Exhibit 10.11(a)
VOLUNTARY SEPARATION AGREEMENT AND RELEASE
This Voluntary Separation Agreement and Release (the "Agreement") is entered
into by and between Lyondell Petrochemical Company (the "Company") and Xxx X.
Xxxxx ("Executive"). As used in this Agreement, the Company shall include and
encompass all of the past, present or future owners, affiliated, related and/or
subsidiary entities of the Company, any successor or predecessor in interest to
the operations or business of the Company, and all past, present or future
directors, officers, employees, agents, attorneys and representatives of the
Company and its owners. This Agreement replaces and supersedes any prior
separation or severance agreement between Company and Executive.
PREAMBLE
Executive has elected to resign from the position of Chief Executive Officer of
the Company effective December 6, 1996 and to retire from his employment with
the Company effective February 1, 1997. In recognition of Executive's service
to the Company and in response to his decision to retire, the parties have
entered into negotiations which have culminated in the following Agreement.
AGREEMENT
In consideration of the mutual promises and undertakings of the parties, the
sufficiency of which is recognized and accepted by each of the parties, it is
agreed as follows:
1. VOLUNTARY RESIGNATION. Executive shall and does hereby voluntarily
resign as Chief Executive Officer of the Company on December 6, 1996.
Executive also shall and does hereby voluntarily resign as an employee of
the Company on January 31, 1997. For
the duration of Executive's employment, he shall receive his present rate
of salary and comprehensive benefits package, including any increases in
same which are awarded to him by the Compensation Committee.
If Executive continues to serve as a member of the Company's Board of
Directors following his resignation from Company employment, Company and
Executive agree that he shall participate solely as a Non-Employee
Director. Executive acknowledges that his prior employment with the
Company may restrict his participation on certain committees of the Board,
specifically the Compensation Committee, as a matter of law.
2. SEVERANCE PAYMENT. In addition to any other amounts payable under
this Agreement, Company shall pay Executive a lump-sum payment in cash in
the amount of two (2) times the Executive's current annual base salary,
including any salary paid on a deferred basis, such as amounts contributed
by or on behalf of Executive under (i) the Company's 401(k) and Savings
Plan, (ii) the Company's Health Care Account Plan or any similar plan
described in Section 125 of the Internal Revenue Code of 1986, as amended,
or (iii) the Company's Executive Deferral Plan or other "excess benefit
plan" as defined in the Employee Retirement Income Security Act of 1974, as
amended. Base pay shall 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.
If a Change in Control occurs in 1997, Executive shall be entitled to an
additional one (1) year's annual base salary. For purposes of this
Agreement, Change in Control shall mean a Change in Control as defined in
the prior Executive Severance Agreement between Executive and Company dated
August 28, 1996.
3. SUPPLEMENTARY BENEFITS. Pursuant to Section 2.6 of the Lyondell
Petrochemical Company Supplementary Executive Retirement Plan (the
"Lyondell SERP"), Executive
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shall receive a special supplementary benefit payment. This payment shall
be determined by calculating the amount generally payable under Article II
of the Lyondell SERP as if that calculation included (x) an additional five
(5) years of age and of service with the Company as of January 31, 1997 and
(y) Executive's current annual base pay plus bonus. "Bonus," for purposes
of this calculation, shall mean one third (1/3) of the cash amount of the
Value Share Plan award paid to Executive in 1996 for his 1995 performance.
This special supplemental benefit payment shall be paid in addition to the
general benefit to which Executive is already entitled under the Lyondell
SERP. The special supplemental benefit shall be paid to Executive in the
same payment form Executive elects for payment of his general benefit
payment from the Lyondell SERP. Following payment of these special and
general supplementary benefits, no further payment will be due to Executive
from the Lyondell SERP.
4. AWARDS. Company agrees that, as a retiree, Executive's shares of
restricted stock awarded under the Company's Restricted Stock Plan shall
vest on his retirement on February 1, 1997. Any unvested stock options
granted to Executive under Company's Long-Term Incentive Plan shall vest
effective with Executive's retirement on February 1, 1997. Executive also
shall be eligible for the full amount of any Value Share Plan award payable
in 1997.
In addition to payments under the Company's Value Share Plan, Executive
shall be paid the following amounts for his prior service with the Company.
In 1998, Executive shall be paid an amount equal to the total amount he
would have received in 1998 under the Value Share Plan had Executive
continued as an officer of the Company throughout 1997. In 1999 through
2002, Executive shall be paid an amount equal to a pro-rated hypothetical
Value Share Plan award calculated as follows:
Executive's pro-rated award shall be determined by first multiplying a
hypothetical award pool by 35% to determine a total amount. This
hypothetical award pool shall be based solely on the MVA and EVA used to
calculate Value Share Plan awards payable by the
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Company in 1999 through 2002. Pro-rated award payments in 1999 through 2002
shall be a percentage of this total amount, as follows:
1999 80% of total amount
2000 60% of total amount
2001 40% of total amount
2002 20% of total amount
If the Company's Value Share Plan terminates for any reason before all
payments under this paragraph have been made, the Company shall use an
average of Executive's last three full Value Share Plan payments to
determine the total amount for purposes of calculating remaining payments.
These bonus payments shall be paid entirely in cash. The Value Share Plan
award payable in 1997 shall be paid as soon as practical after it is
awarded. These cash payments are in lieu of any restricted stock or any
deferred cash payment which the Compensation Committee could have otherwise
awarded.
Executive waives any claim of eligibility or right to payment under any
other bonus or incentive program of Lyondell Petrochemical Company other
than Executive's participation in any Lyondell Petrochemical Company stock
option program or the Executive Long-Term Incentive Plan.
5. DEFERRAL BENEFITS. Executive and the Company acknowledge that
Executive has previously elected to defer compensation pursuant to one or
more Participation Agreements under the Deferral Plan.
Consistent with these elections and Executive's timely execution of this
Agreement under paragraph 21, and to the extent permitted by the Deferral
Plan, on January 31, 1997, the Company shall credit Executive's account
under the Deferral Plan with an amount up to,
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but not to exceed, the total of his unfulfilled deferral commitments under
those Participation Agreements. For purposes of this paragraph, unfulfilled
deferral commitments of Executive's Value Share Plan award for 1996 shall
be equivalent to the amount of the 1995 deferral commitment for the Value
Share Plan.
The amount to be deferred shall include payments under paragraphs 2 and 6
and an amount up to the total lump sum value of Executive's special
supplementary benefit under the Lyondell SERP, as determined in accordance
with paragraph 3. The amount of any special supplementary benefit in
excess of the amount credited to Executive's account under the Deferral
Plan, if any, shall be paid to Executive in the same form of payment
Executive has elected for payment of his general benefit payment from the
Lyondell SERP. Executive understands that if this Agreement is not
executed in a timely basis, in accordance with paragraph 21, the Company
may be unable to credit these sums to Executive's account under the
Deferral Plan and they will be paid to him directly after the Effective
Date.
Executive's outstanding deferrals shall be subject to the Designation of
Distribution Options which he has made for those deferrals regarding the
time and form of payment of his deferred compensation.
6. VACATION. Executive and Company agree that he shall be entitled to
vacation pay for 1996 and 1997, in accordance with the Company's vacation
policy.
7. MEDICAL BENEFITS. Executive and his dependents shall participate in the
Lyondell Petrochemical Company Executive Medical Insurance Plan (Lyondell
Medical Plan) as a retired executive. If the Plan is amended, terminated
or otherwise modified in the future, Executive and his dependents shall
continue to participate in a successor medical plan, provided however, that
in any event Executive and his dependents shall be provided with such
medical benefits that are equal to those provided (i) to active Lyondell
Petrochemical Company executives and their dependents or (ii) if for any
reason there are
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no active Lyondell Petrochemical Company executives, to retired Lyondell
Petrochemical Company executives and their dependents assuming that
Executive is not the only retired Lyondell Petrochemical Company executive
or (iii) if for any reason there are no retired Lyondell Petrochemical
Company executives other than Executive, to any former Lyondell
Petrochemical Company executives and their dependents employed by the
successor, if any, to the business of Lyondell Petrochemical Company and
provided further, nothing in this paragraph shall be construed to limit any
usual or customary offset to Executive's benefits with respect to any
government sponsored program that provides medical benefits to retired
persons.
All benefits, rights and obligations of the parties contained in the
Executive Medical Plan continue unaffected by this Agreement and the
Executive Medical Plan shall be governed by its terms.
8. FINANCIAL COUNSELING. In accordance with and subject to the terms of
the Lyondell Petrochemical Company Policy on Financial Counseling and
Individual Income Tax Service for Executives, the Company agrees that
Executive shall be eligible for full benefits under the Policy in 1997 and
shall be reimbursed for services with respect to Executive's 1997
individual income tax return.
9. EXECUTIVE LIFE INSURANCE AND LONG TERM DISABILITY BENEFITS. Executive
shall continue coverage as a Retiree under the Company's Executive Life
Insurance Plan. With respect to the Company's Long Term Disability Plan,
Executive shall be eligible to convert to an individual policy following
his termination of employment due to retirement, as provided under the
terms of that plan.
10. TOTAL BENEFITS. Executive agrees that the benefits described in this
Agreement are in lieu of any other separation allowance or payment of any
kind, including any special termination payment or allowance under the
Lyondell Special Termination Plan. Executive agrees that he is not entitled
to an allowance under the Special Termination Plan and further
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agrees that, if, for any reason he is determined to be eligible for an
allowance under the Special Termination Plan, or for any other special
Company benefits or allowances, other than as provided under the benefit
plans described in the following sentence, he hereby waives any claim of
eligibility for any such allowance or other special pay or benefits. If it
is determined, whether by an arbitrator pursuant to the arbitration
provisions of this Agreement or by the final decision of a court of
competent jurisdiction, that Executive cannot waive any claim to these
benefits, allowances or special pay for any reason, Executive expressly
agrees that the entire amount paid under this Agreement shall be offset
from any amount to which he is found to be entitled. Except as otherwise
specifically provided in this Agreement, including the mutual release
contained in paragraph 15, does not alter or modify any rights Executive
has as a participant under the Lyondell Petrochemical Company Retirement
Plan, the Lyondell SERP, the Lyondell Petrochemical Company Executive
Deferral Plan, the Lyondell Petrochemical Company Executive Supplementary
Savings Plan, the Lyondell Petrochemical Company Executive Life Insurance
Plan, the Lyondell Petrochemical Company Executive Disability Plan, the
Lyondell Petrochemical Company Medical Plan, or the Lyondell Petrochemical
Company Dental Plan.
11. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The balance of payments of
any nature under this Agreement shall be forfeited if the Board of
Directors of the Company, based on advice of independent counsel,
determines that Executive has engaged in gross misconduct harmful to the
Company, has committed a criminal violation harmful to the Company, or had
concealed actions described above which otherwise would have brought about
Executive's termination without this Agreement. Notwithstanding these
conditions, no action or omission made in Executive's good faith exercise
of business judgment while an officer of the Company or member of the
Company's Board of Directors shall result in any forfeiture under this
paragraph.
12. CONFIDENTIALITY AND NON-DISCLOSURE. Executive acknowledges signing and
agreeing to a specific confidentiality agreement during the term of his
employment. The
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terms of that confidentiality agreement are made a part of this Agreement
as though restated here in full, and they are not modified or amended
except as provided in this paragraph. The parties agree that all business
plans, strategies, product development information, trade secrets, records,
papers, information and documents related to the current and future
operations of the Company to which Executive may have had access in the
course of his employment, other than matters available to the public or
which have otherwise been previously disclosed to persons other than
Executives and agents of the Company, are considered "confidential
information" by the Company and will remain the property of the Company.
Executive agrees that he will return any and all such materials to the
Company. Executive will not be permitted, either directly or indirectly,
under any circumstances or at any time, to use in any way or to disclose to
any person, firm, association or corporation, except with the express
written authorization of the Company, any confidential information acquired
in the course of his employment with the Company. Any and all information
relating to ideas, concepts, discoveries, improvements, devices, processes,
products, computer programs, customer lists, prospect lists, finances
and/or any other information gained by Executive during his employment are
included in the scope of this restriction.
Notwithstanding the restrictions above, Executive shall not be prohibited
from responding to any question presented to him in connection with any
judicial or administrative proceeding or under authority of any court or
administrative agency with subpoena powers, and any such response shall not
be a violation of any provision of this agreement.
Executive agrees that he will keep the provisions of this Agreement
completely confidential and that, except as may be required by law, he will
not hereafter disclose any information concerning this Agreement to anyone
except his immediate family, tax advisor, financial advisor and/or legal
counsel, or as may be required by law.
13. TAXES. Executive acknowledges that the Company may withhold any taxes
it is required by law to withhold on any payment made to Executive pursuant
to this Agreement.
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14. COMBINED GROSS-UP PAYMENT ON CHANGE IN CONTROL. In the event that any
payment under this Agreement is determined to be a "parachute payment" as
defined in the Internal Revenue Code, due to a Change in Control within the
twelve month period following this Agreement, and the payment is or becomes
subject to the tax imposed by Section 4999 of the Internal Revenue Code or
such similar tax that may be hereafter imposed ("Excise Tax") Company
shall pay to Executive an additional cash amount ("Combined Gross-up
Payment") such that the net amount retained by Executive after reduction
for (i) any Excise Tax on the payment 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 payments under this Agreement
determined to be parachute payments. For purposes of determining the
amount of the Combined Gross-up Payment, Executive shall be deemed (i) to
pay federal income tax 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 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.
15. MUTUAL RELEASE. The signatories to this Agreement, and their
respective heirs, assigns, and executors, including those individuals and
entities which the signatories represent, mutually remise, release and
forever discharge each and the other, their heirs, executors,
administrators, successors and assigns from any and all manner of action
and actions, cause and causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages,
judgments, executions, claims and demands whatsoever, in law or in equity,
which against the other they may have ever had, now have or might have had,
by reason of any manner, cause or thing whatsoever, including, but not
limited to, 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, and intentional or
negligent interference with business relations, to the date of this general
mutual release, termination, or 7 days after the execution of this release,
whichever is the
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later. Notwithstanding the preceding provisions of this paragraph, this
release does not apply to any claim of the Company arising under paragraph
11 of this Agreement or other claims arising out of any obligations or
terms and conditions set forth in this Agreement or any claim for benefits
that become payable to Executive after the execution of this Agreement.
16. STATUTORY RELEASE. In addition to the foregoing mutual release, and
in consideration for the special supplementary benefit and other benefits
provided to Executive by the Company, Executive releases and discharges the
Company, its owners, its predecessors, successors, subsidiaries,
Executives, officers and directors from any and all claims arising under
federal, state or local laws prohibiting discrimination or claims growing
out of any legal restriction on the Company's right to terminate its
Executives including, but not limited to, claims under the Age
Discrimination in Employment Act, 29 U.S.C. 626, et. sec., Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871, the
Americans with Disabilities Act, each of the foregoing as amended by the
Civil Rights Act of 1991, or the Texas Commission on Human Rights Act.
17. SURVIVAL OF BENEFITS. This Agreement and all payments hereunder,
including severance payments and payments of any benefits under either the
plans identified herein or any other plans in which Executive is a
participant, shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
heirs, distributees, devisees and legatees.
18. INDEMNIFICATION. Following his retirement, Executive shall continue to
be entitled to those indemnification rights which apply under the Company's
indemnification obligation to Executives as contained in the Company's
Articles of Incorporation or By-Laws and in the Indemnification Agreement
between Executive and Company dated October 24, 1988.
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19. COOPERATION IN LEGAL PROCEEDINGS. Executive agrees that he will
cooperate with the Company in providing information, including testimony at
trial, or in deposition, if needed, regarding any claims filed against the
Company which are based on factual allegations about which Executive has
knowledge.
20. PRESENTATION ADVISORY. Executive was presented this Agreement on
November 7, 1996. Executive expressly acknowledges that he has been
offered and given at least 21 calendar days in which to consider and review
this Agreement prior to signing it, that such time has been sufficient to
permit him to review its terms, and that he has been (and is hereby)
advised to consult with legal counsel of his choice concerning the terms of
this Agreement prior to signing it. Executive specifically acknowledges
that he fully and completely understands the terms of this Agreement and
their significance, that he accepts its terms and enters into the Agreement
freely and voluntarily.
21. EFFECTIVE DATE. Subject to the last sentence of this paragraph, this
Agreement shall become effective: seven (7) calendar days after the date
this Agreement (i) is signed by Executive, as evidenced by the date
adjacent to the signature of Executive at the end of this Agreement, and
(ii) is delivered into the possession of the Company, subject to the
following sentence. This Agreement shall not be effective and shall be
deemed null and void as if never made if prior to the Effective Date
determined under the preceding sentence, Executive revokes his earlier
acceptance of this Agreement, which revocation must be in writing and
delivered into the possession of the Company on or prior to such Effective
Date.
The Company shall have a reasonable time following the later of the
Effective Date of this Agreement or February 1, 1997 to pay Executive any
net amount due under the terms of this Agreement other than benefits
becoming payable under the Company's benefit plans as a result of
Executive's retirement, except as provided under paragraph 4 and as
provided below.
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The Company shall credit Executive's account under the Deferral Plan, per
paragraph 5, prior to Executive's termination of employment but only if
Executive executes this Agreement in sufficient time so that the Effective
Date is on or before January 31, 1997.
22. AGREEMENT CONSTRUCTION. It is agreed and understood that this
Agreement contains the entire understanding of the parties and that with
the exception of the various plan documents pertaining to the various
benefit plans referenced throughout this Agreement, there are no additional
or other promises, representations, terms or provisions applicable to the
parties other than those expressly contained herein, and that all prior
negotiations and agreements are merged and integrated into this Agreement.
This Agreement shall be construed as though jointly drafted by the parties
and it shall not be construed presumptively in favor of or against either
party. Nothing in this Agreement shall be deemed to create a commitment of
continued employment of Executive by the Company or any of its
subsidiaries. Except to the extent preempted by federal law, Texas law
shall be applicable to this Agreement. This Agreement shall not be
modified except in writing by each of the parties, which writing shall
specifically reference this Agreement. If any part of this Agreement is
found invalid or unenforceable, the remainder of the Agreement shall not be
affected.
23. ARBITRATION. Subject only to the final sentence of this paragraph,
any dispute concerning the terms or enforcement of this Agreement shall be
submitted to binding arbitration. The arbitration shall be held in Xxxxxx
County, Texas, unless otherwise mutually agreed by the parties. The
arbitrator shall be appointed and the arbitration held in accordance with
the rules of the Center for Public Resources ("CPR") Rules for Non-
Administered Arbitration of Business Disputes.
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
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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).
Each party shall bear its own costs and attorneys fees. However, if the
Company initiates the arbitration and is determined by the arbitrator, as
a matter of final and binding arbitration under this Section, to be the
non-prevailing party, then the Company will be responsible for all costs
and expenses of the arbitration and CPR, and all filing or other associated
fees and shall reimburse the prevailing party for his costs and expenses,
including attorneys fees previously paid. The arbitrator must specify
which of the parties is the non-prevailing party. Demand for arbitration
must be made within ninety (90) days of the date the party demanding
arbitration reasonably should have known of any alleged breach.
Notice of the alleged breach, including a complete description of the facts
giving rise to the alleged breach, the question or questions to be
submitted for decision or award by arbitration and the relief or remedy
sought must be given to the allegedly breaching party at least ten (10)
days before the demand for arbitration is made. 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.
The decision 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 this
section. Judgment on the arbitration award may be enforced and entered as
a judgment with a court of competent jurisdiction, and, except as provided
in the following sentence, shall be the parties' exclusive remedy.
Notwithstanding the foregoing, if either party claims that the actions of
the other, including any which may be deemed in
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harm or should otherwise should be enjoined, the claiming party may seek
immediate, preliminary and permanent injunctive relief in and through any
court of competent jurisdiction.
IN WITNESS OF WHICH, the parties have executed this Agreement on the date set
forth below.
December 2, 1996 /s/ XXX X. XXXXX
Date: ________________________ ____________________________________
XXX X. XXXXX
LYONDELL PETROCHEMICAL COMPANY
December 2, 1996 /S/ XXXXXXX X. XXXX
Date: ________________________ ____________________________________
BY: XXXXXXX X. XXXX
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