THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
THIRD
AMENDMENT
TO
This
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is entered into
this 17th day of December 2008, by and between LSB INDUSTRIES, INC., a
Delaware corporation (the “Company”), and XXXX X. XXXXXX, an individual
(“Golsen”), and amends that certain Employment Agreement, dated March 21, 1996,
as amended by the First Amendment to Employment Agreement, dated April 29, 2003,
and by the Second Amendment to Employment Agreement, dated May 12, 2005
(collectively, the “Agreement”).
WHEREAS,
Section 409A of the Internal Revenue Code of 1986, as amended (“the Code”), and
the regulations promulgated thereunder (collectively, “Section 409A”) require
that payments of “nonqualified deferred compensation” to “specified employees”
be delayed for six months from “separation from service” (as those terms are
defined under Section 409A);
WHEREAS,
Golsen is currently a “specified employee” as defined in Section
409A;
WHEREAS,
the Agreement provides for the payment of certain severance benefits upon
termination of service, which may be considered nonqualified deferred
compensation subject to Section 409A; and
WHEREAS,
the Company and Golsen desire to amend the terms of the Agreement to comply with
Section 409A.
NOW,
THEREFORE, the Company and Golsen hereby agree to amend the Agreement as
follows:
1. Amendments to Section
4. Section 4 of the Agreement is hereby amended as
follows:
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1.1.
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4.d. Paragraph
d of Section 4 of the Agreement is hereby amended by striking the
paragraph immediately following paragraph c of Section 4 and inserting the
following language in lieu thereof:
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Without
in any way limiting any of Golsen’s other rights or remedies, at law or in
equity, which rights and remedies shall be cumulative, and subject to Section 7
hereof, in the event of Golsen’s separation from service with the Company for
any reason:
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1.2.
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4.d(1) and
(2). Paragraphs d(1) and d(2) of Section 4 are hereby
amended by deleting each occurrence of the phrase “in a lump sum cash
payment on the date of Golsen’s termination of employment” and inserting
in lieu thereof the following:
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in a
single lump sum payment within thirty days after the date of Golsen’s separation
from service
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1.3.
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4.e. Paragraph
e of Section 4 is hereby deleted in its entirety and replaced with the
following:
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e.
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Subject
to Section 10.1 of this Agreement, in the event of Golsen’s separation
from service with the Company for any reason, other than under paragraphs
a or b this Section 4 or disability under Section 5, the Company shall
provide, to Golsen and/or Golsen’s family or estate, as applicable, the
following: (i) during the period commencing on the date of separation from
service and ending on the expiration of 18 months, medical, dental and
vision coverage at least substantially equal to the coverage that would
have been provided to them in accordance with Section 3 hereof, provided
that Golsen agrees to elect COBRA coverage to the extent, and for the
period, available under the Company's health insurance plans, and the
Company shall reimburse the cost of any premiums for such coverage on an
after-tax basis on the last business day of each month, (ii) upon the
expiration of the COBRA period or such earlier time as COBRA coverage may
not be available under the Company’s health insurance plans, until the
expiration of the Term, with such medical, dental and vision coverage
being substantially equal to the coverage that would have been provided to
them in accordance with Section 3, and will reimburse Golsen and or
Golsen’s family or estate, as applicable, the cost of any premiums for
such coverage on an after tax basis on the last business day of each
month, and (iii) the unrestricted use of a vehicle, a cell phone, and
the other benefits listed on Schedule 1 to this Agreement, and on the last
day of each month the Company will reimburse Golsen for all out of pocket
expenses incurred by Golsen in connection with such
benefits. The benefits to be provided pursuant to this
paragraph e of Section 4 and subject to Section 10.1 of this Agreement,
will be provided in accordance with the most favorable plans,
practices, programs or policies of the Company, as may be adopted and
amended from time to time. In the event that Golsen suffers a
disability, the Company agrees to pay him pursuant to Section 5
hereof.
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2. Amendments to Section
5. Section 5 is hereby deleted and a new Section 5 is inserted
in lieu thereof:
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5.
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Disability. In
the event of Golsen’s separation from service from the Company as a result
of a disability, (i) the Company shall pay and provide Golsen all salary,
bonus and benefits remaining during the Term of this Agreement or any
extension thereof, and (ii) thereafter, the Company shall pay to Golsen
annual payments equal to 60% of his Present Base Salary
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until his death. All amounts payable pursuant to this
Section 5 will be paid by the Company in accordance with the Company’s regular
payroll and bonus practices. For purposes of this Agreement, the term
“disability” means Golsen being unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months.
3. New Section
10. The Agreement is hereby amended by inserting the following
new Section 10 immediately following Section 9 of this Agreement:
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10.
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Section
409A.
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10.1
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6-Month
Delay. If any amounts that become due under this
Agreement constitute “nonqualified deferred compensation” within the
meaning of Section 409A of the Code, payment of such amounts shall not
commence until Golsen incurs a “separation from service,” except payments
of amounts due pursuant to Section 5 will not commence unless and until
Golsen suffers a disability. Notwithstanding anything herein to
the contrary, if Golsen is a “specified employee,” for purposes of Section
409A of the Code, on the date on which he incurs a separation from
service, any payment hereunder that provides for the “deferral of
compensation” within the meaning of Section 409A of the Code shall not be
paid prior to the first business day after the date that is six months
following Golsen’s “separation from service;” provided, however, that a
payment delayed pursuant to the preceding clause shall commence earlier in
the event of Golsen’s death prior to the end of the six-month period.
Within 10 business days after the end of such six months, Golsen shall be
paid a lump sum payment in cash equal to any payments delayed because of
the preceding sentence. Thereafter, Golsen shall receive any
remaining benefits as if there had not been an earlier
delay.
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10.2
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Certain
Definitions. For purposes of this Agreement, the term
“separation from service” shall have the meaning set forth in Section
409A(a)(2)(i)(A) of the Code and determined in accordance with the default
rules under Section 409A of the Code. The term “specified
employee” shall have the meaning set forth in Section 409A(a)(2)(B)(1) of
the Code, as determined in accordance with the uniform methodology and
procedures adopted by the Employer and then in
effect.
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10.3
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Reimbursements. Anything
in this Agreement to the contrary notwithstanding, no reimbursement
payable to Golsen pursuant to any provisions of this Agreement or pursuant
to any plan or arrangement of the Company covered by this Agreement shall
be
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3
paid later than the last day of the calendar year following the
calendar year in which the related expense was incurred, except to the extent
that the right to reimbursement does not provide for a “deferral of
compensation” within the meaning of Section 409A of the Code. No amount
reimbursed during any calendar year shall affect the amounts eligible for
reimbursement in any other calendar year.
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10.4
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Separate
Payments. Each amount payable to Golsen pursuant to
paragraph e of Section 4 and pursuant to Section 5 will constitute a
separate payment for purposes of Section 409A of the
Code.
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10.5
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Intent. The
provisions of this Agreement are intended to satisfy the applicable
requirements of Section 409A of the Code with respect to amounts subject
thereto and shall be performed, interpreted and construed consistent with
such intent. If any provision of this Agreement does not satisfy such
requirements or could otherwise cause Golsen to recognize income under
Section 409A of the Code, Golsen and the Company agree to negotiate in
good faith an appropriate modification to maintain, to the maximum extent
practicable, the original intent of the applicable provision without
violating the requirements of Section 409A of the Code or otherwise
causing the recognition of income
thereunder.
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IN WITNESS WHEREOF, this Agreement is
executed effective as of the 17th day of December 2008.
LSB
INDUSTRIES, INC.
By: /s/Xxxx
Xxxxxx,
Name:
Xxxx
Xxxxxx
Title: Vice
President
/s/Xxxx X. Xxxxxx
XXXX X.
XXXXXX, an individual
