Exhibit 10.29
SEPARATION AGREEMENT dated as
of March 9, 2001 (this "Agreement"),
---------
among RESOLUTION PERFORMANCE PRODUCTS
INC., a Delaware corporation ("Parent"),
RESOLUTION PERFORMANCE PRODUCTS LLC, a
Delaware limited liability company (the
"Employer") and DAVID T. PRESTON (the
--------
"Executive").
---------
WHEREAS, Executive is currently the President of Employer;
WHEREAS, pursuant to a Non-Qualified Stock Option Agreement dated as of
November 14, 2000 (the "Option Agreement"), between Parent and Executive,
----------------
Executive acquired 1,300 Tranche A Options (as defined therein) and 2,600
Tranche B Options (as defined therein and collectively with the Tranche A
Options, the "Options") to purchase shares of Parent's Common Stock (as defined
-------
therein), none of which have vested as of the Effective Date;
WHEREAS, pursuant to a Participation Agreement dated as of November 14,
2000 (the "Participation Agreement"), Executive acquired (x) 750 shares of
-----------------------
Parent's Common Stock (after the filing of the Amended and Restated Certificate
of Incorporation of Parent and the dividend issued on November 14, 2000) and (y)
$175,000 principal amount of Notes (as defined in the Participation Agreement).
WHEREAS, Executive is a party to an Investor Rights Agreement dated as of
November 14, 2000 (the "Investor Rights Agreement"), among Parent and holders of
-------------------------
its Common Stock;
WHEREAS, Executive is a party to a Notes Registration Rights Agreement
dated as of November 14, 2000 (the "Notes Registration Rights Agreement" and,
-----------------------------------
collectively with the Investor Rights Agreement, the "Continuing Investment
---------------------
Agreements"), among Parent and holders of its Notes.
- ----------
WHEREAS, Executive has issued to Employer a Secured Promissory Note dated
November 14, 2000 (the "Executive's Note").
----------------
WHEREAS, Executive desires to resign from all of his positions as a
director, officer and/or employee of Parent, Employer and each of their
respective Affiliates (each, a "Company"); and
-------
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby expressly acknowledged, the parties hereto agree as follows:
1. RESIGNATION; WAIVER; CONSIDERATION.
(a) Executive hereby resigns as a director, officer and/or employee of
each Company, effective as of March 17, 2001 (the "Effective Date"). For
--------------
purposes of this Agreement, the term "Affiliate" shall mean, with respect to
---------
Parent or Employer, any Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, either Parent or Employer. 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. As used in this Agreement, the term
"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.
(b) Executive hereby waives any rights he may have to receive
compensation or benefits under any agreement, policy or arrangement of or with
any Company. Notwithstanding the preceding sentence, Executive shall be entitled
to (i) receive all salary and benefits to which he is entitled up to and
including the Effective Date, including without limitation, compensation
payments deferred by Executive, incentive compensation payments earned but not
paid in respect of the calendar year ending December 31, 2000 in accordance with
Employer's plans and policies and payment for accrued vacation days in
accordance with Employer's plans and policies, (ii) continue to receive medical
coverage under Employer's medical insurance plans and Employer shall continue to
pay its portion of the premiums, in each case, for a period commencing on the
Effective Date and ending on June 30, 2001, (iii) receive outplacement
assistance in accordance with Employer's arrangements with its outside placement
services provider and (iv) continue coverage as required under the Consolidated
Omnibus Reconciliation Act of 1985, as amended.
(c) In consideration of the mutual covenants and agreements set forth
herein, Employer hereby agrees to continue to pay to Executive his current
salary, $18,333.33 per month, for a period commencing on the Effective Date and
ending on March 1, 2003 (such period, the "Severance Period"). Such salary shall
-----------------
be paid in accordance with Employer's customary payroll practices. Employer
shall be entitled to withhold, from any payment, any amount required by law to
be withheld.
2. CONFIDENTIAL INFORMATION; NON-SOLICITATION; NONCOMPETITION.
(a) Executive shall not, without the prior written consent of Parent,
divulge, disclose or make accessible to any other Person any Confidential
Information pertaining to any Company, except for such disclosure as is required
by a court of competent jurisdiction, by any governmental agency having
supervisory authority over Parent and Employer, 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. Without limiting the foregoing, Executive hereby represents and
warrants to each Company that it has returned to Employer all Confidential
Information in its possession pertaining to any Company. In furtherance of the
foregoing, without the prior written consent of Parent, Executive shall not
discuss any Confidential Information or any business, operations, condition
(financial or otherwise) or affairs of any Company with any supplier, customer,
employee, securityholder or investor in any Company, including, without
limitation, Shell (as defined below); provided that, (i) to the extent
--------
reasonably necessary or advisable to obtain new employment, Executive
2
shall be permitted to refer to the names of the Companies, his title and
position with the Companies, a description of his duties, responsibilities and
accomplishments for the Companies and his salary and benefits from the Companies
and (ii) Executive shall be permitted to make inquiries to human resources
personnel of Employer to the extent reasonably necessary to obtain information
about benefits available to Executive after the Effective Date and none of the
Companies will take action to prevent Executive from making similar inquiries of
Shell.
(b) For purposes of this Section, "Confidential Information" shall mean
------------------------
(i) any information concerning any Company's financial data, strategic business
plans, product development (or other proprietary product data), customer names
or lists and other information related to customers, supplier names and other
information related to suppliers, price lists, pricing policies, purchasing
policies, market research, marketing techniques and plans and other non-public,
proprietary and confidential information of any Company that is not otherwise
available to the public, (ii) any technical data or know-how including, but not
limited to, that which relates to any Company's hardware, software, screens,
specifications, designs, plans, drawings, data, prototypes, discoveries,
research, developments, processes, procedures, intellectual property or other
technical information and materials, (iii) personnel policies, practices and/or
plans, (iv) financial, operational or contractual arrangements between Parent
and its stockholders or any members of Parent's principal stockholder, in each
case, in oral, demonstrative, written, electronic, graphic, machine-readable or
other form and any analyses, compilations, studies or documents, whether
delivered by or on behalf of any Company or prepared by or on behalf of
Executive or any of Executive's Affiliates or representatives, including any
summaries of any such information. For the avoidance of doubt, Confidential
Information shall include, without limitation, all Confidential Information of
each Company's business prior to November 14, 2000 and Confidential Information
of each predecessor to each Company.
(c) For the period commencing on the Effective Date and ending on the
second anniversary of the Effective Date, without the prior written consent of
Parent, 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 that is in competition with the
business of any Company, (ii) solicit or hire any employees of any Company or
(iii) induce any customer, supplier or other person with whom any Company has a
business relationship to terminate, modify or amend such business relationship.
For purposes hereof, a business shall be deemed to be in competition with a
Company if it is significantly involved in the manufacture of products or the
rendering of services that are purchased, sold, dealt in or rendered by such
Company anywhere in the world. 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 Section 2 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 2% of the outstanding securities of such class.
(d) This Section 2 shall survive any termination or revocation of this
---------
Agreement by Executive.
3
3. NON-DISPARAGEMENT.
(a) Executive shall not take any action that in any way disparages or
defames any Company or any employee, director, shareholder, member or partner of
any Company, or that is principally intended to cause injury to the relationship
between any Company, on the one hand, and any lessor, lessee, vendor, supplier,
customer, distributor, employee, consultant, director, shareholder, member or
partner or any other business relation or potential business relation of any
Company, on the other hand.
(b) No officer, director or holder of more than 50% of the outstanding
shares of Common Stock of Employer shall take any action that in any way
disparages or defames Executive or that is principally intended to cause injury
to the relationship between Executive, on the one hand, and any entity in which
Executive holds more than 50% of the outstanding shares of Common Stock or any
entity that is reasonably likely to be a future employer of Executive or any
other existing business relation of Executive, on the other hand.
(c) This Section 3 shall survive any termination or revocation of this
Agreement.
4. OPTIONS.
As a result of the termination of Executive's employment with Employer,
the Options will cease vesting as of the Effective Date. Executive hereby
forfeits any right to the Options and the Option Agreement is hereby terminated
without liability to any party thereunder. Executive has delivered to Employer
for cancellation, prior to the execution and delivery of this Agreement, all
original signed copies of the Option Agreement. This Section 4 shall survive any
termination or revocation of this Agreement.
5. COMMON STOCK AND NOTES.
(a) Parent hereby agrees to purchase, and Executive agrees to sell to
Parent, all of the shares of Parent's Common Stock and Notes held by Executive.
The purchase will be consummated in accordance with Section 9 of the Investor
Rights Agreement (it being understood that this Agreement will serve as any
notice required thereunder). Executive agrees to deliver, on the date of the
closing of the repurchase, certificates representing such shares and the Notes,
each duly endorsed for transfer to Parent or accompanied by a stock power. The
closing of such repurchase will take place on or about the twentieth business
day after the Effective Date, at which time Parent, subject to the last sentence
of this Section 5(a), will issue to Executive a check for the applicable
purchase price of $250,000, or at such other time as the parties may mutually
agree. Simultaneously with such purchase and sale, Executive shall repay in full
all principal amount of $125,000 owing by Executive under the Executive's Note
(it being understood that all accrued and unpaid interest shall be forgiven as
set forth in the Investor Rights Agreement). Employer shall be entitled to
set-off Executive's obligation to repay the Executive's Note as set forth in the
immediately preceding sentence against its obligation to pay the purchase price
for the Notes and shares of Common Stock as set forth above. Following this
transaction, Executive's Note will be considered to have been repaid in full.
(b) Executive hereby waives any notices required to be delivered by any
Company under the Option Agreement or any of the Continuing Investment
Agreements. Executive
4
further waives all benefits and rights relating to the shares of Parent's Common
Stock and Notes held by Executive, including, without limitation, any benefits
or rights under the Option Agreement or any of the Continuing Investment
Agreements.
6. RELEASE.
(a) Executive, and each of his successors, assigns, heirs, executors and
administrators (collectively, the "Individual Releasors"), in consideration of
--------------------
the premises contained herein, and for good and valuable consideration
(including, but not limited to, the agreement to pay the severance pursuant to
Section 1(b)), the receipt and sufficiency of which are hereby expressly
acknowledged, have remised, released and forever discharged, and by this
Agreement do remise, release and forever discharge each Company and their
respective stockholders, subsidiaries, affiliates, divisions and predecessors
and each of their respective past and present directors, officers, employees and
agents and each of their respective successors, assigns, heirs, executors and
administrators (collectively, the "Employer Releasees"), of and from all manner
------------------
of action and actions, cause and causes of action, suits, debts, dues, sums of
money, accounts, bonds, bills, covenants, contracts, controversies, omissions,
agreements, promises, variances, trespasses, damages, judgments, executions,
claims and demands whatsoever which relate to or arise out of any dealings,
relationships or transactions by and between the Individual Releasors and
Employer Releasees, in law (including but not limited to the Civil Rights Act of
1866, as amended, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, as amended, Title VII of the United States Civil Rights
Act of 1964, as amended, 42 U.S.C. Section 1981 and the Worker Adjustment and
Retraining Notification Act), admiralty or equity (including, but not limited
to, any and all claims arising out of or in any way connected to the employment
relationship, or the termination thereof, between Executive and Employer
(including those arising out of the Participation Agreement, the Option
Agreement and the Continuing Investment Agreements), but excluding any
obligations of Employer Releasees arising under this Agreement), and which any
Employer Releasee has ever had, now has or which it hereafter can, shall or may
have, whether or not now known, for upon or by any reason of any matter, cause,
causes or thing whatsoever from the beginning of the world to the Effective
Date. By way of example only, and not by limitation, this release includes any
claim, lawsuit or cause of action with respect to (1) any Federal, state, local,
foreign or other law covering discrimination, including, without limitation,
those based upon race, sex, color, religion, national origin, citizenship, age,
disability status, handicapped status or veteran status, alleging discrimination
against myself during my employment or because of my termination, (2) any
Federal, state, local, foreign or other law relating to notification of any
plant or business closing or employee layoff, (3) any breach of any express or
implied obligation, duty or contract not to discharge except for good cause,
breach of any implied covenant of good faith and fair dealing or breach of any
express or implied obligation, duty or contract concerning the application of
any personnel policies or procedures, (4) torts, including, without limitation,
intentional or negligent infliction of emotional distress, mental anguish or
mental suffering, negligence, defamation, invasion of privacy, fraud, deceit,
promissory estoppel or personal injury, (5) alleged retaliation relating to
being offered the consideration set forth in Section 1(b) hereof on the terms
set forth herein and/or (6) any other theory of recovery.
5
(b) For the avoidance of doubt, Shell Oil Company and each of its
Affiliates shall be deemed to be predecessors to Employer and therefore shall be
deemed to be Employer Releasees.
(c) Notwithstanding the foregoing, the release set forth above shall not
apply to (i) any liability of Shell to Executive which would not result in any
liability to any Company under any agreement or arrangement between any Company
and Shell and/or (ii) any right to indemnification that Executive is entitled to
in his capacity as an officer and/or director of the Companies.
7. KNOWING AND VOLUNTARY WAIVER; RIGHT TO CONSIDER AND REVOKE.
(a) Executive acknowledges that he has been given a period of up to
twenty-one (21) days to review and consider whether to sign this Agreement.
Executive was given the opportunity to sign this Agreement at any time up to
March 9, 2001 to sign and return an acknowledgment copy of this Agreement to
acknowledge his understanding of and agreement with the foregoing. After such
opportunity, Executive has executed and delivered this Agreement on or prior to
the date indicated in the first paragraph of this Agreement, which is at least
seven days prior to the Effective Date.
(b) During the seven-day period immediately following the time that
Executive executes and delivers this Agreement, Executive may revoke his
agreement to accept the terms hereof by indicating in writing to Employer his
intention to revoke.
(c) If Executive revokes this Agreement pursuant to this Section 7,
---------
Executive will be deemed to have forfeited his right to receive any of the
payments or benefits offered to him hereunder, but not any accrued and unpaid
amounts or severance benefits which Executive would be entitled to if this
Agreement was never executed, and the Option Agreement shall automatically
terminate and become null and void, without any liability to any Company and
this Agreement shall be automatically terminated.
(d) Executive acknowledges that he has been advised to consult with an
attorney prior to signing this Agreement.
8. ARRANGEMENTS WITH SHELL.
(a) Parent agrees to provide its consent, subject to Executive's
compliance with Sections 8(b) and (c) hereof, so as to permit Executive to be
employed by Shell Oil Company and/or its Affiliates ("Shell") from and after
-----
June 1, 2001, pursuant to Section 3.03(a) of the Human Resources Agreement dated
July 10, 2000, among Shell Oil Company, RPP Holdings LLC, as assignee of Resin
Acquisition, LLC, and Employer, as amended by Amendment No. 1 to Master Sale
Agreement, Human Resources Agreement and Seller Disclosure Letter dated as of
November 14, 2000 (the "Amendment to the Transaction Documents").
--------------------------------------
(b) Executive agrees not to become employed or otherwise work in any
function or department of Shell prior to November 14, 2001 if such function or
department or its employees or representatives or agents, directly or indirectly
through any subsidiary, division or Affiliate receives products or services from
or provides products or services to any Company valued in
6
excess of $2,000,000 per annum or reasonably may be expected to do so in the
future. For the period commencing on the Effective Date and ending on the second
anniversary of the Effective Date, Executive shall not participate in or become
involved in dealing with or negotiating with any Company relating to any
Transaction Document, Continuing Affiliate Contract, Non-US Transaction Document
or Non-US Continuing Affiliate Contract (each as defined in the Master Sale
Agreement dated as of July 10, 2000, among Shell Oil Company, RPP Holdings LLC,
as assignee of Resin Acquisition, LLC, and Parent, as amended by the Amendment
to the Transaction Documents).
(c) Executive agrees that if he becomes employed by Shell, whether as an
employee, consultant or otherwise, the term "Severance Period" automatically
will be deemed amended so that it shall mean a period commencing on the
Effective Date and ending on the last day of the 47th week immediately following
the Effective Date.
(d) Nothing contained in this Section 8 shall limit in any way
Executive's obligations under the other Sections of this Agreement. This Section
8 will not survive any termination or revocation of this Agreement by Executive.
(e) Employer agrees that the assets and liabilities of Executive's entire
accrued benefit may remain in the Shell Pension Plan in lieu of being
transferred to the New Pension Plan which Employer is in process of creating;
provided that the foregoing shall be subject to (i) the prior written consent
- --------
and/or waiver of Shell under the Human Resources Agreement dated as of November
14, 2000, between Shell and Employer, in form and substance reasonably
acceptable to Employer, (ii) Employer reasonably concluding that the foregoing
will not require any substantial change to the New Pension Plan, (iii) Employer
reasonably concluding that the foregoing will not result in any liability,
obligation, cost or expense to any Company (other than de minimis costs and
expenses) and (iv) Employer reasonably concluding that the foregoing will not
result in any undue burden upon Employer and its representatives. To the extent
that a consent or waiver is required for Executive's entire accrued benefit
remaining in the Shell Pension Plan under any agreement to which Employer is a
party, Executive agrees to obtain such consent or waiver at his sole cost and
expense and to cause a copy of said consent or waiver to be delivered to
Employer. Promptly after receiving said consent or waiver, subject to the
proviso contained in the first sentence of this Section 8(e), Employer will
likewise indicate its consent or agreement for Executive's entire accrued
benefit to remain in the Shell Pension Plan.
9. NOTICES.
All notices, demands or consents required or permitted under this
Agreement shall be in writing and shall be delivered personally, sent by air
courier or telecopy, or mailed, postage prepaid, registered or certified mail,
to the respective parties at the addresses set forth in the Participation
Agreement or to such other address as a party shall have given to the other
parties. Any such notice or other communication shall be deemed effective upon
the earliest to occur of (i) actual delivery, (ii) transmission by telecopy,
(iii) one business day after shipment by air courier as aforesaid, or (iv) three
business days after mailing as aforesaid.
7
10. GOVERNING LAW.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
11. ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and successors of each
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).
12. BINDING AGREEMENT.
This Agreement shall be binding upon and shall inure to the benefit of
the affiliates, officers, employees, agents, successors and assigns of the
parties hereto.
13. SEPARABILITY; ENFORCEMENT.
(a) 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.
(b) Executive and Employer agree that the covenants contained in this
Agreement are reasonable covenants 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 Agreement would irreparably injure each Company. Accordingly,
any Company may, in addition to pursuing any other remedies they may have in law
(including, without limitation, collecting damages) 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.
14. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which counterpart hereof shall be deemed to be an original instrument, but all
of which together shall constitute one agreement.
15. ENTIRE AGREEMENT.
This Agreement reflects the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and replace and
supercede any prior agreements with respect to the subject matter hereof.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
become effective as of the Effective Date.
RESOLUTION PERFORMANCE PRODUCTS INC.
By: /s/ Marvin O. Schlanger
--------------------------------
Name: Marvin O. Schlanger
Title: Chairman
RESOLUTION PERFORMANCE PRODUCTS LLC
By: Marvin O. Schlanger
--------------------------------
Name: Marvin O. Schlanger
Title: Chairman
/s/ David T. Preston March 9, 2001
------------------------ -------------
DAVID T. PRESTON DATE
9
ACKNOWLEDGEMENT
---------------
I acknowledge and represent to RESOLUTION PERFORMANCE PRODUCTS INC. and
RESOLUTION PERFORMANCE PRODUCTS LLC that I have had an opportunity to consult
with attorneys and other advisers of my choosing regarding this Separation
Agreement, that I have reviewed all of the terms of this Separation Agreement
and that I fully understand all of its provisions, including, without
limitation, the general release and waiver set forth in the Separation Agreement
and the non-disclosure agreement set forth therein. As my free and voluntary
act, by signing below, I am agreeing to all of the terms of this Separation
Agreement and I intend to be legally bound thereby.
/s/ David T. Preston March 9, 2001
------------------------ -------------
DAVID T. PRESTON DATE
10