Exhibit 10.7 (e)(ii)
September 1, 1993
BEVERLEY L. HAYES
Dear Bev:
This letter serves to amend your Gross-Up Agreement with IMCERA Group Inc. dated
July 1, 1992. The amendment is necessary due to the recent increase in your
compensation and executive benefits.
Effective upon your acceptance of this amendment, the last sentence of the
opening paragraph of your Gross-Up Agreement is amended as follows:
"Notwithstanding the foregoing, your Gross-Up Payment, if any, may not
exceed $834,461."
Except as modified hereby all other terms and provisions of your Gross-Up
Agreement with the Company will remain in full force and effect.
Please indicate your acceptance of the amendment to your Gross-Up Agreement
dated July 1, 1992, by signing the attached copy of this letter and returning it
to my attention.
Very truly yours,
/s/ Ray Holman
I have read this letter and
understand and accept its terms.
/s/ B.L. Hayes
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Beverley L. Hayes
Dated this 1st day of September, 1993
July 1, 1992
BEVERLEY L. HAYES
Dear Bev,
This letter is to assure you that in the event you become entitled to payments
by operation of the Employment Agreement dated March 7, 1990 ("Agreement")
between you and IMCERA Group Inc., formerly known as International Minerals &
Chemical Corporation ("IMCERA"), and if any of the payments to be made under the
Agreement ("Agreement Payments") will be subject to the tax ("Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
("Code") (or any similar tax that may hereafter be imposed), IMCERA shall pay to
you at the time specified in paragraph (c) below an additional amount ("Gross-up
Payment") such that the net amount retained by you, after deduction of any
Excise Tax on the Total Payments (as hereinafter defined) and any federal, state
and local income tax and Excise Tax upon the Gross-up Payment provided for by
this paragraph, but before deduction for any federal, state or local income tax
on the Agreement Payments, shall be equal to the sum of (a) the Total Payments,
and (b) an amount equal to the product of any deductions disallowed because of
the inclusion of the Gross-up Payment in your adjusted gross income and the
highest applicable marginal rate of federal income taxation for the calendar
year in which the Gross-up Payment is to be made. Notwithstanding the
foregoing, your Gross-up Payment, if any, may not exceed $576,199.
(1) For purposes of determining whether any of the Agreement Payments will
be subject to the Excise Tax and the amount of such Excise Tax,
(a) any other payments or benefits received or to be received by you
in connection with a change in control (as the term is defined in the
IMCERA Group Inc. Management Compensation and Benefit Assurance Program) of
IMCERA or your termination of employment whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with IMCERA, any
person whose actions result in a change of control of IMCERA or any person
affiliated with IMCERA or such person) (which, together with the Agreement
Payments, shall constitute the "Total Payments") shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code,
and all "excess parachute payments" within the meaning of Section 280G(b)
(1) of the Code shall be treated as subject to the Excise Tax, unless in
the opinion of tax counsel selected by IMCERA's independent auditors, such
other payments or benefits (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are otherwise not
subject to the Excise Tax,
(b) the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (i) the total
amount of the Total Payments or (ii) the amount of excess parachute
payments within the meaning of, Section 280G(b)(1) of the Code (after
applying clause (a), above), and
(c) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by IMCERA's independent auditors in accordance
with the principles of Sections 280(G)(d)(3) and (4) of the Code.
(2) For purposes of determining the amount of the Gross-up Payment, you
shall be deemed to (x) pay federal income taxes at the highest marginal rate of
federal income taxation for the calendar year in which the Gross-up Payment is
to be made and, (y) pay the applicable state and local income taxes at the
highest marginal rate of taxation for the calendar year in which the Gross-up
Payment is to be made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes (determined
without regard to limitations on deductions based upon the amount of your
adjusted gross income), and (z) have otherwise allowable deductions for federal
income tax purposes at least equal to those disallowed because of the inclusion
of the Gross-up Payment in your adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, you shall repay to
IMCERA at the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-up Payment attributable to such reduction
(plus the portion of the Gross-up Payment attributable to the Excise Tax and
federal and state and local income tax imposed on the portion of the Gross-up
Payment being repaid by you if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax deduction), plus interest on
the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time the Gross-up Payment is made (including
by reason of any payment the existence or amount of which cannot be determined
at the time of the Gross-up Payment), IMCERA shall make an additional gross-up
payment in respect of sch excess (plus any interest payable with respect of such
excess) at the time that the amount of such excess is finally determined.
(3) The Gross-up Payment or portion thereof provided for in Paragraphs (1)
and (2)
above shall be paid not later than the thirtieth day following payment of any
amounts under the Agreement; provided, however, that if the amount of such
Gross-up Payment or portion thereof cannot be finally determined on or before
such day, IMCERA shall pay to you on such day an estimate, as determined in good
faith by IMCERA, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate provided in
Section 1274 (b)(2)(B) of the Code) as soon as the amount thereof can be
determined, but in no event later than the forty-fifth day after payment of any
amounts under the Agreement. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by IMCERA to you, payable on the fifth day after
demand by IMCERA (together with interest at the rate provided in Section 1274
(b)(2)(B) of the Code).
Should a change in control occur (as defined in the Management Compensation and
Benefit Assurance Program) and should Gross-up Payments become due you as a
result of the operation of your Agreement, then such Gross-up Payments will be
paid to you from the Trust Agreement between IMCERA Group Inc. and Wachovia Bank
of North Carolina, N.A., which has been established to protect payment
obligations of IMCERA under this letter agreement.
IMCERA is pleased to be able to provide you with this additional assurance of
economic protection in the event of a change in control.
Please sign, date and return the original of this letter in the envelope
provided and retain the enclosed copy for your records.
Very truly yours,
/s/ M.B. Ingle
M.B. Ingle
I have read this letter and
understand and accept its terms.
/s/ B.L. Hayes
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(Signed)
7-1-92
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(Dated)