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June 20, 1996
Stephen J. Carlotti
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, Rhode Island 02903
Dear Steve:
This letter will serve to confirm the substance of our prior discussions
concerning your continued engagement as a consultant to AMTROL Inc. (the
"Company"). You agree to serve as a member of the Company's Board of Directors
and as its Vice Chairman. You will provide executive services to the Company in
order to assist the Chairman in the day-to-day management of the Company. In
addition, you will lead and supervise the activities associated with the
Company's engagement of Smith Barney, Inc. ("Smith Barney") and HSBC Securities,
Inc. to assist the Board in determining the appropriate steps to be taken to
enhance shareholder value. You will serve as primary Company spokesman in
connection with the process leading to and the negotiation and consummation of
any transaction recommended to the Board by Smith Barney. You shall have such
authority as is necessary to carry out of the terms of this engagement, but you
agree to keep the Chairman informed of your activities and to report regularly
to the Board and the Executive Committee concerning the status and prospects of
the Company and any recommendations that you may have.
The Company recognizes that you are a full-time partner of the law firm
of Hinckley, Allen & Snyder ("Hinckley Allen") and that, pursuant to Hinckley
Allen's partnership agreement, any compensation paid to you by the Company will
be paid over to Hinckley Allen. However, the Company wishes to make explicit to
you and to Hinckley Allen that your engagement by the Company is not as an
attorney but as a business consultant to the Company. In this regard, the
Company will treat you as an independent contractor and not as an employee.
For your services, the Company will pay to you the sum of $300 an hour
and shall reimburse you for reasonable out-of-pocket expenses incurred by you in
performing services hereunder. Any amounts paid to you in your capacity as a
director of the Company, as a retainer or for attendance at meetings of the
Board or committees of which you are a member, shall be credited against such
bills. The Company agrees that such bills may be sent by Hinckley Allen as a
matter of convenience to you and the Company, but the sending of any such bills
by Hinckley Allen shall not in any way imply that the services being rendered by
you are other than as a business consultant.
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Stephen J. Carlotti
June 20, 1996
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In addition to the payments as aforesaid, the Company agrees to pay you
(i) an advisory fee of $170,000 (the "Advisory Fee") payable in cash in four
quarterly installments of $42,500 each, commencing on October 1, 1996 and (ii) a
transaction fee (the "Transaction fee"), to be determined in accordance with
SCHEDULE A hereto, payable in cash upon the closing of a transaction. The
Advisory Fee, to the extent previously paid, shall be credited against the
Transaction Fee payable to you hereunder.
The Company may terminate this arrangement at any time, but no such
termination shall relieve the Company of its obligation to pay to you the sums
set forth in the preceding paragraph if the Company should engage in a
transaction within twelve months of the effective date of such termination with
any person identified by Smith Barney as a potential party during the course of
your engagement. You agree that you will continue to provide services pursuant
to this agreement for so long as the Company may request; provided, however,
that at the expiration of one year from the date hereof or upon a change of
control of the Company you may terminate this agreement.
If the foregoing correctly represents your understanding of the terms
and conditions of your engagement, please acknowledge the same on the copy of
this letter which is enclosed.
Very truly yours,
AMTROL INC.
By: /s/ Albert W. Ondis
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Albert W. Ondis
Chairman,
Compensation Committee
Agreed and Accepted
as of June 20, 1996
/s/ Stephen J. Carlotti
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Stephen J. Carlotti
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SCHEDULE A
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TRANSACTION FEE CALCULATION
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The Transaction Fee shall be equal to 0.5375% of the amount by which the
Transaction Value exceeds $111,620,730.
For purposes of this letter agreement, "Transaction Value" shall mean (i) in the
case of the sale, exchange of the Company's equity securities, the total
consideration paid to shareholders of the Company with respect to the
outstanding shares of common stock (excluding amounts paid to holders of
options, warrants and convertible securities, but including the value of any
common stock or other securities of the Company retained by any shareholders of
the Company based on the per share consideration paid to holders of the
Company's common stock); and (ii) in the case of a sale or disposition by the
Company of its assets, the amount by which (A) the total consideration paid for
such assets, plus the net value of any current assets not sold by the Company
and the principal amount of all indebtedness for borrowed money assumed by the
purchaser. Transaction Value shall include amounts paid in cash, notes,
securities or other property. Amounts paid into escrow, installment payments and
contingent payments (whether or not related to future earnings or operations) in
connection with a Transaction will be included as part of the Transaction Value.
Fees on amount paid into escrow will be payable upon the establishment of such
escrow. If the consideration in connection with the Transaction may be increased
by payments related to future events, the portion of the Transaction Fee
relating to such contingent payments will be calculated and payable if and when
such contingent payments are made. For purposes of computing any fees payable
hereunder, non-cash consideration shall be valued as follows: (x) publicly
traded securities shall be valued at the average of their closing prices (as
reported in The Wall Street Journal) for the give trading days prior to the
closing of the Transaction and (y) any other non-cash consideration shall be
valued at the fair market value thereof as determined in good faith by the
Company and Smith Barney for purposes of the Letter agreement between the
Company and Smith Barney.