Exhibit 10.3
March 18, 2009
The Board of Directors
Chemtura Corporation
c/o Craig Rogerson
199 Benson Road
Middlebury, Connecticut 06749
Dear Craig:
This letter confirms and sets forth the terms
and conditions of the engagement between Alvarez & Marsal
North America, LLC (“A&M”) and Chemtura Corporation
and its subsidiaries ( the “Company”), including
the scope of the services to be performed and the basis of
compensation for those services, and supersedes the agreement dated
March 3, 2009 (the “Superseded Agreement”);
provided however that the indemnification attached thereto (the
“Indemnification Agreement”) and any other rights that
survive the termination of that agreement shall continue in full
force and effect. Each reference in the Indemnification
Agreement to the “Agreement” shall be deemed to include
this letter agreement as well as the Superseded Agreement.
Upon execution of this letter by each of the parties below, this
letter will constitute an agreement between the Company and
A&M.
1.
Description of
Services
a.
Officers . In connection with this engagement,
A&M shall make available to the Company:
(i)
Raymond E. Dombrowski, Jr., a
Managing Director of the A&M to serve as Chief Restructuring
Officer (the “CRO”); and
(ii)
such additional personnel as are
necessary to assist in the performance of the duties set forth in
clause 1.b below (the “Additional
Personnel”).
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b.
Duties .
(i)
The CRO, together with any
Additional Personnel, in cooperation with the Chief Executive
Officer of the Company (the “CEO”) and Chief Financial
Officer of the Company (the “CFO”), shall perform a
financial review of the Company, including but not limited to a
review and assessment of financial information that has been, and
that will be, provided by the Company to its creditors, including
without limitation its short and long-term projected cash
flows;
(ii)
The CRO and any Additional Personnel
shall assist in the identification of cost reduction and operations
improvement opportunities; develop and report on cash management
activities and compliance with the covenants under the
Debtor-in-Possession financing;
(iii)
The CRO and any Additional Personnel
shall assist the CEO in developing for the Board’s review
possible restructuring plans or strategic alternatives for
maximizing the enterprise value of the Company’s various
business lines, including assisting with any asset
sales;
(iv)
The CRO shall serve as the principal
contact with the Company’s creditors with respect to the
Company’s financial and operational matters; and shall act as
contact for the DIP and pre-petition lenders, as well as the
unsecured creditors committee and any other statutory or ad
hoc committee that may be formed;
(v)
The CRO and any Additional Personnel
shall assist in the development and preparation of a Chapter 11
Plan of Reorganization, assist with the preparation of any
schedules and statements of financial affairs and assist in the
claims management process; and
(vi)
The CRO and any Additional Personnel
shall perform such other services as requested or directed by the
Board and CEO and agreed to by such officer.
c.
Reporting . Any Additional Personnel shall report to
the CRO. The CRO shall report to the Board.
d.
Employment by A&M
. The CRO and any Additional
Personnel will continue to be employed by A&M and while
rendering services to the Company will continue to work with other
personnel at A&M in connection with other unrelated matters,
which shall not unduly interfere with services pursuant to
this
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engagement. With respect to
the Company, however, the CRO and any Additional Personnel shall
operate under the direction of the Board.
e.
Projections; Reliance; Limitation
of Duties . The
Company understands that the services to be rendered by the CRO and
any Additional Personnel may include the preparation of projections
and other forward-looking statements, and that numerous factors can
affect the actual results of the Company’s operations, which
may materially and adversely differ from those projections and
other forward-looking statements. In addition, the CRO and
any Additional Personnel will be relying on information provided by
other members of the Company’s management in the preparation
of those projections and other forward-looking statements.
Neither the CRO, any Additional Personnel nor A&M makes any
representation or guarantee that an appropriate restructuring
proposal or strategic alternative can be formulated for the
Company, that any restructuring proposal or strategic alternative
presented to the Board will be more successful than all other
possible restructuring proposals or strategic alternatives, that
restructuring is the best available course of action for the
Company or, if formulated, that any proposed restructuring plan or
strategic alternative will be accepted by any of the
Company’s creditors, shareholders and other
constituents. Further, none of the CRO, any Additional
Personnel nor A&M assumes responsibility for the selection of
any restructuring proposal or strategic alternative that any such
officer assists in formulating and presenting to the Board, and the
CRO and any Additional Personnel shall be responsible for
implementation only of the proposal or alternative approved by the
Board and only to the extent and in the manner authorized and
directed by the Board.
f.
Additional
Responsibilities .
Upon the mutual agreement of the Company and A&M, and subject
to Bankruptcy Court approval if necessary, A&M may provide such
additional personnel as the Company may request to assist in
performing the services described above and such other services as
may be agreed to, on such terms and conditions and for such
compensation as the Company and A&M shall agree.
g.
In connection with the services to
be provided hereunder, from time to time A&M may utilize the
services of employees of its affiliates. Such affiliates are
wholly owned by A&M’s parent company and employees, any
of whom shall be bound by the same terms and conditions as those of
the CRO and any Additional Personnel provided by
A&M.
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2.
Compensation
a.
A&M will be paid by the Company
for the services of the CRO and any Additional Personnel at the
following billing rates. The monthly billing rate for the CRO
is $150,000 per month. The current hourly billing rates for
other A&M personnel, based on the position held by such A&M
personnel in A&M, are:
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i.
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Managing Director
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$700-800
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ii.
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Director
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$500-700
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iii.
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Associate
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$350-500
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iv.
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Analyst
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$250-350
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Such rates shall be subject to
adjustment annually at such time as A&M adjusts its rates
generally. A&M shall provide 30 days notice of any such
rate adjustments.
b.
In addition, A&M will be
reimbursed by the Company for the reasonable out-of-pocket expenses
of the CRO and any Additional Personnel, and if applicable, other
A&M personnel, incurred in connection with this assignment,
such as travel, lodging, duplications, computer research, messenger
and telephone charges. In addition, A&M shall be
reimbursed by the Company for the reasonable fees and expenses of
its counsel incurred in connection with the preparation,
negotiation and approval of this Agreement. All fees
and expenses due to A&M will be billed on a monthly basis or,
at A&M’s discretion, more frequently.
c.
In addition to the hourly
compensation, A&M will be entitled to incentive compensation in
the amount of $3,000,000 (the “Incentive Fee”) payable
upon the earlier of (x) the consummation of a Chapter 11 plan
of reorganization; and (y) the sale, transfer, or other
disposition of all or a substantial portion of the assets or equity
of the Company in one or more transactions (the “Incentive
Fee Payment Date”).
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3.
Term
a.
The engagement will commence as of
the date hereof (but not before the filing by the
