EXHIBIT 10.3
THE DIAL CORPORATION
00000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
December 14, 2003
Xxxxxxx X. Xxxx
The Dial Corporation
15501 North Dial Corporation
Xxxxxxxxxx, Xxxxxxx 00000-0000
Dear Xx. Xxxx:
This letter agreement (the "AGREEMENT") sets forth the agreements
among you (sometimes referred to as the "EXECUTIVE"), Xxxxxx KGaA ("HENKEL") and
The Dial Corporation (the "COMPANY") in connection with the amendment and
restatement of your Employment Agreement with the Company, dated as of August
15, 2002 (the "EMPLOYMENT AGREEMENT"), and the cancellation of the Covered
Options (as defined below), on and subject to the terms and conditions of this
Agreement. This Agreement is subject to, and will become effective at the
effective time (the "EFFECTIVE TIME") of, the merger of Henkel Merger
Corporation with and into the Company (the "MERGER") contemplated by the
Agreement and Plan of Merger, dated as of the date hereof, among Henkel, Henkel
Merger Corporation and the Company (the "MERGER AGREEMENT"), except that the
provisions of paragraph 2(b) and 2(c) shall become effective as of the date
hereof, subject to consummation of the Merger. In the event that (i) prior to
the Merger, the Merger Agreement is terminated in accordance with its terms or
(ii) the Company engages in a transaction, other than the Merger, which
constitutes a Change of Control (as defined in the Employment Agreement), the
terms of this Agreement shall be null, void and of no effect ab initio.
Unless specified otherwise, capitalized terms used herein without
definition shall have the meanings assigned thereto in the Merger Agreement.
1. Amendment and Restatement of Employment Agreement.
Contemporaneous with the execution of this Agreement by the Executive and
effective at the Effective Time, the Executive and the Company have entered into
an Amended and Restated Employment Agreement (the "AMENDED EMPLOYMENT
AGREEMENT") that shall supercede the Employment Agreement as provided in such
Amended Employment Agreement, except for the provisions (the "SURVIVING
PROVISIONS") of Section 4(k) (Insurance; Indemnification) and 9 (Certain
Additional Payments by the Company) of the Employment Agreement. The Surviving
Provisions shall survive the termination of this Agreement and shall not be
superceded by the Amended Employment Agreement.
2. Initial Payment. (a) In consideration for your entering into this
Agreement and subject to consummation of the Merger as contemplated by the
Merger Agreement, the Company hereby agrees to pay to you, in a lump sum upon
the Closing Date, an amount equal to (A) the product of (i) three multiplied by
(ii) the sum of (x) your annual base salary, at the rate in
effect on the date hereof, and (y) the highest annual bonus paid to you under
the Company's annual incentive plan in which you were a participant for any of
the last three fiscal years of the Company ending prior to the Effective Time
(such product referred to herein as the "CIC PAYMENT") multiplied by (B) 80%.
(b) You hereby acknowledge and agree that (i) you will not terminate
your employment without "good reason," as defined in any provision of the
Employment Agreement ("EA GOOD REASON"), from or after the date hereof and prior
to the Closing Date, (ii) as of the date hereof, no events, facts or
circumstances have occurred or exist that would constitute the basis for any
termination of your employment with the Company for EA Good Reason and you will
not bring any claim asserting any such right to terminate your employment for EA
Good Reason based on any fact, event or circumstance occurring or existing prior
to the date hereof and (iii) neither the execution or delivery of the Merger
Agreement by the Company nor the consummation of the Merger contemplated
thereby, including without limitation the fact that, from and after the Merger,
the Company will cease to be a public company and will become a subsidiary of
Henkel, constitutes the basis for any termination of your employment with the
Company for EA Good Reason or for "good reason," as defined in the Amended
Employment Agreement ("AA GOOD REASON"), and you will not bring any claim
asserting any such right to terminate your employment for EA Good Reason or AA
Good Reason on the basis thereof.
(c) If the Executive's employment is terminated for EA Good Reason
prior to the Effective Time (as modified by paragraph 2(b) above), the Executive
shall be treated as having terminated his employment for AA Good Reason
immediately after the Effective Time, provided that any compensation or benefits
payable to the Executive under the Employment Agreement in connection with such
termination shall be reduced, dollar for dollar, by the amounts payable to the
Executive pursuant to paragraph 2 or 3 of this Agreement and the amounts payable
under Amended Employment Agreement.
3. Special Bonus. (a) In consideration for your continuing
employment from and after the Effective Time and provided you remain
continuously actively employed by the Company or an Affiliate thereof (including
Henkel and its subsidiaries from and after the Effective Time) from the date
hereof to the second anniversary of the date on which the Effective Time occurs,
the Company hereby agrees to pay to you, in a lump sum in cash within 5 days
following such second anniversary date, an amount equal to 20% of the CIC
Payment, increased by interest on such amount, at an annual rate of 10%, for the
period commencing at the Effective Time and ending on such second anniversary
date.
(b) In consideration for your continued employment after the
Effective Time and provided you remain continuously actively employed by the
Company or an Affiliate thereof from the date hereof to the date on which the
Effective Time occurs or paragraph 2(c) above applies, if your employment with
the Company and its Affiliates (including Henkel and its subsidiaries from and
after the Effective Time) terminates after the Effective Time for any reason,
including death, Disability, your resignation, with or without AA Good Reason,
or termination by the Company for or without Cause, the Company hereby agrees to
pay to you, in a lump sum in cash within 5 days following the effective date of
your termination of employment, an amount equal to 20% of the CIC Payment,
increased by interest on such amount, at an annual rate of (i) 3%, if such
termination arises from death, Disability, your resignation,
2
other than for AA Good Reason, or termination by the Company for Cause or (ii)
10% if such termination is by the Company, other than for Cause or Disability,
or by your resignation for AA Good Reason, in either such case, for the period
commencing at the Effective Time and ending on such date of termination. For all
purposes of this Agreement, the terms "Disability" and "Cause" shall have the
meanings assigned thereto in the Amended Employment Agreement.
4. Cancellation of Options. In consideration for your entering into
this Agreement and subject to consummation of the Merger in accordance with the
Merger Agreement, you hereby agree to surrender for cancellation as of the
Effective Time all of your rights to and interest in respect of all of your
Existing Stock Options (the "COVERED OPTIONS"), and this Agreement constitutes
notice to the Company of your election to surrender all of the Covered Options
for cancellation, in exchange for payment of the Option Consideration, if any,
in accordance with the Merger Agreement for each such Covered Option. You hereby
acknowledge and agree that all of your Covered Options will be cancelled as of
the Effective Time pursuant to your election hereunder, including, without
limitation, those Covered Options under which the exercise price exceeds the
Merger Consideration (the "UNDERWATER OPTIONS") and that you will not be
entitled to any payment or other consideration in respect of such Underwater
Options.
5. Termination of this Agreement. Immediately upon payment of the
Special Bonus pursuant to paragraph 3 hereof, this Agreement shall terminate in
its entirety and be of no further force or effect, except with respect to the
Surviving Provisions and paragraph 2(c) of this Agreement. The termination of
this Agreement shall not cause the Amended Employment Agreement to be terminated
and the Amended Employment Agreement will terminate only in accordance with the
provisions thereof.
6. Miscellaneous. Notwithstanding any other provision of this
Agreement, upon any termination of your employment before the Effective Time due
to your death or Disability (as defined in the Employment Agreement), this
Agreement will automatically terminate and be deemed null, void and of no effect
ab initio. This Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes any prior agreements or
understandings between or among the parties hereto with respect to such subject
matter, including, without limitation, effective at the Effective Time, the
Employment Agreement, but this Agreement shall not supercede (i) the Surviving
Provisions, (ii) the Amended Employment Agreement, (iii) the terms of any other
Indemnification Agreement as in effect on the date hereof between the Company
and the Executive and (iv) the Executive's right to receive any vested accrued
benefits under any plan, policy, practice or program of the Company in which the
Executive is a participant, which benefits shall be payable in accordance with
the terms of such applicable plan, policy, practice or program. This Agreement
may not be amended or modified otherwise then by a written agreement executed by
the parties hereto and their respective successors and legal representatives.
7. Governing Law. The terms of this Agreement shall be governed by
the laws of the State of Arizona.
* * *
3
To evidence and confirm your agreement to all of the terms and
conditions set forth in this Agreement and your election to surrender for
cancellation all of the Covered Options and receive the Option Consideration, if
any, in accordance with the Merger Agreement, please execute and date the
enclosed copy of this Agreement in the space provided below.
XXXXXX KGaA
By:________________________
Name:
Title
THE DIAL CORPORATION
By:________________________
Name:
Title
ACCEPTED AND AGREED, as of December 14, 2003:
________________________________
XXXXXXX X. XXXX
4
