RULES FOR THE
LYONDELLBASELL INDUSTRIES N.V.
1.1 Article 13, paragraph 3 of the Articles provides that the Management Board may adopt rules governing its internal affairs, which rules require the approval of the Supervisory Board.
1.2 The Rules may only be amended by the Management Board with the approval of the Supervisory Board.
1.3 The Management Board and its Members shall observe and comply with these Rules and action shall be taken by the Management Board and its Members to ensure that the Members shall observe and comply with the principles set out in these Rules.
1.4 These Rules are complementary to (i) the provisions regarding the Management Board and its Members contained in applicable law and regulations, including the the principles of good governance and best practice provisions contained in the Dutch Corporate Governance Code and rules of the New York Stock Exchange or any other applicable exchange, , (ii) the Articles and (iii) the rules pertaining to the relationship between the Supervisory Board and the Management Board, contained in the rules governing the Supervisory Board's internal affairs.
1.5 In these Rules, the following expressions shall have the following respective meanings:
Articles means the articles of association of the Company
CEO means the Chief Executive Officer referred to in Article 12 paragraph 1 of the Articles and Clause 2.2.2
Clause means a clause of these Rules
Company means LyondellBasell Industries N.V.
General Meeting means the Company's general meeting of shareholders
Management Board means the management board of the Company
Member means a member of the Management Board
Meeting means a meeting of the Management Board
Rules means these rules governing the Management Board's internal affairs, including its annexes
Supervisory Board means the supervisory board of the Company
2. THE MANAGEMENT BOARD
In addition to the responsibilities that follow from the law and the Articles, the Management Board shall be responsible for the day to day affairs of the Company. In the performance of its duties, the Management Board and its Member(s) shall be guided by the interests of the Company and its associated enterprise.
2.2 Composition and term
2.2.1 The initial Management Board shall consist of one (1) Member. The term of the initial Management Board will be five (5) years. Thereafter, the Supervisory Board may determine the number of Members on subsequent Management Boards.
2.2.2 The Chief Executive Officer (CEO) of the Company shall be the sole Member of the initial Management Board. Thereafter, in the event that the Supervisory Board determines that a subsequent Management Board will consist of more than one (1) Member, the CEO shall be a Member of such subsequent Management Board.
2.2.3 After the term of the initial Member of the Management Board, a Member can be appointed for a maximum term of four (4) years and may be reappointed. There is no limit to the number of times a Member can be reappointed.
2.2.4 If a Member is permanently incapacitated or prevented from acting, Article 14 paragraph 3 of the Articles shall apply.
2.3 Appointment and dismissal of Members
2.3.1 The Member(s) shall be appointed by the General Meeting in the manner as described in Article 12.2 of the Articles.
2.3.2 A Member is suspended and dismissed in the manner as described in Article 12 paragraphs 5, 6 and 7 of the Articles. If a Member is suspended by the General Meeting or the Supervisory Board and the General Meeting does not resolve to dismiss him or to terminate or continue the suspension within three months from the date of suspension, the sus¬pension shall lapse. A suspended Member shall be given an opportunity to account for his actions at the General Meeting and to be assisted by an adviser in doing so.
A resolution to continue the suspension as referred to above may be adopted only once. In such event the suspension may be continued for a maximum period of three (3) months commencing on the day the General Meeting has adopted the resolution to continue the suspension. If within the period of continued suspension the General Meeting has not resolved either to dismiss such Member or to terminate the suspension, the suspension shall lapse.
The Supervisory Board shall determine the remuneration and other terms of employment for the Member(s) (in their capacity as such) on the basis of a remuneration policy determined by the General Meeting, with due observance of Article 12.8 of the Articles.
2.5 Majority and quorum
2.5.1 Each Member shall have the right to cast one vote in a Meeting.
2.5.2 After the term of the initial Management Board has expired, in the event that a subsequent Management Board consists of more than one (1) Member, resolutions shall be passed by an absolute majority of the votes cast. Abstentions will be regarded as votes not cast. In the event of a tie vote or that no votes are cast, the matter shall be decided by the Supervisory Board.
2.5.3 The determination of the CEO with regard to the results of a vote, and, where there has been a vote about a proposal which has not been put in writing, his determination as to the contents of the resolution passed, shall be decisive. However, where the accuracy of the determination referred to in the previous sentence is contested promptly after it has been made, a new vote shall take place if so required by a majority of the votes or, where the first vote did not take place by response to a roll call or in writing, if one person present with the right to vote so requires. The legal consequences of the original vote shall become void as a result of the new vote.
2.5.4 After the term of the initial Management Board has expired, in the event that a subsequent Management Board consists of two (2) Members, a quorum of one (1) Member holding office is required in order to validly hold a Meeting, and in the event that a subsequent Management Board consists of three (3) or more Members, a quorum of the majority of the number of Members holding office is required to validly hold a Meeting.
2.6.1 The Management Board shall conduct approximately six regularly scheduled Meetings a year and such meetings shall coincide with the meetings of the Supervisory Board. Meetings of the Management Board generally shall be held in The Netherlands.
2.6.2 The CEO shall chair the meetings of the Management Board.
2.6.3 Notice of the Meeting shall be given by the CEO and shall set out an agenda identifying in reasonable detail the matters to be discussed at the meeting and shall be accompanied by copies of any relevant papers to be discussed at the meeting. Any matter which is to be submitted to the Management Board for a decision which is not identified in reasonable detail as aforesaid may, notwithstanding the foregoing, be decided upon at the applicable Meeting.
2.6.4 There shall be at least two days between the date on which notice is given to the Member(s) of any Meeting and the date on which it is held, unless the person giving notice of the Meeting determines a shorter notice period is necessary.
2.6.5 Minutes of the matters dealt with at a Meeting shall be sufficient evidence thereof and of the observance of all necessary formalities, provided such minutes are certified by the Chairman of the Management Board.
2.6.6 The Management Board shall require the approval of the Supervisory Board for the resolutions listed in Annex A, except as contemplated by the then approved business plan and budget.
3. CONFLICTS OF INTEREST
A Member shall not participate in taking a decision on a subject or transaction in relation to which he has a direct or indirect personal interest, which is in conflict with the interests of the Company and its associated enterprise. In the event that - as a result of such conflict of interest - no resolution of the Management Board can be adopted in respect of a certain subject or transaction, the Supervisory Board shall decide on the matter concerned.
4.1.1 The Management Board and each member acting individually are entitled to represent the Company.
4.2 Tasks and Responsibilities
4.2.1 The CEO shall see to it that:
a. the Member(s) receive in good time all information which is necessary for the proper performance of their duties;
b. there is sufficient time for consultation and decision-making by the
c. the Management Board shall be constituted and function properly.
4.2.2 The Management Board shall, at least once every year, inform the Supervisory Board in writing of the main features of the strategic plan and annual budget of the Company.
4.2.3 If the CEO is permanently incapacitated or prevented from acting, a replacement Member may be temporarily charged with his tasks.
5. GOVERNING LAW
5.1 These Rules shall be governed by, and be construed in accordance with, the laws of The Netherlands.
5.2 All disputes arising in connection with these Rules shall be finally settled in accordance with the arbitration rules of the Netherlands Arbitration Institute (NAI). The arbitral tribunal shall be composed of 3 (three) arbitrators: one selected by the Management Board, one selected by the Supervisory Board and the third agreed upon by the first two selected arbitrators. The place of arbitration shall be Amsterdam. The arbitral procedures shall be conducted in the English language. Consolidation of the arbitral proceedings with other arbitral proceedings pending in The Netherlands, as provided in article 1046 of the Netherlands Code of Civil Procedure, is excluded.
Resolutions to (to the extent applicable, in one or a series of related transactions):
1. acquire, repurchase, redeem, cancel, sell, or otherwise dispose of any equity interest of the Company or any of its Significant Subsidiaries, or any equity interest convertible into or exchangeable for, or any rights, warrants or options to acquire any shares of, capital stock of the Company or any of its Significant Subsidiaries;
2. declare, set aside, make or pay any dividend or other distribution in respect of the Company’s Securities, or purchase or redeem, directly or indirectly, such Securities;
3. amend, modify or waive any material term of any outstanding (i) Security of the Company or any of its Significant Subsidiaries or (ii) indebtedness (as defined in GAAP) in excess of $125,000,000 of the Company or any of its Significant Subsidiaries;
4. consummate an initial public offering or a public offering of the Securities of any subsidi-ary;
5. make any Material Acquisition or Divestiture of any business or assets;
6. to adopt, materially amend or materially change the annual budget or strategic plan for the Company and its associated enterprises or make aggregate expenditures exceeding the overall budget by greater than 10%;
7. make expenditures for capital projects (i) contemplated by the then approved annual budget, in excess of $125,000,000 or (ii) not contemplated by the then approved annual budget, in excess of $50,000,000;
8. adopt or amend rules governing the Management Board's internal affairs;
9. enter into any material new line of business;
10. agree to enter into or consummate any mergers, amalgamations, consolidations, reorganizations, recapitalizations or other business combinations with unrelated third parties;
11. commence the termination, liquidation or dissolution of the Company, or enter into any agreement or arrangement relating thereto;
12. propose or institute proceedings to adjudicate the Company or any of its subsidiaries as bankrupt, or consent to the filing of a bankruptcy proceeding against the Company or any of its subsidiaries, or file a petition or answer or consent seeking reorganization of the Company or any of its subsidiaries under any applicable bankruptcy or insolvency laws, or consent to the filing of any such petition against the Company or any of its subsidiaries, or consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or any of its subsidiaries, or make an assignment for the benefit of creditors of the Company or any of its subsidiaries or admit in writing the Company’s or any of its subsidiary’s inability to pay its debts generally as they become due;
13. subject to applicable insolvency law, propose that the Company be wound up or that any liquidation proceedings be commenced;
14. enter into, extend or terminate any contract, agreement, arrangement, commitment, letter of intent, memorandum of understanding, obligation or similar understanding (i) in the ordinary course of business, involving more than $$1,500,000,000 for purchase contracts and more than $$750,000,000 for sales contracts or (ii) outside of the ordinary course of business, involving more than $50,000,000;
15. hire or fire any Senior Officer or create any new Senior Officer position;
16. (i) adopt, approve or materially amend compensation and benefit plans and programs of the Company or any of its subsidiaries, including cash bonus plans, option and equity-based or profit sharing plans, (ii) enter into or adopt any welfare, pension or benefit plan or arrangement involving any labor organization (including without limitation any multi-employer trust providing retirement benefits) or (iii) approve any compensation of any Senior Officer, including any grants under any equity based or profit sharing plans;
17. adopt or approve any Company-wide severance agreements or arrangements or any severance agreements or arrangements with any Senior Officer;
18. enter into any agreement providing for the indemnification of any director or Senior Officer of the Company;
19. purchase, obtain, terminate, discontinue or materially amend any “director and officer” insurance for the benefit of any officer, director, employee, agent or representative of the Company;
20. accept or approve the external auditors or auditors’ reports;
21. approve the payment of any investment banking fees in excess of $10,000,000;
22. make any political contribution or make any charitable contribution in excess of $500,000;
23. amend or waive any material term of any agreement or transaction that requires approval of the Supervisory Board hereunder;
24. change the corporate seat of the Company; or
25. make, permit or approve any of the following transactions:
- other than in the ordinary course of business consistent with the then approved business plan and budget, mortgage or otherwise encumber or subject to any Encumbrance any material assets of the Company or any of its Significant Subsidiaries;
- other than in the ordinary course of business consistent with the then approved business plan and budget, lend any money or assets of the Company to any other Person in excess of $50,000,000; provided however, that any loans made to directors, officers or employees of either the Company or of any of its Significant Subsidiaries other than normal advances for travel and entertainment expenses and the like, shall require approval irrespective of the amount; or
- incurrence of (a) indebtedness of the Company or its subsidiaries for money borrowed from others and purchase money indebtedness, in each case in excess of $100,000,000; (b) guarantees by the Company or its subsidiaries of third party indebtedness of the type and amounts described in clause (a) above, but excluding endorsements of checks and other instruments in the ordinary course; and (c) obligations of the Company or its subsidiaries to pay rent or other amounts under any lease of (or other arrangement covering the right to use) real or personal property in excess of $50,000,000, which obligations are required to be classified and accounted for as capital leases on a balance sheet of the Company, as of such date computed in accordance with GAAP.
In this Annex A, the following expressions shall have the following respective meanings:
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. For purposes of this definition, the terms “control,” “controlling,” “controlled by” and “under common control with,” as used with respect to any person, means the possession, directly or indirectly, of the power to direct the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.
“Encumbrances” means any encumbrances, lien, pledge, security interest, claim, charges, option, right of first refusal or offer, mortgage, deed of trust, easement, including restrictions on the right to vote equity interests.
“GAAP” means the generally accepted accounting principles in the United States of America.
“Person” shall be construed broadly and shall include, without limitation, an individual, a partnership, stichting, commanditaire vennootschap, besloten vennootschap, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
“Material Acquisition or Divestiture” means any acquisition or divestiture, including any investment in or acquisition of a non-controlling interest in any entity (and any divestitures thereof) where the Company and its subsidiaries’ equity in the book value of the asset or investment, or the amounts paid or received in the acquisition or divestiture exceed 5% of the Company’s consolidated total assets.
“Securities” means, with respect to any Person, such Person’s capital stock or other equity interests or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, such Person’s capital stock or other equity or equity-linked interests, including phantom stock and stock appreciation rights.
“Senior Officer” means any executive officer, as that term is defined under Rule 3b-7 promulgated under the Securities Exchange Act of 1934, as amended.
“Significant Subsidiary” means any “significant subsidiary” as that term is defined in Item 1-02(w) of Regulation S-X of the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended.