Exhibit 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made
by and among Solutia, Inc., a Delaware corporation ("Solutia"), CPFilms, Inc., a
Delaware corporation and wholly owned subsidiary of Solutia ("CPF"; and together
with Solutia collectively, the "Company"), and Kent J. Davies (the "Executive"),
effective as of the 11th day of April, 2007 (the "Effective Date").
WHEREAS, the Company and the Executive are currently parties to an
Agreement dated January 30, 2006; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stakeholders
to assure that the Company will have the continued dedication of the Executive
until and for a period of time following the Emergence Date (as defined below).
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Emergence Date. The Emergence Date means at such time, if ever, at
which the United States Bankruptcy Court for the Southern District of New York
(the "Bankruptcy Court") shall have confirmed a plan of reorganization of the
Company under Chapter 11 of the United States Bankruptcy Code (the "Chapter 11
Case") and such plan shall have become effective.
2. Employment Period. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to remain in the employ of the Company subject
to the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the date that is the six month anniversary of the
Emergence Date (the "Initial Term") and shall thereafter automatically renew for
an additional three (3) year period (the "Initial Renewal Term"), unless sooner
terminated during the Initial Term or Initial Renewal Term in accordance with
this Agreement or written notice is given by one party to the other at least 90
days prior to the expiration of the Initial Term or the Initial Renewal Term, as
applicable. Upon completion of the Initial Renewal Term, this Agreement shall
thereafter automatically renew for additional 12 month periods (each, a
"Subsequent Renewal Term"), unless sooner terminated in accordance with this
Agreement or written notice is given by one party to the other at least 90 days
prior to the expiration of the Initial Renewal Term or any Subsequent Renewal
Term, as applicable. The Initial Term, Initial Renewal Term and any Subsequent
Renewal Term are herein collectively referred to as the "Employment Period."
Where the context permits, all references to the Company shall include an
affiliate of the Company by which the Executive is employed. As used in this
Agreement, the term "affiliate" or "affiliated companies" shall include any
company controlled by, controlling or under common control with the Company. The
obligations of the Company and the Executive under this Agreement including,
without limitation, the obligations under Sections 5, 6 and 7, shall survive
the termination of the Employment Period to the extent necessary to accomplish
the purposes thereof.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall serve as
Senior Vice President, Solutia Inc. and President, CPFilms reporting
directly to the Company's Chief Executive Officer, with authority, duties
and responsibilities consistent with such position and as may be
reasonably assigned to him from time to time by the Company's Chief
Executive Officer.
(ii) During the Employment Period, the Executive shall serve
the Company faithfully, diligently and to the best of his ability, and
shall devote substantially all of his time and efforts during normal
business hours to the business and affairs of the Company. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) deliver lectures, fulfill speaking engagements or teach
at educational institutions, and (B) manage personal investments, so long
as such activities described in clauses A and B do not interfere with the
performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement, and (C) with the advance
approval of the Board, serve on corporate, civic or charitable boards or
committees.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary") of not less
than $317,500, which shall be paid in accordance with the Company's normal
payroll practices.
(ii) Annual Bonuses. In addition to Annual Base Salary, the
Executive shall participate in the Company's Annual Incentive Program, or
any successor annual bonus plan(s), with a target annual bonus opportunity
of not less than 100% of his Annual Base Salary. In addition, during the
Employment Period, the Executive shall be entitled to participate in all
long-term and other incentive plans, practices, policies and programs
generally applicable to senior executive officers of the Company and its
affiliated companies.
(iii) Equity Compensation. During the Employment Period, the
Executive shall have the right to participate in an equity compensation
arrangement to be established by the Board or the ECDC of the Board and
subject to such terms and conditions as will be determined by the Board in
its sole discretion.
(iv) Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all savings and
retirement plans, practices, policies and programs generally applicable to
senior executive officers of the Company and its affiliated companies,
subject to the Board's authority to modify or terminate any such plans,
practices, policies or programs on a Company-wide basis at any time.
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(v) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
prescription drug, dental, disability, salary continuance, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent generally applicable to senior executive officers
of the Company and its affiliated companies, subject to the Board's
authority to modify or terminate any such plans, practices, policies or
programs on a Company-wide basis at any time.
(vi) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement, in accordance with
Company policy, for all reasonable expenses incurred by the Executive in
performing his duties hereunder.
(vii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies as in
effect from time to time.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 9(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the Executive's long term disability for purposes of any
reasonable occupation as determined under the Company's disability plan that is
applicable to the Executive.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one of
its affiliates (other than any such failure resulting from incapacity due
to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board of the Company
which specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive's duties,
(ii) the willful engaging by the Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company;
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(iii) the Executive's conviction of, or plea of guilty or no
contest to, a felony or any other crime involving moral turpitude, fraud,
theft, embezzlement or dishonesty; or
(iv) the Executive's habitual drug or alcohol abuse.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than a majority of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, in the case of conduct described in
subparagraph (i) or (ii) above, to be heard before the Board), finding that, in
the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i), (ii), (iii) or (iv) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) a material failure by the Company to comply with any of
the provisions of Section 3(b) of this Agreement relating to compensation,
other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(ii) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position as Senior Vice
President, Solutia Inc. and President, CPFilms and the authority, duties
and responsibilities contemplated by Section 3(a) of this Agreement, or
any other action by the Company, including a fundamental change to the
nature and scope of the Company's business, which results in a material
diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive; or
(iii) Executive's receipt of the Company's written notice not
to renew the Agreement or the failure of the Company and the Executive to
enter into a new employment agreement by the last day of the Employment
Period.
If the Executive terminates his employment for Good Reason pursuant to
subparagraph (ii) above as a result of a sale by the Company of substantially
all of its assets, then the Executive shall make himself available to the
Company as a paid independent consultant for such fee, at
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such times, over such period of time and for such number of hours as the parties
shall reasonably agree, taking account of any new employment that the Executive
may undertake.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 9(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than 30
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
5. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. Except as provided in Section
5(b) below, if, during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause or the Executive shall terminate
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within ten days of the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Executive's accrued Annual Base
Salary through the Date of Termination, (2) any unpaid annual bonus
earned by the Executive with respect to the previous year, and (3)
any accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and (3)
shall be hereinafter referred to as the "Accrued Obligations"); and
B. an amount equal to the payment the Executive would
have received under the Company's Annual Incentive Program for the
fiscal year of such termination in accordance with Section 3(b)(ii),
multiplied by the number of
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days that have transpired during that fiscal year immediately prior
to the Date of Termination, divided by 365; and
C. an amount equal to 200% of the sum of (i) the
Executive's Annual Base Salary immediately prior to the Date of
Termination and (ii) the average annualized payment the Executive
received for the 3 years (or such shorter period during which the
Executive has served as Vice President, Solutia Inc. and President,
CPFilms) immediately preceding the Date of Termination under the
Company's Annual Incentive Program (the "Severance Payment").
(ii) subject to the provisions of Section 9(f) hereof, to the
extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits, excluding any
severance or separation pay or benefits, required to be paid or provided
or which the Executive is eligible to receive under any plan, program,
policy, practice, contract or agreement of the Company and its affiliated
companies, including, without limitation, the vested benefit, if any, of
the Executive under any qualified defined contribution retirement plan of
the Company and its affiliated companies in which the Executive
participates, in accordance with the terms of such plan (such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
(iii) the Company shall continue to provide (on the same basis
as at the Executive's Date of Termination) for the continued participation
of the Executive and, to the extent applicable, his family, in the
Company's medical, dental, vision and basic life insurance plans and
programs, for a period of four months commencing with the Date of
Termination; and
(iv) the Company shall provide the Executive with outplacement
services during the twelve month period commencing with the Date of
Termination up to an aggregate cost of $25,000.
(b) Change in Control. If the Company shall terminate the
Executive's employment other than for Cause or the Executive shall terminate
employment for Good Reason upon a Change in Control (pursuant to the definition
of Change in Control set forth below) or at any time within 24 months after the
Change in Control, then the Executive shall be entitled to receive (1) all
amounts as provided for in Section 5(a) hereof, provided, however, that the
Severance Payment under this Section 5(b) will be an amount equal to 250% of the
sum of (i) the Executive's Annual Base Salary immediately prior to the Date of
Termination and (ii) the average annualized payment the Executive received for
the 3 most recent years under the Company's Annual Incentive Program (or such
shorter period during which the Executive has served as Vice President, Solutia
Inc. and President, CPFilms), and (2) immediate vesting of all outstanding
equity awards granted pursuant to the Company's equity compensation plan as may
be in effect from time to time.
(i) For purposes of this Agreement, "Change in Control" shall
be deemed to have occurred if:
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A. Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes a "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50%
of the voting power of the then outstanding securities of the
Company, and such person owns more aggregate voting power of the
Company's then outstanding securities entitled to vote generally in
the election of directors than any other person;
B. The shareholders of the Company approve (or, if
shareholder approval is not required, the Board approves) an
agreement providing for (x) the merger or consolidation of the
Company with another corporation where the shareholders of the
Company, immediately prior to the merger or consolidation, will not
beneficially own, immediately after the merger or consolidation,
shares entitling such shareholders to 50% or more of all votes to
which all shareholders of the surviving corporation would be
entitled in the election of directors (without consideration of the
rights of any class of stock to elect directors by a separate class
vote), (y) the sale or other disposition of 50% or more of the
Company's assets that it owns as of the Effective Date of this
Agreement, or (z) a liquidation or dissolution of the Company;
provided, however, the effectiveness of a plan of reorganization
pursuant to which a majority of the common stock of the reorganized
Company is distributed (i) to Persons who are (a) holders of claims
against the Company; (b) holders of equity interests in the Company;
and/or (c) designated in the Company's plan of reorganization
proposal dated December 8, 2006, to receive common stock of the
reorganized Company; or (ii) to or for the benefit of Company
management, shall not constitute a "Change in Control"; or
C. Directors are elected such that a majority of the
members of the Board shall have been members of the Board for less
than two years, unless the election or nomination for election of
each new director who was not a director at the beginning of such
two-year period was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning
of such period.
(c) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for timely payment or provision of the
following:
(i) Accrued Obligations, and
(ii) Other Benefits.
Accrued Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
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(d) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for timely payment or provision of the following:
(i) Accrued Obligations, and
(ii) Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination.
(e) Cause. If the Executive's employment shall be terminated for
Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive, other than for Accrued Obligations and the
timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
6. Full Settlement; Legal Fees. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest, in
which the Executive is the prevailing party, by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (whether such contest
is between the Company and the Executive or between either of them and any third
party, and including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case interest on
any payment from the time at which the liability for the applicable legal fees
and expenses was incurred by Executive, at the applicable Federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended
(the "Code").
7. Confidential Information, Competitive Activity and Nonsolicitation.
(a) Confidential Information. As used herein, "Confidential
Information" means all technical and business information of the Company and its
affiliated companies, whether patentable or not, which is of a confidential,
trade secret and/or proprietary character and which is 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 affiliated company of, technical or business information in the public
domain.
The Executive shall use the Executive's best efforts and diligence both
during and after employment by the Company to protect the confidential, trade
secret and/or proprietary character of all Confidential Information. The
Executive shall not, directly or indirectly, use (for the
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Executive or another) or disclose any Confidential Information, for so long as
it shall remain proprietary or protectable as confidential or trade secret
information, except as may be necessary for the performance of the Executive's
duties with the Company.
The Executive shall deliver promptly to the Company, at the termination of
the Executive's employment, 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 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 affiliated company has a business relationship.
The Executive understands that the Executive is not to disclose to the
Company or any affiliated company, or use for its benefit, any of the
confidential, trade secret or proprietary information of others, including any
of the Executive's former employers.
(b) Covenant Not to Compete.
(i) Definitions. For purposes of this Section, in addition to terms
defined elsewhere herein, the following capitalized terms have the following
meanings.
(A) "Affiliate" means: (i) any Person which, directly or
indirectly, is in control of, is controlled by or is under
common control with the party for whom an affiliate is being
determined; (ii) any Person who is a director or officer of
any Person described in clause (i) above or of the party for
whom an affiliate is being determined; or (iii) any partner
(general or limited), trustee, beneficiary, spouse, child or
sibling of any Person described in clause (i) above or of the
party for whom an affiliate is being determined. For purposes
hereof, control of a Person means the power, direct or
indirect, to: (x) vote 5% or more of the securities having
ordinary voting power for the election of directors (or
comparable positions) of such Person; or (y) direct or cause
the direction of the management and policies of such Person,
whether by contract or otherwise and either alone or in
conjunction with others.
(B) "Business" means any business in which CPF is currently
engaged, including, but not limited to, the business of
designing, manufacturing and selling window film, precision
coated films, tint or shading products and related services
and any other businesses which CPF may engage in or
substantially contemplate engaging in through formal
evaluation or study during the Employment Period.
(C) "Person" means any natural person, corporation, limited
partnership, general partnership, joint venture, association,
company, trust, joint stock company, bank, trust company, land
trust, vehicle trust, business trust, real
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estate investment trust, estate, limited liability company,
limited liability partnership or other organization
irrespective of whether it is a legal entity, and any
governmental authority.
(D) "Non-Compete Term" means the Employment Period for so long as
it is in effect and regardless of the reason it ends and the
two (2) year period thereafter.
(ii) Restrictions on Competition. Except on behalf of or as directed
by the Company, Executive shall not, during the Non-Compete Term, directly or
indirectly, anywhere in the world: (i) engage in the Business; (ii) engage in
any business which is in competition with CPF; (iii) invest in any Person which
is engaged in the Business or is engaged in any business which is in competition
with CPF; (iv) be employed by or provide consulting services to any Person
engaged in the Business or engaged in any business which is in competition with
CPF; or (v) solicit, attempt to solicit, call upon, or otherwise accept for his
own benefit or for the benefit of any other Person, any client or customer of
CPF or in any way attempt to divert business from CPF(or its respective
Affiliates, successors and assigns); or (vi) attempt to interfere with CPF's
relationship with any of its customers.
(c) Non-Solicitation of Employees. Executive agrees that, so long as
he is employed by the Company and for a period of two (2) years after the
termination of his employment for any reason whatsoever (regardless of which
party terminates the employment relationship), he shall not, without the prior
written approval of the Company (which approval may be granted or withheld in
the Company's sole discretion), either individually or through an Affiliate,
anywhere in the world, solicit, recruit, hire, attempt to hire, interfere with
or otherwise accept services from any employee or independent contractor engaged
by CPF within the preceding twelve (12) months or induce any employee or
independent contractor engaged by CPF within the preceding twelve (12) months to
terminate their relationship with CPF. This restriction is intended to protect
CPF confidential business information, trade secrets, customer relationships,
supply relationships, goodwill and loyalty.
(d) Permitted Investments. Anything herein to the contrary
notwithstanding, an investment by Executive in publicly traded stock of a Person
which is engaged in the Business or is engaged in any business which is in
competition with CPF shall not violate Section 7(b)(ii) hereof provided that
Executive and all Affiliates of Executive own, in the aggregate, less than 2% of
all the issued and outstanding stock of such Person.
(e) Restrictions, Reasonable Review. Executive hereby agrees that
the restrictions set forth in this Section 7 are an integral aspect of this
Agreement and are reasonable and necessary and, accordingly, that the Company
(and their respective Affiliates, successors and assigns) shall be entitled to
injunctive relief, from a court having jurisdiction with respect to the matter,
for the purpose of restraining Executive and any Person in which Executive has
an interest (as described in Section 7(b)(ii) hereof) from any actual or
threatened breach of the restrictions set forth in this Section 7 and to any
other appropriate relief. If any court of competent jurisdiction or arbitrator
determines that the time period, activities covered or the geographical scope
referenced in this Section 7 is unreasonable or otherwise in contravention of
the law, such restrictions shall not be determined to be null and void and of no
effect, but shall be
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reformed by the court or arbitrator to impose a reasonable time period,
activities covered or geographical scope, as the case may be.
(f) Specific Performance and Injunctive Relief. Executive recognizes
that, if he shall fail to perform, observe or discharge any of his obligations
under this Section 7, no remedy at law will provide adequate relief to the
Company. Therefore, the Company is hereby authorized to demand specific
performance of this Section 7, and shall be entitled to temporary and permanent
injunctive relief, in a court of competent jurisdiction at any time when
Executive shall fail to comply with any of the provisions of this Section 7
applicable to him.
(g) Acknowledgments. Executive hereby acknowledges and agrees that
CPF's Business is worldwide in scope and activity and that the Company has a
protectable business interest in its customer relationships and stock in trade
throughout the world.
(h) Blue Pencil. If, at any time, the provisions of this Section 7
shall be determined to be invalid or unenforceable under any applicable law, by
reason of being vague or unreasonable as to area, duration or scope of activity,
this Agreement shall be considered divisible and shall become and be immediately
amended to only such area, duration and scope of activity as shall be determined
to be reasonable and enforceable by the court or other body having jurisdiction
over the matter and the Executive and the Company agree that this Agreement as
amended shall be valid and binding as though any invalid or unenforceable
provision had not been included herein.
8. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
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If to the Executive:
Kent J. Davies
[address]
If to the Company:
Jeffry N. Quinn, Esq.
Chairman of the Board, President and Chief Executive Officer
Solutia Inc.
P.O. Box 66760
St. Louis, MO 63166-6760
With a copy to:
Rosemary L. Klein
Senior Vice President, General Counsel and Corporate Secretary
Solutia Inc.
P.O. Box 66760
St. Louis, MO 63166-6760
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any one or more provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder shall not be deemed to be
a waiver of such provision or right or any other provision or right of this
Agreement.
(f) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements, oral and written, between the parties hereto with respect to the
subject matter hereof, including the Agreement dated January 30, 2006; provided,
that this Agreement shall have no effect on the Executive's rights under any
plan, program, policy or practice provided by the Company or any of its
affiliated companies except that the benefits and other payments provided for
pursuant to Section 5 hereof shall be in lieu of any severance or separation pay
or benefits to which the Executive might otherwise be entitled under any plan,
program, policy or arrangement of the Company and its affiliates.
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(g) No amounts shall be payable pursuant to Sections 5(a)(i)(B),
5(a)(i)(C) or 5(b) of this Agreement unless and until the Executive shall have
executed and delivered a waiver and release of claims against the Company
substantially in the form attached hereto as Exhibit A.
(h) Except as otherwise provided by Section 7(f), in the event of
any dispute, controversy or claim arising out of or relating to this Agreement
or Executive's employment or termination thereof, the parties hereby agree to
settle such dispute, controversy or claim in a binding arbitration by a single
arbitrator in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, which arbitration shall be conducted in St. Louis,
Missouri. The parties agree that the arbitral award shall be final and
non-appealable and, except as otherwise provided by Section 7(f), shall be the
sole and exclusive remedy between the parties hereunder. The parties agree that
judgment on the arbitral award may be entered in any court having competent
jurisdiction over the parties or their assets.
10. Code Section 409A. Compliance. The arrangements under this Agreement
are not intended to create "deferred compensation" within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended (the "Code") and any
rulings or regulations thereunder, including IRS Notice 2005-1, and all
provisions of this Agreement shall be interpreted consistently with such intent.
In the event that any amounts payable under this Agreement that would otherwise
be considered deferred compensation pursuant to Section 409A of the Code (or any
applicable regulations or guidance promulgated by the Secretary of the Treasury
in connection therewith) are paid within six (6) months following the date of
termination of employment, such amounts shall be paid at the earlier of the time
otherwise provided under this Agreement or the time that will prevent such
amounts from being considered deferred compensation under Section 409A of the
Code. Further, in the event that (a) the Company determines that there is an
ambiguity with respect to any provision of this Agreement that could cause such
provision to result in an obligation to pay deferred compensation subject to
Section 409A of the Code, such ambiguity shall be interpreted and resolved in
the manner that the Company deems necessary to either avoid the obligation to
pay deferred compensation within the meaning of Section 409A of the Code or to
comply with timing and payment provisions of Section 409A of the Code, and (b)
the Company determines, in good faith, that any amendment to this Agreement is
necessary or appropriate in order to comply with timing and payment provisions
of Section 409A of the Code or to avoid the obligation to pay deferred
compensation within the meaning of Section 409A of the Code, the Company shall
have the right to make such amendment, on a prospective or retroactive basis, in
its sole discretion.
11. Code Section 4999. If, as a result of payments provided for under or
pursuant to this Agreement together with all other payments in the nature of
compensation provided to or for the benefit of Executive, any state, local or
federal taxing authority imposes any taxes on Executive that would not be
imposed on such payments but for the occurrence of a Change of Control,
including any excise tax under Section 4999 of the Code, then, in addition to
any other benefits provided under or pursuant to this Agreement or otherwise,
the Company (including any successor to or assignee of the Company) shall pay to
Executive at the time any such payments are made under or pursuant to this
Agreement or the other agreements, an amount equal to the amount of any such
taxes imposed or to be imposed on Executive (the amount of any such payment, the
"Tax Reimbursement"). In addition, the Company (including any successor to or
assignee of the Company) shall "gross up" such Tax Reimbursement by paying to
Executive at
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the same time an additional amount equal to the aggregate amount of any
additional taxes (whether income taxes, excise taxes, special taxes, employment
taxes or otherwise) that are or will be payable by Executive as a result of the
Tax Reimbursement being paid or payable to Executive and/or as a result of the
additional amounts paid or payable to Executive pursuant to this sentence, such
that after payment of such additional taxes Executive shall have been paid on a
net after-tax basis an amount equal to the Tax Reimbursement. The amount of any
Tax Reimbursement and of any such gross-up amounts shall be determined by the
Company's independent auditing firm, whose determination, absent manifest error,
shall be treated as conclusive and binding absent a binding determination by a
governmental taxing authority that a greater amount of taxes is payable by
Executive.
12 Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other party in original or facsimile form.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
-------------------------------
Kent J. Davies
SOLUTIA INC.
By
-----------------------------
Jeffry N. Quinn
Chairman of the Board, President and
Chief Executive Officer
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Exhibit A
WAIVER AND RELEASE
Reference is made to that Amended and Restated Employment Agreement (the
"Agreement"), dated as of April 11, 2007, by and among Solutia, Inc., a Delaware
corporation ("Solutia"), CPFilms, Inc., a Delaware corporation and wholly owned
subsidiary of Solutia ("CPF"; and together with Solutia collectively, the
"Company"), and Kent J. Davies (the "Executive"). This Waiver and Release (this
"Waiver") is made as of the ____ day of ____________, 200__, by the Executive
pursuant to Section 9(g) of the Agreement.
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 payments and
other consideration provided for under the Agreement, hereby forever releases
and discharges the Company and its successors, their affiliated entities, 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 date of this Waiver, 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 based on
race, color, religion, sex or national origin; the Family and Medical Leave Act;
the Americans With Disabilities Act; the Age Discrimination in Employment Act;
other federal, state and local laws, ordinances and regulations; and any
unemployment or workers' compensation law, excepting only those obligations of
the Company expressly recited in the Agreement or this Waiver and any claims to
benefits under the Company's employee benefit plans as defined exclusively in
written plan documents; (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 except as otherwise provided herein or in the
Agreement.
(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 Waiver. In the event there is
presently pending any action, suit, claim, charge or proceeding within the scope
of this Waiver, or if such a proceeding is commenced in the future, the
Executive shall promptly withdraw it, with prejudice, to the extent he has the
power to do so. 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.
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(c) In the event any action, suit, claim, charge or proceeding within the
scope of this Waiver 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) In the event of a breach of this Waiver by the Executive, the
Company's obligations pursuant to the Agreement shall cease as of the date of
such breach. Furthermore, the Executive understands that his breach of the
provisions of this Waiver will cause monetary damages to the Company. Thus,
should the Executive breach the provisions of this Waiver, he shall be required
to pay the Company, as liquidated damages, the Severance Payment paid by the
Company to the Executive pursuant to the Agreement plus all costs and expenses,
including all attorneys' fees and expenses, that the Company incurs in enforcing
this Waiver. The Executive agrees that the foregoing amount of liquidated
damages is reasonable and necessary, and does not constitute a penalty.
Voluntary Execution of Waiver.
BY HIS SIGNATURE BELOW, THE EXECUTIVE ACKNOWLEDGES THAT:
(A) I HAVE RECEIVED A COPY OF THIS WAIVER AND WAS OFFERED A PERIOD OF
TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT;
(B) IF I SIGN THIS WAIVER PRIOR TO THE EXPIRATION OF TWENTY-ONE (21) DAYS,
I KNOWINGLY AND VOLUNTARILY WAIVE AND GIVE UP THIS RIGHT OF REVIEW;
(C) I HAVE THE RIGHT TO REVOKE THIS WAIVER FOR A PERIOD OF SEVEN (7) DAYS
AFTER I SIGN IT BY MAILING OR DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE
COMPANY'S GENERAL COUNSEL, NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH
DAY AFTER THE DAY ON WHICH I SIGNED THIS WAIVER;
(D) THIS WAIVER SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN
DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE WAIVER HAVING BEEN REVOKED;
(E) THIS WAIVER 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
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THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS
WAIVER;
(G) NO PROMISE OR INDUCEMENT FOR THIS WAIVER HAS BEEN MADE EXCEPT AS SET
FORTH IN THIS WAIVER;
(H) I AM LEGALLY COMPETENT TO EXECUTE THIS WAIVER AND ACCEPT FULL
RESPONSIBILITY FOR IT; AND
(I) I HAVE CAREFULLY READ THIS WAIVER, ACKNOWLEDGE THAT I HAVE NOT RELIED
ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS
DOCUMENT OR THE AGREEMENT, AND WARRANT AND REPRESENT THAT I AM SIGNING THIS
WAIVER KNOWINGLY AND VOLUNTARILY.
Intending to be legally bound, I have signed this Waiver as of the date
first set forth above.
-------------------------------
Kent J. Davies
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