June 2, 1995
Chemical Xxxxxx Tank Lines, Inc.
and Chemical Xxxxxx Corporation
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Gentlemen:
This will set forth the terms under which I will be employed by
Chemical Xxxxxx Tank Lines, Inc. ("Tank Lines") and a member of the Board of
Directors of Tank Lines's sole parent, Chemical Xxxxxx Corporation (the
"Parent") (Tank Lines and the Parent being collectively referred to as the
"Companies"), as follows:
1. I will be President and Chief Executive Officer of Tank Lines, a
member of its Board of Directors of the Parent. I will report directly to Xxxxx
X. Xxxxxxxx. Xx. Xxxxxxxx and Xxxxxx XxXxxxxx (the "Shareholders") are the
principal and controlling shareholders of the Parent. My employment will
commence on or about July 14, 1995.
2. The Companies will pay me a base salary at the rate of $300,000 per
year with an annual performance and salary review at the end of each fiscal year
of the Companies. In no event will my base salary be reduced.
3. The Companies will pay me a bonus based on targets mutually agreed
upon by you and me each year. Presently, Tank Lines sets an operating profit
goal each year and the attainment of that goal will result in a bonus to me of
100% of my base salary. The bonus arrangement will not be capped, so that a
bonus of more than 100% is possible. If 100% of the goal is not attained, a
bonus computed on a sliding scale will be payable. I will be guaranteed a
minimum bonus of 50% of my base salary for the remainder of 1995 (prorated on a
per diem basis) and for 1996. Each such bonus for each calendar year will be
paid at the time the Companies' customarily pay executive bonuses, but no later
than 90 days after the completion of the Companies' audit for such calendar
year. If I am not employed by the Companies for the entire calendar year, my
bonus for that calendar year will be prorated by prorating the targets for that
calendar year and prorating the amount of the bonus based on the prorated
targets, it being understood, however, that for 1995 and 1996 my bonuses will
not be less than the foregoing minimum bonuses for those years prorated on a per
diem basis. The Companies will also pay me an annual supplementary bonus for
each year on or before January 31st of the following year. The supplementary
bonus will be not less than an amount equal to the interest payable under my
note(s) referred to in paragraph 8 for the prior calendar year less the amount
of any dividends which were paid to me during such prior calendar year on my
common stock of the Parent. In the event of the termination of my employment for
any reason (including death or disability), I (or, in
the case of my death or disability, my representative) shall have the option to
require the Companies to purchase for cash all of my stock of the Parent at fair
market value. If the Companies and I are unable to agree on the fair market
value, we will mutually select a recognized investment banker or appraiser to
determine the fair market value of my stock, which decision will be binding. The
fees and costs of the appraiser shall be paid by the Companies.
4. I will be entitled to the benefits package made available to other
executives at Tank Lines. A copy of a summary of the benefit plans have been
furnished to me. In addition, for business purposes, I will be entitled, without
cost to me, to the use of a car of my choice supplied by Tank Lines and to a
club membership of my choice. The cost of the car cannot exceed a Cadillac or
its equivalent. The cost of the club membership which the Companies will pay
will be the initiation fee, base dues and reasonable business expenses which I
will charge at the club. I will be responsible for my income taxes on the
benefit which I receive from the Companies' furnishing me with such car and club
membership. I will be entitled to four weeks per year of paid vacation. The
Companies will also pay my reasonable relocation expenses to the Philadelphia
area which shall include moving expenses, brokerage, legal and other costs of
selling my Chicago condominium and points (other than buying down a loan to
below market rates) and other costs in connection with purchasing a new home in
the Philadelphia area. If my employment is terminated because of a disability, I
will be entitled to continue to receive compensation until the disability policy
begins to be paid, so that there will be no gap. Upon my death or disability,
the Companies will continue to provide health insurance benefits for me and my
dependents for the full period provided by COBRA, at no cost to me. As an
officer an director of each of the Companies, I will be entitled to the benefit
of indemnification and exculpation provisions from each of the Companies, a copy
of which have been furnished to me.
5. If I am terminated at any time for any reason other than "Just
Cause" within the first three years of my employment, the Companies will pay me
severance equal to one year's base salary and will continue to provide health
insurance benefits for me and my dependents for one year also, without cost to
me. However, if I obtain employment within the one year period, my severance
benefits will be reduced by the amount of my compensation from such employment.
For purposes of the foregoing, "Just Cause" shall mean: prosecution for a
felony; conviction of a misdemeanor involving moral turpitude; my theft from the
Companies; and the substantial abandonment of my responsibilities.
6. If, during the first five years of my employment, there is a change
of control so that the Shareholders no longer control the Companies and either I
am terminated or choose not to work for the Companies under the control of the
new owners, the Companies will pay me, upon my termination, an amount equal to
two years of my then base salary and provide health benefits for me and my
dependents for the two years (if the Companies can do so after using reasonable
efforts or, if not, 18 months) following my termination at no cost to me.
7. Upon the commencement of my employment, the Companies shall pay me a
sum equal to $366,663 in cash.
8. I hereby agree to purchase from the Parent, and the Parent agrees to
sell me, 76 vested shares of common stock of the Parent (or slightly more than
2-1/2% of the outstanding shares of common stock, computed on a fully diluted
basis) at a price of $6,000 per share for a total purchase price of $456,000.
The purchase price will be paid by my promissory note under which I will be
personally liable for a maximum amount of $91,200. The note will be secured by a
pledge of my stock to the Parent and will bear interest at the rate of 6.83% per
annum. I will be entitled to receive dividends and other distributions on my
stock as long as I am not in default under the note. Interest will be payable
annually on or before January 31, 2004 or the sale of my shares (to the extent
of the net sale proceeds). Concurrently, you have given me a stock certificate
representing the shares which I have purchased and I have given you my note. If
the Parent hereafter redeems all or substantially all of the so-called "Xxxxx
block" of shares, consisting of 454 shares of common stock of the Parent, the
Parent will give me the opportunity then to purchase an additional number of
shares of common stock of the Parent at $6,000 per share (to be equitably
adjusted for stock splits, etc.). The number will be that number which is
necessary to increase my ownership of the outstanding shares of common stock of
the Parent on a fully diluted basis to 3% (or slightly more to take into account
a rounding-up for a fractional share). The purchase price will be paid by my
note, the terms of which will be identical to my note for the initial shares,
except for the amount of the principal, and the amount for which I am personally
liable (which will be 20% of the original principal amount), and except that the
interest rate for the additional shares will be at the then lowest applicable
interest rate that will not result in the imputation of interest for federal
income tax purposes.
9. I will make and file with the Internal Revenue Service a Section
83(b) election. If the Internal Revenue Service should take the position that
my acquisition of any of the shares of common stock of the Parent results in
compensation to me, the Companies will pay me a sum equal to my federal, state
and local income taxes on such compensation. Such payment shall be grossed up
for the amount of such taxes on such payment.
10. Parent hereby grants to me registration rights consisting of (a)
one demand registration right after an initial public offering of any capital
stock of the Parent provided that the registration can be done on a form S-3 or
other available "short form" registration statement, and (b) piggy-back
registration rights with respect to all registration statements filed by Parent
(other than on form S-4 or S-8). Such piggy-back registration rights shall be
on a pro rata basis with the Shareholders. The terms of such demand and
piggy-back registration rights shall be customary including my signing customary
indemnifications, it being understood, however, that I shall not be required to
pay any portion of the costs and expenses in connection with any such
registration. The Parent also hereby grants to me pre-emptive rights shall allow
me to purchase a proportionate amount of all new securities issued by the Parent
to the same extent and on the same terms per share as the Shareholders.
11. The Shareholders hereby grant me tag-along rights so that if either
or both of the Shareholders sell stock in the Parent to a third party, they or
he will, as a condition of such sale, grant me the right to sell a proportionate
number of my shares to the third party for cash at the same price per share and
at the same terms as the selling Shareholder(s).
12. I have entered into a non-compete agreement with my present
employer which contains the provisions set forth on Exhibit A attached hereto.
The Companies agree, at my option, to pay my reasonable attorneys' fees and
litigation costs in the event that a lawsuit is brought against me by my former
employer for violating those provisions as a result of my employment with the
companies, provided that if I exercise my option, the Companies shall have the
right reasonably to control the litigation, provided, further, that they will
keep me advised of all significant events, they will consult with me as to major
decisions and will not be unreasonably withheld. If the attorneys representing
me determine that they have a conflict with the Companies, I will be entitled to
retain my own attorneys, the fees and costs of which will be paid by the
Companies.
13. The Companies will pay the reasonable fees and costs of my
attorneys in connection with this letter, provided that the fees shall not
exceed $2,500.00.
14. My pre-emptive rights and my tag-along rights set forth in
paragraphs 10 and 11 shall terminate upon the completion of an initial public
offering of the common stock of the Parent provided such stock is listed on a
national stock exchange or traded on the NASDAQ national market.
If this letter correctly sets forth our agreement, please sign and
return the enclosed copy.
Very truly yours,
/s/ Xxxxxx X. Xxxxx
------------------------
Xxxxxx X. Xxxxx
AGREED AND ACCEPTED:
CHEMICAL XXXXXX TANK LINES, INC.
By: Xxxxx X. Xxxxxxxx
----------------------------
CHEMICAL XXXXXX CORPORATION
By: Xxxxx X. Xxxxxxxx
----------------------------
The undersigned Shareholders agree to comply with the registration,
tag-along and pre-emptive rights granted to Xxxxxx X. Xxxxx in paragraphs 10 and
11 of the above letter.
/s/ Xxxxx X. Xxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxx XxXxxxxx
--------------------------
Xxxxxx XxXxxxxx
