EXHIBIT 10.1
SETTLEMENT AGREEMENT, WAIVER AND GENERAL RELEASE
THIS SETTLEMENT AGREEMENT, WAIVER AND GENERAL RELEASE (this
"Agreement") is made as of February __, 2003, by and between Sterling Chemicals,
Inc., a Delaware corporation ("Sterling"), and Xxxxx X. Xxxxxx x/x Xxxxxx &
Xxxxxx XXX, 0000 Xxxxx Xxxx Xxxxx, 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx,
00000-0000 ("Xx. Xxxxxx" and, together with Sterling, the "Parties").
BACKGROUND
1. On July 16, 2001, Sterling Chemicals Holdings, Inc. ("Holdings") and
certain of its direct and indirect subsidiaries, including Sterling
(together, the "Debtors") filed voluntary petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy
Code") in the United States Bankruptcy Court for the Southern District
of Texas (the "Bankruptcy Court"). The Debtors' bankruptcy cases are
being jointly administered by the Bankruptcy Court under Case No.
01-37805-H4-11. The Debtors, together with their direct and indirect
subsidiaries are collectively referred to herein as the "Company").
2. On December 13, 2001 and November 13, 2002, respectively, Xx. Xxxxxx
filed a proof of claim and an administrative claim (together, the
"Claim") in the Debtors' bankruptcy case. By his Claim, Xx. Xxxxxx
sought to recover, among other things, benefits allegedly owed to him
under the terms of a Third Amended and Restated Key Employee Protection
Plan, an Amended and Restated Retention Bonus Plan, and an Amended and
Restated Supplemental Pay Plan, as amended (together, the "Benefit
Plans"). Each of the Benefit Plans is or was maintained by Holdings and
Sterling.
3. The Debtors objected to Xx. Xxxxxx'x Claim. In doing so, the Debtors
asserted that Xx. Xxxxxx is not entitled to benefits under any of the
Benefit Plans. On November 21, 2002, the Bankruptcy Court entered an
order confirming a Plan of Reorganization in the Debtors' bankruptcy
case (the "Plan of Reorganization").
4. An arbitration proceeding (the "Arbitration") was initiated to resolve
certain aspects of Xx. Xxxxxx'x Claim, and the Arbitration is being
administered by the Dallas Office of the American Arbitration
Association ("AAA") at Case Number 70 116 00171 02.
5. Sterling and Xx. Xxxxxx wish to resolve Xx. Xxxxxx'x Claim, including
any and all disputes arising from Xx. Xxxxxx'x employment with the
Company or his participation in the Benefit Plans, on the terms and
conditions set forth below.
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NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound, hereby agree as follows:
Section 1. Allowed Administrative Claim: Subject to the terms and
conditions of this Agreement and of the Plan of Reorganization, Xx. Xxxxxx'x
Claim shall be Allowed as an Administrative Claim in the amount of: (a)
$300,000; plus (b) an additional amount of $150,000 as reimbursement in full for
attorneys' fees incurred by Xx. Xxxxxx in pursuing his Claim.
Section 2: Mutual Release and Waiver of all Claims: Subject to the
terms and conditions of this Agreement, Xx. Xxxxxx hereby releases and waives --
for himself and for his heirs, spouse, representatives, attorneys, executors,
administrators and assigns -- any and all claims, whether at law, equity, by
statute or contract, that he has or may have against, the Company, or any of
their respective bankruptcy estates, officers, directors, shareholders,
employees, agents, administrators, trustees or fiduciaries, arising out of or in
any way related to Xx. Xxxxxx'x employment by or service for Sterling or the
Debtors. This release of claims includes, but is not limited to, claims under
the Benefit Plans, claims for breach of any implied or express contract or
covenant; claims for promissory estoppel; claims of entitlement to any pay
(other than the Allowed Administrative Claim provided for under Section 1 of
this Agreement); claims of wrongful denial of insurance and employee benefits;
claims for wrongful termination, public policy violations, defamation, invasion
of privacy, fraud, misrepresentation, emotional distress or other common law or
tort matters; whistle blower claims, claims of harassment, retaliation or
discrimination based on age, race, color, religion, sex, national origin,
ancestry, physical or mental disability, medical condition, marital status,
sexual preference, union action or veteran status; claims under the Texas
Commission on Human Rights Act, Texas Labor Code Section 21.001, et seq., the
Texas Workers' Compensation Act, Texas Labor Code Section 451.001, Texas Payday
Law, Title II, Chapter 61 and Texas Labor Code; claims based on legal
restrictions on Sterling's right to terminate, not to hire or promote employees,
or to change an employee's compensation; and claims based on any federal, state
or other governmental statute, regulation or ordinance, including, without
limitation: Title VII of the Civil Rights Act of 1964, as amended; the Equal Pay
Act, 29 U.S.C. Section 206(d)(1); the Age Discrimination in Employment Act
("ADEA"); the Americans with Disabilities Act; the Labor Management Relations
Act; and the Employee Retirement Income Security Act ("ERISA"). Subject to the
terms and conditions of this Agreement, Sterling hereby releases and waives any
and all claims, whether at law, equity, by statute or contract, that it has or
may have against Xx. Xxxxxx arising out of or in any way related to Xx. Xxxxxx'x
employment by or service for the Company.
Section 3. Taxes: Xx. Xxxxxx acknowledges and agrees that a $300,000
portion of the Allowed Administrative Claim described in Section 1 of this
Agreement represents settlement of a disputed claim for benefits under the
Benefit Plans and, as such, shall constitute "wages" subject to employment taxes
under Subtitle C of the Internal Revenue Code of 1986, as amended. Xx. Xxxxxx
further acknowledges and agrees that he is fully responsible for the payment of
any
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and all federal and state income taxes that may apply with respect to any
and all amounts received pursuant to the Allowed Administrative Claim described
in Section 1 of this Agreement.
Section 4. Conditions to Effectiveness: The Parties acknowledge and
agree that this Agreement and the waivers and releases contained herein shall
not be or become effective unless and until the following conditions are
satisfied:
(i) this Agreement shall have been executed and delivered by the
Parties; and
(ii) the Bankruptcy Court shall have issued an order approving the
terms of the Agreement
Section 5. Non-Disparagement: Subject to Section 7 below: (i) the
Company agrees that it will not make any statements to third parties that are
intended to disparage, discredit or injure the reputation of Xx. Xxxxxx; and
(ii) Xx. Xxxxxx agrees that he will not make any statements to third parties
that are intended to disparage, discredit or injure the reputation of the
Company or any of their respective bankruptcy estates, officers, directors,
shareholders, employees, agents, administrators, trustees or fiduciaries. Xx.
Xxxxxx further agrees that he will not do anything that would in any way tend to
harm the Company's good will and relationships with customers, suppliers and
others having business dealings with the Company. Nothing in this Section 5
shall obligate either Party to commit perjury or violate any law or court order.
Section 6. Cooperation: Xx. Xxxxxx agrees that, if reasonably requested
by the Company, he will be reasonably available to, and will cooperate in all
reasonable respects with the Company or any of its respective bankruptcy
estates, officers, directors, shareholders, employees, agents, administrators,
trustees or fiduciaries, and their respective counsel in connection with any
litigation, proceeding or investigation (administrative, civil or criminal). It
is understood and agreed that Xx. Xxxxxx shall not be required to devote more
than one day of his time pursuant to any particular request by the Company under
this Section 6 unless the Parties shall have mutually agreed upon the amount of
reasonably compensation to be paid to Xx. Xxxxxx therefore. Upon written request
accompanied by appropriate documentation, the Company agrees to reimburse Xx.
Xxxxxx for any reasonably expenses incurred by Xx. Xxxxxx in connection with any
actions taken by him pursuant to this Section 6.
Section 7. Revocation: For a period of seven (7) calendar days
following his execution of this Agreement, Xx. Xxxxxx may revoke the Agreement.
Said revocation must be in writing and must be delivered by telefacsimile and by
registered or certified mail, postmarked within seven (7) days of execution of
this Agreement, to:
Xxxxxx X. Xxxxx
Groom Law Group, Chtd.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Phone (000) 000-0000
Telefacsimile (000) 000-0000
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The Agreement shall not become effective or enforceable until the revocation
period has expired.
Section 8. Binding Effect. This Agreement shall insure to the benefit
of, and shall be binding upon the Parties and their respective heirs,
successors, permitted assigns, trustees and representatives.
Section 9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same agreement. It shall not be necessary
in making proof of this Agreement to produce or account for more than one such
counterpart.
Section 10. Severability. Should any clause, sentence, paragraph,
subsection or Section of this Agreement be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating or
voiding the remainder of this Agreement, and the Parties agree that the part or
parts of this Agreement so held to be invalid, unenforceable or void will be
deemed to have been stricken herefrom as if such stricken part or parts had
never been included herein.
Section 11. Governing Law. This Agreement Shall Be Construed and
Enforced in Accordance With, and the Rights of the Parties Shall Be Governed By,
the Internal Laws of the State of Texas, Without Reference to Principles of
Conflicts of Law.
Section 12. Entire Agreement. This Agreement sets forth all of the
promises, agreements, conditions, understandings, warranties and representations
between the Parties with respect to the matters covered hereby, and supersedes
all prior agreements, arrangements and understandings between the Parties,
whether written, oral or otherwise. There are no promises, agreements,
conditions, understandings, warranties or representations, oral or written,
express or implied, between the Parties concerning the subject matter hereof
except as set forth herein.
Section 13. Arbitration. Upon satisfaction of the Conditions to
Effectiveness, the Parties shall notify the AAA that Xx. Xxxxxx'x Claim has been
settled. Xx. Xxxxxx shall withdraw all claims pending in the Arbitration and
request that the AAA close the arbitration proceedings. Any outstanding fees and
costs of the Arbitration, including the Arbitrator's fee, shall be borne equally
by the Parties.
Section 14. Acknowledgements, Representations and Warranties: Xx.
Xxxxxx, in connection with his execution of this Agreement, acknowledges that:
he is waiving rights or claims arising under the Age Discrimination in
Employment Act and ERISA; he has been advised by Sterling to consult with an
attorney prior to executing this Agreement; he has a period
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of 21 days in which to consider this Agreement; and for a period of 7 days
following execution of this Agreement, he may revoke the Agreement (pursuant to
Section 5), and that the Agreement shall not become effective and enforceable
until that 7-day revocation period has expired. Xx. Xxxxxx further represents
and warrants that he has completely read this Agreement prior to executing it,
has had an opportunity to review it and to understand its terms, contents,
conditions and effects and has entered into this Agreement knowingly and
voluntarily.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first written above.
XXXXX X. XXXXXX
/s/ Xxxxx X. Xxxxxx
-----------------------------------
STERLING CHEMICALS, INC.
BY: /s/ Xxxx X. Xxxxx
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