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EXHIBIT 10.3
XxxXxxxx.xxx, Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
February 8, 2000
XxxXxxxx.xxx Management Group
c/o XxxXxxxx.xxx, Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Re: Amendment and Restatement of Management Incentive
Agreement
Ladies and Gentlemen:
Reference is made to the arrangement (sometimes referred to as the
"Management Incentive Agreement") contained in that certain letter agreement
dated June 21, 1999 between PetroChemNet Holdings, Inc. (now known as
XxxXxxxx.xxx, Inc., and referred to herein as the "Company") and certain
management members, as amended by that certain letter agreement dated October
26, 1999 which provides for certain incentives to certain management members and
other key employees of the Company upon certain events. This letter agreement
will supersede, amend, and restate the Management Incentive Agreement, which
shall be and read as follows:
In order to promote the growth of the Company and increase the
Company's value and return on investment for its stockholders, the Company has
agreed to provide certain incentives to Xxxx XxXxxxxxxx, Xxxx Xxxx, Xxxxx Xxxxxx
and Xxxxx XxXxxx (the "Management Group" or "you") as well as certain other key
employees of the Company (who shall be determined pursuant to the procedures set
forth below and who shall be known herein as the "Key Employees") in the event
the Company has a "fundamental change" (as defined below). This letter agreement
confirms our understanding with respect to this arrangement (and shall be known
as the "Management Incentive Agreement").
1. In the event the Company has a "fundamental change," the Company
shall be obligated to pay the Management Group and Key Employees (subject to the
terms hereof) an aggregate bonus amount (the "Incentive Payment") equal to the
following percentage of Proceeds (as defined below), which in no event shall
exceed a maximum of $15,000,000 in the aggregate, at the times specified below:
Date "Fundamental Change" Occurs Percentage of Proceeds Payable
-------------------------------- ------------------------------
June 21, 1999 to June 21, 2000 Two percent (2%)
June 22, 2000 to September 21, 0000 Xxx and one-half percent (1 1/2%)
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September 22, 2000 to December 21, 0000 Xxx percent (1%)
December 22, 2000 to March 21, 2001 Three-quarters percent (3/4%)
March 21, 2001 to June 21, 2001 One-half percent (1/2%)
The Incentive Payment shall be payable upon the occurrence of the first
"fundamental change," except that any portion of the Incentive Payment that is
attributable to escrow payments or future contingent payments shall be payable
if, and at such time or times as, that portion of the consideration is received
by the Company or its securityholders. For purposes of a Public Offering (as
defined below), the "fundamental change" shall be deemed to have occurred on the
date the Company's registration statement becomes effective, but the Incentive
Payment shall not be payable until ninety (90) days thereafter. For the purposes
of a Sale (as defined below), the "fundamental change" date shall be the date of
the closing of the Sale transaction.
In the event that all or any portion of the consideration received by
the Company upon a "fundamental change" is non-cash, the Incentive Payment shall
be made in such non-cash form, wholly or pro rata, as applicable, based upon a
good faith valuation made by the Board of Directors (which, in the case of
publicly-traded securities, shall take into consideration the most recent
closing prices from trades of such securities). Subject to the foregoing and
upon written notice to the Company, each of you and each Key Employee shall have
the option to receive all or such portion as you (or the Key Employee to be
paid) of the Incentive Payment in the form of stock of the Company, in lieu of
cash, which such stock shall have a fair market value when received equal to the
amount of cash in lieu of which it is received (such fair market value to be
determined in good faith by the Board of Directors or the Compensation Committee
thereof).
The Incentive Payment made hereunder shall be in addition to any other
payment that the individual members of the Management Group receive under their
written employment agreements with the Company or with respect to their
ownership (immediately prior to the transaction) of stock of the Company (due to
the exercise of stock options or otherwise) in connection with any "fundamental
change" of the Company. When used herein, the term "fundamental change" shall
mean either (i) the sale or transfer, in one or more related transactions, of
(A) equity securities (including, but not limited to, shares of preferred stock)
representing in excess of 50% of the voting power (on an as-converted basis) of
the capital stock of the Company or (B) all or substantially all of the assets
of the Company, and in both cases based on a valuation of the Company of at
least Two Hundred Million Dollars ($200,000,000) (a "Sale"), or (ii) a public
offering (a "Public Offering") of any of the Company's securities pursuant to a
registration statement filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, in which (A) the aggregate net proceeds
from such offering to the Company are at least Twenty Five Million Dollars
($25,000,000) and (B) the price paid by the public for each such security shall
be at least $9.87 per common share (as adjusted for splits, etc.). In the case
of a Public Offering, the Proceeds shall be calculated based on the average
daily closing price of the Company's Common Stock for the 90-day period
immediately following the effectiveness of the Public Offering.
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2. You hereby acknowledge that the aggregate Incentive Payment is to be
allocated and paid to each of you in the following percentages:
Xxxx Xxxx 20%
Xxxxx Xxxxxx 20%
Xxxx XxXxxxxxxx 20%
Xxxxx XxXxxx 15%
Xxxx Xxxx, Xxxxx Xxxxxx and Xxxx XxXxxxxxxx shall be entitled to their portion
of the Incentive Payment, notwithstanding any termination of employment or other
relationship with the Company. If the Company terminates Xxxxx XxXxxx without
Cause prior to a "fundamental change," he shall remain entitled to his portion
of the Incentive Payment. However, if Xxxxx XxXxxx is terminated for Cause or
voluntarily leaves the employment of the Company prior to a "fundamental
change", he shall not be entitled to receive his portion of the Incentive
Payment, and his portion of the Incentive Payment shall be allocated to the Key
Employees. "Cause" shall be defined as set forth in the Incentive Stock Option
and Stock Repurchase Agreement of Xxxxx XxXxxx.
The remaining 25% of the Incentive Payment shall be paid to the Key
Employees. The Key Employees and the amounts to be paid to each Key Employee
shall be determined by a management committee to be composed of Xxxx XxXxxxxxxx
and Xxxxx XxXxxx on or before the time when such proceeds are payable. If the
employment with the Company of either Xxxx XxXxxxxxxx or Xxxxx XxXxxx terminates
prior to such determination, the Compensation Committee of the Board shall have
the discretion to select a replacement member or members of such committee.
3. Options for the purchase of common stock of the Company shall be
granted, as set forth below:
NAME NUMBER OF OPTIONS EXERCISE PRICE
---- ----------------- --------------
Xxxx XxXxxxxxxx 168,000 $27.28
Xxxx Xxxx 168,000 $27.28
Xxxxx Xxxxxx 168,000 $27.28
Xxxxx XxXxxx 126,000 $27.28
Other Employees 210,000 $27.28
Total 840,000
Such options shall be vested immediately, and shall expire after the expiration
of five (5) years from the date hereof. One-half of such options shall be
exercisable only after the expiration of one year from the date of grant, and
the remaining one-half shall be exercisable after two years from the date of
grant. Such options shall otherwise be issued under the terms and conditions of
the Company's 1999 Stock Plan with the exception that such options shall not
terminate if such person's employment or other relationship with the Company
terminates.
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4. None of the above provisions shall be deemed to limit or in any
other way affect the right or benefits to which you or the Key Employees may be
entitled pursuant to a "fundamental change," due to equity ownership or
otherwise. To the extent deemed necessary by legal counsel to the Company, the
Board of Directors will take all actions and make appropriate recommendations to
the Company's stockholders, including the recommendation that this letter
agreement be approved by at least seventy-five percent of the stockholders, so
that the so-called "golden parachute" provisions of the Internal Revenue Code
("Code") Section 280G do not apply to the Company and the provisions of Code
Section 4999 do not apply to the Management Group or to any Key Employee.
5. Except as otherwise provided herein, the provisions of this letter
agreement shall terminate and be of no further force or effect upon the
occurrence of the first "fundamental change" and payment of the Incentive
Payment or if a "fundamental change" does not occur on or before June 21, 2001
(the "Termination Date"); provided, however, that the term hereof may be
extended by the Board of Directors for a single additional three-month period in
the event that the Company or its shareholders are actively engaged in bona-fide
negotiations with respect to a "fundamental change" on the date which should,
absent such extension, have been Termination Date.
6. As used herein, the term "Proceeds" shall mean the aggregate value
of the (i) proceeds paid or payable, in the case of Sale, to the holders of the
Company's equity securities in any transaction resulting in a "fundamental
change" after payment (or assumption by the acquirer) of all outstanding
obligations of the Company (to the extent such need to be discharged at the time
of, or remain the obligation of, the Company or its shareholders following the
"fundamental change"), including but not limited to all promissory notes, lines
of credit, investment banking fees, any severance payments to officers,
employees, and independent consultants, or (ii) in the case of a Public
Offering, the average daily closing price of the Company's Common Stock for the
90-day period immediately following the effectiveness of the Public Offering
multiplied by the number of shares of the Company's Common Stock outstanding, on
a fully diluted basis, on the 90th day immediately following the effectiveness
of the Public Offering.
This is a binding agreement among the parties and supersedes all other
agreements and understandings between the parties (excluding any employment
agreements and stock option agreements) relating to payments to you in the event
of a "fundamental change."
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Please indicate your acceptance of the foregoing by signing and
returning one copy of the undersigned.
XXXXXXXX.XXX, INC.
By: /s/ XXXX X. XXXXXXXXXX
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Name: Xxxx X. XxXxxxxxxx
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Title: Chairman, President and
Chief Executive Officer
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MANAGEMENT GROUP
Agreed and Accepted:
/s/ XXXX XXXX
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Xxxx Xxxx
/s/ XXXXX XXXXXX
---------------------------------
Xxxxx Xxxxxx
/s/ XXXX X. XXXXXXXXXX
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Xxxx X. XxXxxxxxxx
/s/ XXXXX XXXXXX
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Xxxxx XxXxxx
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