1
Exhibit 10.15
May 1, 0000
Xxxxx X. Xxxxxxx
Xxxxx, White & Hickton
Attorneys at Law
0000 Xxxxx Xxxxxx Place
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Dear Xx. Xxxxxxx:
This Letter Agreement sets forth the basis upon which I have been authorized by
the Board of Directors of RMI Titanium Company ("Company") to employ you in the
executive officer position described in Paragraph 1 below for the Employment
Period (as hereinafter defined). The "Employment Period" shall initially be the
period June 1, 1997 through May 31, 2000; provided, however, that on June 1,
2000 and each June 1 thereafter, the Employment Period shall automatically be
extended for one additional year unless, not later than the immediately
preceding February 1, either you or the Company shall have given written notice
to the other that you or it does not wish to extend the Employment Period; and
provided further that the Employment Period shall terminate automatically when
you attain age sixty-five (65). In the event this Letter Agreement is terminated
for any reason other than your death, your obligations as set forth in Paragraph
9 shall survive and be enforceable notwithstanding such termination.
1. During the Employment Period, you will serve as Vice President &
General Counsel of the Company (or on any other executive officer
position within the Company to which you may hereafter be elected by
the Company's Board of Directors), performing all duties and functions
appropriate to that office, as well as such additional duties as the
Company's Executive Vice President & Chief Financial Officer or Board
of Directors may, from time to time, assign to you. During the
Employment Period, you will devote your full time and best efforts to
the performance of all such duties.
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2. During the Employment Period, the Company will pay you, in equal
monthly installments, as compensation for your services an annual
salary of $110,000.00. This annual salary may be increased from time
to time in the sole discretion of the Company, but may only be
decreased by the Company with your written consent. Such annual
salary, whether increased or decreased, shall constitute your "Base
Salary". In addition, you may be awarded such bonuses as the Board of
Directors of the Company determines to be appropriate under the
Company's Annual Incentive Compensation Plan or any successor bonus
plan. You will also be eligible to participate in the Company's 1995
Stock Plan, or any successor stock plan.
3. In the event of your death during the Employment Period, your right to
all compensation under this Letter Agreement allocable to days
subsequent to your death shall terminate and no further payments shall
be due to you, your personal representative, or your estate, except
for that portion, if any, of your Base Salary that is accrued and
unpaid upon the date of your death.
4. In the event you become physically or mentally disabled, in the sole
judgment of physicians selected by the Company's Board of Directors,
such that you cannot perform the duties and functions contracted for
pursuant to this Letter Agreement, and should such disability continue
for at least 180 consecutive days (or in the judgment of such
physicians, be likely to continue for at least 180 consecutive days),
the Company may terminate your employment upon written notice to you.
If your employment is terminated because of physical or mental
disability, your right to all compensation under this Letter Agreement
allocable to days subsequent to such termination shall terminate and
no further payments shall be due to you, your personal representative,
or your estate, except for that portion, if any, of your Base Salary
that is accrued and unpaid upon the date of termination.
5. The Company may, upon written notice to you fixing the date of
termination, terminate your services during the Employment Period for
Cause, (as Cause is defined in Paragraph 7(c) below). In such event,
your right to receive continued compensation under this Letter
Agreement will terminate and no further installments will be paid to
you, except for that portion, if any, of your Base Salary that is
accrued and unpaid upon the date of termination.
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6. In addition to your annual Base Salary as set forth in Paragraph 2
above, you will be entitled in each calendar year to a vacation with
pay in accordance with the vacation policies of the Company. You will
also be entitled to: (1) participate in all of the Company's existing
and future employee benefit programs applicable to officers of the
Company in accordance with the terms of such benefit program plan
documents; (2) receive one comprehensive physical examination, at
Company expense, in each calendar year, such examination to be
conducted by the Cleveland Clinic or comparable facility and provided
in accordance with terms and conditions comparable to those applicable
to medical examinations for USX executive officers; and (3) tax
preparation and financial planning advice under terms and conditions
comparable to those applicable to USX executive management.
7. Change of Control Provisions
(a) For purposes of this Letter Agreement, a "Change in Control" of
the Company shall mean a change in control of a nature that would
be required to be reported by it in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or
not the Company is then subject to such reporting requirement;
provided, that, without limitation, such a change in control
shall be deemed to have occurred if:
(1) Any person (within the meaning of that term as used in
Sections 13(d) and 14(d) of the Exchange Act (a "Person") is
or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent (20%)
or more of the combined voting power of the Company's then
outstanding voting securities; provided, however, that for
purposes of this Agreement the term "Person" shall not
include (i) the Company or any of its majority-owned
subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of
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the Company in substantially the same proportions as their
ownership of stock of the Company, (v) USX Corporation; or
(2) The following individuals cease for any reason to constitute a
majority of the number of directors then serving on the Board of
Directors of the Company; individuals who, on the date hereof, are
serving as directors on the Board and any new director (other than a
director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved, or
(3) There is consummated a merger or consolidation of the Company or a
subsidiary thereof with any other corporation, other than a merger or
consolidation which would result in the holders of the voting
securities of the Company outstanding immediately prior thereto
holding securities which represent immediately after such merger or
consolidation at least 50% of the combined voting power of the voting
securities of the entity surviving the merger or consolidation, (or
the parent of such surviving entity) or the shareholders of the
Company approve a plan of complete liquidation of the Company, or
there is consummated the sale or other disposition of all or
substantially all of the Corporation's assets.
(b) If any of the events described above constituting a Change in
Control of the Company shall have occurred, you shall be entitled
to the benefits provided in Paragraph 7(f) hereof upon the
termination of your employment during the term of this Letter
Agreement unless such termination is (i) because of your death or
disability, (ii) by the Company for Cause, (iii) by you other
than for Good Reason, or (iv) on or after the date that you
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attain age sixty-five (65). In the event your employment with the
Company is terminated for any reason prior to the occurrence of a
Change in Control, you shall not be entitled to any benefits
under this Paragraph 7; provided, however, that if your
employment is terminated prior to a Change in Control without
Cause at the direction of a person who has entered into an
agreement with the Company, the consummation of which will
constitute a Change in Control, your employment shall be deemed
to have terminated following a Change in Control. Your
entitlement to benefits under any of the Company's retirement
plans will not adversely affect your rights to receive payments
hereunder.
(c) Termination by the Company of your employment for "Cause" shall
mean termination upon (i) the willful and continued failure by
you to substantially perform your duties with the Company (other
than any such failure resulting from termination by you for Good
Reason), after a demand for substantial performance is delivered
to you that specifically identifies the manner in which the
Company believes that you have not substantially performed your
duties, and you have failed to resume substantial performance of
your duties on a continuous basis within fourteen (14) days of
receiving such demand, (ii) the willful engaging by you in
conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise or (iii) your conviction of any
felony or conviction of a misdemeanor which impairs your ability
substantially to perform your duties with the Company. For
purposes of this paragraph, no act, or failure to act, on your
part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that
your action or omission was in the best interest of the Company.
(d) For purposes of this Letter Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a
Change in Control of the Company of any one or more of the
following:
(1) The assignment to you of duties inconsistent with your
position immediately prior to the Change in Control;
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(2) A reduction or alteration in the nature of your position,
duties, status or responsibilities from those in effect
immediately prior to the Change in Control;
(3) The failure by the Company to continue in effect any of the
Company's employee benefit plans, programs, policies,
practices or arrangements in which you participate (or
substantially equivalent successor or replacement employee
benefit plans, programs, policies, practices or
arrangements) or the failure by the Company to continue your
participation therein on substantially the same basis, both
in terms of the amount of benefits provided and the level of
your participation relative to other participants, as
existed immediately prior to the Change in Control;
(4) The failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume and
agree to perform this Letter Agreement;
(5) Any purported termination by the Company of your employment
that is not effected pursuant to a Notice of Termination
satisfying the requirements of Subparagraph (e) below, and
for purposes of this Letter Agreement, no such purported
termination shall be effective; and
(6) The Company's requiring you to be based at a location in
excess of fifty (50) miles from the location where you are
based immediately prior to the Change in Control.
(e) Any termination by the Company for Cause or by you for Good
Reason shall be communicated by Notice of Termination to the
other party hereto. For purposes of this Letter Agreement, a
"Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Letter
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
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(f) Following a Change in Control of the Company, as defined above,
upon termination of your employment you shall be entitled to the
following benefits:
(1) If your employment shall be terminated by the Company for
Cause or by you other than for Good Reason, the Company
shall pay you your full Base Salary through the date of
termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you
are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have
no further obligations to you under this Agreement.
(2) If your employment terminates by reason of your death or
disability, your benefits shall be determined in accordance
with Paragraphs 3 and 4 of this Letter Agreement and the
Company's retirement, survivor's benefits, insurance and
other applicable programs and plans, then in effect.
(3) If your employment by the Company shall be terminated (i) by
the Company other than for Cause, your death or disability,
or (ii) by you for Good Reason, you shall be entitled to the
benefits (the "Severance Payments") provided in Paragraphs
7(f)(3), (i), (ii), (iii), (iv) and (v) following, which
Severance Payments shall be in lieu of and cancel any
further rights you have to receive any Base Salary that
would be otherwise due under Paragraph 2 of this Letter
Agreement:
(i) The Company shall pay you your full Base Salary through
the date of termination at the rate in effect at the
time Notice of Termination is given;
(ii) The Company will pay as severance benefits to you, not
later than the fifth day following the date of
termination, a lump sum severance payment (the
"Severance Payment") equal to the product of (1) a
fraction, the numerator of which is equal to the lesser
of (x) twenty-four (24) or (y) the number of full and
partial months existing between the date
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of termination and your sixty-fifth (65th) birthday and
the denominator of which is equal to twelve (12), and
(2) the sum of (x) your annual Base Salary in effect
immediately prior to the occurrence of the
circumstances giving rise to such termination, and (y)
the amount, if any, of the arithmetic average of the
annual bonuses awarded to you under any annual bonus
plan of the Company calculated using the two (2) years
immediately preceding date of termination;
(iii) TheOptions previously issued to you under any
option or incentive plan of the Company to purchase
shares of Common Stock of the Company (Option Shares),
as well as any previously unvested shares of Restricted
Stock granted to you, shall irrevocably vest upon any
such termination and the stock options for such Option
Shares shall become thereafter uncancellable by the
Company;
(iv) In the event that you become entitled to the
Severance Payments, if any of the Severance Payments or
other portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed
by Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), the Company shall pay to you
at the time specified below, an additional amount (the
"Gross-Up Payment") such that the net amount retained
by you, after deduction of (1) any Excise Tax on the
Severance Payments and such other Total Payments, and
(2) any federal, state and local income tax,
FICA-Health Insurance tax, and Excise Tax upon the
payment provided for by this paragraph, shall be equal
to the Severance Payments and such other total
Payments. For purposes of determining whether any of
the payments will be subject to the Excise Tax and the
amount of such Excise Tax, (1) any other payments or
benefits received or to be received by you in
connection with a Change in Control of the Company or
your
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termination of employment whether pursuant to the terms
of this Letter Agreement or any other plan, arrangement
or agreement with the Company, any person whose actions
result in a Change of Control of the Company or any
person affiliated with the Company or such person
(together with the Severance Payment, 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) shall be treated as subject to
the Excise Tax, except to the extent that in the
opinion of tax counsel selected by the Company's
independent auditors and acceptable by you 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, (2) the amount of the Total Payments
which shall be treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of
the Total Payments or (B) the amount of excess
parachute payments within the meaning of Section
280G(b)(1) (after applying clause (1), above), and (3)
the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up
Payment, you shall be deemed to pay federal income
taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes
at the highest marginal rate of taxation in the state
and locality of your residence on the date of
termination, net
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of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and
local taxes. In the event that the Excise Tax is
subsequently determined to be less than the amount
taken into account hereunder at the time of termination
of your employment, you shall repay to the Company 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 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 of the termination of your
employment (including by reason of any payment the
existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such
excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is
finally determined.
The payments provided for in the paragraph above shall
be made not later than the fifth day following the date
of termination; provided, however, that if the amounts
of such payments cannot be finally determined on or
before such day, the Company shall pay to you on such
day an estimate as determined in good faith by the
Company 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 thirtieth day
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after the date of termination. 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 the Company to you payable
on the fifth day after demand by the Company (together
with interest at the rate provided in Section
1274(b)(2)(B) of the Code);
(v) The Company shall also pay to you all legal fees
and expenses incurred by you as a result of such
termination of employment (including all such fees and
expenses, if any, incurred in contesting or disputing
any such termination or in seeking to obtain or enforce
any right or benefit provided by this Letter Agreement
or in connection with any tax audit or proceeding to
the extent attributable to the application of Section
4999 of the Code to any payment or benefit provided
hereunder); and
(vi) For a twenty-four (24) month period after date of
termination, the Company will arrange to provide you at
the Company's expense with life, disability, accident
and health insurance benefits substantially similar to
those which you were receiving immediately prior to the
Notice of Termination; but benefits otherwise
receivable by you pursuant to this paragraph shall be
reduced to the extent comparable benefits are actually
received by you during the twenty-four (24) month
period following your termination, and any such
benefits actually received by you shall be reported to
the Company.
(h) You shall not be required to mitigate the amount of any Severance
Payments provided for in this Paragraph 7 by seeking other
employment or otherwise, nor, except as provided in Paragraph
(vi) above, shall the amount of any payment or benefit provided
for in this Paragraph 7 be reduced by any compensation or benefit
earned by you as the result of employment by another employer
after the date of termination, or otherwise.
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(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
the Company or of any division or subsidiary thereof
employing you to expressly assume and agree to perform this
Letter Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Letter
Agreement and shall entitle you to compensation from the
Company in the same amount and on the same terms as you
would be entitled hereunder if you terminate your employment
for Good Reason.
8. This Letter Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should
die while any amount would still be payable to you hereunder if you
had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Letter
Agreement, to your devisee, legatee or other designee or, if there is
not such designee, to your estate.
9. As additional consideration for the compensation and benefits provided
to you pursuant to this Letter Agreement, you agree that you will not,
for a period of twenty-four (24) months after the end of the
Employment Period, or the termination of your employment with the
Company (whichever first occurs), directly or indirectly, compete
with, engage in the same business as, be employed by, act a consultant
to, or be a director, officer, employee, owner or partner, or
otherwise participate in or assist (including, without limitation, by
soliciting customers for, or individuals to provide services to), any
business or organization which competes with the Company; provided,
that this restriction shall not apply if you terminate your employment
with the Company for Good Reason after a Change in Control of the
Company. For purposes of this Paragraph 9, you will not be deemed to
have breached your commitment merely because you own, directly or
indirectly, not more than one percent (1%) of the outstanding common
stock of such a corporation if, at the time you acquire such stock,
such stock is listed on a national securities exchange or is regularly
traded in the over-the-counter market by a member of either a
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national securities exchange or the National Association of Securities
Dealers, Inc. In order to protect the interest of the Company, you
will also maintain in strict confidence and not disclose to any other
person or entity any information received from any source in the
Company or developed by you in the course of performing your duties
for the Company. This obligation shall not extend to: (a) anything you
can establish as known to you from a source outside the Company, (b)
anything which has been published or becomes published hereafter other
than by you, or (c) anything which you receive from a non-Company
source without restriction on its disclosure. Should you breach or
threaten to breach the commitments in this Paragraph 9, and in
recognition of the fact that the Company would not under such
circumstances be adequately compensated by money damages, the Company
shall be entitled, in addition to any other rights and remedies
available to it, to an injunction restraining you from such breach.
Further, you acknowledge and agree that the provisions of this
Paragraph 9 are necessary, reasonable, and proportionate to protect
the Company during such non-competition period.
10. The validity, interpretation, construction and performance of this
Letter Agreement shall be governed by the laws of the State of Ohio.
If the provisions of this Letter Agreement are acceptable to you, please sign
one original copy of this Letter Agreement and return it to me. You may retain
the second signed original for your files.
Very truly yours,
RMI TITANIUM COMPANY
By:
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XXXXXXX X. XXXXXX
Executive Vice President &
Chief Financial Officer
CONFIRMED:
DATE:
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XXXXX X. XXXXXXX
