EXHIBIT 10.15
March 21, 1996
Jack Golsen
1299 Glenbrook Terrace
Oklahoma City, Oklahoma 73116
RE: Employment Agreement and Amendment to Severance Agreement dated
January 17, 1989
Dear Jack:
The Board of Directors of LSB Industries, Inc. ("LSB" or "the Company")
has considered and recognizes the long standing contribution that you have
made to LSB and its subsidiaries as LSB's founder, president and Chairman of
the Board. We have considered and reviewed your invaluable contributions to
the Company in these various roles and your future value to LSB. In
recognition of your contributions and importance to the Company, it is our
purpose and goal to encourage you to always make your services available to
LSB. To that end, we have met and agree to the following Agreement
("Agreement"). If you accept these terms and agree to the following, please
sign and return the enclosed copy of this letter.
WHEREAS the services, knowledge and contributions of Jack E. Golsen are
considered of utmost value to LSB; and
WHEREAS, the Board of Directors desires to induce Jack E. Golsen to
continue to make his services and knowledge available to LSB.
NOW, THEREFORE, LSB Industries, Inc. hereby agrees to provide the
following compensation and benefits to Jack E. Golsen ("Golsen") for the term
set forth below:
1. Term. This Agreement shall commence immediately and shall continue for
three years ("the Initial Three Year Term"). At the end of the Initial
Three Year Term, this Agreement shall automatically extend for an
additional three year period (the "Second Three Year Term") unless
terminated by either party by the giving of written notice at least one
(1) year prior to the termination of the Initial Three Year Term. At
the end of the Second Three Year Term, this Agreement shall
automatically extend for an additional three year period unless
terminated by either party by the giving of written notice at least one
(1) year prior to the termination of the Second Three Year Term (the
"Third Three Year Term"). The Initial Three Year Term, Second Three
Year Term, and Third Three Year Term shall collectively be referred to
as the "Term".
2. Position and Duties.
a. The Company agrees to employ Golsen, and Golsen agrees to such
employment, as an Executive Officer of the Company or such other
position as is acceptable to Golsen in writing. For purposes of
this Agreement, "Board Chairman" or "Chairman of the Executive
Committee" shall be considered an Executive Officer. Golsen's
authority and duties shall be at least commensurate in all
material respects with the most significant of those exercised by
Golsen during the 12-month period immediately preceding the date
of this Agreement. Golsen's duties and services shall be
performed at the location where he was employed by the Company
immediately preceding the date of this Agreement or any other
office or location satisfactory to Golsen.
b. Excluding any periods of vacation and sick leave to which Golsen
is entitled, Golsen agrees to devote reasonable attention and time
to the business and affairs of the Company and, to the extent
necessary and consistent with Section 2.a. above, to discharge the
responsibilities assigned to him hereunder, to use reasonable
efforts to perform faithfully and efficiently such
responsibilities. It shall not be a violation of this Agreement
for Golsen to (i) serve on corporate, civic or charitable boards
or committees, (ii) deliver lectures, fulfill speaking engagements
or teach at educational institutes, and (iii) manage personal
investments, so long as such activities do not significantly
interfere with the performance of Golsen's responsibilities as an
employee of the Company in accordance with this Agreement. It is
expressly understood and agreed that, to the extent that any such
activities have been conducted by Golsen prior to the date of this
Agreement, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto)
subsequent to the date of this Agreement shall not thereafter be
deemed to interfere with the performance of Golsen's
responsibilities to the Company.
3. Compensation and Benefits.
a. Base Salary. The Company shall pay to Golsen an annual base
salary at his 1995 base rate of salary as such may be adjusted
from time to time by the Compensation Committee of the Board of
Directors of the Company, but such shall never be adjusted to an
amount less than Golsen's 1995 base salary ("Annual Base Salary"),
payable in equal bi-weekly installments, less appropriate
withholdings and deductions, in accordance with the Company's
customary payroll practices.
b. Bonus. In addition to the Golsen's Annual Base Salary, as
adjusted, the Company shall pay to Golsen an annual bonus
("Bonus") as may be determined by the Compensation Committee of
the Board of Directors of LSB from time to time.
c. Benefits.
(1) Golsen shall be eligible for such employee benefits and
participation in employee benefit plans as are generally
made available to other employees of the Company, subject to
the terms and conditions of such benefits and plans and as
such benefits and plans may be changed by the Company from
time to time in its sole discretion. Such benefits in
existence as of the date hereof are as follows:
(a) Group medical insurance coverage.
(b) Group life insurance coverage.
(2) In addition, Golsen shall be eligible to participate in and
be provided the following individual benefits at a minimum:
(a) Stock options as granted from time to time by the
Company's Board of Directors or the Stock Option
Committee of the Board of Directors.
(b) Death benefit package as set forth in the agreement
between Golsen and the Company dated April 1, 1981 and
amended March 1, 1993, as hereafter amended, modified
or renewed.
(c) Split dollar life insurance in an amount approved by
the Compensation Committee of the Board of Directors
of LSB, but no less than $3,000,000.
(d) Severance Agreement, dated January 17, 1989, between
Golsen and the Company, as amended, modified or
renewed and attached hereto (the "Severance
Agreement"), except that the Severance Agreement is
hereby amended as follows:
i) Subsection 1.2 of the Severance Agreement is
hereby amended to read, in its entirety, as
follows:
"1.2 The "Change of Control Period" is the period commencing on the
date hereof and ending on the third anniversary of such; provided,
however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (the date one
year after the date hereof and each annual anniversary of such
date, is hereinafter referred to as the "Renewal Date"), the
Change of Control Period shall be automatically extended so as to
terminate three (3) years from such Renewal Date, unless at least
one (1) year prior to the Renewal Date the Company shall give
notice that the change of Control Period shall not be so
extended."
ii) Subsection 3.2 "Cause" of the Severance
Agreement is hereby amended to read, in its
entirety, as follows:
"3.2 Cause. The Company may terminate Golsen's employment for "Cause".
For purposes of this Agreement, termination of Golsen's employment
by the Company for "Cause" shall mean termination for one of the
following reasons:
"a. the ultimate conviction (after all appeals have been
decided) of Golsen of a felony involving moral turpitude by
a federal or state court of competent jurisdiction; or
"b. if Golsen's serious willful gross misconduct or willful
gross neglect of his duties as set forth herein has resulted
in material damage to the Company and its subsidiaries,
taken as a whole; provided that (i) no action or failure to
act by Golsen will constitute a reason for termination if
Golsen believed in good faith that such action or failure to
act was in the Company's or its subsidiaries' best interest,
and (ii) failure of Golsen to perform his duties hereunder
due to Disability shall not be considered willful gross
misconduct or willful gross negligence of duties for any
purpose."
iii) The Severance Agreement, as amended by this
Section 3c(2)(d), shall remain in full force and
effect.
(e) The Board hereby agrees that Golsen may, at his
option, purchase any life insurance policies in effect
on his life for an amount equal to the net cash value
of such insurance. The policy funding the benefit of
3c(2)(b) of this letter shall be excepted from this
option.
d. Expenses. The Company shall pay directly, or reimburse Golsen,
for any reasonable and necessary expenses and costs incurred by
Golsen in connection with or arising out of the performance of
Golsen's duties hereunder, provided that such expenses and costs
shall be paid or reimbursed subject to such rules, regulations,
and policies of the Company as established from time to time by
the Company. In the event that Golsen incurs legal fees and
expenses to enforce this Agreement, the Company shall reimburse
Golsen such fees and expenses in full.
e. Fringe Benefits. Golsen shall be entitled to all fringe benefits,
including but not limited to vacation, in accordance with the
most favorable plans, practices, programs and policies of the
Company during the 12-month period immediately preceding the date
of this Agreement, or, if more favorable to Golsen, as in effect
at any time thereafter with respect to other key management
employees of the Company.
f. Effect of Increases. Any increase in Annual Base Salary, Bonus or
any other benefit or perquisite described in this Agreement shall
in no way diminish any obligation of the Company under this
Agreement.
Nothing in this Agreement shall prevent or limit Golsen's continuing or
future participation in any benefit, bonus, incentive or other plan or
program provided by LSB or any of its affiliated companies and for which
Golsen may qualify, nor shall anything herein limit or otherwise affect
such rights as Golsen may have under any stock option or other agreement
with LSB or any of its affiliated companies.
4. Termination. During the term of this Agreement, the Company may
terminate Golsen's employment only for one of the following reasons:
a. the ultimate conviction (after all appeals have been decided) of
Golsen of a felony involving moral turpitude by a federal or state
court of competent jurisdiction; or
b. if Golsen's serious willful gross misconduct or willful gross
neglect of duties has resulted in material damage to the Company
and its subsidiaries taken as a whole; provided that (i) no action
or failure to act by Golsen will constitute a reason for
termination if Golsen believed in good faith that such action or
failure to act was in the Company's or its subsidiaries' best
interest and (ii) failure of Golsen to perform his duties
hereunder due to a disability shall not be considered willful
gross misconduct or willful gross neglect of duties for any
purpose; or
c. Golsen's death.
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 that Golsen's employment under
this Agreement is terminated for any reason:
d. the Company shall pay to Golsen:
(1) in a lump sum cash payment on the date of Golsen's
termination of employment, to the extent not therefor paid,
the balance of Golsen's Annual Base Salary through the date
of termination; and
(2) in the event that Golsen's employment is terminated for any
reason, other than under subparagraphs a or b of paragraph 1
of this Section 4 or Disability under Section 5 hereof, the
Company shall provide, at the Company's sole cost and
expense, to Golsen and/or Golsen's family or estate, in a
lump sum cash payment on the date of Golsen's termination of
employment, a sum equal to the amount of the Annual Base
Salary being paid to Golsen at the time of such termination
and the amount of the Bonus paid to Golsen for the last
fiscal year prior to such termination in which Golsen
received a Bonus times (i) the number of years remaining in
the Initial Three Year Term or the Second Three Year Term or
the Third Three Year Term, whichever is applicable at the
time of termination, or (ii) four (4) if the termination
occurs during the last twelve (12) months of the Initial
Three Year Term or the Second Three Year Term, whichever is
applicable at the time of termination. For this purposes of
this subparagraph (2), a partial year shall be considered a
full year. In the event that Golsen becomes disabled, the
Company agrees to pay him pursuant to Section 5 hereof.
e. In the event that Golsen's employment is terminated for any
reason, other than under subparagraphs a or b of paragraph 1 of
this Section 4 or Disability under Section 5, the Company shall
provide at the Company's sole cost and expense, to Golsen and/or
Golsen's family or estate all of the fringe benefits, benefits,
and individual benefits described in Section 3 hereof as though
Golsen's employment had not been terminated, including, but not
limited to, health, disability and life insurance, in accordance
with the most favorable plans, practices, programs or policies of
the Company during the remainder of the Initial Three Year Term or
the Second Three Year Term or the Third Three Year Term, whichever
is applicable at the time of such termination (unless such
termination occurred during the last twelve (12) months of the
Initial Three Year Term or the Second Three Year Term, whichever
is applicable at the time of such termination, then for the
remainder of the term in which such termination occurred and for
the full extension period that follows such termination. In the
event that Golsen becomes disabled, the Company agrees to pay him
pursuant to Section 5 hereof.
f. Golsen shall not be deemed to have been terminated by the Company
pursuant to the terms of Section 4 hereof unless and until there
shall have been delivered to Golsen a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths
(3/4ths) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to
Golsen and an opportunity for Golsen, together with Golsen's
counsel, to be heard before the Board ), finding that in the good
faith opinion of the Board, Golsen was guilty of conduct set forth
in Section 4a or 4b above and specifying the particulars thereof
in detail.
5. Disability. If Golsen shall be mentally or physically disabled from
properly performing his duties and responsibilities hereunder for a
period of twelve consecutive months within any two-year period, all as
determined by the Board in good faith and supported by medical evidence,
the Company shall pay and provide Golsen any salary bonus or benefits
remaining under the Initial Three Year Term of this Agreement or any
extension thereof. In addition, in the event of disability, after such
payments, the Company shall pay to Golsen annually 60% of his Present
Base Salary until his death. This provision shall be deemed to survive
the termination of this Agreement and the termination of Golsen's
employment under this Agreement.
6. Successors. This Agreement shall inure to the benefit of Golsen and
Golsen's heirs and assigns. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors (including any
purchaser of the assets of the Company). In the event of a Change of
Control (as defined in the Severance Agreement) of the Company, any
parent company or successor shall, in the case of a successor, by an
agreement in form and substance satisfactory to Golsen, expressly assume
and agree to perform this Agreement in writing prior to such change in
control and, in the case of a parent company, by an agreement in form
and substance satisfactory to Golsen, guarantee and agree to cause the
performance of this Agreement, in each case, in the same manner and to
the same extent as the Company would be required to perform if no Change
of Control had taken place.
7. Coordination with other Agreements. In the event that the Severance
Agreement and this Agreement are both in effect, the provisions of this
Agreement shall apply and be controlling in all respects; except, in the
event that there is a Change in Control (as defined in the Severance
Agreement) and if (i) within 24 months after the Control Date (as
defined in the Severance Agreement), the Company shall terminate
Golsen's employment, other than for Cause (as defined in the Severance
Agreement) or (ii) within 24 months after the Control Date (as defined
in the Severance Agreement), Golsen shall terminate his employment with
the Company for Good Reason (as defined in the Severance Agreement),
then, in such event, the Severance Agreement shall apply and be
controlling in all respects and this Agreement shall terminate.
Notwithstanding the foregoing, the Disability provisions of this
Agreement shall apply in all cases.
8. Governing Law, Severability. This Agreement shall be governed by the
laws of Oklahoma. It constitutes the entire agreement among the
parties. Should any provision of this Agreement be unenforceable or
prohibited by an applicable law, this Agreement shall be considered
divisible as to such provision which shall be inoperative, and the
remainder of this Agreement shall be valid and binding as though such
provision were not included herein. All amendments hereto shall be in
writing and be valid only if executed by both parties.
9. Notice. Any and all notices to be required or permitted to be in
writing and shall be delivered to the party to receive the same by U.S.
certified mail, return receipt requested, addressed to the following:
Company: LSB Industries, Inc.
P.O. Box 754
Oklahoma City, OK 73101
Golsen: Jack E. Golsen
1299 Glenbrook Terrace
Oklahoma City, OK 73116
or to such other address as a party shall from time to time advise the other
party. Any notice given under this Agreement shall be effective, if sent by
mail, on the date of placing the same in the United States mail, the date of
such delivery.
On behalf of LSB Industries, Inc., the Compensation Committee of the
Board of Directors of the Company approved this Agreement on the 21st day of
March, 1996, and the Board of Directors of the Company approved this Agreement
and the execution, delivery and performance of this Agreement by the Company
on the 21st day of March, 1996. This Agreement is executed and effective on
this 21st day of March, 1996.
LSB INDUSTRIES, INC.
By: _______________________________
Title: Senior Vice President
I hereby agree to this Agreement effective this _____ day of
_____________, 1996.
___________________________________
Jack E. Golsen
2\hbgc\jgolsen2.321