Exhibit 10(aa)
RETENTION AGREEMENT
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This Retention Agreement ("Agreement") is entered into by and between
Solutia Inc., a Delaware corporation ("Solutia") and Xxxxxxxx X. Xxxxx
("Employee"), as of the date indicated on the signature page attached
hereto.
WHEREAS, Employee and Solutia had previously entered into a retention
agreement prior to Solutia's commencement of its Chapter 11 Bankruptcy
filing ("Prior Agreement"); and
WHEREAS, as a result of the Chapter 11 Bankruptcy filing, the Prior
Agreement became subject to the United States Bankruptcy Court's approval;
and
WHEREAS, the Bankruptcy Court ruled that the Prior Agreement was null and
void from the beginning; and
WHEREAS, the Bankruptcy Court granted approval of this revised Retention
Agreement; and
WHEREAS, Solutia believes that establishing an incentive arrangement for
Employee will increase the likelihood that Solutia will continue to have
Employee's advice, counsel, leadership and dedication.
NOW, THEREFORE, for good and valuable consideration, Solutia and Employee,
intending to be bound, agree as set forth in this Agreement.
1) EMPLOYMENT
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a) Employee's employment with Solutia during the Employment Period
will be under the same terms and conditions as those that applied
immediately prior to the date of this Agreement (or as subsequently
amended from time to time). The "Employment Period" for purposes of
this Agreement shall mean the period beginning on the date of this
Agreement and ending six months after the Emergence Date (as
defined below).
b) Nothing in this Agreement is intended, and nothing herein will be
construed as limiting the ability of Employee or Solutia to
terminate such employment. Moreover, Employee understands that
their employment will remain as an "at will" relationship.
c) During the Employment Period, Employee will:
i) Devote all business time to the duties of employment with Solutia;
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ii) perform all duties of employment with Solutia faithfully and
effectively and to the best of Employee's ability;
iii) act in the best interests of Solutia and its shareholders and
engage in no conflict of interest with Solutia.
2) COMPENSATION; SPECIAL AWARD
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a) During the Employment Period, Solutia will compensate Employee in
accordance with the terms and conditions in effect immediately
prior to the date of this Agreement (as amended from time to time),
including eligibility for an award under the terms of the Solutia
Inc. Annual Incentive Plan ("AIP"). Nothing in this Agreement shall
be construed to provide Employee with the right to participate in
the AIP or any other incentive or benefit plan if Solutia
determines to change or terminate such plan and the change or
termination is generally applicable to employees who are similarly
situated to Employee.
b) In addition to the foregoing, subject to Section 2(c) below,
Employee shall receive a special incentive award (the "Special
Award"). The amount of the Special Award will be 75% of Employee's
base salary as of the date of the Special Award payment.
c) The Special Award will be paid in four (4) equal installments, less
applicable taxes and withholdings, on the following dates and,
provided that the Employee has fulfilled the obligations set forth
in Section 1 of this Agreement, in the judgment of the CEO of
Solutia or his designee:
i) On or about June 30, 2004, Solutia will pay to Employee 25% of the
Special Award, less applicable taxes and withholdings, provided
that Employee is employed by Solutia on such date.
ii) On or about December 31, 2004, Solutia will pay to Employee 25% of
the Special Award, less applicable taxes and withholdings, provided
that Employee is employed by Solutia on such date.
iii) As soon as practicable following the time, if ever, at which both
(x) the United States Bankruptcy Court for the Southern District of
New York shall have confirmed a plan of reorganization of Solutia
under Chapter 11 of the United States Bankruptcy Code and (y) such
confirmation shall have become non-appealable (the "Emergence
Date"), Solutia will pay to Employee 25% of the Special Award, less
applicable taxes and withholdings, provided that Employee is
employed by Solutia on such date.
iv) On the six (6) month anniversary of the Emergence Date, Solutia
will pay to Employee 25% of the Special Award, less applicable
taxes and withholdings, provided that Employee is employed by
Solutia on such date.
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3) TERMINATION OF EMPLOYMENT
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a) If, prior to an applicable installment payment date during the
Employment Period, Employee (i) retires or voluntarily terminates
employment with Solutia (other than as a result of death or
Disability); (ii) announces his or her intent to so retire or
terminate employment; or (iii) is terminated by Solutia for Cause,
Employee will not receive any portion of the Special Award
installment payment applicable to that installment period. "Cause"
as used in this Agreement shall include willful misconduct,
dishonesty, insubordination, conviction of a felony or its
equivalent, negligence in the performance of Employee's duties,
the illegal use of drugs or controlled substances and violation of
Solutia's policies (including without limitation Solutia's
Guidelines for Employee Conduct) in such a manner as to expose the
employer to administrative, civil or criminal liability;
b) If, prior to an applicable installment payment date during the
Employment Period, Employee is terminated other than for Cause,
Solutia shall pay to Employee in a lump sum, less applicable taxes
and withholdings, any unpaid amounts that would have otherwise been
payable to Employee pursuant to Section 2(b).
c) If Employee is not actively employed for the entire installment
period due to disability, sick leave, family leave, or other
approved leave of absence, but is otherwise eligible for a Special
Award, the Award will be pro-rated to cover only the time actively
employed plus any qualifying leave (up to 12 weeks) under the
federal Family Medical Leave Act, but will not cover any other
disability or other leave. Employee must return to active
employment in order to qualify for the Special Award installment,
and will be paid only after he or she so returns.
d) Payment of the Special Award terminates any and all obligations of
Solutia under this Agreement.
e) Solutia retains the right to condition payment of any portion of
the Special Award on Employee signing a waiver and release, in a
form acceptable to Solutia.
4) GENERAL
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a) Employee agrees not to disclose the existence of this Agreement or
any of its terms to anyone other than Employee's spouse and a
financial or legal advisor who agrees in writing to be bound not to
make any such disclosure. Notwithstanding anything to the contrary
in this Agreement, in the event this Agreement or its terms are
disclosed by Employee, Employee's spouse or a legal or financial
advisor, Employee will not receive any portion of the Special
Award.
b) All amounts required by law to be withheld from any payment made
pursuant to this Agreement, including any and all amounts required
to be withheld by the
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Internal Revenue Code or by the Federal Insurance Contribution Act,
any applicable state or foreign country's income tax act, any
applicable city, county or municipality's earnings or income tax
act, will be withheld.
c) This Agreement will be binding upon and inure to the benefit of
Employee and Employee's estate, and Solutia and any successor,
direct or indirect, of Solutia, whether such succession, direct or
indirect, of Solutia, results from a merger, consolidation,
liquidation, reorganization, purchase of securities, acquisition of
assets or otherwise.
d) The interests of Employee under this Agreement are not subject to
the claims of Employee's creditors and may not be voluntarily or
involuntarily sold, transferred, alienated, assigned, pledged,
anticipated or encumbered. Any attempt by Employee or any other
person or entity to sell, transfer, alienate, assign, pledge,
anticipate, encumber, charge or otherwise dispose of any right to
benefits payable hereunder will be void and shall terminate any
obligation of Solutia hereunder to make payment. At no time will
any interest or other charge be due or payable on any amounts owing
hereunder.
e) The payment provided under this Agreement is not intended to
qualify under Section 401 of the Internal Revenue Code and will be
paid from the general assets of Solutia or a third party. Nothing
contained herein shall require Solutia to segregate any monies from
its general funds or to create any trusts, or to make any special
deposits for amounts payable to Employee. In no case will any
amounts paid under this Agreement be taken into account in
determining any of Employee's Solutia benefits, including without
limitation savings and investment plan contributions, pension, life
insurance and disability or in determining any other incentive
award or compensation.
f) Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in
any jurisdiction will not invalidate or render unenforceable such
provision in any other jurisdiction.
g) Solutia has full power and authority in its sole discretion to
construe, interpret, and administer this Agreement. Decisions of
Solutia shall be final, conclusive, and binding on all parties
hereto.
h) This Agreement will in all respects be governed by, and construed
in accordance with, the laws of the State of Delaware, without
reference to conflicts of law principles thereunder.
i) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior
agreements, oral and
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written, between the parties hereto with respect to the subject matter
hereof, if any. Separate copies of this document shall constitute
original documents which may be signed separately, but which together
will constitute one single agreement.
j) In the event of any breach by Employee of any term or condition set
forth in this Agreement, Employee's right to receive the Special
Payment shall immediately be forfeited.
k) The Employee acknowledges that Employee has carefully read this
Agreement in its entirety, fully understands its provisions and its
final and binding effect, and that Employee is signing this
Agreement voluntarily.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of June 17, 2004.
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Date
SOLUTIA INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Title: Director, Human Resources
Accepted and Agreed to
EMPLOYEE:
By: /s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx
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Printed Name
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