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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 21, 1994.
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LYONDELL PETROCHEMICAL COMPANY
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-10145 95-4160558
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
1221 MCKINNEY STREET, SUITE 1600, HOUSTON, TEXAS 77010
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICERS) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 652-7200
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NOT APPLICABLE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
The Company has recently entered into severance agreements with each of its
executive officers. The severance agreements provide for the receipt by the
executive officers of certain payments and benefits in the event of a "Change in
Control" of the Company. A Change in Control occurs when (i) the Incumbent
Directors (as defined in the severance agreements) cease to constitute at least
a majority of the Board, (ii) the stockholders of the Company approve any
merger, consolidation, recapitalization or sale of substantially all of the
assets of the Company under circumstances where such stockholders would own less
than 80% of the outstanding voting securities of the surviving entity, or where
the Incumbent Directors would not constitute a majority of the Board of
Directors immediately after such transaction, or such stockholders approve any
plan or proposal for the liquidation or dissolution of the Company, (iii) any
person or group, other than ARCO, holds or acquires, directly or indirectly,
more than 20% of the Company's then outstanding voting securities or (iv) ARCO
acquires (other than in an inadvertent transaction that is effectively reversed)
ownership, directly or indirectly, of more than 50% of the Company's then
outstanding voting securities.
In the event of a Change in Control, the severance agreements provide for the
vesting of all of the executives' non-vested stock options (and dividend share
credits with respect thereto) granted to the executive under the Company's
Executive Long-Term Incentive Plan. In the further event that there is a
cessation of an active market for the Company's common stock at or within three
years after the Change in Control, the Company is required to pay the executive
a lump-sum payment based on the Black Scholes value (as of the date immediately
preceding the cessation of an active market) and remaining term of the options
for all of the executive's unexercised stock options, notwithstanding the
possibility that the average exercise price of such options is in excess of the
market value of the underlying common stock. Also upon a Change in Control, the
Company may be required to make a lump-sum payment based on the pro-rata value
of the performance units then held by the executive under the Company's
Executive Long-Term Incentive Plan.
The severance agreements provide for additional payments and benefits in the
event the executive's employment with the Company is actually or constructively
terminated at any time within three years following a Change in Control,
including lump-sum payments based on three times the executive's base salary and
targeted bonus, certain tax gross-up payments, additional pension benefits and
benefits upon termination of the executive's Deferral Plan. The Company expects
that a material portion of any payments required to be made under the severance
agreements would be considered "parachute" payments under applicable Internal
Revenue Code provisions and would therefore not be deductible for Federal Income
Tax purposes by the Company. The agreement extends through August 1995 but is
renewable at the request of the Company and upon specific approval of the
Compensation Committee.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 21, 1994 LYONDELL PETROCHEMICAL COMPANY
By: /s/ Joseph M. Putz
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Joseph M. Putz
Vice President and Controller
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EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED PAGE
NO. EXHIBITS WHERE LOCATED
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10 Form of Executive Severance Agreement
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Exhibit 10
EXECUTIVE SEVERANCE AGREEMENT,
DATED AS OF __________________, 1994,
BETWEEN
LYONDELL PETROCHEMICAL COMPANY,
A DELAWARE CORPORATION (THE "COMPANY"), AND
_____________________________ ("EXECUTIVE")
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TABLE OF CONTENTS
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PAGE
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<C> <S> <C>
Section 1. Stock Options and Performance Units......... 1
(a) Stock Options............................... 1
(b) Performance Units........................... 2
Section 2. Termination Following Change in Control..... 3
(a) Termination Upon Change in Control.......... 3
(b) Change in Control........................... 4
Section 3. Rights and Benefits upon Termination........ 7
(a) Salary and Other Payment at Termination..... 8
(b) Prorated Targeted Bonus..................... 8
(c) Crediting of Additional Pension Benefit..... 8
(d) Stock Options............................... 9
(e) Executive Deferral Plan..................... 9
(f) Insurance and Other Benefits................ 10
(g) Financial Counseling........................ 11
(h) Outplacement................................ 11
(i) No Duty to Mitigate......................... 11
Section 4. Other Benefit Plans......................... 11
Section 5. Payment Obligations Absolute................ 12
Section 6. Gross-up Payment; Tax Defense............... 12
(a) Combined Gross-up Payment................... 12
(b) Tax Defense................................. 12
Section 7. Conditions to the Obligations of the Company 13
Section 8. Confidentiality; Cooperation; Consultancy... 13
(a) Cooperation................................. 13
(b) Consultation................................ 14
(c) Release of Liability........................ 14
Section 9. Term of Agreement........................... 14
Section 10. Arbitration................................. 15
(a) Arbitrable Matters.......................... 15
(b) Submission to Arbitration................... 15
</TABLE>
(i)
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<TABLE>
<C> <S> <C>
(c) Arbitration Procedures...................... 16
(d) Compliance with Decisions................... 16
(e) Costs and Expenses.......................... 17
Section 11. Notices..................................... 17
Section 12. Miscellaneous............................... 17
(a) Assignment.................................. 17
(b) Construction of Agreement................... 18
(c) Amendment................................... 18
(d) Waiver...................................... 18
(e) Severability................................ 18
(f) Successors.................................. 18
(g) Taxes....................................... 18
(h) Governing Law............................... 19
(i) Entire Agreement............................ 19
</TABLE>
(ii)
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EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT, is made and entered into this _____ day
of ____________, 1994, by and between LYONDELL PETROCHEMICAL COMPANY, a Delaware
corporation (hereinafter referred to as "Company"), and _____________
______________________________, an individual (hereinafter referred to as
"Executive").
W I T N E S S E T H :
WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Compensation Committee") has authorized the Company to enter into
a severance agreement in the form hereof with Executive;
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that, in the event the Company becomes subject to any proposed or threatened
change in control, it is imperative that the Company and the Board be able to
rely upon Executive to continue in Executive's position, and that the Company be
able to receive and rely upon Executive's advice, if requested, as to the best
interests of the Company and its stockholders without concern that Executive
might be distracted by the personal uncertainties and risks created by such a
proposal or threat;
WHEREAS, in the event the Company receives any such proposal or threat,
Executive may, in addition to Executive's regular duties, be called upon to
assist in the assessment of such matters, advise management and the Board as to
whether such proposals or other matters would be in the best interests of the
Company and its stockholders, and to take such other actions as the Board might
determine to be appropriate;
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive and the availability of Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of an effort to take over
control of the Company, and to induce Executive to remain in the employ of the
Company, and for other good and valuable consideration, the Company and
Executive agree as follows:
SECTION 1. STOCK OPTIONS AND PERFORMANCE UNITS.
(a) Stock Options. If a Change in Control occurs while Executive is
employed by the Company or any subsidiary thereof, then with respect to any
stock options granted to Executive under the Company's Executive Long-Term
Incentive Plan (the "Stock Option Plan"), notwithstanding any provision of
the Stock Option Plan or Executive's associated stock option agreement, if
any, to the contrary, all non-vested options shall become 100% vested and
fully exercisable as of the last business day immediately preceding the
Change in Control. For purposes of this Agreement, all references herein
to stock options shall also include all associated dividend share credits
granted under the Stock Option Plan with respect to such options.
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In the further event that there is a "Cessation of Active Market" for
the Company's common stock coincident with or within three (3) years
following a Change in Control, then notwithstanding any provision of the
Stock Option Plan or Executive's associated stock option agreement, if any,
to the contrary, with respect to any stock options which Executive has
elected not to exercise, Company shall pay to Executive a cash lump-sum
payment equal to the "Black-Scholes Value" for all of his unexercised stock
options within forty-five (45) calendar days from the date that there is a
Cessation of Active Market; provided, however, payment of such amount shall
be delayed by the Company for a period of up to six (6) months to the
extent that payment at an earlier date could subject Executive to liability
for short swing profits under Section 16(b) of the Securities Exchange Act
of 1934, as amended ("Exchange Act").
For purposes of this Section, a "Cessation of Active Market" shall be
deemed to have occurred if the Company's common stock ceases to meet the
requirements for listing on the New York Stock Exchange or any other
established securities market or system on which it is listed.
For purposes of this Section, "Black-Scholes Value" shall mean the
value of the stock options, as calculated by Hewitt Associates, L.L.C., or
any other compensation consultant that is mutually agreeable to the parties
(the "Compensation Consultant") using the Black-Scholes method of
valuation, determined as if the valuation was based on the average closing
price of the Company's common stock for the period of thirty (30) trading
days ending on the day immediately preceding the date of Cessation of
Active Market. Such valuation also shall take into consideration the
remaining term of each stock option. In preparing such valuation, the
Compensation Consultant in its good faith discretion shall be responsible
for designating reasonable and customary parameters for the Black-Scholes
method. Company shall deliver to Executive the determination of the Black-
Scholes Value of his stock options with the payment therefor.
(b) Performance Units. Upon a Change in Control on or prior to March
6, 1995 which occurs while Executive is employed by the Company (which for
this purpose also shall include LCR (as defined in Section 2(c)) and any
subsidiary of the Company or LCR), the number of performance units granted
under the Stock Option Plan, if any, and held by Executive as of the Change
in Control shall be multiplied by a fraction, the numerator of which is the
number of months in the performance cycle that have elapsed as of the
Change in Control (including any fraction of a month) and the denominator
of which is the number of months in the entire performance cycle ending
March 6, 1995 (including any fraction of a month). The product computed in
accordance with the preceding sentence shall be deemed the number of
performance units held by Executive as of the Change in Control
notwithstanding any contrary provision of the Stock Option Plan and any
grant of a larger number of performance units to Executive and, moreover,
any performance units held by Executive in excess of this product shall be
deemed to be void. For purposes of computing the value of performance
units deemed held by Executive as of the Change in Control, the ranking of
competitor companies, the level
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of payout (0, 1x or 2x) and the fair market value of the Company's common
stock shall be determined, in accordance with the terms of the performance
unit, as of the Change in Control. A cash lump-sum payment for the value
of Executive's performance units, computed in accordance with the preceding
sentence as of the Change in Control, shall be made by Company to Executive
as of the earlier of (i) the last day of the Executive's employment with
the Company or any of its subsidiaries or (ii) March 6, 1995.
(c) Any long-term incentive compensation program, including subsequent
awards of performance units, that may exist or that may be adopted in the
future, shall follow the intent of this Agreement as described under
Sections 1(a) and 1(b) hereof with respect to the complete vesting and
payout of a pro rata share of awards effective with a Change in Control.
(d) Capitalized terms not defined in this Section are defined in
Section 2(c) of this Agreement.
SECTION 2. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) Termination Upon Change in Control. The Company will provide or
cause to be provided to Executive the rights and benefits described in
Section 3 of this Agreement in the event that Executive's employment by the
Company (which for this purpose also shall include LCR and any subsidiary
of the Company or LCR) is terminated at any time within three (3) years
following a Change in Control (as defined in Section 2(b)): (1) by the
Company for reasons other than (A) "Cause" (as defined in Section 7), (B)
Executive's death or permanent disability or (C) Executive's retirement
upon reaching age 65 ("Normal Retirement Date"), or (2) by Executive within
ninety (90) days following the occurrence of any of the following events
without Executive's written consent which events shall constitute
"Constructive Termination for Good Reason":
(i) the assignment of Executive to any duties or responsibilities that
are inconsistent with Executive's position, offices, duties,
responsibilities or status immediately preceding such Change in Control, or
a change in Executive's reporting responsibilities or titles in effect at
such time resulting in a reduction of Executive's responsibilities or
position at the Company;
(ii) the reduction of Executive's annual salary (including any
deferred portions thereof) or Targeted Bonus, or a material reduction in
the level of benefits or supplemental compensation provided to Executive;
or
(iii) the actual transfer, or the proposed transfer, as evidenced in
a written communication from Company to Executive, of Executive to another
location other than the location at which he was primarily employed
immediately preceding the Change in Control, unless such new location is a
major operating unit or facility of the Company
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that is located within 50 miles of Executive's primary location as of the
date immediately preceding such Change in Control; provided, however, (1)
Executive, within thirty (30) days from the date that he is given written
notice by the Company of such actual or proposed transfer, shall provide
the Board with written notice that such transfer shall constitute a
Constructive Termination for Good Reason hereunder, (2) Company within
twenty (20) days of receipt of such notice by the Board shall fail to
provide Executive with written notice rescinding such actual or proposed
transfer and (3) if the transfer is not rescinded by the Company, Executive
must terminate his employment due to Constructive Termination for Good
Reason within forty (40) days following expiration of the 20-day period
referred to in the preceding clause so that in any event Executive shall
have terminated his employment with the Company within 90 days after
Executive first receives written notice from the Company of such actual or
proposed transfer.
(b) Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred as of the date that one or more
of the following occurs:
(i) Individuals who, as of the date hereof, constitute the entire
Board of Directors of the Company ("Incumbent Directors") cease for any
reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the then Incumbent Directors
shall be considered as though such individual was an Incumbent Director,
but excluding, for this purpose any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest, as such terms are used in Rule 14a-11 under the Exchange
Act or other actual or threatened solicitation of proxies or consents by or
on behalf of any Person (as defined below) other than the Board; provided,
further, that in the event ARCO at any time determines to achieve minority
representation on the Company's Board of Directors approximately equal to
its then ownership percentage of the Company's common stock, its
implementation of such determination through the election of ARCO employees
as directors of the Company shall not be deemed to be a Change in Control
and such ARCO employees shall constitute Incumbent Directors;
(ii) The stockholders of the Company shall approve (A) any merger,
consolidation or recapitalization of the Company (or, if the capital stock
of the Company is affected, any subsidiary of the Company), or any sale,
lease, or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of the Company (each of the foregoing being
an "Acquisition Transaction") where (1) the shareholders of the Company
immediately prior to such Acquisition Transaction would not immediately
after such Acquisition Transaction beneficially own, directly or
indirectly, shares or other ownership interests representing in the
aggregate eighty percent (80%) or more of (a) the then outstanding common
stock or other equity interests of the corporation or other entity
surviving or
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resulting from such merger, consolidation or recapitalization or acquiring
such assets of the Company, as the case may be (the "Surviving Entity") (or
of its ultimate parent corporation or other entity, if any), and (b) the
Combined Voting Power of the then outstanding Voting Securities of the
Surviving Entity (or of its ultimate parent corporation or other entity, if
any) or (2) the Incumbent Directors at the time of the initial approval of
such Acquisition Transaction would not immediately after such Acquisition
Transaction constitute a majority of the Board of Directors, or similar
managing group, of the Surviving Entity (or of its ultimate parent
corporation or other entity, if any), or (B) any plan or proposal for the
liquidation or dissolution of the Company;
(iii) Any Person except for ARCO shall be or become the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing in the
aggregate more than twenty percent (20%) of either (A) the then outstanding
shares of common stock of the Company ("Common Shares") or (B) the Combined
Voting Power of all then outstanding Voting Securities of the Company;
provided, however, that notwithstanding the foregoing, a "Change of
Control" shall not be deemed to have occurred for purposes of this
Subsection (iii):
(1) Solely as a result of an acquisition of securities by the Company
which, by reducing the number of Common Shares or other Voting
Securities outstanding, increases (a) the proportionate number of
Common Shares beneficially owned by any Person to more than
twenty percent (20%) of the Common Shares then outstanding, or
(b) the proportionate voting power represented by the Voting
Securities beneficially owned by any Person to more than twenty
percent (20%) of the Combined Voting Power of all then
outstanding Voting Securities; or
(2) Solely as a result of an acquisition of securities directly from
the Company except for any conversion of a security that was not
acquired directly from the Company,
provided, further, that if any Person referred to in paragraph (1) or (2)
of this Subsection (iii) shall thereafter become the beneficial owner of
any additional Common Shares or other Voting Securities of the Company
(other than pursuant to a stock split, stock dividend or similar
transaction), then a "Change of Control" shall be deemed to have occurred
for purposes of this Subsection (iii); or
(iv) ARCO shall become the owner, directly or indirectly, of
securities of the Company representing in the aggregate more than fifty
percent (50%) of either (i) the then outstanding Common Shares or (ii) the
Combined Voting Power of all then outstanding Voting Securities of the
Company except as the result of an acquisition of securities by the Company
which, by reducing the number of Common Shares or other Voting Securities
outstanding, increases (x) the proportionate number of Common Shares
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beneficially owned by ARCO to more than fifty percent (50%) of the Common
Shares then outstanding, or (y) the proportionate voting power represented
by the Voting Securities beneficially owned by ARCO to more than fifty
percent (50%) of the Combined Voting Power of all then outstanding Voting
Securities; provided, however, that if thereafter ARCO becomes the
beneficial owner of any additional Common Shares or other Voting Securities
of the Company (other than pursuant to a stock split, stock dividend or
similar transaction) the exception provided above shall no longer apply;
provided, further, that for purposes of this Subsection (iv), neither
record ownership of common stock of the Company by the Trustee for ARCO's
401(a) qualified plans nor beneficial ownership of common stock of the
Company by any of ARCO's directors for their personal account shall be
deemed to constitute "indirect" ownership of common stock of the Company by
ARCO; provided, further, that notwithstanding any contrary provision of
this Agreement, no Change in Control shall be deemed to have occurred
pursuant to this Subsection (iv) if as a result of an inadvertent act ARCO
becomes the owner, directly or indirectly, of additional Common Shares or
Voting Securities and such securities are sold or otherwise disposed of by
ARCO within 30 days after ARCO discovers, or is notified by the Company as
to, the potential Change of Control resulting from such ownership, so that,
as a result of such subsequent sale or other disposition by ARCO, no Change
in Control would otherwise be deemed to have occurred pursuant to the terms
(excluding this proviso) of this Subsection (iv).
Notwithstanding any of the foregoing, no Change in Control shall be deemed
to have occurred as a result solely of (i) the registration by ARCO of the
Exchangeable Notes pursuant to the Registration Statement, (ii) the
issuance and sale by ARCO of the Exchangeable Notes to the underwriters in
accordance with the Registration Statement, or (iii) prior to the maturity
of the Exchangeable Notes, purchases and sales of the Exchangeable Notes.
(c) For purposes of this Agreement:
(i) "Affiliate" shall mean, as to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified Person,
within the meaning of such terms as used in Rule 405 under the Securities
Act of 1933, as amended, or any successor rule.
(ii) "ARCO" shall mean Atlantic Richfield Company and any of its
Affiliates, excluding the Company.
(iii) "Combined Voting Power" shall mean the aggregate votes entitled to
be cast generally in the election of the Board of Directors, or similar
managing group, of a corporation or other entity by holders of then
outstanding Voting Securities of such corporation or other entity.
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(iv) "Exchangeable Notes" shall mean the debt securities exchangeable upon
maturity, at ARCO's option, into shares of the Company's common stock or
cash, as such debt securities are described in the Registration Statement.
(v) "LCR" shall mean LYONDELL-CITGO Refining Company Ltd., a Limited
Liability Company organized under the laws of the State of Texas.
(vi) "Person" shall mean any individual, entity (including, without
limitation, any corporation, partnership, trust, joint venture, association
or governmental body) or group (as defined in Sections 14(d)(3) or 15(d)(2)
of the Exchange Act and the rules and regulations thereunder); provided,
however, that Person shall not include the Company or LCR, any of their
subsidiaries, any employee benefit plan of the Company or LCR or any of
their majority-owned subsidiaries or any entity organized, appointed or
established by the Company, LCR or such subsidiaries for or pursuant to the
terms of any such plan.
(vii) "Registration Statement" shall mean ARCO's registration statement on
Form S-3 (Registration No. 33-53481) with respect to the Exchangeable
Notes.
(viii) "Targeted Bonus" shall mean an amount equal to the difference
between (1) the sixtieth (60th) percentile of total cash compensation and
(2) the sixtieth (60th) percentile of annual base compensation for the
Executive's position as determined by the most recent annual executive
compensation survey analysis performed by the Company. If the Executive's
position is not capable of being matched to a position in the executive
compensation survey or if an annual executive compensation survey analysis
has not been performed within twelve (12) months of Executive's
Termination, the Targeted Bonus shall be a percentage of the Executive's
current annual base salary and, in such situation, the applicable
percentage shall be determined by the Compensation Consultant (as defined
in Section 1(a)), but in no event shall the Targeted Bonus be less than the
highest average of Executive's annual bonuses for any consecutive thirty-
six (36) month period during the sixty (60) months immediately preceding
Termination.
(ix) "Voting Securities" shall mean all securities of a corporation or
other entity having the right under ordinary circumstances to vote in an
election of the Board of Directors, or similar managing group, of such
corporation or other entity.
SECTION 3. RIGHTS AND BENEFITS UPON TERMINATION. In the event Executive
is entitled pursuant to Section 2 to receive the rights and benefits described
in this Section as a result of the termination or Constructive Termination for
Good Reason of Executive's employment within three years following a Change in
Control (hereinafter collectively referred to as "Termination"), the Company
agrees to provide or cause to be provided to Executive the following rights and
benefits:
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(a) Salary and Other Payment at Termination. Company shall pay to
Executive not later than thirty (30) days following Termination a lump-sum
payment in cash in the amount of three (3) times Executive's "Applicable
Annual Earnings" (as defined below); provided, however, if there are fewer
than thirty-six (36) full months remaining from the date of Termination to
Executive's Normal Retirement Date, the payment Executive shall be entitled
to receive pursuant to this Section 3(a) will equal such amount multiplied
by a fraction, the numerator of which is the number of months (including
any fraction of a month) so remaining to Executive's Normal Retirement Date
and the denominator of which is 36.
For purposes of this Agreement, "Applicable Annual Earnings" shall
mean the sum of the Executive's current annual base salary and Targeted
Bonus (in each case determined using the highest rate in effect up to and
including the effective date of Termination, whether or not paid) for
personal services on behalf of the Company, LCR or their subsidiaries for
the calendar year in which the Termination occurs (except that if Executive
is subject to a Constructive Termination for Good Reason because his salary
or Targeted Bonus is reduced, then the current annual base salary and
Targeted Bonus used to determine Applicable Annual Earnings shall be the
annual base salary in effect or Targeted Bonus, as applicable, immediately
prior to such Constructive Termination for Good Reason). Applicable Annual
Earnings shall include Executive's current annual base salary and Targeted
Bonus whether or not paid on a deferred basis, including, without
limitation, amounts contributed by or on behalf of Executive under a
Company-sponsored plan, such as (i) a plan described in Section 125 or
401(k) of the Internal Revenue Code of 1986, as amended, or (ii) the
Company's Executive Deferral Plan or an "excess benefit plan" as defined in
the Employee Retirement Income Security Act of 1974, as amended.
Notwithstanding the preceding provisions of this paragraph, Applicable
Annual Earnings does not include any income attributable to stock options,
stock appreciation rights, performance awards, dividend credits, and
restricted stock granted under, and dividends on shares acquired pursuant
to, any stock option plan, restricted stock plan or performance unit plan.
(b) Prorated Targeted Bonus. Company shall pay to Executive, not
later than thirty (30) days following Termination, a cash lump-sum payment
equal to his Targeted Bonus for the year of Termination (except that, if
Executive is subject to Constructive Termination for Good Reason because
his Targeted Bonus was reduced, then Targeted Bonus for this purpose shall
be the Targeted Bonus prior to such Constructive Termination for Good
Reason) multiplied by a fraction, the numerator of which is the number of
elapsed days in the year of Termination up to and including the date of
Termination and the denominator of which is 365.
(c) Crediting of Additional Pension Benefit. In accordance with the
special supplemental retirement benefit authorized by the Compensation
Committee on September 13, 1991, Company shall credit Executive with an
additional five (5) years of (i) age (not to exceed age 65) and (ii)
service with the Company, under the
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Company's Supplementary Executive Retirement Plan (or its successor) for
purposes of determining his accrued benefits thereunder.
(d) Stock Options. Notwithstanding any provision of the Stock Option
Plan or Executive's stock option agreement, if any, to the contrary, all
stock options owned by Executive shall be freely exercisable following
Termination for the remainder of their existing terms without regard to any
earlier date that may be specified therein including, without limitation,
an earlier expiration date specified with respect to Executive's
termination of employment.
(e) Executive Deferral Plan. The provisions of this Section 3(e)
shall apply notwithstanding any provisions of the Company's Executive
Deferral Plan (the "Deferral Plan") or the initial paragraph of Section 3
hereof to the contrary.
In the event that (i) there is a "Termination or Adverse Amendment"
(as defined below) of the Deferral Plan within three years following a
Change in Control and (ii) a Termination within the meaning of this
Agreement has not occurred with respect to Executive, then, notwithstanding
any other provision of this Agreement, the full amount of contributions and
earnings accrued or credited to Executive's account balance under the
Deferral Plan (as of the date immediately preceding the Termination or
Adverse Amendment) shall be immediately distributed to Executive in a cash
lump-sum payment and the Company shall pay Executive in a cash lump-sum
payment an additional amount equal to the "Income Tax Gross-up" (as defined
below).
In the event that Executive as of his Termination date is not eligible
to receive an "Immediate Retirement Benefit" (as defined below), then the
full amount of contributions and earnings accrued or credited to
Executive's account balance under the Deferral Plan (as of the date
immediately preceding his Termination) shall be immediately distributed to
Executive in a cash lump-sum payment and the Company shall pay Executive in
a cash lump-sum payment an additional amount equal to the Income Tax Gross-
up, without regard to whether or not there has been a Termination or
Adverse Amendment.
In the event that (i) there is a Termination or Adverse Amendment of
the Deferral Plan following a Change in Control and (ii) Executive as of
his Termination date is either eligible to receive an Immediate Retirement
Benefit or elects (or has elected) to commence an Immediate Retirement
Benefit, then the full amount of contributions and earnings accrued or
credited to Executive's account balance under the Deferral Plan (as of the
date immediately preceding the Termination or Adverse Amendment) shall be
immediately distributed to Executive in a cash lump-sum payment and the
Company shall pay Executive in a cash lump-sum payment an additional amount
equal to the Income Tax Gross-up.
For purposes of this Agreement, "Termination or Adverse Amendment"
means that the Deferral Plan is either (i) terminated for whatever reason
by the Company or (ii)
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amended by the Company in any way that adversely affects Executive's
rights, privileges or benefits thereunder including, without limitation, an
amendment that results in a change to the methodology used to determine the
interest rate for earnings credited to Executive's account balance, without
the Executive's written consent to such amendment, other than an amendment
which is required by law.
For purposes of this Agreement, "Immediate Retirement Benefit" means
Executive is eligible (after giving effect to Section 3(c)) to receive an
immediate allowance or distribution (whether reduced or unreduced) from a
retirement plan maintained by the Company which is intended to be a
qualified plan under Section 401(a) of the Internal Revenue Code of 1986,
as amended.
For purposes of this Agreement, "Income Tax Gross-up" shall mean the
amount necessary so that after payment of any federal, state and local
income or employment tax by Executive on the distribution of amounts under
the Deferral Plan and the Income Tax Gross-up, the net amount retained by
Executive shall be the full amount accrued and credited to his account
balance under the Deferral Plan at the time immediately preceding
distribution. For purposes of determining the amount of the Income Tax
Gross-up, Executive shall be deemed (i) to pay federal income taxes at the
highest stated rate of federal income taxation (including surtaxes, if any)
for the calendar year in which the Income Tax Gross-up is to be made (for
1994, the highest stated rate is 39.6%); and (ii) to pay any applicable
state and local income taxes at the highest stated rate of taxation
(including surtaxes, if any) for the calendar year in which the Income Tax
Gross-up is to be made. Any Income Tax Gross-up required hereunder shall
be paid by Company to Executive at the same time that any payment made
under the Deferral Plan which is subject to income tax is paid or deemed
received by Executive.
(f) Insurance and Other Benefits. To the extent that Executive is
eligible thereunder, then for a period of thirty-six (36) months following
Termination, Executive (and his dependents, as applicable) shall continue
to be covered at Company's expense by the life insurance, medical and
dental plans, and accident and disability plans of the Company and its
subsidiaries, or any successor to a plan or program in effect at
Termination for employees in the same class or category as Executive
(hereafter individually and collectively referred to as "Company Welfare
Plan"), subject to the terms of the Company Welfare Plan and to Executive's
making any required contributions thereto which contributions shall not
exceed those charged to employees in the same class or category in which
Executive was employed by the Company. In the event that Executive is
ineligible to continue to be so covered under the terms of any Company
Welfare Plan, or in the event that Executive is eligible but the benefits
applicable to Executive (and his dependents, as applicable) are not
substantially equivalent to such benefits immediately prior to Termination,
then, for a period of thirty-six (36) months following Termination, the
Company shall at its expense provide to Executive (and his dependents, as
applicable) through other sources such benefits as may be necessary to make
the benefits applicable to Executive (and his dependents, as
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applicable) substantially equivalent to those in effect immediately prior
to Termination. Continuation coverage provided hereunder pursuant to any
group health plan maintained by the Company or a subsidiary shall be in
lieu of, and not in addition to, any continuation coverage required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"). Any retiree coverage provided to Executive by Company shall be
on the same terms and conditions, including bridging of coverage, as that
provided to executives in the same class or category in which Executive was
employed by Company.
(g) Financial Counseling. For a period of one year following
Termination, Executive shall continue to be covered at Company's expense
under the financial counseling program of Company, or any successor
program, in effect at Termination for employees in the same class or
category as Executive, subject to the terms of such program. In the event
the benefits available to Executive under such financial counseling program
are not substantially equivalent to the benefits available to Executive at
Termination, Company at its expense shall provide to Executive through
other sources such benefits as may be necessary to make the benefits
available to Executive substantially equivalent to those in effect at
Termination.
(h) Outplacement. Company shall provide to Executive, at Company's
expense but not to exceed fifteen percent (15%) of Executive's Applicable
Annual Earnings, outplacement assistance for Executive from a professional
outplacement assistance firm which is reasonably suitable to Executive.
(i) No Duty to Mitigate. Executive's entitlement to benefits
hereunder shall not be governed by any duty to mitigate Executive's damages
by seeking further employment nor offset by any compensation which
Executive may receive from future employment.
SECTION 4. OTHER BENEFIT PLANS. The specific arrangements referred to in
this Agreement are not intended (i) to exclude or limit Executive's
participation in other benefit plans or programs in which Executive currently
participates or may participate including, without limitation, retiree benefits,
or benefits which are available to executive personnel generally in the same
class or category as Executive (excluding only the Company's Special Termination
Plan and the special supplemental retirement benefit authorized by the
Compensation Committee on September 13, 1991) or (ii) to preclude or limit other
compensation or benefits as may be authorized by the Compensation Committee or
the Board from time to time. To the extent not otherwise paid or provided, the
Company shall timely pay or provide to the Executive and/or the Executive's
dependents any other amounts or benefits required to be paid or provided or
which the Executive or the Executive's dependents are eligible to receive
pursuant to this Agreement and under any plan, program, policy or practice or
contract or agreement of the Company and its Affiliates as in effect and
applicable generally to executive personnel in the same class or category of
Executive.
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SECTION 5. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to pay
or provide or cause to be paid or provided to Executive the amounts and
benefits, and to make the arrangements, provided in this Agreement shall be
absolute and unconditional and shall not be affected by any circumstances
(including, without limitation, any setoff, claim, counterclaim, recoupment,
defense or other right, which the Company may have against Executive or anyone
else). All amounts payable by or on behalf of the Company hereunder shall be
paid without notice or demand. Each and every payment made hereunder by or on
behalf of the Company shall be final and the Company and its subsidiaries shall
not, for any reason whatsoever, seek to recover all or any part of such payment
from Executive or from whomever shall be entitled thereto. In no event shall an
asserted violation of any provision of this Agreement constitute a basis for
deferring or withholding any amount payable to, or on behalf of, Executive
under this Agreement.
SECTION 6. COMBINED GROSS-UP PAYMENT; TAX DEFENSE.
(a) Combined Gross-up Payment. If the Executive becomes entitled to
one or more payments (with a "payment" including, without limitation, an
increase in pension benefits and the vesting of an option or other non-cash
benefit or property) pursuant to the terms of any plan, arrangement or
agreement with the Company (the "Total Payments"), which are or become
subject to the tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code") (or any similar tax that may hereafter be
imposed) (the "Excise Tax"), the Company shall pay to Executive an
additional cash amount (the "Combined Gross-up Payment") such that the net
amount retained by Executive after reduction for (i) any Excise Tax on the
Total Payments and (ii) any federal, state and local income or employment
tax and Excise Tax payable with respect to the Combined Gross-up Payment,
shall equal the Total Payments. For purposes of determining the amount of
the Combined Gross-up Payment, Executive shall be deemed (i) to pay federal
income taxes at the highest stated rate of federal income taxation
(including surtaxes, if any) for the calendar year in which the Combined
Gross-up Payment is to be made (for 1994, the highest stated rate is
39.6%); and (ii) to pay any applicable state and local income taxes at the
highest stated rate of taxation (including surtaxes, if any) for the
calendar year in which the Combined Gross-up Payment is to be made. Any
Combined Gross-up Payment required hereunder shall be made to Executive at
the same time any Total Payment subject to the Excise Tax is paid or deemed
received by Executive.
(b) Tax Defense. If in connection with the examination of Executive's
tax return the Internal Revenue Service asserts that any amount payable or
benefit provided hereunder is a "parachute payment" as defined in the Code
and such amount or benefit was not treated as a parachute payment in
determining the Combined Gross-up Payment (as defined in Section 6(a)
above), Company at its cost shall assume the defense of any controversy
involving such issue and shall indemnify and hold Executive harmless for
all liabilities, costs, taxes, interest and penalties attributable to such
issue and shall to the extent necessary (without duplication) increase the
Combined Gross-up Payment to give
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<PAGE>
effect to any additional amount or benefit determined to be a parachute
payment. Executive shall cooperate with Company so that Company will be
able to challenge any adverse determination by the Internal Revenue Service
through administrative proceedings and, if determined by Company, through
litigation.
SECTION 7. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The Company
shall have no obligation to provide or cause to be provided to Executive the
rights and benefits described in this Agreement if the Company shall terminate
Executive's employment for "Cause", which for purposes of this Agreement shall
be defined and limited to: (i) the continued and willful refusal by Executive to
substantially perform his duties (other than a willful refusal to perform a duty
which constitutes Constructive Termination for Good Reason or a refusal
resulting from Executive's incapacity due to physical or mental illness), after
demand for substantial performance is delivered by the Board, which demand
specifically identifies the manner in which the Board has determined that
Executive has not substantially performed his duties, and Executive's
performance is not cured to the Board's reasonable satisfaction within thirty
(30) days from such demand; (ii) the engagement by Executive in willful
misconduct or dishonesty that is materially injurious to the Company, monetarily
or otherwise; or (iii) Executive's final conviction of a felony.
Notwithstanding the foregoing, the Company shall not be deemed to have
terminated Executive for Cause without (1) reasonable written notice to
Executive setting forth the reasons for the Company's intention to terminate
Executive for Cause and (2) an opportunity for Executive, together with his
counsel, to be heard before the Board. Notwithstanding any contrary provision
of this Agreement, it is specifically agreed that Cause shall not include any
act or omission by Executive in the good faith exercise of Executive's business
judgment as an officer of the Company or as a member of the Board.
If Executive is terminated for Cause, Company, in accordance with and
subject to the provisions of the immediately preceding paragraph, shall not be
required to provide Executive with at least sixty (60) days advance written
notice of such termination for Cause. If Executive is terminated for a reason
other than for Cause, Company shall be required to provide sixty (60) days
advance written notice to Executive unless Executive agrees to a shorter notice
period. Regardless of the reason for termination, Executive shall receive, in
addition to any other payments provided to Executive hereunder or otherwise,
payment for his accrued base salary and a vacation allowance based on years of
service through his termination date.
SECTION 8. CONFIDENTIALITY; COOPERATION; CONSULTANCY.
(a) Cooperation. Executive agrees that, at all times following
Termination, Executive will furnish such information and render such
assistance and cooperation as may reasonably be requested in connection
with any litigation or legal proceedings concerning the Company or any of
its subsidiaries (other than any legal proceedings arising out of or
concerning Executive's employment or its termination). In connection with
such cooperation, the Company will pay or reimburse Executive for
reasonable expenses.
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(b) Consultation. Executive agrees that, for a period of six (6)
months following the date of Termination, Executive will use reasonable
efforts to be available to the Company and its subsidiaries for
consultation with senior officers of the Company or one of its
subsidiaries, as the case may be; provided, however, Executive shall not be
required to perform consulting services (i) for more than five (5) days in
any month or (ii) for more than thirty (30) hours in any month. It is
expressly agreed that Executive's consulting services will be required at
such time and such places as will result in the least inconvenience to
Executive, taking into consideration Executive's other business and
personal commitments during such period which may obligate Executive to
honor such other commitments prior to the rendering of consulting services
by Executive. It is further agreed that Executive's consulting services
shall be rendered by personal consultation at Executive's principal
residence or office, wherever maintained, or by correspondence through
mail, telephone or facsimile machine or other similar modes of
communication at times, including weekends and evenings, most convenient to
Executive. The Company and Executive agree that if, during such period,
Executive should enter into the full-time employ of another company or
firm, Executive shall not be required to consult at times that will
conflict with Executive's responsibilities with respect to such employment.
No additional consideration shall be provided to Executive for making such
consulting services available to Company regardless of whether Company
elects to utilize such services; provided, however, Company shall reimburse
Executive for all reasonable out-of-pocket expenses incurred by Employee in
the course of his performance of consulting services hereunder, including,
without limitation, supplies, mileage and travel expenses.
(c) Release of Liability. Executive hereby represents and covenants
that prior to the time he is eligible to receive any payments provided for
in Section 3 of this Agreement, he will execute and deliver to the Company,
on a form reasonably satisfactory to the Company and the Executive, a
separate release and waiver, which, without limiting the generality of the
foregoing, shall include a release and discharge of the Company and its
subsidiaries and affiliates, and its and their directors, officers,
employees, owners, agents, successors and assigns from any and all suits,
causes of action, demands, claims, charges, complaints, liabilities, costs,
losses, damages, injuries, bonds, judgments, attorneys' fees and expenses,
in any form whatsoever, in law or in equity, whether known or unknown,
whether suspected or unsuspected, arising out of Executive's employment
with Company through his Termination, including, without limitation, claims
arising under any federal, state or local law for breach of an implied
covenant of good faith and fair dealing, breach of contract, defamation,
slander, negligent misrepresentation, fraud, intentional or negligent
interference with business relations, and employment discrimination,
including, but not limited to, claims under the Age Discrimination in
Employment Act, the Americans with Disabilities Act and the Texas
Commission on Human Rights Act.
SECTION 9. TERM OF AGREEMENT. This Agreement shall terminate at midnight
on August 31, 1995 (the "Expiration Date"). Notwithstanding the foregoing, in
no event shall this
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Agreement terminate, within three (3) years after a Change in Control without
the written consent of Executive. It is the Company's intention to provide to
Executive the benefits set forth herein if the Company is subject to any Change
in Control and the other applicable conditions are satisfied. However, the
Compensation Committee has determined that the term of this Agreement shall not
be automatically renewed, but shall be renewed only with the express approval of
the Compensation Committee. For so long as the Agreement is in effect, the
Company agrees that at least ninety (90) days prior to the Expiration Date it
shall request the Compensation Committee to decide whether the term of the
Agreement should be extended. The Company shall notify Executive in writing of
the Compensation Committee's determination of whether the Company will extend
the term of the Agreement beyond the Expiration Date. If no notice is received
by Executive indicating that the term of the Agreement is extended, then subject
to the second sentence of this Section 9, the Agreement will terminate on the
Expiration Date.
SECTION 10. ARBITRATION.
(a) Arbitrable Matters. Any dispute under this Agreement arising
between the parties shall be settled by binding arbitration. In the event
of any dispute between Executive and Company hereunder, either party shall
be entitled to submit the dispute to arbitration. The arbitration
proceeding shall be held in Houston, Texas (unless otherwise mutually
agreed by the parties), and shall be conducted in accordance with the
Center for Public Resources ("CPR") Rules for Non-Administered Arbitration
of Business Disputes. The arbitration shall be conducted by a sole
arbitrator appointed in accordance with rules established by CPR (the
"Arbitrator").
Any arbitration between Executive and Company pursuant to this
Agreement shall be governed by the United States Arbitration Act, 9 U.S.C.
(S)(S) 1-16 (or its successor). If the United States Arbitration Act is
determined by the Arbitrator not to apply to this type of employer/employee
agreement based on precedential legal authority, the parties agree to
arbitrate any dispute under the Texas General Arbitration Act, V.A.T.S.
Art. 238-6 et. seq. (or its successor).
(b) Submission to Arbitration. The party submitting any matter
arising out of this Agreement to arbitration (the "demanding party") shall
do so by delivering written notice thereof (the "arbitration notice") to
the other party (the "noticed party"). In addition to indicating the
demanding party's intention to commence arbitration proceedings, the
arbitration notice shall state the nature, with reasonable detail, of the
dispute and the demanding party's claim or claims, the question or
questions to be submitted for decision or award by arbitration and the
relief or remedy sought. A copy of the arbitration notice shall be
concurrently provided to CPR, along with a copy of this Agreement and a
request to appoint an Arbitrator. Either party may bring an action in any
court of competent jurisdiction to compel arbitration under this Agreement.
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(c) Arbitration Procedures. The Arbitrator shall apply the
substantive law (and the law of remedies, if applicable) of the State of
Texas as applicable to the claim asserted. The Federal Rules of Evidence
shall apply. The Arbitrator shall have no authority to change this
Agreement unless otherwise agreed by both parties. The Arbitrator, and not
any federal, state, or local court or agency, shall have exclusive
authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Agreement, including but
not limited to any claim that all or any part of this Agreement is void or
voidable. Any party may be represented by an attorney or other
representative selected by the party.
The Arbitrator shall have jurisdiction to hear and rule on pre-hearing
disputes and is authorized to hold pre-hearing conferences by telephone or
in person as the Arbitrator deems necessary. The Arbitrator shall have the
authority to entertain a motion to dismiss and/or a motion for summary
judgment by any party and shall apply the standards governing such motions
under the Federal Rules of Civil Procedure.
At any time after the date of receipt of the arbitration notice, each
party can make discovery requests of the other in any form permitted under
the Federal Rules of Civil Procedure. The recipient of a discovery request
shall have 20 days after the receipt of such request to object to any or
all portions of such request, and shall respond to any portions of such
request not so objected to within 30 days of the receipt of such request.
All objections shall be in writing and shall indicate the reasons for such
objections. The objecting party shall insure that all objections and
responses are received by other parties within the above time periods. Any
party seeking to compel discovery following receipt of an objection shall
file with the other party and the Arbitrator a motion to compel, including
a copy of the initial request and the objection. The Arbitrator shall
allow 10 days for responses to the motion to compel before ruling. Claims
of privilege and other objections shall be determined as they would in
federal court in a case applying Texas law.
At least 30 days before the arbitration, the parties must exchange
lists of witnesses, including any expert witnesses, and copies of all
exhibits intended to be used at the arbitration. Each party shall have the
right to subpoena witnesses and documents for the arbitration. Either
party may arrange for a court reporter to provide a stenographic record of
proceedings. The cost of the court reporter will be paid by the Company.
(d) Compliance with Decisions. To the extent permissible under
applicable law, the parties agree that the award of the Arbitrator shall be
final and binding and shall be subject only to the judicial review
permitted by the United States Arbitration Act or other applicable
arbitration law pursuant to Section 10(a) hereof. Judgment on the
arbitration award may be entered and enforced in any court having
jurisdiction over the parties or their assets. It is the intent of the
parties that the arbitration provisions hereof be enforced to the fullest
extent permitted by applicable law.
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(e) Costs and Expenses. The Company shall promptly pay or reimburse
Executive for all costs and expenses, including, without limitation,
attorneys' fees and witnesses' fees, incurred by Executive as result of any
arbitration (regardless of the outcome thereof) arising out of this
Agreement. All expenses of such arbitration, including the reasonable fees
and expenses of legal counsel for Executive and the costs and expenses
incurred by the Arbitrator, shall be borne by the Company.
SECTION 11. NOTICES. All notices, requests, demands and other
communications required or permitted to be given hereunder (hereinafter referred
to as "notices") shall be in writing and shall be deemed to have been duly given
if delivered by-hand, given by prepaid telecopy, telex or telegram, or mailed
via certified or registered U.S. mail, to the party to receive such notice at
such party's address set forth below; provided that either party may change its
address for notice by giving to the other party written notice of such change.
If to Company:
Lyondell Petrochemical Company
1221 McKinney, Suite 1600
Houston, TX 77002
Attn: Chairman of the Board of Directors
If to Executive:
-------------------------------
-------------------------------
-------------------------------
-------------------------------
Any notice given pursuant to this Agreement shall be deemed received (i) if
delivered by-hand, when delivered; (ii) if sent by telecopy, telex or telegram,
24 hours after sending; and (iii) if mailed, when delivered.
SECTION 12. MISCELLANEOUS.
(a) Assignment. No right, benefit or interest hereunder shall be
subject to assignment, anticipation, alienation, sale, encumbrance, charge,
pledge, hypothecation or set-off in respect of any claim, debt or
obligation, or to execution; attachment, levy or similar process; provided,
however, that Executive may assign any right, benefit or interest hereunder
if such assignment is permitted under the terms of any plan or policy of
insurance, or annuity contract governing such right, benefit or interest.
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(b) Construction of Agreement. Nothing in this Agreement shall be
construed to amend any provision of any plan or policy of the Company
except as otherwise expressly noted herein. This Agreement is not, and
nothing herein shall be deemed to create, a commitment of continued
employment of Executive by the Company or any of its subsidiaries. The
captions of this Agreement are not part of the provisions hereof and shall
have no force or effect. Whenever the context of this Agreement so
requires, the masculine gender includes the feminine gender, and words
used in the singular or plural will include the other. The words "herein",
"hereunder," and other similar compounds of the word "here" refer to the
entire Agreement and not to any particular, section or provision.
(c) Amendment. This Agreement may not be amended, modified or
canceled except by written agreement of the parties or their respective
successors and legal representatives.
(d) Waiver. No provision of this Agreement may be waived except by a
writing signed by the party to be bound thereby.
(e) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(f) Successors. This Agreement is personal to Executive and without
the prior written consent of the Company shall not be assignable by
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. The Company will require any successor
(whether direct or indirect) by purchase, merger, consolidation or
otherwise of all or substantially all of the business and/or assets of the
Company or of any division or subsidiary thereof, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform this Agreement if no such
succession had taken place. Failure of the Company to obtain such
assumption and agreement, prior to the effective date for any such
succession, shall constitute a breach of this Agreement and shall entitle
Executive to compensation from the Company in the same amount and on the
same terms as he would be entitled hereunder with respect to Constructive
Termination for Good Reason.
This Agreement shall be binding upon and inure to the benefit of the
Company and any successor organization or organizations which shall succeed
to substantially all of the business and/or assets of the Company (whether
direct or indirect by means of merger, consolidation, acquisition of
substantially all the assets of the Company, or otherwise, including by
operation of law).
(g) Taxes. Any payment or delivery required under this Agreement
shall be subject to all requirements of the law with regard to withholding
of taxes, filing, making of reports and the like.
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(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO
ITS CONFLICTS OF LAW PRINCIPLES.
(i) Entire Agreement. Except as otherwise provided in Section 4 or
Section 12(b) hereof, this Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the matters covered
hereby.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
_____ day of ____________________, 1994.
LYONDELL PETROCHEMICAL COMPANY
By:-----------------------------
[Name and Title]
EXECUTIVE
--------------------------------
[Signature of Executive]
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