EXHIBIT 10.1
EMPLOYMENT AGREEMENT
dated as of July 16, 2001 (this
"Agreement"), by and between
RESOLUTION PERFORMANCE PRODUCTS
LLC, a Delaware corporation
(the "Company") and XXXXXXX X.
XXXXXXX ("Executive").
In order to induce Executive to accept employment with the Company, the
Company desires to provide Executive with compensation and other benefits on the
terms and conditions set forth in this Agreement. Executive is willing to enter
into such employment and perform services for the Company on the terms and
conditions set forth in this Agreement. Therefore, the Company and Executive
agree as follows:
1. Employment.
Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the term hereof as President and Chief
Operating Officer of the Company. Executive hereby accepts employment as such
and agrees to devote his full working time and efforts, to the best of his
ability, experience and talent, to the performance of services, duties and
responsibilities in connection therewith. As President and Chief Operating
Officer, Executive will perform those duties that are (a) customarily performed
by presidents and chief operating officers of companies similar to the Company
and/or (b) requested by the Chief Executive Officer or the Board of Directors
(the "Board") of the Company. Without limiting the professional responsibilities
detailed herein, Executive will not engage in any professional activities except
as set forth herein.
2. Term of Employment.
This Agreement and the term of employment shall commence and be
effective from and after the date hereof (the "Commencement Date") and, subject
to the terms hereof, shall terminate on the third anniversary of the
Commencement Date (the "Termination Date"); provided, however, that on such
anniversary date and on each subsequent one year anniversary of such anniversary
date, the Termination Date shall automatically be extended for a period of one
year, unless either party shall have given written notice to the other party not
less than one hundred and twenty days prior to the Termination Date that the
Termination Date shall not be so extended.
3. Compensation and Benefits.
(a) Base Salary. The Company shall pay Executive a base salary ("Base Salary")
at the annual rate of $250,000. The Base Salary shall be payable in accordance
with the ordinary payroll practices of the Company and shall be subject to
increase as determined by the Board or its compensation committee (the
"Compensation Committee").
(b) Bonus. In addition to the Base Salary, Executive shall be entitled to
receive a cash bonus (the "Bonus") with respect to each fiscal year; provided
that the Executive is employed by the Company on the last day of such fiscal
year. The Bonus shall be based on the Company's achievement of certain operating
and/or financial goals to be established by the Compensation Committee, with an
annual target bonus amount equal to 50% of Executive's then current Base Salary.
(c) Benefits. During the term of employment hereunder, the Company shall provide
to Executive coverage under any standard employee benefit programs, plans and
practices, in accordance with the terms that the Company makes generally
available to its executive officers.
4. Termination of Employment.
(a) Termination Rights. The Company may terminate Executive's employment at
any time, and Executive may terminate his employment at any time.
(b) Definitions.
(i) "Affiliate" of the Company shall mean a Person that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Company. As used in
this definition, the term "control," including the correlative terms
"controlling," "controlled by" and "under common control with," means
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of
securities or any partnership or other ownership interest, by contract
or otherwise) of a Person. The term "Affiliate" shall not include at
any time any portfolio companies of Apollo Management IV, L.P. or its
Affiliates.
(ii) "Cause" shall mean termination by the Company of Executive's employment
(a) based on a determination that Executive has engaged in conduct
constituting willful misconduct or gross negligence, or breach of
a fiduciary duty; (b) based on a determination that Executive has
failed to perform the duties required by such Executive's employment
and such failure shall not have been cured within a reasonable time
after notice from the Company; (c) because Executive has breached
or violated any of the provisions of the Company's employee handbook
or other policies in effect from time to time that by their terms may
result in termination of employment; (d) because Executive has
committed a felony, has engaged in any act involving the misuse or
misappropriation of money or other property of the Company, has
defrauded the Company, any Affiliate of the Company or any customer of
the Company, or because of habitual intoxication while performing his
job duties, or drug addiction; or (e) because Executive has failed to
take action consistent with or has taken actions inconsistent with a
directive of the Chief Executive Officer of the Company or the Board.
(iii) "Good Reason" shall mean the occurrence of any of the following events
without Executive's express prior written consent and which event
shall not have been cured within a reasonable period after notice from
the Executive: (A) the assignment to Executive by the Company of duties
materially inconsistent with Executive's duties as set forth in Section
1 hereof, or any material reduction by the Company of Executive's
duties, except in connection with the termination of Executive's
employment for any other reason; (B) a reduction by the Company in
Executive's Base Salary or Bonus (other than due to the failure to meet
applicable performance objectives); or (C) any material breach by the
Company of any material provision of this Agreement after a written
notice of such breach shall have been delivered to the Company and, if
such breach can be cured, such breach shall not have been cured prior
to the tenth day after delivery of such notice.
(iv) "Person" shall be construed broadly and shall include, without
limitation, an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a
trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision
thereof.
(v) "Termination Payments" shall mean earned but unpaid amounts as of the
date of any termination under applicable benefit plans or programs.
(c) Termination other than for Cause or Termination for Good Reason. If
Executive's employment is terminated by the Company other than for
Cause or Executive terminates his employment for Good Reason, in each
case, prior to the Termination Date, Executive shall be entitled to
receive (i) within a reasonable time after the date of termination,
the Termination Payments and (ii) in lieu of any other cash
compensation provided for herein but not in substitution for
compensation already paid or earned, payable in accordance with the
Company's customary payroll practices, for a period equal to the
greater of (x) 12 months following the date of termination and (y)
the period between the date of termination and the second anniversary
of the date hereof (such period, the "Termination Period") an amount
equal to the Executive's Base Salary at its then current annual rate.
During the Termination Period, the Company shall continue to provide
Executive with access to the Company's health benefit programs and
plans.
(d) Voluntary Termination by Executive; Discharge for other reasons. If
Executive's employment is terminated by the Company for any reason
other than a termination without Cause or by Executive other than for
Good Reason, in each case prior to the Termination Date, Executive
shall be entitled to receive, within a reasonable time after the date
of termination, the Termination Payments.
(e) DEFRA.
(i) Notwithstanding anything in this Agreement or any other agreement
between the Executive and the Company to the contrary, in the event
that the provisions of the Deficit Reduction Act of 1984 ("DEFRA"),
and Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") relating to "excess parachute payments" (as defined in
the Code) shall be applicable to any payment or benefit received or to
be received by Executive, then the total amount of payments or benefits
payable to Executive shall be reduced to the largest amount such that
the provisions of DEFRA and Section 280G of the Code relating to
"excess parachute payments" shall no longer be applicable. Should such
a reduction be required, the Executive shall determine, in the exercise
of his sole discretion, which payment or benefit to reduce or
eliminate. Pending such determination, the Company shall continue to
make all other required payments to Executive at the time and in the
manner provided herein and shall pay the largest portion of any
parachute payments such that the provisions of DEFRA relating to
"excess parachute payments" shall no longer be applicable.
(ii) Due to the complexity in the application of Section 280(G) of the Code,
it is possible that payments made or benefits received hereunder should
not have been made under clause (e)(i) above (an "Overpayment"). If it
is determined by the Company's outside auditors in their reasonable
good faith judgment or by any court of competent jurisdiction that an
Overpayment has been made resulting in an "Excess Parachute Payment" as
defined in Section 280G(b)(1) of the Code), then any such Overpayment
shall be treated for all purposes as an unsecured, long-term loan from
the Company to the Executive, or the Executive's personal
representative, successors or assigns, as the case may be, that is
payable, together with accrued interest from the date of the making of
the Overpayment at the rate of 8% per annum on the later to occur of
the third anniversary of the payment of such Overpayment, or 6 months
following the date upon which it is determined an Overpayment was made.
Should it be determined that such an Overpayment has been made, the
Executive shall determine, in the exercise of his sole discretion,
which payments or benefits shall be deemed to constitute the
Overpayment.
5. Notices.
All notices or communications hereunder shall be in writing, addressed,
in the case of the Executive, at the address set forth on the signature pages
hereto, and to the Company, as follows:
Resolution Performance Products LLC
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Vice President -- Human Resources
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
RPP Holdings LLC
c/o Apollo Management, L.P.
1301 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
X'Xxxxxxxx LLP
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Any such notice or communication shall be sent certified or registered mail,
return receipt requested, postage prepaid, addressed as above (or to such other
address as such party may designate in a notice duly delivered as described
above), and the actual date of mailing shall constitute the time at which notice
was given.
6. Separability; Arbitration.
If any provision of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions hereof, which shall remain in full-force and
effect. Any controversy or claim arising out of or relating to this Agreement or
the breach of this Agreement (other than Section 9 hereof) that cannot be
resolved by Executive on the one hand and the Company on the other, including
any dispute as to the calculation of Executive's benefits or any payments
hereunder, shall be submitted to arbitration in New York, New York in accordance
with New York law and the procedures of the American Arbitration Association.
The determination of the arbitrators shall be conclusive and binding on the
Company and Executive, and judgment may be entered on the arbitrators' award in
any court having jurisdiction.
7. Assignment.
This contract shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and successors of the
Company, but neither this nor any rights hereunder shall be assignable or
otherwise subject to hypothecation by Executive except by will or by operation
of the laws of intestate succession.
8. Amendment.
This Agreement may only be amended by written agreement of the parties
hereto.
9. Nondisclosure of Confidential Information; Non-Competition.
(a) Executive shall not, without the prior written consent of the Company,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company, except (i) while employed by the Company, in the
business of and for the benefit of the Company, or (ii) when required to do so
by a court of competent jurisdiction, by any governmental agency having
supervisory authority over the business of the Company, or by any administrative
body or legislative body (including a committee thereof) with purported or
apparent jurisdiction to order Executive to divulge, disclose or make accessible
such information.
(b) For purposes of this Section, "Confidential Information" shall mean
non-public information concerning the Company's and its Affiliates' financial
data, strategic business plans, product development (or other proprietary
product data), customer lists, marketing plans and other non-public, proprietary
and confidential information of the Company and its Affiliates that is not
otherwise available to the public.
(c) For the period commencing on the date hereof and ending on (x) the last day
on which Executive receives any payment from the Company or any of its
Affiliates, with respect to a termination by the Company other than for Cause or
a termination by Executive for Good Reason, or (y) the one year anniversary of
the last day on which Executive receives any payment from the Company or any of
its Affiliates, with respect to all other terminations, without the prior
written consent of the Company, the Executive shall not, directly or indirectly,
(i) either as principal, manager, agent, consultant, officer, director,
stockholder, partner, member, investor, lender or employee or in any other
capacity, carry on, be engaged in or have any financial interest in any business
within the chemicals industry, including, without limitation, any business that
is in material competition with the business of the Company and/or its
Affiliates, or (ii) solicit or hire any employees of the Company and/or its
Affiliates. For purposes hereof, a business shall be deemed to be in competition
with the Company if it is significantly involved in the rendering of any service
significantly purchased, sold, dealt in or rendered by the Company and/or its
Affiliates. As used in the preceding sentence, the term "significantly" shall be
deemed to refer to activities generating gross annual sales of at least $25
million. Nothing in this shall be construed so as to preclude Executive from
investing in any publicly held company provided Executive's beneficial ownership
of any class of such company's securities does not exceed 5% of the outstanding
securities of such class.
(d) Executive and the Company agree that the foregoing covenant not to compete
is a reasonable covenant under the circumstances, and further agree that if in
the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of such covenant as to the
court shall appear not reasonable and to enforce the remainder of the covenant
as so amended. Executive agrees that any breach of the covenants contained in
this Section would irreparably injure the Company. Accordingly, the Company may,
in addition to pursuing any other remedies they may have in law or in equity,
obtain an injunction against Executive from any court having jurisdiction over
the matter, restraining any further violation of this Section by Executive.
10. Governing Law.
This Agreement shall be construed, interpreted and governed in
accordance with the laws of the State of New York, without reference to rules
relating to conflict of laws.
11. Withholding.
The Company shall be entitled to withhold from any payment hereunder or
under any other agreement between the Company and the Executive any amount
required by law to be withheld.
12. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original.
13. Entire Agreement.
This Agreement reflects the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and replaces and
supercedes any prior employment agreements.
* * * * *
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
RESOLUTION PERFORMANCE PRODUCTS LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
Title: CEO
/s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Address:
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000 Xxxxxx Xxxx Xxxxx
Xxxx, Xxxxxxxx 00000