THE STERLING GROUP
THE STERLING GROUP, INC.
EIGHT GREENWAY PLAZA, SUITE 702
HOUSTON, TEXAS 77046
713-877-8257
FAX 713-877-1824
May 6, 1996
Texas Petrochemical Holdings, Inc.
TPC Holding Corp.
8 Greenway Plaza, Suite 702
Houston, Texas 77046
Ladies and Gentlemen:
This letter agreement will confirm the agreement between Texas Petrochemical
Holdings, Inc. ("Holdings") and TPC Holding Corp. ("TPCHC"), on behalf of
themselves and their respective present and future direct and indirect
wholly-owned subsidiaries (collectively, the "Companies" and individually, a
"Company"), and The Sterling Group, Inc. ("Sterling") in connection with TPCHC's
acquisition of the common stock of Texas Olefins Company and its subsidiary
Texas Petrochemicals Corporation (the "Acquisition"), as follows:
1. SERVICES. Sterling has provided or will provide consulting services prior
to the closing to Holdings, TPCHC and the Companies in connection with the
organization of Holdings, TPCHC and the Companies, structuring the
Acquisition and the financing thereof, arrangements for outside consulting
services in connection with the Acquisition, advice with respect to
employee benefit and compensation arrangements and other reasonable
assistance prior to the closing of the Acquisition when and as requested by
Holdings, TPCHC or any of the Companies.
2. FEE AND EXPENSES. For its services in connection with the Acquisition,
Sterling will be entitled to receive from the TPCHC at the consummation of
the Acquisition a fee in the amount of $4,000,000 and reimbursement of all
expenses paid or incurred by Sterling in connection therewith.
3. INDEMNIFICATION. Holdings and TPCHC, on behalf of themselves and each of
the Companies, jointly and severally, agree to indemnify and hold harmless
Sterling, its consultants, each of their respective controlling persons and
each director, officer, employee, principal, consultant, affiliate and
agent thereof (each an "Indemnified Person") from and against any and all
losses, claims, damages and liabilities, joint or several, to which any
Indemnified Person may become subject relating to or arising out of, or in
connection with, any advice or services provided under this Agreement or
the transactions contemplated by this Agreement, the Acquisition
(including, without limitation, the use of proceeds from the sale of
securities and the financing of the Acquisition) or any related transaction
(including without limitation, any engagement letters entered into by
Sterling with CS First Boston Corporation, Merrill Lynch & Co., or any
other investment banking firm with respect to the financing of the
Acquisition, and that certain letter agreement between Sterling and Texas
Commerce Bank National Association dated April 30, 1996 and the
transactions contemplated thereby), and to reimburse each Indemnified
Person, promptly upon demand, for expenses (including reasonable counsel
fees and expenses) as they are incurred in connection with the
investigation of, giving testimony or furnishing documents for, preparation
for or defense of any pending or threatened loss, claim, damage or
liability, or any litigation, proceeding or other action in respect thereof
(collectively, "Actions"), including any amount paid in settlement of any
litigation, proceeding or other action (commenced or threatened), to which
Holdings shall have consented in writing (such consent not to be
unreasonably withheld), whether or not any Indemnified Person is a party
and whether or not liability resulted therefrom; provided, however, that
the indemnity contained in this Agreement will not apply to any Indemnified
Person with respect to losses, claims, damages, liabilities or related
expenses that are found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted from the
willful misconduct or gross negligence of such Indemnified Person. In
addition, neither Holdings, TPCHC nor any of the Companies will, without
prior written consent of Sterling, settle, compromise or consent to the
entry of any judgment in or otherwise seek to terminate any pending or
threatened Action in respect of which indemnification or contribution may
be sought hereunder (whether or not any Indemnified Person is a party
thereto) unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Person from all
liabilities arising out of such Action.
Promptly after receipt by an Indemnified Person of written notice with
respect to the commencement of any investigation, claim or other Action
with respect to which such Indemnified Person may seek indemnification
hereunder, such Indemnified Person shall notify Holdings in writing at the
address set forth on the first page hereof of such Action; but the omission
so to notify Holdings shall not relieve Holdings, TPCHC or any of the
Companies from any liability that Holdings, TPCHC or any of the Companies
may have hereunder to such Indemnified Person. The Indemnified Persons
shall be entitled to retain separate counsel of their own choice; provided
that Holdings, TPCHC or any of the Companies shall not be responsible for
the fees and expenses of more than one firm of attorneys (and local
counsel, if appropriate) for all of the Indemnified Persons in any single
Action, unless the Indemnified Persons shall have been advised that there
may be one or more legal defenses available to any of them that may be
different from or additional to those available to the others, in which
event each such Indemnified Person shall be entitled to separate counsel at
the expense of Holdings, TPCHC and the Companies.
If indemnification is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) for reason of public policy or
any other reason not to
be available, Holdings and TPCHC, on behalf of themselves and each of the
Companies, and the Indemnified Person shall contribute to the losses, claims,
damages, liabilities or expenses (or Actions in respect thereof) for which
such indemnification is held unavailable in such proportion as is appropriate
to reflect the relative benefits to and fault of Holdings, TPCHC or any of
the Companies, on the one hand, and the Indemnified Person, on the other
hand, in connection with the matter giving rise to such losses, claims,
damages, liabilities or expenses (or Actions in respect thereof).
Notwithstanding the foregoing, Sterling shall not be obligated to contribute
any amount hereunder that exceeds the fees and expenses received by Sterling
hereunder. No person found liable for a fraudulent misrepresentation (within
the meaning of Section 11 (f) of the Securities Act of 1933, as amended)
shall be entitled to contribution from any person who is not found liable for
such fraudulent misrepresentation.
Holdings and TPCHC, on behalf of themselves and each of the Companies, also
agree, jointly and severally, that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to
Holdings, TPCHC or any of the Companies for or in connection with advice or
services rendered or to be rendered by any Indemnified Person pursuant to
this Agreement, the Acquisition, the financing thereof, the transactions
contemplated thereby or any Indemnified Person's actions or inactions in
connection with any such advice, services or transactions except for
liabilities that are determined by a judgment of a court of competent
jurisdiction (not subject to further appeal) to have resulted from such
Indemnified Person's gross negligence or willful misconduct in connection
with any such advice, actions, inactions or services.
If any term, provision, covenant or restriction contained in this Section is
held by a court of competent jurisdiction or other authority to be invalid,
void, unenforceable or against public policy, the remainder of the terms,
provisions, covenants and restrictions contained in the Agreement (including
this Section) shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
The provisions contained in this Section 3 shall remain in full force and
effect (i) whether or not any of the transactions contemplated hereby are
consummated, (ii) regardless of the termination or completion of any
Indemnified Person's services hereunder, (iii) notwithstanding the
termination of this Agreement and (iv) notwithstanding any investigation made
by or on behalf of Sterling or any Indemnified Person.
This Section 3 is for the benefit of the parties hereto and the Indemnified
Persons, and may be enforced directly by any Indemnified Person, whether or
not a party to this Agreement.
4. GOVERNING LAW. This Agreement shall be governed by and constructed in
accordance with, the laws of the State of Texas, without giving effect to
choice of law doctrines requiring the application of laws of any other
jurisdiction.
If the foregoing meets with your approval and correctly expresses our agreement,
please sign and return the enclosed duplicate copy of this letter.
Very truly yours,
THE STERLING GROUP, INC.
By: SUSAN O. RHENEY
Name: SUSAN O. RHENEY
Title: PRINCIPAL
ACKNOWLEDGED AND AGREED
TEXAS PETROCHEMICAL HOLDINGS, INC.
By: WILLIAM A. McMINN
Name: WILLIAM A. McMINN
Title: CHAIRMAN
TPC HOLDING CORP.
By: WILLIAM A. McMINN
Name: WILLIAM McMINN
Title: CHAIRMAN