MID-TERM INCENTIVE PLAN AWARD AGREEMENT
LYONDELLBASELL
INDUSTRIES AF S.C.A.
MID-TERM
INCENTIVE PLAN
By letter
(the “Grant
Letter”), LyondellBasell Industries AF S.C.A., a Luxembourg company (the
“Company”), has
granted to the recipient of the Grant Letter (the “Participant”) an
award under the LyondellBasell Industries AF S.C.A. Mid-Term Incentive Plan (the
“Plan”),
effective on the date specified in the Grant Letter (“Grant Date”).
This
Award is subject to the terms and conditions of the Plan, this Award Agreement,
and the Grant Letter.
1. Relationship to the
Plan.
This
Award is subject to all of the terms and conditions of the Plan and to such
administrative requirements or interpretations as the Plan Administrator, acting
in its sole discretion, may adopt.
2. Definitions.
Except as
defined in this Award Agreement, capitalized terms have the meanings ascribed to
them in the Plan, and, if not defined therein, the Grant Letter.
“Affiliate” means,
with respect to any Person or entity, any other Person or entity that directly
or indirectly through one or more intermediaries controls or is controlled by or
is under common control with such Person or entity. “Control” means the
power to direct the management and policies of a Person or entity, affirmatively
(by direction) and negatively (by veto), directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
“controlling” and “controlled” have meanings correlative to the
foregoing.
“Award” means the cash
award granted to a Participant pursuant to this Award Agreement.
“Award Agreement”
means this agreement which, together with the Plan, sets forth the terms,
conditions and limitations applicable to this Award.
“Beneficiary” means
(i) the Participant’s designated beneficiary under the Company’s or Affiliate’s
group life insurance plan in which the Participant is eligible to participate,
(ii) if there is no group life insurance designation, the Participant’s
surviving spouse, or (iii) if there is no surviving spouse, the personal
representative of the Participant’s estate.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Disability” means a
permanent and total disability, as defined in the applicable long-term
disability plan or policy of the Company or its Subsidiaries.
“Employment” means
employment as an employee of the Company or any of its Subsidiaries or
Affiliates. Neither the Participant’s transfer from employment by the
Company to employment by any Subsidiary or Affiliate, the Participant’s transfer
from employment by any Subsidiary or Affiliate to Company employment, nor the
Participant’s transfer between Subsidiaries and/or Affiliates shall be deemed to
be a termination of Participant’s employment. Moreover, a
Participant’s employment shall not be deemed to terminate because the
Participant is absent from active employment due to temporary illness, during
authorized vacation, during temporary leaves of absence granted by the Company
or the employing Subsidiary or Affiliate for professional advancement,
education, health or government service, during military leave for any period if
the Participant returns to active employment within 90 days after military leave
terminates, or during any period required to be treated as a leave of absence by
any valid law or agreement. Termination of employment is governed by
the laws of employment of the country in which the Participant is
employed. Notwithstanding anything contained herein to the contrary,
no Participant who is a U.S. taxpayer shall be considered to have terminated
employment for purposes of the Plan and the Award Agreement unless the
Participant would be considered to have incurred a “separation from service”
within the meaning of Section 409A of the Code.
“EBITDA” means the
Company’s earnings for a calendar year before interest, taxes depreciation and
amortization, as calculated under the formula in Schedule A.
“Financial Measures”
means EBITDA and other objective measures of the Company’s financial and
operational performance used by the Company to evaluate the Company’s
performance over the Performance Cycle. The Company may use any
performance measures as Financial Measures. The specific performance
measures used by the Company are set forth in Schedule A.
“MTI Funding Ratio”
means the amount available for Awards determined as set forth on Schedule
A.
“Payment Date” means
the date when an Award is paid or delivered to the Participant. The
Payment date for any Award shall be no later than March 15 of the calendar year
following the end of the Performance Cycle, except than an Award to a non-US
eligible employee may be paid as soon as administratively feasible after March
15.
“Performance Cycle”
means the period beginning on January 1 of the year in which the Grant Date
occurs and ending on December 31 of the third calendar year (including the year
of the Grant) after the Grant Date, or such other period as determined by the
Company and specified in the Grant Letter.
“Plan Administrator”
means the Company or its Delegate (as such term is defined in the
Plan).
“Retirement” means the
Participant’s voluntary termination of Employment on or after the earliest of
(a) age 65, (b) age 55 with 10 years of participation service credited under a
qualified defined benefit pension plan that is maintained by the Company, a
Subsidiary or an Affiliate and in which the Participant is eligible to
participate, or (c) with regard to a Participant whose primary place of
employment with the Company, a Subsidiary or an Affiliate is now or has ever
been outside the United States, whenever retirement is permitted under
applicable law and the Participant is eligible to receive a retirement
benefit. The Plan Administrator shall have the authority, in its sole
discretion, to determine the location of the Participant’s primary place of
employment and the applicable law.
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“Subsidiary” means
with respect to any Person, (a) a corporation a majority of the voting Equity
Interests of which are at the time, directly or indirectly, owned by such
Person; or (b) any other Person (other than a corporation), including, a
partnership, limited liability company, business trust or joint venture, in
which such Person, at the time thereof, directly or indirectly, has at least a
majority ownership interest entitled to vote in the election of directors,
managers or trustees thereof (or other Person performing similar
functions).
“Target Award Amount”
means the amount stated in the Grant Letter.
3.
Conditions Applicable to
Awards.
(a) For
each Award, the Grant Letter shall specify the Target Award Amount, the
Performance Cycle and the Grant Date.
(b) The
Award shall be forfeited if the Participant is not employed, or has terminated
Employment for any reason other than death, Disability or Retirement, before
payment of the Award is approved by the Plan Administrator.
(i) If
the Participant’s Employment ends due to death, Disability or Retirement before
the Performance Cycle ends, the Participant’s Award will be pro-rated based on
the number of days the Participant was an employee during the Performance Cycle.
The Participant, or his Beneficiary, will be eligible for the pro-rated amount
of the award for that Performance Cycle.
(ii) If
the Participant’s Employment ends due to death, Disability or Retirement after
the end of the Performance Cycle but before payment of the Award is approved by
the Plan Administrator, the Participant or his Beneficiary will be eligible for
the full amount of the Award for that Performance Cycle.
(c) Notwithstanding
the foregoing or any other provision of this Award Agreement to the contrary,
the Company, in its sole discretion, may permit continued participation,
proration or early distribution for Awards that would otherwise be forfeited,
unless an individual is a “covered employee” under Section 162(m)(3) of the
Code.
4.
Calculation and Payment of
Awards.
(a) Eligible
Employee’s Awards will be calculated by multiplying the eligible employee’s
Target Award Amount by the MTI Funding Ratio determined at the end of the
Performance Cycle.
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(b) The
Company will certify the amount of the MTI Funding Ratio within 60 days after
the end of the Performance Cycle.
(c) An
Award will be paid in cash on the Payment Date.
5.
Tax Compliance Issues for
Participants who are U.S. Taxpayers.
For Participants who are
U.S. Taxpayers:
(a) This
Award Agreement shall be interpreted and operated in a manner consistent with
Section 409A of the Code, so as to avoid adverse tax consequences in connection
with this Award.
(b) Notwithstanding
the foregoing or any other provision of this Award Agreement to the contrary, in
the event it shall be determined that any payment or distribution in the nature
of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of Participant, whether paid or payable or distributed or
distributable pursuant to the terms of this Award Agreement or otherwise would
be subject to the excise tax imposed by Section 4999 of the Code (“Excise Tax”),
then the amount of “parachute payments” (as defined in Section 280G of the Code)
payable or required to be provided to Participant shall be automatically reduced
(a “Reduction”) to the minimum extent necessary to avoid imposition of such
Excise Tax if, and only if, by reason of the Reduction, the net after-tax
benefit shall exceed the net after-tax benefit if the Reduction were not
made. “Net after-tax benefit” for these purposes shall mean the sum
of (i) the total amount payable to Participant under this Agreement, plus
(ii) all other payments and benefits which Participant receives or is then
entitled to receive from the Company, a Subsidiary or an Affiliate that, alone
or in combination with the payments and benefits payable under this Agreement,
would constitute a “parachute payment” within the meaning of Section 280G
of the Code, less (iii) the amount of federal income taxes payable with respect
to the foregoing calculated at the maximum marginal income tax rate for each
year in which the foregoing shall be paid to the Participant (based upon the
rate in effect for such year as set forth in the Code at the time of the payment
under this Award Agreement), less (iv) the amount of excise taxes imposed
with respect to the payments and benefits described in (i) and (ii) above by
Section 4999 of the Code.
6.
Tax Compliance Issues for
Participants who are not U.S. Taxpayers.
For
Participants who are not U.S. taxpayers, Award payments are subject to
compliance with the tax laws of the applicable jurisdictions.
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7.
Withholding.
The
Company has the right to deduct applicable taxes from any Award payment,
withhold an appropriate amount of cash for payment of taxes required by law at
delivery, or to take other action that, in the Company’s opinion, is necessary
to satisfy all tax withholding obligations.
8.
Offsets for Certain Other
Incentive Payments.
The
Company reserves the right to offset from payment of any Award any amount paid
or owed to an eligible employee through an incentive program, scheme,
arrangement, or other plan required by law,
regulation, custom, contract or agreement,
other than payments made under the LyondellBasell Industries AF S.C.A. Long-Term
Incentive Plan or the annual short-term incentive program for employees of the
Company and its Subsidiaries or Affiliates.
9.
Successors and
Assigns.
This
Award shall bind and inure to the benefit of and be enforceable by the
Participant, the Company and their respective successors and assigns (including
personal representatives, heirs and legatees), but the Participant may not
assign any rights or obligations under this Award Agreement except to the extent
and in the manner expressly permitted by the Plan.
10. No Right to Employment or
Future Awards.
No
provision of this Award Agreement shall confer any right to continued employment
with the Company or a Subsidiary or an Affiliate. Furthermore, no
provision of this Award Agreement shall confer any right to any future
Awards.
11. Arbitration of
Disagreements.
(a) For Participants Paid on a
U.S. Dollar Payroll: For Participants
paid on a U.S. Dollar payroll, any dispute, controversy or claim arising out of
or relating to this Award Agreement shall be settled by final and binding
arbitration conducted by the American Arbitration Association (the “AAA”) in the
State of Delaware. The arbitrator shall be selected by mutual
agreement of the parties, if possible. If the parties fail to reach
agreement upon appointment of an arbitrator within 30 days after one party
receives the other party’s notice of desire to arbitrate, the arbitrator shall
be selected from a panel or panels submitted by the AAA. The
selection process to be used is set forth in the rules of the AAA, but if the
parties fail to select an arbitrator from one or more panels, AAA shall not have
the power to appoint an arbitrator but shall continue to submit additional
panels until an arbitrator has been selected. All fees and expenses
of the arbitration, including a transcript if requested, will be borne by the
parties equally.
(b) For Participants Paid other
than on a U.S. Dollar Payroll: For
Participants paid other than on a U.S. Dollar payroll, any dispute, controversy
or claim arising out of or relating to this Award Agreement shall be settled by
final and binding arbitration conducted according to the laws of the Grand Duchy
of Luxembourg.
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12. Governing
Law.
(a) For Participants Paid on a
U.S. Dollar Payroll: For
Participants paid on a U.S. Dollar payroll, this Award Agreement shall be
governed by, and construed and enforced according to, the laws of the State of
Delaware.
(b) For Participants Paid other
than on a U.S. Dollar Payroll: For
Participants paid other than on a U.S. Dollar payroll, this Award Agreement
shall be governed by, and construed and enforced according to, the laws of the
Grand Duchy of Luxembourg.
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LYONDELLBASELL
INDUSTRIES AF S.C.A.
MID-TERM
INCENTIVE PLAN
AWARD
AGREEMENT
2008-2010
AWARD
SCHEDULE A – MTI FUNDING FOR
2011 PAYOUT
MTI Funding
Percentages
The MTI
Funding Percentages are determined according to EBITDA performance with
threshold funding starting at $3.5B annually over a three-year Performance Cycle
as follows:
|
EBITDA
|
Below
$10.5B
|
$10.5B
|
$10.65B
|
$10.8B
|
$10.95B
|
$11.1B
|
$11.25B
|
Over
$11.25B
|
|
MTI
Funding Percentage
|
0%
|
0.167%
|
0.200%
|
0.233%
|
0.267%
|
0.300%
|
0.333%
|
0.333%
|
MTI
funding percentages shall be interpolated between the values listed in the chart
above.
MTI Pool
Budgeted
Pool = Budgeted EBITDA for the Performance Cycle x .333%
=
($5.3B + $4.8B + $4.5B) x .333% = $48.67MM
Actual
Pool = Actual EBITDA for the Performance Cycle x MTI Funding
Percentage
“Budgeted
EBITDA” means
the amount of assumed EBITDA budgeted for the Performance Cycle to calculate
individual Target Award Amounts.
MTI Funding
Ratios
MTI
Funding Ratios for each Performance Cycle shall be determined according to the
following formula:
Funding
Ratio = Actual
Pool
Budgeted
Pool
Award
Calculation
The
actual Award for each Performance Cycle shall be determined according to the
following formula:
Award
= Funding Ratio for the Performance Cycle x Target Award Amount
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EBITDA
EBITDA is
an abbreviation for "Earnings Before Interest, Taxes, Depreciation and
Amortization." It is calculated by taking all profits, operating and
non-operating, before deducting interest, income taxes, depreciation,
amortization, and asset impairment, but including cash dividends received from
Associates. The intent of EBITDA is to analyze a company's operating
profitability before such non-operating expenses as interest and taxes and
non-cash charges (depreciation and amortization and asset impairment). It also
represents a measure of the Company’s success in operating the existing assets
for the Plan year.
EBITDA is
calculated as follows:
|
Net
Income
|
|
|
Add
|
Total
Interest Expense and Accounts Receivable Securitization Interest and
Fees
|
|
Deduct
|
Total
Interest Income
|
|
Add
|
Provision
For Taxes
|
|
Add
|
Depreciation-Total
|
|
Add
|
Amortization-Total
|
|
Add
|
Asset
Impairment
|
|
Add
|
Other
non-cash unusual items including inventory fair value revaluation step up
impacts due to an acquisition
|
|
Add
|
Cash
dividends received from
Associates
|
The
target EBITDA for MTI purposes is set at the beginning of the effective
performance cycle and typically represents as a target the EBITDA forecast of
the current year LRP (long range plan).
If
extraordinary events occur during the calendar year which alters the basis upon
which the EBITDA is calculated, the effect of these events, with the Company’s
approval, may be removed from or added to EBITDA. Events warranting this
action may include, but are not limited to, major acquisitions, divestitures, or
recapitalization.
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LYONDELLBASELL
INDUSTRIES AF S.C.A.
MID-TERM
INCENTIVE PLAN
AWARD
AGREEMENT
2008-2009
AWARD
SCHEDULE A-1 – MTI FUNDING
FOR 2009 PAYOUT
MTI Funding
Percentages
The MTI
Funding Percentages are determined according to EBITDA performance with
threshold funding starting at $3.5B for the one-year Performance Cycle as
follows:
|
EBITDA
|
Below
$3.5B
|
$3.5B
|
$3.55B
|
$3.6B
|
$3.65B
|
$3.7B
|
$3.75B
|
Over
$3.75B
|
|
MTI
Funding Percentage
|
0%
|
0.167%
|
0.200%
|
0.233%
|
0.267%
|
0.300%
|
0.333%
|
0.333%
|
MTI
funding percentages shall be interpolated between the values listed in the chart
above.
MTI Pool
Budgeted Pool =
((2008 Budgeted EBITDA x 2) + 2009 Budgeted EBITDA) x MTI Funding
Percentage
= ($5.3B + $5.3B + $4.8B) x .333% = $51.33MM
Actual
Pool = Actual EBITDA for 2008 x MTI Funding Percentage (from above
chart)
“Budgeted
EBITDA” means the amount of assumed EBITDA budgeted for the one-year Performance
Cycle to calculate individual Target Award Amounts.
MTI Funding
Ratios
MTI
Funding Ratios for each Performance Cycle shall be determined according to the
following formula:
Funding
Ratio = Actual
Pool
Budgeted
Pool
Award
Calculation
The
actual Award for each Performance Cycle shall be determined according to the
following formula:
Award =
Funding Ratio for the Performance Cycle x Target Award Amount
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LYONDELLBASELL
INDUSTRIES AF S.C.A.
MID-TERM
INCENTIVE PLAN
AWARD
AGREEMENT
2008-2009
AWARD
SCHEDULE A-2 – 2010
PAYOUT
MTI Funding
Percentages
The MTI
Funding Percentages are determined according to EBITDA performance with
threshold funding starting at $3.5B annually over a three-year Performance Cycle
as follows:
|
EBITDA
|
Below
$10.5B
|
$10.5B
|
$10.65B
|
$10.8B
|
$10.95B
|
$11.1B
|
$11.25B
|
Over
$11.25B
|
|
MTI
Funding Percentage
|
0%
|
0.167%
|
0.200%
|
0.233%
|
0.267%
|
0.300%
|
0.333%
|
0.333%
|
MTI
funding percentages shall be interpolated between the values listed in the chart
above.
MTI Pool
Budgeted Pool =
((2008 Budgeted EBITDA x 2) + 2009 Budgeted EBITDA) x MTI Funding
Percentage
=
($5.3B + $5.3B + $4.8B) x .333% = $51.33MM
Actual Pool =
((2008 Actual EBITDA x 2) + 2009 Actual EBITDA) x MTI Funding
Percentage
“Budgeted
EBITDA” means
the amount of assumed EBITDA budgeted for the Performance Cycle to calculate
individual Target Award Amounts.
MTI Funding
Ratios
MTI
Funding Ratios for each Performance Cycle shall be determined according to the
following formula:
Funding
Ratio = Actual
Pool
Budgeted Pool
Award
Calculation
The
actual Award for each Performance Cycle shall be determined according to the
following formula:
Award
= (Funding Ratio for the Performance Cycle x Target Award Amount) Less 2009
Payout
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