EXHIBIT 10.19
FORM OF CHANGE-IN-CONTROL AGREEMENT BETWEEN EACH OF THE COMPANY'S OPERATING
SUBSIDIARIES AND CERTAIN OFFICERS OF SUCH SUBSIDIARIES WHO ARE NOT EXECUTIVE
OFFICERS OF THE COMPANY
[Name and Address of Relevant Subsidiary Employer]
[Date]
Name
Address
Dear ________:
1. INTRODUCTION. [Name of Employee's Subsidiary Employer] (the "Company")
believes that the maintenance of a sound and vital management of the Company and
of Millennium Chemicals Inc., which is the ultimate parent corporation of the
Company ("Millennium"), is essential to the protection and enhancement of the
interests of the Company and Millennium and their stockholders. The Company also
recognizes that the possibility of a Change in Control of the Company or a
Change in Control of Millennium (each as defined in Part II of Exhibit A), with
the attendant uncertainties and risks, might result in the departure or
distraction of key employees of the Company to the detriment of the Company,
Millennium and their shareholders. In light of the possibility of a Change in
Control of the Company or Millennium, the Company has determined that it is
appropriate to induce key employees to remain with the Company, and to reinforce
and encourage their continued attention and dedication. Accordingly, upon your
written acceptance of the terms and conditions of this agreement (the
"Agreement") evidenced by signing below, the Company intends to provide you the
protections set forth herein as of the date first set forth above (the
"Effective Date"). Capitalized terms not defined in the body of this Agreement
shall have the meanings set forth in Exhibit A hereto, which is incorporated
herein and made a part of this Agreement. This Agreement shall replace the prior
agreement regarding a change in control of Millennium and the Company dated July
24, 1998 by and between you and the Company, and said prior agreement is hereby
rendered null and void and shall no longer have any force and effect.
2. TERMINATION FOLLOWING A CHANGE IN CONTROL. If a Change in Control occurs on
or after the Effective Date and your employment is terminated during the Post
Change in Control Period (i) by the Company without Cause or due to your
Disability, (ii) by you for Good Reason or, subject to Section 3 below, without
Good Reason, (iii) due to your
-1-
death or (iv) due to your Retirement, then you shall be entitled to the amounts
and benefits provided in Section 4 herein. Furthermore, if a Change in Control
occurs on or after the Effective Date and your employment was terminated within
the Pre Change in Control Period (i) by the Company without Cause or due to your
Disability, (ii) by you for Good Reason (based on an event that occurred within
the Pre Change in Control Period), or (iii) due to your death, you shall be
entitled to the amounts and benefits provided in Section 4 herein.
3. DIRECT PAY LETTER OF CREDIT. Notwithstanding anything else herein, your right
to voluntarily terminate employment without Good Reason after the date of a
Change in Control and receive the amounts due under Section 4 hereof shall be
delayed until one hundred and eighty (180) days after the Change in Control if,
simultaneous with the Change in Control, the Company or the person or entity
triggering the Change in Control delivers to you an irrevocable direct pay
letter of credit (the "Direct Pay Letter of Credit") satisfying the requirements
of this Section 3 and an indemnity agreement covering in a similar manner the
provisions of Section 6 with regard to activities after the Change in Control.
The Direct Pay Letter of Credit shall be in an amount equal to the aggregate
amount you would be entitled to receive under Sections 4(A)(i) and (ii) hereof
if you were terminated without Cause immediately upon the Change in Control and
shall have an expiration date of no less than two (2) years after the date of
such Change in Control. You (or, if applicable, your legal representative) shall
be entitled to draw on the Direct Pay Letter of Credit upon presentation to the
issuing bank of a demand for payment signed by you (or, if applicable, your
legal representative) that states that (i) a Good Reason event has occurred and
your employment has terminated during the Post Change in Control Period, or (ii)
one-hundred and eighty (180) days have expired since the Change in Control and
your employment has terminated during the Post Change in Control Period. There
shall be no other requirements (including no requirement that you first make
demand upon the Company) with regard to payment of the Direct Pay Letter of
Credit. To the extent the Direct Pay Letter of Credit is not adequate to cover
the amount owed to you under this Agreement, is not submitted by you or is not
paid by the issuing bank, the Company shall remain liable to you for any amounts
owed to you pursuant to the terms of this Agreement. To the extent any amount is
paid under the Direct Pay Letter of Credit it shall be a credit against any
amount the Company then or thereafter would owe to you under Section 4 of this
Agreement. The Direct Pay Letter of Credit shall be issued by a national money
center bank with a rating of at least A by Standard and Poor's. The Company
shall bear the cost of the Direct Pay Letter of Credit.
4. COMPENSATION ON CHANGE IN CONTROL TERMINATION. If pursuant to Section 2 you
are entitled to amounts and benefits under this Section 4, the Company shall,
subject to Section 8, pay and provide to you: (A) in a lump sum within five (5)
days after such termination (or, if such termination occurred during the Pre
Change in Control Period, within five (5) days after the Change in Control) the
sum of (i) three (3) times your highest annual base salary in effect within
one-hundred and eighty (180) days prior to the Change in Control, computed by
including the amount of base salary deferred by you (voluntarily or otherwise
pursuant to the Millennium Chemicals Inc. Salary and Bonus Deferral Plan (the
"Deferral Plan") or any other agreement or plan that is or may
-2-
have been in effect at the time of such deferral) as part of the base salary for
the year in which it was accrued, (ii) three (3) times the highest annual bonus
paid or payable to you for any of the last three (3) completed fiscal years by
the Company or its predecessors or any affiliate of the Company or its
predecessors (which shall in no event include amounts contributed or allocated
by the Company (or its predecessors or affiliates thereof) on your behalf or
paid to you under any supplemental executive bonus plans applicable to you
(including, without limitation, the 1993 or 1996 HI Long Term Incentive Plans,
any other plan commonly referred to by the Company as a "top-hat" plan or any
equity plan such as the Millennium Chemicals Inc. Long Term Stock Incentive
Plan)), computed by including the amount of any annual bonus deferred by you
(voluntarily or otherwise pursuant to the Deferral Plan or any other agreement
or plan that is or may have been in effect at the time of such deferral) as part
of the annual bonus for the year in which it was accrued, (iii) any unreimbursed
business expenses for the period prior to termination payable in accordance with
the Company's policies, and (iv) any base salary, bonus, vacation pay or other
deferred compensation accrued or earned under law or in accordance with the
Company's policies applicable to you but not yet paid; (B) any other amounts or
benefits due under the then applicable employee benefit, equity or incentive
plans of the Company applicable to you as shall be determined and paid in
accordance with such plans; (C) three (3) years of additional age, service and
compensation credit (using, for such purposes, the base salary and (to the
extent applicable) annual bonus calculated under Sections 4(A)(i) and (ii),
respectively, as your deemed compensation in such years) for pension purposes
under any defined benefit type qualified or nonqualified pension plan or
arrangement of the Company and its affiliates applicable to you, measured from
the date of termination of employment and not credited to the extent that you
are otherwise entitled to such credit during such three (3) year period, which
payments shall be made through and in accordance with the terms of the
nonqualified defined benefit pension plan or arrangement if any then exists, or,
if not, in an actuarially equivalent lump sum (using the actuarial factors then
applying in the Company's or its affiliates' defined benefit plan covering you
and your actual age on the date of termination of employment); (D) an amount
equal to the maximum amount which would be contributed by the Company to your
account balance(s) (as Company matching contributions) under any type of
qualified 401(k) plan or nonqualified excess 401(k) plan, assuming you deferred
the maximum amount and you continued employment for three (3) years after the
date of termination of employment at the base salary and, to the extent
applicable, the annual bonus calculated under Sections 4(A)(i) and (ii),
respectively, to the extent not otherwise contributed to such plans, payable in
a lump sum at the same time payment is made under Section 4(A) hereof; and (E)
payment by the Company of the premiums for you (except in the case of your
death) and your dependents' health coverage for three (3) years from the date of
termination of your employment under the Company's health plans which cover the
senior executives of the Company or materially similar benefits (to the extent
not otherwise provided), provided that in the case of termination within one
hundred eighty (180) days prior to a Change in Control, the obligations under
this subpart (E) shall only exist to the extent that you or your dependents, as
the case may be, had timely elected or timely elect COBRA coverage which
continued at the time of the Change in Control and the obligation with regard to
the period prior to the Change in
-3-
Control shall be limited to reimbursement of the COBRA premiums previously paid
or due for such period. For the avoidance of doubt, in calculating the amount of
annual bonus "paid or payable" to you in a particular year under the Millennium
Chemicals Inc. Annual Performance Incentive Plan or any similar plan that
contains a "bonus bank" feature, the annual bonus credited to your "bonus bank"
account under such plan for such year shall be deemed to be the bonus "paid or
payable" to you under such plan for such year. Any amendment or termination of
benefits, equity or incentive plans within one-hundred and eighty (180) days
prior to, or after, a Change in Control that is detrimental to you shall be
ignored with respect to (C), (D) and (E) above. Payments under (E) above may, at
the discretion of the Company, be made by continuing your participation in the
plan as a terminee, by paying the applicable COBRA premium for you and your
dependents, or by covering you and your dependents under substitute
arrangements, provided that, to the extent you incur tax that you would not have
incurred as an active employee as a result of the aforementioned coverage or the
benefits provided thereunder, you shall receive from the Company an additional
payment in the amount necessary so that you will have no additional cost for
receiving such items or any additional payment. Section 6 hereof shall also
continue to apply in all instances.
5. SPECIAL TAX PROVISION. (a) Anything in this Agreement to the contrary
notwithstanding, in the event that any amount or benefit paid, payable, or to be
paid, or distributed, distributable, or to be distributed to or with respect to
you (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions result in a
change of ownership covered by Section 28OG(b)(2) of the Internal Revenue Code
of 1986, as amended (the "Code") or any person affiliated with the Company or
such person) as a result of a change in ownership of Millennium covered by Code
Section 28OG(b)(2), but not including the payment provided for in this Section 5
(collectively, the "Covered Payments"), is or becomes subject to the excise tax
imposed by or under Section 4999 of the Code (or any similar tax that may
hereafter be imposed), and/or any interest or penalties with respect to such
excise tax (such excise tax, together with such interest and penalties thereon,
is hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay to you an additional amount (the "Tax Reimbursement Payment") such that
after payment by you of all taxes (including, without limitation, any payroll
tax, any income tax, any interest or penalties and any Excise Tax imposed on or
attributable to the Tax Reimbursement Payment itself), you retain an amount of
the Tax Reimbursement Payment equal to the sum of (i) the amount of the Excise
Tax imposed upon the Covered Payments, and (ii) without duplication, an amount
equal to the product of (A) any deductions disallowed for federal, state or
local income tax purposes because of the inclusion of the Tax Reimbursement
Payment in your adjusted gross income, and (B) the highest applicable marginal
rates of federal, state or local income tax for the calendar year in which the
Tax Reimbursement Payment is made or is to be made. The intent of this Section 5
is that after paying your federal, state and local income tax and any payroll
taxes with respect to the Tax Reimbursement Payment, you will be in the same
position as if you were not subject to the Excise Tax under Section 4999 of the
Code and did not receive the extra payments pursuant to this Section 5 and this
Section 5 shall be interpreted accordingly.
-4-
(b) Except as otherwise provided in Section 5(a), for purposes of
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax, (i) such Covered Payments will be treated
as "parachute payments" (within the meaning of Section 28OG(b)(2) of the Code)
and such payments in excess of the Code Section 28OG(b)(3) "base amount" shall
be treated as subject to the Excise Tax, unless, and except to the extent that,
the Company's independent certified public accountants appointed prior to the
change in ownership covered by Code Section 28OG(b)(2) or legal counsel
(reasonably acceptable to you) appointed by such public accountants (or, if the
public accountants decline such appointment and decline appointing such legal
counsel, such independent certified public accountants as promptly mutually
agreed on in good faith by the Company and you) (the "Accountant"), deliver a
written opinion to you, reasonably satisfactory to your legal counsel, that you
have a reasonable basis to claim that the Covered Payments (in whole or in part)
(A) do not constitute "parachute payments", (B) represent reasonable
compensation for services actually rendered (within the meaning of Section
28OG(b)(4) of the Code) in excess of the "base amount" allocable to such
reasonable compensation, or (C) such "parachute payments" are otherwise not
subject to such Excise Tax (with appropriate legal authority, detailed analysis
and explanation provided therein by the Accountant); and (ii) the value of any
Covered Payments which are non-cash benefits or deferred payments or benefits
shall be determined by the Accountant in accordance with the principles of
Section 28OG of the Code.
(c) For purposes of determining the amount of the Tax Reimbursement
Payment, you shall be deemed: (i) to pay federal, state and/or local income
taxes at the highest applicable marginal rate of income taxation for the
calendar year in which the Tax Reimbursement Payment is made or is to be made,
and (ii) to have otherwise allowable deductions for federal, state and local
income tax purposes at least equal to those which would be disallowed due to the
inclusion of the Tax Reimbursement Payment in your adjusted gross income.
(d)(i) (A) In the event that prior to the time you have filed any of
your tax returns for the calendar year in which the change in ownership event
covered by Code Section 28OG(b)(2) occurred, the Accountant determines, for any
reason whatsoever, the correct amount of the Tax Reimbursement Payment to be
less than the amount determined at the time the Tax Reimbursement Payment was
made, you shall repay to the Company, at the time that the amount of such
reduction in Tax Reimbursement Payment is determined by the Accountant, the
portion of the prior Tax Reimbursement Payment attributable to such reduction
(including the portion of the Tax Reimbursement Payment attributable to the
Excise Tax and federal, state and local income and payroll tax imposed on the
portion of the Tax Reimbursement Payment being repaid by you, using the
assumptions and methodology utilized to calculate the Tax Reimbursement Payment
(unless manifestly erroneous)), plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code.
(B) In the event that a determination described in (A) above is made by
the Accountant after the filing by you of any of your tax returns for the
calendar year in which the change in ownership event covered by Code Section
28OG(b)(2) occurred
-5-
but prior to one (1) year after the occurrence of such change in ownership, you
shall file at the request of the Company amended tax returns in accordance with
the Accountant's determination, but no portion of the Tax Reimbursement Payment
otherwise payable to the Company shall be required to be refunded to the Company
until actual refund or credit of such portion has been made to you, and interest
payable to the Company shall not exceed the interest received or credited to you
by such tax authority for the period it held such portion (less any tax you must
pay on such interest and which you are unable to deduct as a result of payment
of the refund).
(C) In the event you receive a refund pursuant to (B) above and repay
such amount to the Company, you shall thereafter file for any refunds or credits
that may be due to you by reason of the repayments to the Company. You and the
Company shall mutually reasonably agree upon the course of action, if any, to be
pursued (which shall be at the expense of the Company) if your claim for such
refund or credit is denied.
(ii) In the event that the Excise Tax is later determined by the
Accountant or the Internal Revenue Service to exceed the amount taken into
account hereunder at the time the Tax Reimbursement Payment is made (including
by reason of any payment the existence or amount of which cannot be determined
at the time of the Tax Reimbursement Payment), the Company shall make an
additional Tax Reimbursement Payment in respect of such excess (plus any
interest or penalties payable with respect to such excess) once the amount of
such excess is finally determined.
(iii) In the event of any controversy between you and the Internal
Revenue Service (or other taxing authority) that relates to the payment provided
for under this Section 5, subject to the second sentence of subpart (i)(C)
above, you shall permit the Company to control issues related to this Section 5
(at its expense), provided that such issues do not potentially materially
adversely affect you, but you shall control any other issues that you may have
with the Internal Revenue Service (or other taxing authority). In the event the
issues are interrelated, you and the Company shall in good faith cooperate so as
not to jeopardize resolution of either issue, but if the parties cannot agree
you shall make the final determination with regard to the issues that you may
have with the Internal Revenue Service (or other taxing authority). In the event
of any conference with any taxing authority as to the Excise Tax or associated
income taxes, you shall permit the representative of the Company to accompany
you, and you and your representative shall cooperate with the Company and its
representative.
(iv) With regard to any initial filing for a refund or any other
action required pursuant to this Section 5 (other than by mutual agreement) or,
if not required, agreed to by the Company and you, you shall cooperate fully
with the Company, and the Company shall bear the expense for the preparation of
any such filing or amended tax return, provided that the foregoing shall not
apply to actions that are provided herein to be at your sole discretion.
(e) The Tax Reimbursement Payment, or any portion thereof, payable by
the Company shall be paid not later than the fifth (5th) day following the
determination by the Accountant, and any payment made after such fifth (5th) day
shall bear interest at
-6-
the rate provided in Code Section 1274(b)(2)(B). The Company shall use its best
efforts to cause the Accountant to promptly deliver the initial determination
required hereunder and, if not delivered, within ninety (90) days after the
change in ownership event covered by Section 28OG(b)(2) of the Code, the Company
shall pay you the Tax Reimbursement Payment set forth in an opinion from counsel
recognized as knowledgeable in the relevant areas selected by you, and
reasonably acceptable to the Company, within five (5) days after delivery of
such opinion. In accordance with Section 15, the Company may withhold from the
Tax Reimbursement Payment and deposit with the applicable taxing authorities
such amounts as they are required to withhold by applicable law. To the extent
that you are required to pay estimated or other taxes on amounts received by you
beyond any withheld amounts, you shall promptly make such payments. The amount
of such payment shall be subject to later adjustment in accordance with the
determination of the Accountant as provided herein.
(f) The Company shall be responsible for all charges of the Accountant
and, if Section 5(e) is applicable, the reasonable charges for the opinion given
by your counsel.
(g) You and the Company shall mutually agree on and promulgate further
guidelines in accordance with this Section 5 to the extent, if any, necessary to
effect the reversal of excessive or shortfall Tax Reimbursement Payments. The
foregoing shall not in any way be inconsistent with Section 5(d)(i)(C) hereof.
6. INDEMNIFICATION. (a) The Company and Millennium, jointly and severally, agree
that if you are made a party to or threatened to be made a party to any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that you are or were a director or officer
of the Company or Millennium or their predecessors, and/or any other affiliate
of any of such companies, or are or were serving at the request of any of such
companies or affiliates as a director, officer, member, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including, without limitation, service with respect to employee
benefit plans, whether or not the basis of such Proceeding is alleged action in
an official capacity as a director, officer, member, employee, fiduciary or
agent while serving as a director, officer, member, employee, fiduciary or
agent, you shall be indemnified and held harmless by the Company and Millennium
to the fullest extent authorized by Delaware law (or, if different, the law
applicable to such company), as the same exists or may hereafter be amended,
against all Expenses incurred or suffered by you in connection therewith, and
such indemnification shall continue as to you even if you have ceased to be an
officer, director, member, fiduciary or agent, or are no longer employed by the
Company, and shall inure to the benefit of your heirs, executors and
administrators.
(b) As used in this Agreement, the term "Expenses" shall include,
without limitation, damages, losses, judgments, liabilities, fines, penalties,
excise taxes, settlements and reasonable costs, reasonable attorneys' fees,
reasonable accountants' fees, and reasonable disbursements and costs of
attachment or similar bonds,
-7-
investigations, and any reasonable expenses of establishing a right to
indemnification under this Agreement.
(c) Expenses incurred by you in connection with any Proceeding shall be
paid by the Company and Millennium in advance upon your request and the giving
by you of any undertakings required by applicable law.
(d) You shall give the Company and Millennium prompt notice of any
claim made against you for which indemnity will or could be sought under this
Agreement. In addition, you shall give the Company and Millennium such
information and cooperation as it may reasonably require and as shall be within
your power and at such times and places as are reasonably convenient for you.
(e) With respect to any Proceeding as to which you notify the Company
and Millennium of the commencement thereof: (i) the Company will be entitled to
participate therein at its own expense; and (ii) except as otherwise provided
below, to the extent that it may wish, the Company jointly with any other
indemnifying party similarly notified will be entitled to assume the defense
thereof. You also shall have the right to employ your own counsel in such
Proceeding and the fees and expenses of such counsel shall be at the expense of
the Company.
(f) The Company and Millennium shall not be liable to indemnify you
under this Agreement for any amounts paid in settlement of any Proceeding
effected without its written consent. Neither the Company nor Millennium shall
settle any Proceeding in any manner which would impose any penalty or limitation
on you without your written consent. Neither the Company, Millennium nor you
will unreasonably withhold or delay their consent to any proposed settlement.
(g) The right to indemnification and the payment of expenses incurred
in defending a Proceeding in advance of its final disposition conferred in this
Section 6 shall not be exclusive of any other right which you may have or
hereafter may acquire under any statute, provision of the certificate of
incorporation or by-laws of the company, agreement, vote of stockholders or
disinterested directors or otherwise.
7. LEGAL FEES. In the event that a claim for payment or benefits under this
Agreement or any other plan or agreement of the Company or its affiliates is
disputed as a result of events which occurred on or after a Change in Control,
or during the Pre Change in Control Period, the Company shall pay all reasonable
attorney, accountant and other professional fees and reasonable expenses
incurred by you in pursuing such claim, unless the claim by you is found to be
frivolous by any court or arbitrator.
8. NO DUTY TO MITIGATE/SET-OFF. The Company agrees that if your employment with
the Company is terminated during the term of this Agreement, you shall not be
required to seek other employment or to attempt in any way to reduce any amounts
payable to you by the Company pursuant to this Agreement. Further, the amount of
any payment or benefit provided for in this Agreement shall not be reduced by
any compensation earned by you or benefit provided to you as the result of
employment by another
-8-
employer or otherwise. Except as otherwise provided herein and apart from any
disagreement between you and the Company concerning interpretation of this
Agreement or any term or provision hereof, the Company's obligations to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against you. The amounts due under Section 4 are inclusive,
and in lieu of, any amounts payable under any other salary continuation or cash
severance arrangement of the Company and to the extent paid or provided under
any other such arrangement shall be offset against the amount due hereunder.
9. TERM. This Agreement shall be for a term (the "Term") commencing on the
Effective Date and terminating on the Termination Date as defined herein,
provided that if a Change in Control has taken place prior to the Termination
Date, this Agreement shall continue in full force and effect during the Change
in Control Protection Period and further provided that the payment and other
obligations hereunder shall survive such termination to the extent a Change in
Control has occurred during the Term, and in any event, the obligations under
Section 6 hereof shall survive the end of the Term with regard to matters
occurring during the Term (even if a claim is made after the Term). The
Termination Date shall initially be September 30, 2002 and shall automatically
be extended for successive one (1) year periods as of September 30, 2002 and as
of each anniversary of the Termination Date, unless notice is given in writing
to you by the Company at least 180 days prior to September 30, 2002, or any such
anniversary of the Termination Date, of its intention to not extend the
Termination Date.
10. SUCCESSORS; BINDING AGREEMENT. In addition to any obligations imposed by law
upon any successor to the Company, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree in writing to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place and this Agreement shall inure to the
benefit of such successor. Any such assignment shall not relieve the Company
from liability hereunder, for periods prior to such assignment, but shall
relieve the Company from liability for periods after such assignment. Reference
to the Company herein shall also include any successor to the Company. This
Agreement shall inure to the benefit of and be enforceable by your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devises and legatees. If you die while any amount would still by
payable to you hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of the
Agreement to the executors, personal representatives, estate trustees, or
administrators of your estate. This Agreement is personal to you and neither
this Agreement nor any rights hereunder may be assigned by you.
11. COMMUNICATIONS. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, or sent by
registered mail, postage prepaid as follows:
-9-
(i) If to the Company or Millennium, to such entity at:
c/o Millennium American Holdings Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
Red Bank, New Jersey 07701
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III Senior Vice
President-Law and Administration
(ii) If to you, to the last shown address
on the books of the Company or Millennium.
Any such notice shall be deemed given when so delivered personally, or,
if mailed, five (5) days after the date of deposit (in the form of registered or
certified mail, return receipt requested, postage prepaid) in the United States
postal system. Any party may by notice designate another address or person for
receipt of notices hereunder.
12. NOT AN AGREEMENT OF EMPLOYMENT. This is not an agreement assuring employment
and the Company reserves the right to terminate your employment at any time with
or without Cause, subject to the payment provisions hereof if such termination
is during the Change in Control Protection Period. You acknowledge that you are
aware that you shall have no claim against the Company hereunder or for
deprivation of the right to receive the amounts hereunder as a result of any
termination that does not specifically satisfy the requirements hereof. The
foregoing shall not affect your rights under any other agreement with the
Company.
13. MISCELLANEOUS. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Company Board (as defined in Part III of Exhibit A). No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. This Agreement constitutes the entire Agreement between the parties hereto
pertaining to the subject matter hereof and supersedes any prior agreements
between the Company and you. For the avoidance of doubt, the Company and you
concur that the formation of Equistar Chemicals, LP ("Equistar") and the
contribution of assets by Millennium Petrochemicals Inc. to Equistar on December
1, 1997, does not constitute a Change in Control under this Agreement or any
other agreement or plan affecting you (including your Restricted Stock Agreement
with Millennium); in addition, the sale or disposition of all or any part of
Millennium's interests in Equistar shall not be deemed to constitute a Change in
Control under this Agreement or any other agreement or plan affecting you. No
agreements or
-10-
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. All references to any law shall be deemed also to refer
to any successor provisions to such laws.
14. INDEPENDENT REPRESENTATION. You acknowledge that you have been advised by
the Company to have the Agreement reviewed by independent counsel and you have
been given the opportunity to do so.
15. WITHHOLDING TAXES. The Company may withhold from any and all amounts payable
under this Agreement such federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.
-11-
16. GOVERNING LAW. This Agreement shall be construed, interpreted, and governed
in accordance with the laws of the State of Delaware without reference to rules
relating to conflicts of law.
Very truly yours,
[Name of Employee's Subsidiary Employer]
By:________________________________
Name:
Title: Vice President
Agreed and Accepted
as of the first date written above:
MILLENNIUM CHEMICALS INC.
(for purposes of Section 6 only)
By___________________________ __________________________
Name: Name:
Title: Chairman and Chief
Executive Officer
-12-
EXHIBIT A
Part I - Cause
1. Subject to compliance with the notification provisions in this Exhibit A,
this Agreement shall not prevent the termination of your employment by the
Company for Cause. A termination for Cause means a termination by the Company
effected by a written notice of termination for Cause. For purposes of this
Agreement, the term "Cause" shall be limited to your: (i) willful misconduct
with regard to the Company or its affiliates or their businesses which has a
material adverse effect on the Company and its affiliates taken as a whole; (ii)
refusal to follow the proper written direction of the Company Board provided
that the foregoing refusal shall not be "Cause" if in good faith you believe
that such direction is illegal, unethical or immoral and you promptly so notify
the applicable Company Board; (iii) conviction of a felony (other than a felony
involving a motor vehicle) and either (x) exhausting all appeals without a
reversal of the conviction or (y) commencing a term of incarceration in a house
of detention; (iv) breach of any fiduciary duty owed to the Company or its
affiliates which has a material adverse effect on the Company and its affiliates
taken as a whole; or (v) your material fraud with regard to the Company or any
of its affiliates.
2. A notice of termination for Cause shall mean a notice that shall set forth in
reasonable detail the specific basis, facts and circumstances which provide for
a basis for termination for Cause and shall include a copy of a resolution duly
adopted by at least two-thirds of the directors of the applicable Company at a
meeting which was called for the purpose of considering such termination and
which you and your representative had the right to attend and address, finding
that, in the good faith opinion of the applicable board, you engaged in conduct
set forth in the definition of Cause herein and specifying the particulars
thereof in reasonable detail. The date of termination for a termination for
Cause shall be the date indicated in the notice of termination.
3. Notwithstanding anything to the contrary contained in this Agreement, if any
purported termination for Cause within the Change in Control Protection Period
that occurs on or after the Effective Date is held by a court not to have been
based on the grounds set forth in this Agreement, or not to have followed the
procedures set forth in this Agreement, such purported termination for Cause
shall be deemed a termination by the Company without Cause and you shall be
entitled to the amounts and benefits provided in Section 4 to the extent, if
any, applicable.
-1-
Part II - Change in Control
1. For purposes of this Agreement, a "Change in Control" shall mean either a
Change in Control of Millennium or a Change in Control of the Company. Only one
(1) Change in Control may occur under this Agreement.
2. Change in Control of Millennium. For purposes of this Agreement, the term
"Change in Control of Millennium" shall mean (i) any "person" as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 ("Act")
(other than Millennium, any trustee or other fiduciary holding securities under
any employee benefit plan of Millennium or any company owned, directly or
indirectly, by the stockholders of Millennium in substantially the same
proportions as their ownership of Common Stock of Millennium), becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of Millennium representing twenty-five percent (25%)
or more of the combined voting power of Millennium's then outstanding
securities; (ii) during any period of two (2) consecutive years (not including
any period prior to October 1, 1996), individuals who at the beginning of such
period constitute the Board of Directors of Millennium, and any new director
(other than a director designated by a person who has entered into an agreement
with Millennium to effect a transaction described in clause (i), (iii), or (iv)
of this paragraph or a director whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a person
other than the Board of Directors of Millennium) whose election by the Board of
Directors of Millennium or nomination for election by Millennium's stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the two (2) year period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority of the Board of Directors of
Millennium; (iii) the merger or consolidation of Millennium with any other
corporation, other than a merger or consolidation which would result in the
voting securities of Millennium outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the
combined voting power of the voting securities of Millennium or such surviving
entity outstanding immediately after such merger or consolidation; provided,
however, that a merger or consolidation effected to implement a recapitalization
of Millennium (or similar transaction) in which no person (other than those
covered by the exceptions in (i) above) acquires more than twenty-five percent
(25%) of the combined voting power of Millennium's then outstanding securities
shall not constitute a Change in Control of Millennium; or (iv) approval by the
stockholders of Millennium of a plan of complete liquidation of Millennium or
the closing of the sale or disposition by Millennium of all or substantially all
of Millennium's assets other than the sale or disposition of all or
substantially all of the assets of Millennium to one or more Subsidiaries (as
defined below) of Millennium or to a person or persons who beneficially own,
directly or indirectly, at least fifty percent (50%) or more of the combined
voting power of the outstanding voting securities of Millennium at the time of
the sale.
-2-
3. For purposes of this Agreement, unless the Board of Directors of Millennium
shall determine prior to the occurrence of an event set forth in Section (i) or
(ii) of this paragraph 3 that such event is not a Change in Control of the
Company, the term "Change in Control of the Company" shall mean (i) any "person"
as such term is used in Sections 13(d) and 14(d) of the Act (other than
Millennium or a Subsidiary (as defined below) of Millennium) becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company's then outstanding securities
entitled to vote in a general election for directors; or (ii) all or
substantially all of the Company's assets are sold other than to Millennium or a
Subsidiary of Millennium. "Subsidiary" shall have the meaning set forth in
Section 424 of the Code and the term shall also include any partnership, limited
liability company or other business entity if Millennium owns, directly or
indirectly, securities or other ownership interests representing at least fifty
percent (50%) of the ordinary voting power or equity or capital interests of
such entity.
4. Change in Control Protection Period. For purposes of this Agreement, the term
"Change in Control Protection Period" shall mean the Pre Change in Control
Period and the Post Change in Control Period as defined below.
5. Pre Change in Control Period. For purposes of this Agreement, Pre Change in
Control Period shall mean the one hundred and eighty (180) day period prior to
the date of a Change in Control that occurs on or after the Effective Date.
6. Post Change in Control Period. For purposes of this Agreement, Post Change in
Control Period shall mean the period commencing on the date of a Change in
Control that occurs on or after the Effective Date and ending the day
immediately prior to the second anniversary of the Change in Control.
Part III - Company Board
For purposes of this Agreement, the term "Company Board" shall be deemed
to refer to the Board of Directors of the Company and Millennium.
Part IV - Disability
For purposes of this Agreement, the term "Disability" shall mean your
inability to perform your material duties and responsibilities hereunder due to
the same or related physical or mental reasons for more than one hundred eighty
(180) consecutive days in any twelve (12) consecutive month period. A
termination for Disability shall be deemed to occur when you are terminated by
the Company by written notice after you incur a Disability and while you remain
disabled.
-3-
Part V - Good Reason
1. For purposes of this Agreement, a termination for "Good Reason" shall mean a
termination by you effected by a written notice of termination for Good Reason
given within ninety (90) days after the occurrence of the Good Reason event.
Subject to subsection 3 below, "Good Reason" shall mean the occurrence or
failure to cause the occurrence, as the case may be, without your express
written consent, of (i) any material diminution of your positions, duties or
responsibilities with the Company from the highest position held within the Pre
Change in Control Period (except in each case in connection with the termination
of your employment for Cause, Disability or as a result of your death, or in the
case of a material diminution of duties or responsibilities, temporarily as a
result of your illness or other absence) or the assignment to you of duties or
responsibilities that are inconsistent with your aforementioned highest
position; (ii) your removal from, or the nonreelection to, your positions as an
officer with the Company or Millennium held during the Pre Change in Control
Period; (iii) a relocation of the Company's principal United States executive
offices to a location more than twenty-five (25) miles from where they are at
the time of the Change in Control, or a relocation by the Company of your
principal office away from such principal United States executive offices; (iv)
a failure by the Company or Millennium (A) to continue any bonus plan, program
or arrangement in which you were entitled to participate during the Pre Change
in Control Period (the "Bonus Plans"), provided that any such Bonus Plans may be
modified at the Company's discretion from time to time but shall be deemed
terminated if (x) any such plan does not remain substantially in the form in
effect prior to such modification or (y) if plans providing you with
substantially similar benefits are not substituted therefor ("Substitute
Plans"), or (B) to continue you as a participant in the Bonus Plans or
Substitute Plans on not less than the same maximum level of award and not more
than the same level of difficulty for achievability thereof as was applicable to
you immediately prior to any change in such plans, in accordance with the Bonus
Plans and the Substitute Plans; (v) any material breach by the Company or
Millennium of any provision of this Agreement; (vi) if on the Company Board
during the Pre Change in Control Period, your removal from or failure to be
reelected to the Company Board; (vii) a reduction by the Company of your rate of
annual base salary to a level below your highest rate of base salary within
one-hundred and eighty (180) days prior to the Change in Control; or (viii)
failure of any successor of the Company to assume in a writing delivered to you
upon the assignee becoming such, the obligations of the Company hereunder.
2. A notice of termination for Good Reason shall indicate the specific basis for
termination relied upon and set forth in reasonable detail the facts and
circumstances claimed to provide a basis for a termination for Good Reason. The
failure by you to set forth in the notice of termination for Good Reason any
facts or circumstances which contribute to the showing of Good Reason shall not
waive any of your rights hereunder or preclude you from asserting such fact or
circumstance in enforcing your rights hereunder. The notice of termination for
Good Reason shall provide for a date of termination neither less than ten (10)
nor more than sixty (60) days after the date such notice of termination for Good
Reason is given.
-4-
3. In the event that a Direct Pay Letter of Credit is delivered in accordance
with Section 3 of this Agreement at the time of a Change in Control, the
definition of Good Reason shall not include the events set forth in subsections
1 (i), (ii) and (vi) above so long as during such period you are maintained in a
senior advisory capacity (without any line or other staff responsibilities) to
assist in the order transition to new management.
Part VI - Retirement
For purposes of this Agreement, the term "Retirement" shall mean your retirement
by the Company at or after your sixty-fifth (65th) birthday to the extent such
termination is specifically permitted as a stated exception from applicable
federal and state age discrimination laws based on position and retirement
benefits.
-5-