidiary, or use for
its benefit, any of the confidential, trade secret or proprietary
information of others, including any of the Executive's former employers.
8. Competitive Activity.
--------------------
The Executive shall not, directly or indirectly (whether as owner,
partner, consultant, employee or otherwise), at any time during the period
of two years following his Resignation Date engage in or contribute his
knowledge to any work or activity that involves a product, process,
apparatus, service or development which is then competitive with or similar
to a product, process, apparatus, service or development on which he worked
or with respect to which he had access to Confidential Information while
employed by the Company or an affiliate at any time during the period of
five years immediately prior to his Resignation Date ("Competitive Work").
However, the Executive shall be permitted to engage in such proposed work or
activity, and the Company shall furnish him a written consent to that effect
signed by an officer of the Company, if the Executive shall have furnished
to the Company clear and convincing written evidence, including assurances
from the Executive and his new employer, that the fulfillment of his duties
in such proposed work or activity would not likely cause him to disclose,
base judgment upon, or use any Confidential Information. In addition, for a
period of two years following his Resignation Date, the Executive shall not,
directly or indirectly, induce or attempt to induce a salaried employee of
the Company or any of its affiliates to accept employment or affiliation
involving Competitive Work with another firm or corporation of which the
Executive is an employee, owner, partner or consultant.
9. Release and Waiver of Claims Against the Company.
------------------------------------------------
(a) The Executive, on behalf of himself, his agents, heirs,
successors, assigns, executors and administrators, in consideration for the
payment and other consideration provided for under this Agreement, hereby
forever releases and discharges the Company and its successors, their
affiliated entities and controlling persons, and their past and present
directors, employees, agents, attorneys, accountants, representatives, plan
fiduciaries, successors and assigns from any and all known and unknown
causes of action, actions, judgments, liens, indebtedness, damages, losses,
claims, liabilities, and demands of whatsoever kind and character in any
manner whatsoever arising on or prior to the Effective Date of this
Agreement, including but not limited to (i) any claim for breach of
contract, breach of implied covenant, breach of oral or written promise,
wrongful termination, intentional infliction of emotional distress,
defamation, interference with contract relations or prospective economic
advantage, negligence, misrepresentation or employment discrimination, and
including without limitation alleged violations of Title VII of the Civil
Rights Act of 1964, as amended, prohibiting discrimination
5
based on race, color, religion, sex or national origin; the Family and
Medical Leave Act; the Americans With Disabilities Act prohibiting
discrimination based on disability; the Age Discrimination in Employment Act
prohibiting discrimination based on age over 40; other federal, state and
local laws, ordinances and regulations; and any unemployment or workers'
compensation law; (ii) any and all liability that was or may have been
alleged against or imputed to the Company by the Executive or by anyone
acting on his behalf; (iii) all claims for wages, monetary or equitable
relief, employment or reemployment with the Company in any position, and any
punitive, compensatory or liquidated damages; and (iv) all rights to and
claims for attorneys' fees and costs; provided, however, that this release
shall not extend to the obligations of the Company that are specifically
recited or referred to in this Agreement. The Executive expressly waives any
and all rights granted by any federal, state or local laws or ordinances or
regulations that are intended to protect the Executive from waiving unknown
claims.
(b) The Executive shall not file or cause to be filed any action,
suit, claim, charge or proceeding with any federal, state or local court or
agency relating to any claim within the scope of this Section 9. The
Executive represents and warrants that he has not assigned any claim
released herein, or authorized any other person to assert any claim on his
behalf.
(c) In the event any action, suit, claim, charge or proceeding
within the scope of this Section 9 is brought by any government agency,
putative class representative or other third party to vindicate any alleged
rights of the Executive, (i) the Executive shall, except to the extent
required or compelled by law, legal process or subpoena, refrain from
participating, testifying or producing documents therein, and (ii) all
damages, inclusive of attorneys' fees, if any, required to be paid to the
Executive by the Company as a consequence of such action, suit, claim,
charge or proceeding shall be repaid to the Company by the Executive within
ten (10) days of his receipt thereof.
(d) Notwithstanding anything in this Agreement to the contrary, in
the event of a violation of this Section 9 by the Executive, the Company's
obligations pursuant to this Agreement shall cease as of the date of such
violation and the Executive shall be liable to the Company for any actual
damages the Company suffers as a result of such violation, including costs,
expenses and all attorneys' fees and expenses.
10. Release and Waiver of Claims Against the Executive.
--------------------------------------------------
(a) The Company shall use its commercially reasonable efforts to
seek Bankruptcy Court approval of a release from the Company in favor of the
Executive, in connection with the plan of reorganization of the Company
under Chapter 11 of the United States Bankruptcy Code; provided, however,
that any such release from the Company to the Executive shall not apply to
any act of fraud or criminal conduct by the Executive of which the Company
is not aware as of the date of this Agreement, nor to any act of
non-compliance with the terms of this Agreement by the Executive.
(b) In further consideration for the Executive's compliance with
all of his obligations hereunder, the Company further agrees to indemnify
Executive and hold Executive harmless to the maximum extent permitted by law
from and against any claims, damages, liabilities, losses, costs or expenses
in connection with or arising out of the performance by Executive of his
6
provision of consulting services pursuant to Section 5 of this Agreement,
other than any such claims, damages, liabilities, losses, costs or expenses
arising out of any act of fraud or criminal conduct by Executive. This
indemnification shall apply with respect to any act or omission occurring
during any period of time during which Executive provides consulting
services pursuant to Section 5 of this Agreement. In addition, the Company
agrees that it will maintain full coverage for Executive under its liability
insurance polic(y)(ies) so long as the Executive provides consulting
services pursuant to Section 5 of this Agreement.
11. No Admission of Wrongdoing.
--------------------------
The release and waiver of claims by the Company in Section 10 of
this Agreement, and the payment by the Company of that portion of the
amounts set forth in this Agreement to which the Executive would not
otherwise be entitled, are being given to the Executive in return for the
Executive's agreements and covenants contained in this Agreement. Nothing
contained in this Agreement shall be construed as an admission of liability
or wrongdoing by either the Executive or the Company.
12. Voluntary Execution of Agreement.
--------------------------------
BY HIS SIGNATURE BELOW, THE EXECUTIVE ACKNOWLEDGES THAT:
(A) I HAVE RECEIVED A COPY OF THIS AGREEMENT AND WAS OFFERED A
PERIOD OF TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT;
(B) IF I SIGN THIS AGREEMENT PRIOR TO THE EXPIRATION OF
TWENTY-ONE DAYS, I KNOWINGLY AND VOLUNTARILY WAIVE AND GIVE UP THIS RIGHT OF
REVIEW;
(C) I HAVE THE RIGHT TO REVOKE THIS AGREEMENT FOR A PERIOD
OF SEVEN DAYS AFTER I SIGN IT OR, IF LATER, AFTER APPROVAL OF THIS AGREEMENT
BY THE BANKRUPTCY COURT AND SUCH ORDER OF APPROVAL HAS BECOME FINAL FOR
PURPOSES OF APPEAL AND NO TIMELY APPEAL HAS BEEN TAKEN, BY MAILING OR
DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE CHIEF EXECUTIVE OFFICER OF
THE COMPANY, NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH DAY AFTER
THE LATER OF THE DAY ON WHICH I SIGNED THIS AGREEMENT OR THE DAY OF ITS
APPROVAL BY THE BANKRUPTCY COURT;
(D) THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR
ENFORCEABLE UNTIL THE SEVEN DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE
AGREEMENT HAVING BEEN REVOKED;
(E) THIS AGREEMENT WILL BE FINAL AND BINDING AFTER THE
EXPIRATION OF THE REVOCATION PERIOD REFERRED TO IN (C). I AGREE NOT TO
CHALLENGE ITS ENFORCEABILITY;
(F) I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY, HAVE
BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY, AND HAVE HAD
7
THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING
THIS AGREEMENT;
(G) NO PROMISE OR INDUCEMENT FOR THIS AGREEMENT HAS BEEN
MADE EXCEPT AS SET FORTH IN THIS AGREEMENT;
(H) I AM LEGALLY COMPETENT TO EXECUTE THIS AGREEMENT AND
ACCEPT FULL RESPONSIBILITY FOR IT; AND
(I) I HAVE CAREFULLY READ THIS AGREEMENT INCLUDING THE
RELEASE SET FORTH IN SECTION 9, ACKNOWLEDGE THAT I HAVE NOT RELIED ON ANY
REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT
OR THE WRITTEN MATERIALS PRESENTED TO ME WITH THIS AGREEMENT, AND WARRANT
AND REPRESENT THAT I AM SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.
13. Notices.
-------
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing, shall be deemed properly given if
delivered personally or sent by certified or registered mail, postage
prepaid, return receipt requested, or sent by telegram, telex, telecopy or
similar form of telecommunication, and shall be deemed to have been given
when received. Any such notice, request, demand or communication shall be
addressed: (a) if to the Company, to the Chief Executive Officer of the
Company; (b) if to the Executive, to his last known home address on file
with the Company; or (c) to such other address as the parties shall have
furnished to one another in writing.
14. Notice to Executive of Alleged Breach.
-------------------------------------
Should the Company form a reasonable belief that the Executive is
breaching or has breached any of the terms of this Agreement, the Company
shall provide written notice thereof to the Executive and the Executive
shall have ten (10) days to cure any such breach. If the Company fails to
provide such notice, the Company shall waive its rights under this Agreement
with respect to such breach.
15. Termination and Amendments; Miscellaneous.
-----------------------------------------
(a) This Agreement may only be terminated, or the provisions of
this Agreement amended or waived, prior to the expiration of the Company's
and the Executive's obligations under this Agreement, by a writing signed by
the Company and the Executive.
(b) The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(c) The failure to insist upon strict compliance with any
provision hereof, or the failure to assert any right hereunder, shall not be
deemed to be a waiver of such provision or right or of any other provision
or right under this Agreement. In the event that any term,
8
provision or release of claims or rights contained in this Agreement is
found or determined to be illegal or otherwise invalid and unenforceable,
whether in whole or in part, such invalidity shall not affect the
enforceability of the remaining terms, provisions and releases of claims or
rights.
(d) Nothing in this Agreement shall confer upon the Executive any
right to continue in the employ of the Company or its affiliates, except as
set forth in Section 1.
(e) This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and
supersedes all prior oral and written and all contemporaneous oral
discussions, agreements and understandings of any kind or nature. This
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective permitted successors and assigns.
(f) Any reference within this Agreement to an action, judgment,
conclusion, or determination by the Company shall mean an action, judgment,
conclusion, or determination of the Board of Directors of the Company or its
authorized representative(s).
(g) The headings preceding the text of the sections hereof are
inserted solely for convenience of reference, and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
(h) This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of Missouri. If either
Executive or the Company pursues either legal or equitable relief to settle
a dispute between them arising under or relating to this Agreement, the
party shall bring such an action only in the Circuit Court of St. Louis
County, Missouri.
(i) This Agreement may be executed in two or more counterparts,
all of which shall have the same force and effect as if all parties thereto
had executed a single copy.
(j) If either Executive or the Company pursues either legal or
equitable relief, or both to settle a dispute between them arising under or
relating to this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys fees and costs incurred in bringing or
defending such an action.
IN WITNESS WHEREOF, the Company and the Executive have acknowledged
and executed this Agreement effective as of the Effective Date, unless
revoked by the Executive in the manner set forth in Section 12 above.
SOLUTIA INC.
/s/ John C. Hunter III By: /s/ James M. Sullivan
- --------------------------------- -----------------------------------
John C. Hunter III Name: James M. Sullivan
---------------------------------
Title: Senior Vice President and Chief
--------------------------------
Financial Officer
--------------------------------
9