October 31, 1997
Mr. X. Xxxxxx Xxxxxx
Xx. Xxxxxxx X. Xxxxxxxxxx
X. Xxxxxx Xxxxxx & Associates, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This letter is to confirm our understanding with regard to the compensation to
be paid to Messrs. X. Xxxxxx Xxxxxx and Xxxxxxx X. Xxxxxxxxxx (collectively, the
"Employees" and individually, an "Employee") for services to be rendered to
Xxxxxx Chemical Group, Inc. ("HCG") and its subsidiaries (including, without
limitation, Great Salt Lake Minerals Corporation ("GSL"), Xxxxxx Chemical North
America, Inc. ("HCNA"), Xxxxxx Soda Products Europe ("HSPE"), Xxxxxxx & Xxxxx
("M&W"), North American Chemical Company ("NACC"), North American Salt Company
("NASC"), Salt Union Limited ("SUL"), and Societa Chimica Larderello ("SCL")
(collectively, the "Companies", and individually, a "Company"). This letter
supersedes and cancels: (a) the letter of Agreement dated October 28, 1993 (the
"1993 Agreement"); (b) the Xxxxxx Consultancy Agreement with M&W dated March 24,
1994; (c) the Xxxxxxxxxx Consultancy Agreement dated March 24, 1994; and (d) the
DGH&A Management Agreement dated December 15, 1995.
A. During the term of this Agreement, the Employees will render such services of
an executive and administrative character to the Companies as the respective
boards of directors of the Companies may from time to time direct. Each Employee
will devote his best efforts and such of his business time and attention to the
business of the Companies as is necessary to attain the operational and
strategic goals for the benefit of the stockholders of the Companies. In the
event that any employee fails to devote a majority of his business time and
attention to the business of the Companies, then the Compensation Committee of
the board of directors of HCG (the "Compensation Committee") shall be entitled
to make such adjustments in the amounts payable under this Agreement to such
Employee as it may reasonably determine to reflect the reduction in the
performance of such services.
B. For services rendered during the term of this Agreement, each Employee
shall be entitled to receive monthly compensation in the amount and for the
periods set forth below:
DGH AJP
November 1997 - December 1997 $62,500 $43,750
January 1998 - March 2001 $50,000 $35,000
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C. Each Employee will participate in the Incentive Compensation Plan ("ICP") for
executives of the Company under the same rules and conditions applicable to all
other ICP participants, with the exceptions outlined below:
For Fiscal Year 1998 DGH AJP
------------------------------------------ --- ---
Fiscal Year Earnings for ICP Purposes $600,000 $420,000
Nominal ICP Level 100% 100%
For Fiscal Years 1999 through 2001
------------------------------------------
ICP Payment at 100% of HCG Target or above $600,000 $420,000
ICP Payment at 85% of HCG Target $300,000 $210,000
ICP Payment below 85% of HCG Target $0 $0
For HCG performance between 85 and 100% of Target, payment
will be made on a pro-rata basis.
Further, any amount earned under the ICP will only be payable in the form of
deep discount stock options. Also, beginning with Fiscal Year 1999, the above
outlines the only basis under which the Employees will be entitled to receive
ICP payments.
D. The Employees shall be entitled to participate in and be covered by any and
all employee pension or welfare benefit plans under the same terms and
conditions and to the same extent as such participation and coverage are made
available to other employees of the Company.
E. The Companies agree to employ the Employees through March 31, 2001 and no
Employee shall be terminated except for Cause (as such term is defined in the
Stockholders Agreement dated as of October 28, 1993 among HCG and its
Stockholders, as amended (the "Stockholders Agreement") as in effect on the date
hereof). In the event of the termination of any Employee for cause or the
voluntary resignation of any Employee prior to March 31, 2001, this Agreement
shall be automatically terminated and of no further force and effect with
respect to such Employee. In the event of the incapacity of any Employee during
the term of this Agreement, the Agreement shall continue in full force and
effect. In the event of the death of any Employee during the term of this
Agreement, the Agreement shall also continue in full force and effect; provided,
however, the monthly compensation provisions outlined in Paragraph B shall cease
on the last day of the month following the month in which the Employee has died.
F. In the event of a change of control (other than a public offering) prior to
March 31, 2001 which results in all HCG shareholders collectively selling
essentially 100% of their holdings of HCG, the Employees will be entitled to the
payments and benefits outlined in
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subparagraphs 1, 2, and 3 below; and this Agreement shall then terminate upon
the effective date of such change of control.
DGH AJP
--- ---
1. Exit Payment $600,000 $420,000
2. Exit Bonus. The Employees will be entitled to an Exit Bonus
based on the realized shareholder equity value of HCG at the
time of the change of control, in accordance with the
following formula:
Equity Value DGH AJP
------------ --- ---
Less than $150MM $ 0 $ 0
$150MM $ 750,000 $ 525,000
$300MM $3,500,000 $2,450,000
$500MM or above $6,000,000 $4,200,000
Exit Bonus payments for an equity value between $150MM and
$300MM will be made on a pro-rata basis between these points;
payments for an equity value between $300MM and $500MM will
likewise be made on a pro-rata basis between these points.
3. Welfare Benefits. Upon the termination of each Employee's
coverage under any HCG Welfare Plan as a result of a change of
control, the Employee (and each of his covered dependents)
shall have the right to elect continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") for as long as such Welfare Plans exist. The
participation in and coverage of the Employee (and/or each of
his covered dependents) under this provision shall be
conditioned upon his (or his covered dependents') payment when
due of the aggregate monthly premium for such coverage.
G. Each Employee agrees that he shall not at any time during or following the
term of this Agreement (or any extension thereof), directly or indirectly,
disclose, transfer or use, for any purpose whatsoever, any information,
observations or data obtained by him during the course of his employment by the
Companies concerning the business or affairs of the Companies in any manner that
is adverse to any Company, except as may be required by law.
H. This Agreement shall be effective November 1, 1997. This Agreement
constitutes the entire agreement among the parties relating to the Employees'
compensation and benefits for services rendered to HCG and its subsidiaries and
supersedes all prior agreements with HCG and/or any of its subsidiaries, whether
oral or written, which may have related to the subject matter hereof including,
without limitation, the 1993, 1994 and
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1995 agreements. Except as expressly contemplated herein, this Agreement may be
amended or modified only by written agreement signed by each of the parties
hereto; provided that any amendment or modification (including but not limited
to any addition or other change to the compensation and benefits outlined in
this Agreement) must be authorized by a majority of the disinterested members of
the Compensation Committee. The obligations of the Companies hereunder shall be
joint and several. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in accordance
with the internal law (and not the law of conflicts) of the State of New York.
Kindly execute the enclosed copy of this Agreement in the space provided below
to indicate your agreement to be bound by the terms hereof.
XXXXXX CHEMICAL GROUP, INC.
By /s/ X. X. Xxxxxxxxx XXX
CHAIRMAN, COMPENSATION COMMITTEE
BOARD OF DIRECTORS
By /s/ Xxxxxxx X. Xxxxxx, Xx.
SENIOR VICE PRESIDENT
HUMAN RESOURCES
Xxxxxx and accepted this 31st day of Oct, 1997.
/s/ D. Xxxxxx Xxxxxx
X. Xxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxx
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