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EXHIBIT 10.15
EXECUTIVE EMPLOYMENT CONTRACT
THIS AGREEMENT is between Xxxxx X. Xxxxxxxxx ("Executive") and
Aristech Chemical Corporation, a Delaware Corporation having its principal place
of business in the City of Pittsburgh, Pennsylvania ("the Company").
W I T N E S S E T H:
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WHEREAS, the Company has embarked on a significant
restructuring of the Company, involving, among other things, the possible sale
or transfer of certain product lines, as a result of which the security of the
positions and incomes of senior executives has been questioned; and
WHEREAS, the Company desires to make a significant commitment
to its executives and to obtain from them a similar commitment, so that the
restructuring can be completed without the loss of its key executives and
without compromising their professional security; and
WHEREAS, the Company has offered to employ Executive under the
terms and conditions set forth below and Executive has accepted employment under
those terms and conditions,
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and intending to be legally bound, the parties agree as
follows:
1. EMPLOYMENT. The Company will employ Executive, and
Executive agrees to serve, as Senior Vice President - Research and Technology,
in accordance with the terms of this Agreement. During the term of this
Agreement, and excluding any periods of vacation and sick leave to which
Executive is entitled, the Executive agrees to devote reasonable attention and
time to the business and affairs of the Company and, to the extent
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necessary to discharge responsibilities assigned to the Executive hereunder, to
use the Executive's best efforts to perform faithfully and efficiently such
responsibilities.
2. TERM. This Contract will become effective when signed by
both parties and shall remain in effect for a period of three years thereafter,
unless earlier terminated under the provisions of Paragraph 4.
3. COMPENSATION. Executive shall be paid a minimum base annual
salary of $209,786, which salary will be subject to adjustment annually by the
Compensation Committee of the Board. Executive will be eligible to participate
in such stock option, annual bonus, deferred compensation, incentive, retirement
and employee welfare benefit plans to the extent such plans or programs are
applicable generally to other peer executives of the Company, but in no event
shall such plans or programs provide the Executive with benefits less favorable
than those offered to him as of the effective date of this Agreement. Executive
will be eligible for severance pay as provided in Paragraph 4. Executive waives
all rights under the Aristech Chemical Corporation Severance Program. Executive
will continue to be entitled to the Company-paid perquisites currently provided
to him, such as financial planning assistance, access to dining or recreational
clubs and a parking space in the Headquarters Building.
4. TERMINATION OF EMPLOYMENT. Executive's employment may be
terminated by the Company for good cause (defined below), upon Executive's
disability (defined below) or without cause. Executive may terminate his
employment hereunder for Good Reason (defined below) or without reason. Upon
termination of the Agreement by either party for any reason, Executive will be
paid accrued salary, unused earned vacation, a pro-rated annual bonus and any
other compensation which is accrued and unpaid as of the date of
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termination, as well as any unreimbursed appropriately documented authorized
business expenses. In the case of termination by the Company without cause or
for disability, or termination by the Executive for Good Reason, Executive will
be entitled to the following additional payments, upon signing a separation
agreement and general release of the Company from all liability relating to
Executive's employment and employment termination (the "Separation Agreement"):
a. Termination without good cause or by the Executive for Good
Reason. If the employment is terminated by the Company without
good cause or by the Executive for Good Reason, the Executive
will be entitled to a payment equal to the sum of three years'
base salary and three years' annual bonus at 50% of base
salary (target), payable in a lump sum. All payments will be
subject to required payroll deductions and withholdings. For a
period of three years after termination of employment, the
Company will continue Executive's health, dental, vision,
prescription, and life insurance coverage and paid financial
planning assistance on the same terms as such coverage and
assistance were provided as of the effective date of this
Agreement. All other Company-paid perquisites will terminate
on the date of termination.
b. Termination Due to Disability of Executive. If Executive is
unable to substantially perform the duties of his position
because of physical or mental impairment or illness for an
aggregate of six months during any twelve month period, the
Company may elect to terminate Executive's employment, in
which case all obligations of the Company under this agreement
shall terminate, except that the Company shall continue
Executive's pre-termination base salary, health, dental,
vision, prescription and life insurance coverage for a period
of twelve months after the termination date, reduced by any
disability payments for which Executive is eligible under any
Company-sponsored disability plans. For purposes of this
paragraph "disability" means the absence of the Executive from
the Executive's duties with the Company due to physical or
mental incapacity, which incapacity and its cause for such
absence is determined by a physician selected by the Company
or its insurers and acceptable to Executive or the Executive's
legal representative.
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As used throughout this Agreement, "good cause" means and is
limited to (i) action by the Executive involving willful and wanton malfeasance
involving specifically a wholly wrongful act; (ii) the Executive being convicted
of, or pleading guilty/nolo contendere to, a felony; (iii) an intentional,
material and substantial violation by the Executive of a rule, regulation,
policy or procedure of the Company generally applicable to all employees; (iv) a
substantial and material neglect of Executive's duties, which remains
uncorrected after written notice thereof and a cure period of thirty days; or
(v) a material failure by the Executive to follow a directive of the Board of
Directors of the Company or the Executive's boss, but only if such directive
does not require the Executive to violate Company policy, or his professional or
ethical responsibilities. The Executive Committee of the Board (or its
equivalent in a successor corporation) will determine the existence of good
cause, after written notice of the charges to the Executive and an opportunity
for the Executive to be heard.
During the term of this Agreement it shall not be a violation of this
Agreement for the Executive to serve on a corporate, civic or charitable board
or committee; deliver lectures, fulfill speaking engagements or teach at
educational institutions; or to manage personal investments, so long as such
activities do not violate applicable corporate policy or procedures as in effect
on the effective date of this Agreement and do not materially interfere with the
performance of Executive's duties and responsibilities. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the effective date of this Agreement, the
continued conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the effective date of this Agreement
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shall not thereafter be deemed to interfere with the performance of Executive's
duties hereunder or to the Executive's responsibilities to the Company.
As used herein, the term "Good Reason" means a material
diminution of the Executive's authorities, duties, responsibilities, or status
(including offices, titles, and reporting requirements); a reduction in
Executive's base salary or any material reduction by the Company of the
Executive's other compensation or benefits from that in effect as of the
effective date of this Agreement; provided, however, that the executive will not
have "Good Reason" to terminate the employment for the foregoing reasons unless
the condition continues uncorrected for thirty or more days after written notice
to Executive's immediate superior or the Board specifying the condition(s) with
specific reference to this provision of the Agreement. If a sale or transfer of
the Company's assets or stock or any other transaction results in Executive no
longer being employed by a corporation controlled by Mitsubishi Corporation,
Executive will be deemed to have Good Reason to terminate the Agreement, unless
the purchaser or subsequent employer offers Executive employment in a position
which is at a location which is within fifty miles of Executive's then-primary
office location and accepts a full and complete assignment of this Agreement and
agrees to discharge all obligations to Executive hereunder, including but not
limited to offering a position which is substantially equivalent in duties,
responsibilities and status. If, notwithstanding the foregoing, Executive
accepts an offer of employment with the purchaser which provides for a lower
salary or benefits package, then the Company's payment obligation to Executive
under subparagraph (a) above will be satisfied by a payment equal to the
difference in value between the salary and benefits package provided for herein
and the salary and benefits package accepted by Executive calculated over a
three-year term.
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The payment under subparagraph (a) will be made, and the
salary continuation payments under subparagraph (b) will begin, within thirty
days after the Executive executes the Separation Agreement, which is attached
hereto as Exhibit A. Executive authorizes the Company to withhold from any
salary continuation payments all amounts for which he is indebted to the Company
for premium contributions, loans, overpayments, damaged or unreturned property,
unreimbursed personal charges on Company credit cards or otherwise.
If, under the terms of a plan or insurance contract, the
Company is unable to extend a welfare benefit beyond termination of employment,
the Company will pay Executive in cash an amount equal to the all-in cost to
provide the benefit(s) while the Executive was employed. This payment, if any,
will be made within thirty days after the date of termination.
In the event that a change in control or ownership, as defined in
Treasury Regulations proposed or promulgated under the Internal Revenue Code
Section 280G, causes a payment to be made to the Executive hereunder, and if the
payments to the Executive are deemed to constitute excess parachute payments
under Section 280G, the Company will pay Executive an additional amount
sufficient to cover any applicable excise taxes. This provision will survive the
termination of this Agreement for a period equal to the statute of limitations
for the Internal Revenue Service to challenge Executive's personal income tax
returns.
5. RETENTION INCENTIVE. If Executive remains actively employed pursuant
to the terms and conditions of this Agreement until the earlier of (a) one year
from the effective date of this Agreement or (b) the date on which Executive is
terminated without good cause, the Company will pay Executive a bonus equal to
180% of Executive's base salary. Such payment will be made within thirty days of
its being earned hereunder.
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The bonus payments under this paragraph are in lieu of any payment
otherwise due under the Company's Variable Bonus Plan.
6. TRANSACTION INCENTIVES. If the Company sells or transfers assets
within twelve months of the effective date of this Agreement (the assets
actually or deemed sold and/or transferred within such twelve month period
referred to in the aggregate as the "Transaction"), then the Company will pay
the Executive a bonus payment calculated as follows:
a. If the Value of the Transaction is equal to or less than $1 billion, then
the bonus payment will equal 25% of the Executive's base salary;
b. If the Value of the Transaction is greater than $1 billion, then the bonus
will equal 50% of the Executive's base salary with interpolation up to
99.9% of base salary to an aggregate Value of the Transaction of $1.3
billion;
c. If the Value of the Transaction is greater than $1.3 billion, then the
bonus will equal 100% of the Executive's base salary with interpolation up
to 199.9% of base salary to an aggregate Value of the Transaction of $1.5
billion; and
d. If the Value of the Transaction is greater than $1.5 billion, then the
bonus will be 200% of the Executive's base salary.
For purposes of this paragraph: Value for sold assets means cash
received and/or debt assumed in exchange for the assets sold. Value for assets
transferred or contributed for other than cash or debt assumed means the
Enterprise Value of the assets as determined by the Company's investment banker
for the Transaction. Enterprise Value means the transferred or contributed
assets' discounted cash flow value plus terminal value, and shall be calculated
in
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accordance with the standard calculation of Enterprise Value in the investment
banking profession.
If within twelve months only a part of the Company's assets are sold or
transferred, then the assets not sold or transferred shall be deemed to have the
following Value for purposes of calculating the aggregate Value of the
Transaction and for purposes of determining any bonuses payable hereunder:
LINE OF DEEMED
BUSINESS VALUES ($MM)
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Polypropylene (Confidential Treatment Requested)
Phenol (Confidential Treatment Requested)
Plasticizers (Confidential Treatment Requested)
Acrylics (Confidential Treatment Requested)
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TOTAL (Confidential Treatment Requested)
The Company is currently waiting for results of an Enterprise
Value analysis of the Company's assets, which is being performed by the
Company's current investment bankers Xxxxxx Xxxxxxx Xxxx Xxxxxx (MSDW). The
Deemed Values set forth above will be changed to those in the MSDW Enterprise
Value analysis to the extent that any such values are lower by 15% or more than
those set forth for any Line of Business. In such case, the financial targets
set forth in sections a, b,
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c, and d above will be adjusted downward proportionally to reflect any
adjustments in the Deemed Values.
To be entitled to this Transaction Incentive payment, the Executive
agrees to be employed for at least thirteen months from the effective date of
this Agreement, unless terminated earlier by the Company without good cause. The
bonus, if earned hereunder, will be paid to Executive in a lump sum within
thirty days of the earlier of (a) the expiration of the thirteenth month from
the effective date of this Agreement, or (b) the date on which the last of the
assets are sold.
The Transaction Incentives payable under this paragraph are in lieu of
and replace any year 2000 grants to the Executive under the Company's Phantom
Stock Option Plan, and Executive waives any rights to any such grants.
7. NONSOLICITATION/CONFIDENTIAL INFORMATION. The following
definitions apply to this Paragraph:
a. Confidential Business Information. Confidential
Business Information, as used in this Agreement, includes, but
is not limited to, non-public Company information relating to:
manufacturing processes; product formulations; research and
development activities; inventions and inventions in process;
expansion or acquisition plans; existing and prospective
marketing plans and activities; past, existing and future
litigation and litigation strategies; the identity of all
customers' key employees, contact persons and requirements;
operating costs; prices and other customer contract
provisions; bid or proposal opportunities; the identities and
compensation arrangements of key employees of the Company;
business plans and strategies; and other non-public
information which is of value to the Company or to a
competitor, regardless of whether such information is
patented, patentable, copyrighted, or technically classifiable
as a trade secret.
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b. Competitive Business. The term Competitive
Business means the manufacture or provision of the same
products or services manufactured or provided by the Company
during Executive's employment.
Executive covenants and agrees that during and for a period of
two years after termination of his employment, whether the termination is
voluntary or involuntary and regardless of the reason therefor, Executive will
not solicit or induce, or attempt to solicit or induce, any employee of the
Company to terminate employment or to become employed by another person or
entity which is engaged in a Competitive Business.
Executive agrees to hold and safeguard for the benefit of the
Company all Confidential Business Information acquired or developed during the
employment relationship. Executive will not, without the prior written consent
of an officer of the Company, during the employment term or thereafter,
misappropriate, use for his own advantage, disclose or otherwise make available
Confidential Business Information to any person, except in the good faith
performance of Executive's job duties while employed by the Company to persons
having a need to know such information for the benefit of the Company.
Before disclosing Confidential Business Information under the
compulsion of legal process, Executive agrees to give prompt notice to the
Company of the fact that he has been served with legal process which may require
the disclosure of such Information.
Upon termination of Executive's employment, he agrees
immediately to return to the Company all Confidential Business Information in
his possession or under his control. Executive agrees that he will not retain
any copies or reproductions of Confidential Business Information.
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Executive agrees, during the two-year period after termination
of employment with the Company, to notify the Company of any offer of
employment, consulting agreement or ownership opportunity which may involve a
Competitive Business, before accepting such offer and sufficiently in advance
thereof to permit the Company to protect its rights hereunder. Executive further
agrees, that upon acceptance of any offer to become an employee or consultant of
a Competitive Business, to make full disclosure of the existence and contents of
this Paragraph to the prospective employer or principal, and hereby authorizes
the Company to do the same.
Executive recognizes that irreparable harm will result to the
Company if Executive were to breach the covenants of this Paragraph 7. The
Company shall have the right, therefore, in addition to and not in lieu of any
other remedies which may be available at law or in equity, to apply to any Court
of competent jurisdiction to restrain, temporarily and permanently, Executive
from violating these provisions.
8. GENERAL. a. This Agreement will be enforceable by, and
shall inure to the benefit of, the Company, its successors and assigns. The
Agreement may be assigned by the Company to a successor without the prior
consent of Executive.
b. The failure or refusal of either party to enforce this
Agreement or to assert a violation hereof in a particular situation shall not
be, and shall not be regarded as, a waiver of any other or subsequent breach of
the same or any other provision of this Agreement.
c. This Agreement may not be modified, amended or terminated
orally, but only by a written agreement which is signed by the Chief Executive
Officer of the Company and by the Executive.
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d. This Agreement supersedes all prior and contemporaneous
agreements which relate to the terms and conditions of Executive's employment,
including any Change in Control Agreements, except for the Company's benefit
plans and compensation programs offered to executives or employees generally.
e. The enforceability and interpretation of this Agreement
shall be determined according to the laws of the Commonwealth of Pennsylvania,
without regard to its choice or conflict of laws principles.
f. All claims or disputes between Executive and the Company
arising out of this Agreement shall be settled by final and binding arbitration
conducted in Pittsburgh, Pennsylvania under the American Arbitration
Association's Employment Dispute Resolution Rules. The claim shall be heard and
decided by a single arbitrator selected in accordance with those Rules, except
that the arbitrator shall be an attorney who has been a member of the Bar of a
state for at least 15 years. The award rendered by the arbitration panel shall
be final and binding as between the parties, their heirs, executors, successors
and assigns, and judgment on the award may be entered by any court having
jurisdiction thereof. The party initiating an arbitration shall advance the
required filing and administrative fees and the parties shall each advance
one-half of the arbitrator's fee, pending issuance of an award allocating fees
and expenses as provided in subparagraph (g).
g. In any arbitration or other legal proceedings between the
parties, if the Executive substantially prevails he will be entitled to recover
his costs, including reasonable attorneys' fees and all arbitration expenses,
from the Company. If the Executive does not substantially prevail and it is
determined that the claim or defense of the Executive was
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frivolous, the Company shall be entitled to recover its costs, including
reasonable attorneys' fees and arbitration expenses, from the Executive.
IN WITNESS WHEREOF, the parties have signed this Agreement on
the 30th day of June, 2000.
ARISTECH CHEMICAL CORPORATION
By: /S/ X. XXXXXXXXX
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EXECUTIVE:
/s/ XXXXX XXXXXXXXX
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