Exhibit 4.8
LYONDELL CHEMICAL COMPANY
1999 LONG-TERM INCENTIVE PLAN
PERFORMANCE SHARE AGREEMENT
1999-2001 PERFORMANCE CYCLE
Lyondell Chemical Company (the "Company") hereby grants on ___________,
____, ______ (the "Grant Date"), subject to shareholder approval as provided
below, to ________________ (the "Participant"), an employee of the Company,
_________ Target Performance Shares, as defined below, such number being subject
to adjustment as provided in Section 11 of the Lyondell Chemical Company 1999
Long-Term Incentive Plan (the "Plan"), for the 1999-2001 Performance Cycle, as
defined below. This grant of Performance Shares represents the opportunity for
the Participant, over the course of the 1999-2001 Performance Cycle, to earn an
Award Payment, as defined below, depending on the Company's performance and
subject to the following terms and conditions:
1. RELATIONSHIP TO PLAN; DEFINITIONS.
This grant of Performance Shares is subject to all of the terms,
conditions and provisions of the Plan and administrative interpretations
thereunder, if any, which have been adopted by the Committee thereunder and are
in effect on the date hereof, and is subject to the approval of the Plan by the
shareholders of the Company as provided in Section 19 of the Plan. Except as
defined herein, capitalized terms shall have the same meanings ascribed to them
under the Plan.
For purposes of this Award Agreement, the following definitions apply:
"1999-2001 Performance Cycle" means the period from January 1,
1999 to December 31, 2001.
"Award Opportunity" means the percentage of the Participant's
Target Performance Shares payable upon the achievement of a
Performance Goal. The Award Opportunity for each Performance Goal is
listed in Section 3(a).
"Award Payment" means the amount payable pursuant to this Award
Agreement upon the achievement of a Performance Goal.
"Change in Control" shall be deemed to have occurred as of the
date that one or more of the following occurs:
(a) Individuals who, as of the date hereof, constitute the entire
Board of Directors of the Company ("Incumbent Directors") cease for
any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority
of the then Incumbent Directors shall be considered as though such
individual was an Incumbent Director, but excluding, for this purpose
any such individual whose initial assumption of office occurs as a
result of either an actual
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or threatened election contest, as such terms are used in Rule 14a-11
under the Exchange Act or other actual or threatened solicitation of
proxies or consents by or on behalf of any Person (as defined below)
other than the Board;
(b) The stockholders of the Company shall approve (A) any merger,
consolidation or recapitalization of the Company (or, if the capital
stock of the Company is affected, any subsidiary of the Company), or
any sale, lease, or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan)
of all or substantially all of the assets of the Company (each of the
foregoing being an "Acquisition Transaction") where (1) the
shareholders of the Company immediately prior to such Acquisition
Transaction would not immediately after such Acquisition Transaction
beneficially own, directly or indirectly, shares or other ownership
interests representing in the aggregate eighty percent (80%) or more
of (a) the then outstanding common stock or other equity interests of
the corporation or other entity surviving or resulting from such
merger, consolidation or recapitalization or acquiring such assets of
the Company, as the case may be (the "Surviving Entity") (or of its
ultimate parent corporation or other entity, if any), and (b) the
Combined Voting Power of the then outstanding Voting Securities of the
Surviving Entity (or of its ultimate parent corporation or other
entity, if any) or (2) the Incumbent Directors at the time of the
initial approval of such Acquisition Transaction would not immediately
after such Acquisition Transaction constitute a majority of the Board
of Directors, or similar managing group, of the Surviving Entity (or
of its ultimate parent corporation or other entity, if any), or
(B) any plan or proposal for the liquidation or dissolution of the
Company; or
(c) Any Person shall be or become the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of securities of the Company representing in the aggregate
more than twenty percent (20%) of either (A) the then outstanding
shares of common stock of the Company ("Common Shares") or (B) the
Combined Voting Power of all then outstanding Voting Securities of the
Company; provided, however, that notwithstanding the foregoing, a
Change in Control shall not be deemed to have occurred for purposes of
this Subsection (iii):
(1) Solely as a result of an acquisition of securities by
the Company which, by reducing the number of Common Shares or
other Voting Securities outstanding, increases (a) the
proportionate number of Common Shares beneficially owned by any
Person to more than twenty percent (20%) of the Common Shares
then outstanding, or (b) the proportionate voting power
represented by the Voting Securities beneficially owned by any
Person to more than twenty percent (20%) of the Combined Voting
Power of all then outstanding Voting Securities; or
(2) Solely as a result of an acquisition of securities
directly from the Company except for any conversion of a security
that was not acquired directly from the Company;
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provided, further, that if any Person referred to in paragraph (1) or
(2) of this Subsection (iii) shall thereafter become the beneficial
owner of any additional Common Shares or other Voting Securities of
the Company (other than pursuant to a stock split, stock dividend or
similar transaction), then a Change in Control shall be deemed to have
occurred for purposes of this Subsection (iii).
(d) For purposes of this definition:
(1) "Affiliate" shall mean, as to a specified Person,
another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common
control with, the specified Person, within the meaning of such
terms as used in Rule 405 under the Securities Act of 1933, as
amended, or any successor rule.
(2) "Combined Voting Power" shall mean the aggregate votes
entitled to be cast generally in the election of the Board of
Directors, or similar managing group, of a corporation or other
entity by holders of then outstanding Voting Securities of such
corporation or other entity.
(3) "LCR" shall mean LYONDELL-CITGO Refining Company Ltd.
(from and after January 1, 1999, LYONDELL-CITGO Refining LP), a
Limited Liability Company organized under the laws of the State
of Texas.
(4) "Person" shall mean any individual, entity (including,
without limitation, any corporation, partnership, trust, joint
venture, association or governmental body) or group (as defined
in Sections 14(d)(3) or 15(d)(2) of the Exchange Act and the
rules and regulations thereunder); provided, however, that Person
shall not include the Company or LCR, any of their subsidiaries,
any employee benefit plan of the Company or LCR or any of their
majority-owned subsidiaries or any entity organized, appointed or
established by the Company, LCR or such subsidiaries for or
pursuant to the terms of any such plan.
(5) "Voting Securities" shall mean all securities of a
corporation or other entity having the right under ordinary
circumstances to vote in an election of the Board of Directors,
or similar managing group, of such corporation or other entity.
"Disability" means a permanent and total disability as defined in
the Company's Executive Long-Term Disability Plan.
"Maximum Performance" means TSR Ranking which is considered to be
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outstanding performance. The Maximum Performance level is established
in Section 2(a).
"Peer Group" means, as of the end of the 1999-2001 Performance
Cycle, the companies that comprise the S&P Chemicals Index and the S&P
Mid-Cap Chemicals Index and that were also members of those indexes as
of the first day of the 1999-2001 Performance Cycle, or such other
group of companies as selected by the Committee in its discretion.
"Payment Date" means the date on which the Award Payment is made
to the Participant.
"Retirement" means a termination of employment initiated
voluntarily by the Participant (i) on or after age 65 or (ii) on or
after age 55 with 10 years of participation service as credited under
the Company's qualified defined benefit pension plan.
"Target Performance" means the expected TSR Ranking for the 1999-
2001 Performance Cycle. The Target Performance level is established
in Section 2(b).
"Target Performance Shares" means the number of Performance
Shares that the Participant may earn during the 1999-2001 Performance
Period if the Company achieves Target Performance.
"Threshold Performance" means a TSR Ranking considered to be the
minimum acceptable performance for payment of a Performance Award.
The Threshold Performance level is established in Section 2(c).
"Total Shareholder Return" means the change in the market price
of the Common Stock of the Company plus dividend yield, measured over
the course of the 1999-2001 Performance Cycle.
"TSR Ranking" means the relative performance of the Company's
Total Shareholder Return as compared to the Peer Group, expressed as a
percentile ranking.
2. PERFORMANCE GOALS
The Performance Goals for the 1999-2001 Performance Cycle are:
(a) Maximum Performance means a TSR Ranking of at least 80th
percentile.
(b) Target Performance means a TSR Ranking of at least 50th
percentile.
(c) Threshold Performance means a TSR Ranking of at least 30th
percentile.
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3. AWARD OPPORTUNITY
(a) The following chart shows the number of Performance Shares
payable, as a percentage of the Target Performance Shares granted, for each
level of performance over the 1999-2001 Performance Cycle:
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PERFORMANCE LEVEL % OF TARGET LEVEL OF PERFORMANCE
SHARES EARNED
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Maximum Performance 200%
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Target Performance 100%
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Threshold Performance 20%
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Below Threshold 0%
Performance
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(b) The Award Opportunity for a TSR Ranking between Threshold
Performance and Target Performance, or between Target Performance and
Maximum Performance, shall be determined by interpolation between the
values listed in the chart in Section 3(a). However, in no event shall the
amount potentially payable to the Participant exceed, as a percentage of a
Participant's Target Performance Shares, the Award Opportunity for Maximum
Performance as listed in Section 3(a)
(c) The Award Payment will be equal to the product of (i) the number
of Performance Shares earned as determined pursuant to Sections 3(a) and
3(b) and (ii) the average Fair Market Value of a share of Common Stock for
the five trading days preceding the Payment Date.
4. PAYMENT OF AWARDS
(a) Payment of Awards. The Committee has sole and absolute authority
and discretion to determine the level of Performance Goal achieved. The
determination of the Committee, which shall be binding and conclusive on
the Participant, shall be communicated in writing to the Participant.
Notwithstanding anything in this Plan to the contrary, the Participant
shall not be entitled to a Performance Award unless and until the Committee
determines that the Performance Goals to which such Performance Award
relates have been satisfied.
(b) Form of Payment. The Award Payment will be paid, in the sole
discretion of the Committee, in cash or shares of Common Stock, or in any
combination of cash and shares of Common Stock.
(c) Timing of Payment. The Award Payment will be paid as soon as
practicable after the close of the 1999-2001 Performance Cycle, upon the
Committee's determination, in writing, that the Performance Goals have been
satisfied and subject to the remaining provisions of this Section 4. The
date of the payment is the "Payment
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Date" for purposes of this Award Agreement.
(d) Adjustments. The Committee may not retroactively change any
Performance Goals, except as and to the extent determined by the Committee
in the event of changes in accounting practices or extraordinary or
unanticipated circumstances, which could have a material effect on the
achievement of the Performance Goals. However, in no event may the
Committee increase the Award Opportunity (as a percentage of the Target
Performance Shares) associated with Maximum Performance.
(e) Termination, Death or Disability: Award Payments will be paid only
if the Participant is actually an Employee on the Payment Date, except as
indicated below and in Section 5.
(i) If the Participant's employment terminates for cause (as
determined by the Committee) or is terminated by the Participant not under
circumstances described in Subparagraph (e)(ii) or (iii) prior to the
Payment Date, the Participant shall forfeit any and all rights to payment
under this Award Agreement.
(ii) If the Participant's employment terminates due to death,
Disability or Retirement, or by the Company without cause
(as determined by the Committee), prior to the end of the
1999-2001 Performance Cycle, the Participant will be paid a
pro-rata portion of the Award Payment based on the number of
days of the 1999-2001 Performance Cycle that the Participant
was an employee. Such prorated payment will be made at the
time and in the form that all payments are normally made to
all other Participants under the Plan.
(iii) If the Participant's employment terminates due to death,
Disability or Retirement, or by the Company without cause,
(as determined by the Committee), after the end of the 1999-
2001 Performance Cycle but prior to the Payment Date, the
Participant will receive the full amount of Award Payment to
which the Participant would otherwise be entitled. Such
payment shall be made at the time and in the form that all
payments are normally made to all other Participants under
the Plan.
(iv) If the Participant's employment terminates because of death,
the Participant's beneficiary or beneficiaries, designated
by the Participant for purposes of this Award Agreement in
the manner prescribed by the Committee, or if there is no
such designation, under the Company's Group Life Insurance
Plan, or in the absence of any such beneficiary, the
Participant's surviving spouse, or if there is no surviving
spouse, the personal representative of such Participant's
estate, shall be entitled to receive the Performance Award
to which the Participant was entitled under this Section
4(e).
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(v) Notwithstanding any provision in this Section 4 or any other
provision of the Plan to the contrary, for purposes of
determining whether the Participant has terminated
employment hereunder, "employment" means employment as an
Employee with the Company or any Subsidiary. Neither the
transfer of the Participant from employment by the Company
to employment by any Subsidiary, the transfer of the
Participant from employment by any Subsidiary to employment
by the Company, nor the transfer of the Participant between
Subsidiaries shall be deemed to be a termination of
employment of the Participant. Moreover, the employment of
the Participant shall not be deemed to have been terminated
because of the Participant's absence from active employment
on account of temporary illness or during authorized
vacation or during temporary leaves of absence, granted by
the Company or a Subsidiary for reasons of professional
advancement, education, health or government service, or
during military leave for any period if the Participant
returns to active employment within 90 days after the
termination of his military leave, or during any period
required to be treated as a leave of absence by virtue of
any valid law or agreement.
5. CHANGE IN CONTROL. Upon the occurrence of a Change in Control
prior to the end of the 1999-2001 Performance Cycle, an Award Payment shall be
payable to the Participant as if the date of the Change in Control was the end
of the 1999-2001 Performance Cycle and the Target Performance level had been
reached as of that date. Payment of the Award Payment under this section shall
be within 60 days after the date of the Change in Control. Notwithstanding the
foregoing, unless otherwise provided by the Company pursuant to a separate
written agreement or plan covering the Participant, to the extent the
Participant would be subject to the excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), on the amounts above and
such other amounts or benefits the Participant receives from the Company, any
person whose actions result in a change of ownership covered by Section
280G(b)(2) of the Code or any person affiliated with the Company or such person,
required to be included in the calculation of parachute payments for purposes of
Sections 280G and 4999 of the Code, the amounts provided under this Agreement
shall be automatically reduced to an amount one dollar less than that, when
combined with such other amounts, would subject the Participant to such excise
tax.
6. ASSIGNMENT OF AWARD. The Participant's rights under the Plan and
this Award Agreement are personal; no assignment or transfer of the
Participant's rights under and interest in this Award Agreement may be made by
the Participant other than pursuant to a marital settlement agreement or similar
domestic relations agreement, decree or order. Any attempted assignment or
transfer in violation of this Section shall be null and void.
7. WITHHOLDING. No cash payments and no certificates representing
shares of Common Stock awarded hereunder shall be delivered to or in respect of
the Participant unless the amount of all federal, state and other governmental
withholding tax requirements imposed
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upon the Company with respect to the payment or the issuance of such shares of
Common Stock has been remitted to the Company or unless provisions to pay such
withholding requirements have been made to the satisfaction of the Committee.
The Committee may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with this
Award Agreement. The Participant may pay all or any portion of the taxes
required to be withheld by the Company or paid by the Participant in connection
with this Award Agreement by delivering cash, or by electing to have the Company
withhold shares of Common Stock, or by delivering previously owned shares of
Common Stock, having a Fair Market Value determined in accordance with the Plan
equal to the amount required to be withheld or paid. The Participant must make
the foregoing election on or before the date that the amount of tax to be
withheld is determined.
8. SHAREHOLDER RIGHTS. The Participant shall have no rights of a
shareholder with respect to shares of Common Stock potentially deliverable
pursuant to this Award Agreement unless and until such time as the ownership of
such shares of Common Stock has been transferred to the Participant.
9. SUCCESSORS AND ASSIGNS. This Award Agreement shall bind and inure
to the benefit of and be enforceable by the Participant, the Company and their
respective permitted successors and assigns (including personal representatives,
heirs and legatees), except that the Participant may not assign any rights or
obligations under this Award Agreement except to the extent and in the manner
expressly permitted herein.
10. NO EMPLOYMENT GUARANTEED. No provision of this Award Agreement
shall confer any right upon the Participant to continued employment with the
Company or any Subsidiary.
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11. GOVERNING LAW. This Award Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of Texas.
LYONDELL CHEMICAL COMPANY
Dated________________ By______________________________________
Name:___________________________________
Title:__________________________________
The Participant hereby accepts the foregoing Award Agreement, subject
to the terms and provisions of the Plan and administrative interpretations
thereof referred to above.
__________________________________ ____________________
Participant's Signature Date
__________________________________
Participant's Address
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