Exhibit (e)(12)
SERVICE AGREEMENT FOR
MEMBERS OF THE BOARD OF MANAGEMENT
between
CELANESE XX
Xxxxxxxxxxx Xxxxxxx 000
00000 Xxxxxxxx i. Ts.
represented by the Chairman of the Supervisory Board of Celanese AG,
Xx. Xxxxxx Xxxx
- hereinafter referred to as "CELANESE AG" or the "COMPANY" -
and
XX. XXXXX X. XXXXXXX
- hereinafter Xx. Xxxxxxx and the Company together referred to as the "PARTIES"
or each of them individually referred to as the "PARTY" -
Xx. Xxxxxxx has been re-appointed a Member of the Board of Management of
Celanese AG by a resolution of the Supervisory Board on May 15, 2002. With
effect as of October 22, 2002, the following service agreement (hereinafter
referred to as the "SERVICE AGREEMENT" or the "AGREEMENT") shall be agreed
between the Company and Xx. Xxxxxxx by replacing at the same time all earlier
agreements, except agreements regarding already existing Long Term
Service Agreement of Xx. Xxxxx X. Xxxxxxx 2
Incentive Plans and the letter agreement of December 8, 1997 between Celanese
Americas Corporation (then Hoechst Corporation), Hoechst AG and Xx. Xxxxxxx:
I. DUTIES OF THE MEMBER OF THE BOARD OF MANAGEMENT
1. Xx. Xxxxxxx will perform his activity as a Member of the Board of
Management in accordance with the provisions of the law, the Articles of
Association of the Company and the Rules of Procedure for the Board of
Management. As far as Xx. Xxxxxxx' activities are allocated to his
Membership in the Board of Management in the Company, Xx. Xxxxxxx will
devote his professional energies exclusively to the Company. The following
provisions of this Section I. of this Agreement do not affect legally
justified restrictions of other activities Xx. Xxxxxxx may perform.
2. The acceptance of significant activity outside the private area (privater
Bereich) - irrespective of whether it is paid or pro xxxx - requires the
prior approval of the Chairman of the Supervisory Board which shall not be
unreasonably withheld. This applies in particular to the acceptance of
mandates to other supervisory boards, managing director activities
(Geschaftsfuhrungstatigkeiten) and similar positions, as well as regarding
expert reports, publications and lectures to the extent that the Company's
interests may be affected.
3. Should the Supervisory Board wish so, Xx. Xxxxxxx will accept supervisory
board mandates and similar positions without any remuneration in companies
in which Celanese AG is directly or indirectly participated, as well as any
activity in associations and similar bodies to which Celanese belongs owing
to the nature of its business activity. Xx. Xxxxxxx undertakes, that on the
termination of this Service Agreement or, in case the Supervisory Board
wishes at an earlier time, Xx. Xxxxxxx will retire from aforementioned
mandates that he has accepted in the interest of the Company.
4. During the appointment Xx. Xxxxxxx will not participate in any company that
competes with Celanese AG or which maintains essential business relations
with Celanese AG. A shareholding which allows no influence regarding the
executive bodies of the relevant company is not considered as participation
within the meaning of this clause. A possibility to influence listed
companies shall be understood for purposes of this Agreement when having
reached 5% of the voting rights.
5. Xx. Xxxxxxx is obliged not to use any knowledge he obtains as a result of
his Board of Management activity for stock exchange or other speculative
transactions.
Service Agreement of Xx. Xxxxx X. Xxxxxxx 3
6. Xx. Xxxxxxx is further obliged to assign to the Company the entire results
of his professional work herein as the exclusive property of the Company
without special remuneration.
7. The confidentiality obligation of Section 93 of the German Stock
Corporation Act (Aktiengesetz) applies after the end of Xx. Xxxxxxx'
service term.
8. Xx. Xxxxxxx will treat all non-public documentation relating to the
Company, as well as all business memoranda including electronic data as the
Company's property. Xx. Xxxxxxx will preserve them carefully and at the
termination of his service term Xx. Xxxxxxx will hand them over to the
Chairman of the Supervisory Board or his appointee or delete them without
being specially requested to do so. In reasonable cases the Supervisory
Board may release Xx. Xxxxxxx from this obligation, e.g. in case he needs
such documentation as regards governmental or other regulatory inquiries.
II. COMPENSATION
1. From October 22, 2002 onwards, Xx. Xxxxxxx receives the following income:
a) a fixed annual salary of EUR 513.000,-- gross (in words: Euro five
hundred thirteen thousand), to be paid monthly in arrears;
b) an annual bonus which is subject to reaching the economic and personal
objectives agreed by the Personnel and Compensation Committee of the
Supervisory Board with Xx. Xxxxxxx and which amounts to 80% of the
annual salary at target performance. The bonus is to be paid once a
year according to a separate regulation to be resolved by the
Personnel and Compensation Committee of the Supervisory Board in each
case. Should Xx. Xxxxxxx leave during a year, a pro-rata bonus payment
will be made for the period served.
2. In view of Xx. Xxxxxxx split activities for Celanese AG in Germany (approx.
65% of his working time) and for the American holding company in the U.S.
(approx. 35% of his working time), 35% of the total compensation payable
to Xx. Xxxxxxx under the Agreement will be paid by the American holding
company and charged to the account of the American holding company. It is
understood by the Parties that this split payroll does not affect the
additional compensation paid to Xx. Xxxxxxx as chairman of the former
Hoechst Corporation, today named Celanese Americas Corporation.
3. Should Xx. Xxxxxxx die during the term of this Service Agreement, his widow
and his unmarried legitimate children, if and as long as they have not
reached the age of 21 or if
Service Agreement of Xx. Xxxxx X. Xxxxxxx 4
and as long as they are in education and have not reached the age of 27,
have a right as joint and several creditors to an unreduced granting of
monthly installments of the annual salary according to Section II.1.a.)
of this Agreement for the three months following the month in which the
death occurred, however, at the latest until the planned end of the Service
Agreement; and in addition a pro rata amount of the annual bonus earned
according to Section II.1.b.) of this Agreement.
4. Xx. Xxxxxxx' gross compensation shall be reduced by the amount of the gross
income Xx. Xxxxxxx receives in respect of supervisory board mandates or
similar positions in companies in which the Company has a direct or
indirect holding. This provision shall not apply regarding Section II.2.
sentence 2 of this Service Agreement, i.e. regarding Celanese Americas
Corporation.
5. As far as Xx. Xxxxxxx on request of the Supervisory Board of the Company
will according to Section I. 3. of this Agreement assume responsibilities
as member of the board of other companies or associations, the Company will
take care of insuring Xx. Xxxxxxx against possible director's liabilities
resulting from those board memberships by concluding an appropriate
director's and officer's insurance. The Company will bear the costs
associated with such insurance.
The Company has already concluded a director's and officer's insurance
which covers Xx. Xxxxxxx' activities as Member of Board of Management of
Celanese AG.
6. Xx. Xxxxxxx will participate in the existing Long Term Incentive Plans of
the Company, which have been or will be introduced in the form of stock
appreciation rights/stock options. The scale of the rights/options granted
to Xx. Xxxxxxx will be determined by the Supervisory Board periodically.
7. In order to provide a compensation for incremental tax liabilities (i.e.,
liabilities that would not have been incurred, had Xx. Xxxxxxx been subject
to taxation solely in the U.S.) Xx. Xxxxxxx will receive an additional
annual payment equal to the amount of actual German income tax (excluding
church tax) on regular income (i.e., without tax equalization payments) or
severance payments under this Agreement which are not credited against U.S.
Federal income taxes. If any of these excess German taxes are taken as a
credit and reduce U.S. Federal tax in a subsequent tax year, the amount
credited in the subsequent year will reduce the reimbursement under this
Section II. that subsequent year. To the extent there is no reimbursement
due under this Section in the subsequent year, the credit taken will be
refunded to Celanese AG. The resulting tax reimbursement will be paid net
(i.e., will be grossed - up for tax purposes).
Service Agreement of Xx. Xxxxx X. Xxxxxxx 5
III. DURATION OF THE CONTRACT
1. The Service Agreement becomes effective on October 22, 2002 and shall apply
until October 31, 2004.
2. During this term the Agreement may be terminated by either Party only for
cause. However, Xx. Xxxxxxx may terminate the Agreement with a 6 months'
notice when having reached the age of 50.
3. No later than 10 months prior to the end of his Service Agreement it shall
be discussed with Xx. Xxxxxxx whether and under which conditions the
contractual relationship and the activity as Member of the Board of
Management will be continued. At least 6 months prior to the expiry of the
Service Agreement, a statement regarding the reappointment of Xx. Xxxxxxx
as Member of the Board of Management shall be made to Xx. Xxxxxxx by the
Chairman of the Supervisory Board.
4. In case the appointment of Xx. Xxxxxxx is withdrawn prior to October 31,
2004, the Service Agreement with Xx. Xxxxxxx ends at the same time with the
expiry of the appointment. In this case Xx. Xxxxxxx' claims are governed by
Section IV. of this Agreement. In case the Service Agreement due to expiry
on October 31, 2004 is not extended, the claims of Xx. Xxxxxxx are likewise
governed by Section IV. of this Agreement. Following the revocation of the
appointment, the Supervisory Board is entitled to release Xx. Xxxxxxx.
5. The Company will be responsible to ensure that all approvals required for
Xx. Xxxxxxx to work and reside in Germany are maintained. Celanese AG will
bear the costs to relocate Xx. Xxxxxxx and his family from Germany. If
family circumstances entail an early relocation of his family while he
continues to work in Germany, the Company will bear associated costs,
including for example, relocating the family from Germany and relocating
Xx. Xxxxxxx within Germany.
If, prior to August 31, 2003, the Company shall relocate its domicile to
the United States of America, Xx. Xxxxxxx will consider a transfer of this
Agreement so as to continue his appointment from the Summit, New Jersey,
office.
Service Agreement of Xx. Xxxxx X. Xxxxxxx 6
IV. SEVERANCE
1. SEVERANCE PAYMENT
a.) In the event that
the Service Agreement with Xx. Xxxxxxx is not extended by the
Supervisory Board of the Company,
or the Service Agreement with Xx. Xxxxxxx is terminated prematurely by
revocation of Xx. Xxxxxxx' appointment as Member of the Board of
Management without cause,
or Xx. Xxxxxxx is entitled to terminate the Service Agreement for cause,
the Company shall pay Xx. Xxxxxxx x xxxxx xxxxxxxxx sum equivalent to two
total annual remuneration payments which Xx. Xxxxxxx receives for his
activities for Celanese AG (hereinafter referred to as the "SEVERANCE").
b.) In case Xx. Xxxxxxx is either required to relocate or to continue his
residence in Germany in order to perform his activity as Member of the
Board of Management in the interest of the Company during the term of this
Agreement and either circumstance leads to an unreasonable hardship for his
personal, family or financial situation (hereinafter referred to as
"HARDSHIP") the Company will consider under good faith a relocation or
transferal to his original office or other accommodation. In case the
Parties are unable to find a solution for this Hardship, such Hardship
shall be considered as cause under the termination provision of this
Section IV.1.a.).
c.) The total annual remuneration used to determine Severance consists of the
sum of the fixed annual remuneration applicable to the year of Xx. Xxxxxxx'
leaving, the annual Bonus calculated at Target for the business year in
which the Service Agreement is terminated and the value of the most
recently granted Long Term Incentives (hereinafter referred to as the
"LONG TERM INCENTIVES") provided that these remuneration payments refer
only to Xx. Xxxxxxx' activities as a Member of the Board of Management of
Celanese AG. Value of Long Term Incentives in the meaning of this Section
IV.1.c.) shall be determined as the net present value according to the
Black Scholes methodology and calculated at the date of termination on a
pro rata 12 months basis.
d.) If the non-prolongation or the premature termination of the Service
Agreement with Xx. Xxxxxxx occurs after him having reached the age of 55
but prior to him having reached the age of 57, the severance payment shall
amount to one total annual remuneration; if Mr.
Service Agreement of Xx. Xxxxx X. Xxxxxxx 7
Xxxxxxx' leaving from the employment as a Member of the Board of Management
occurs after having reached the age of 57, no severance payment shall be
made.
e.) Sums which shall be set off against the Severance are payment obligations
arising out of the Service Agreement with Xx. Xxxxxxx until the originally
agreed expiration of this Service Agreement, benefits from the Pension
arrangements applicable for Xx. Xxxxxxx to be paid over a 2-year period
following the leaving of Xx. Xxxxxxx prior to reaching the age of 55,
respectively over a period of one year following the leaving after reaching
the age of 55, as well as benefits from any other compensation and
severance payments arising from any other employment with any company of
the Celanese Group. However, the voluntary deferred compensation, 401 K
Plan withdrawals, tax equalization, exercise of vested SARs or SOPs or
medical benefits of Xx. Xxxxxxx shall not be offset against the severance
payment.
f.) The annual bonus for the business year in which the termination of the
Service Agreement occurs shall be paid in addition to the Severance on a
pro rata basis for the lapsed period of time of the corresponding year.
g.) Claims arising out of the Long Term Incentives that are taken into account
in the calculation of the Severance expire as soon as a severance payment
is made under this Section IV.1.
2. CHANGE IN CONTROL
a.) In the event that
a person other than a person holding already at least 25% of the
shares in the Company at the time of signing this Service Agreement
takes over the Company by reaching the actual, on the basis of the
last General Meeting determined majority in the General Meeting,
or a person other than a person holding already at least 25% of the
shares in the Company at the time of signing this Service Agreement
takes over 30% or more of the shares in the Company,
or the General Meeting of the Company approves the merger with another
company outside of the Celanese Group
(all events together hereinafter referred to as the "CHANGE IN CONTROL
- EVENT")
and due to the Change in Control - Event
Service Agreement of Xx. Xxxxx X. Xxxxxxx 8
the Service Agreement is not extended by the Supervisory Board of the
Company
or the Service Agreement is terminated prematurely by revocation of Xx.
Xxxxxxx' appointment as Member of the Board of Management without
cause,
or Xx. Xxxxxxx is entitled to terminate the Service Agreement for cause
the Company is obliged to pay Xx. Xxxxxxx a Change in
Control-Severance.
b.) In case of a Change in Control - Event "cause" shall apply regarding a
termination by Xx. Xxxxxxx if the conditions change unreasonably, in
particular if his place of employment is relocated, if his remuneration is
reduced or if his scope of duties are limited.
c.) In this respect the Change in Control-Severance shall be measured and
included in a separate Cancellation Agreement as follows:
(1) At the time of Xx. Xxxxxxx' leaving the Company, Xx. Xxxxxxx receives
in a Change in Control -Event a lump-sum gross severance payment in
the amount of three times his total annual cash remuneration for the
loss of his mandate as Member of the Board of Management. The total
annual cash remuneration consists of the average of the fixed annual
remuneration paid over the last three years and the average of the
bonus payments paid over the last three years provided that these
remuneration payments refer only to Xx. Xxxxxxx' activities as a
Member of the Board of Management of Celanese AG. In case the total
period of service as a Member of the Board of Management of Celanese
AG of Xx. Xxxxxxx exists less than three years, only the lapsed time
of the term(s) of the Service Agreement(s) covering Xx. Xxxxxxx'
period of time as a Member of the Board of Management will be
considered for the calculation of the annual average. The same shall
apply in case Xx. Xxxxxxx was employed with Celanese AG or its
affiliated companies on another contract's basis prior to being
appointed Member of the Board of Management. The payment of this
amount shall be made after tax deductions according to the tax
regulations in force at that time. The claims arising out of the
current Long Term Incentives, as long as they have not yet been
exercised, shall be made according to the regulations in the
corresponding Long Term Incentive Plan Documents. Whether a Change in
Control - Event applies shall be governed according to this Service
Agreement for the Long Term Incentives as well. The exercise, however,
shall be governed by the Long Term Incentive Plan Documents.
(2) Should Xx. Xxxxxxx, after having been notified of the intention to not
extend this Service Agreement, wish to prematurely withdraw from his
employment prior to
Service Agreement of Xx. Xxxxx X. Xxxxxxx 9
expiration of this Service Agreement, Xx. Xxxxxxx may terminate his
employment with giving a six weeks' notice to the end of the month. No
payment shall be made for the remaining term of the of the Service
Agreement which was originally agreed.
(3) Section IV.2.a.) of this Service Agreement shall not apply, in case
Xx. Xxxxxxx enters an employment with an affiliated company of the
Celanese Group.
(4) Any bonus Xx. Xxxxxxx is entitled to according to this Service
Agreement shall be paid on a pro-rata basis in case of a termination
of his employment prior to the end of the calendar year. The payment
shall be made at the time when bonus payments usually are made for the
lapsed business year according to Section II.1.b).
(5) If the non-prolongation or the premature termination of Xx. Xxxxxxx'
Service Agreement occurs after Xx. Xxxxxxx having reached the age of
55 but prior to him having reached the age of 57, the severance
payment shall amount to two times the total annual remuneration; if
his leaving from the employment as a Member of the Board of Management
occurs after Xx. Xxxxxxx' having reached the age of 57, no severance
payments shall be made.
(6) Sums which shall be set off against the severance payment are payment
obligations arising out of Xx. Xxxxxxx' Service Agreement until the
originally agreed expiration of his Service Agreement, benefits from
the Company Pension Scheme applicable to Xx. Xxxxxxx that are to be
paid over a 2-year period following his leaving prior to having
reached the age of 55, respectively over a period of one year
following his leaving after having reached the age of 55, as well as
benefits from any other compensation and severance payments arising
from any other employment with any company of the Celanese Group.
However, the voluntary deferred compensation, 401 K Plan withdrawals,
tax equalization, exercise of vested SARs or SOPs or medical benefits
of Xx. Xxxxxxx shall not be offset against the severance payment.
(7) Any claims for entering a Cancellation Agreement with the above
mentioned basic regulations can only be asserted within a period of
180 days following the Change in Control - Event as described under
Section IV.2.
(8) The remaining provisions of the Cancellation Agreement to be entered
into are subject to this separate agreement.
(9) Any claims against the Company are compensated with the Cancellation
Agreement.
Service Agreement of Xx. Xxxxx X. Xxxxxxx 10
3. OTHER PROVISIONS REGARDING SEVERANCE PAYMENTS
a.) Provisions under Section IV. of this Agreement expire one day following the
termination of Xx. Xxxxxxx' Service Agreement at the latest. Any claims
arising from Section IV. shall remain unaffected.
b.) In case the preconditions defined under Section IV.1. regarding Severance
Payment and the preconditions defined under Section IV.2. regarding Change
in Control occur simultaneously, Xx. Xxxxxxx is entitled to the higher
compensation. The other claim becomes extinct. Insofar neither Party shall
have a right to choose.
c.) The Company reserves the right to pay with Xx. Xxxxxxx' consent a part of
the payment resulting out of this Agreement by way of compensation for a
post-contractual competition ban (nachvertragliches Wettbewerbsverbot) or
for subsequent consultancy services. In these cases a separate agreement
will be agreed with Xx. Xxxxxxx.
d.) The Company will try to achieve an arrangement which, complying with all
statutory regulations, contains favorable tax provisions for Xx. Xxxxxxx.
V. INVENTIONS / UNDERTAKING TO REFRAIN FROM COMPETITIVE ACTIVITY
1. Xx. Xxxxxxx will report to and offer to the Company his inventions
attributable to his professional work following his appointment to the
Board of Management as long as he is receiving a salary or benefits
(Versorgungsleistungen) from the Company. The inventions will be treated by
the Company in accordance with the regulations of the law on employee
inventions.
2. The Company reserves the right to agree with Xx. Xxxxxxx post-contractual
competition ban (nachvertragliches Wettbewerbsverbot).
VI. EQUITY PARTICIPATION
Xx. Xxxxxxx is obliged to acquire shares in Celanese AG to a value equivalent to
his gross annual base salary and not to dispose of these shares in accordance
with the provisions of the Equity Participation Plan of the Company. More
detailed particulars on arrangements are to be found in the Company's Equity
Participation concept under observing Insider rules.
Service Agreement of Xx. Xxxxx X. Xxxxxxx 11
VII. PENSION
1. All benefits, such as, but not limited to, Pension Plan, Executive Pension
Plan, 401 (k), Supplemental Savings Plan, medical plans and disability
plans, will remain at least at a level as Xx. Xxxxxxx would have continued
his executive function at the American holding company and as if
compensation was fully paid in the U.S. The benefits to be provided to Xx.
Xxxxxxx will also honor the pension provision and retirement medical
provision associated with his former executive function at Centeon.
Where Celanese AG does not provide these benefits directly, Celanese AG
ensures that they are administered by a U.S. subsidiary, although Celanese
AG remains the primary obligor hereunder.
2. To the extend that this cannot be done through the plans themselves,
appropriate equivalent payouts will be made to Xx. Xxxxxxx outside the
plan. For this purpose, the Company may set up a "mirror-plan" in Germany
and may make equivalent payments out of this plan.
IX. MISCELLANEOUS
1. For the duration of his employment the Company will provide Xx. Xxxxxxx
with an upper-range BMW/Mercedes or equivalent make of company car, and
will pay the tax chargeable for providing this as a benefit with monetary
value.
2. The Company will pay the costs of Xx. Xxxxxxx' tax consultant as long as
any tax equalization amounts are outstanding under this Agreement. However,
this shall only apply in respect of tax equalization matters in connection
with Celanese AG.
3. For the duration of the Service Agreement the Company will conclude an
accident insurance for Xx. Xxxxxxx with the following insured sums:
EUR 1.022.583,76 for death
EUR 1.022.583,76 for invalidity
EUR 10.225,84 for medical treatment costs
X. CONCLUDING PROVISIONS
1. If any provision of this Agreement should be partly or wholly invalid or
subsequently loose its legal validity, this shall not affect the validity
of the remaining provisions. The invalid provision shall, as far as legally
permissible, be replaced by another, appropriate,
Service Agreement of Xx. Xxxxx X. Xxxxxxx 12
provision whose economic effect comes closest to what the Parties wished or
would have wished if they had taken into consideration the invalidity of
the original provision.
2. Amendments and additions to this Agreement need to be in writing. This
requirement cannot be replaced by oral agreements. The German version of
this Agreement shall be authoritative for interpreting this Agreement.
3. This Agreement shall be governed by German law.
4. The place of fulfillment for all performances deriving out of this
Agreement is the seat of the Company. The seat of the Company under Section
38 Subsec. 3 No. 2 of the German Civil Procedure Code (Zivilprozessordnung)
shall be agreed as the place of jurisdiction.
Kronberg i. Ts., October 9, 2002
Celanese AG
/s/ Xx. Xxxxxx Xxxx /s/ Xxxxx X. Xxxxxxx
-------------------------------- -----------------------------------
Xx. Xxxxxx Xxxx Xxxxx X. Xxxxxxx
(Chairman of the Supervisory Board)
