Employment Agreement
Exhibit 10.7
This Employment Agreement (the “Agreement”) is entered into this 13th day of
November, 2006 by and between Globe Specialty Metals, Inc. (the “Company”) and Xxxxxxxx Xxxxxxx
(“Executive”).
WHEREAS, the Company desires to employ Executive on the terms and conditions set forth herein;
and
WHEREAS, Executive has agreed to perform services for the Company as set forth below.
NOW THEREFORE, in consideration of the mutual covenants set forth herein, the parties
agree as follows:
1. Position. Executive shall serve as the Company’s Chief Financial Officer (“CFO”)
reporting to the Company’s Chief Executive Officer (“CEO”). Executive shall perform such
responsibilities that are normally associated with the CFO position and as otherwise may be
reasonably assigned to Executive from time to time by the CEO. Executive shall perform the
services set forth in this Agreement on 90% of a full-time basis. Aside from normal and
necessary business travel, the Executive shall perform his duties under this Agreement in New
York County, New York. Executive’s position shall commence on the date this Agreement is
executed (the “Commencement Date”).
2. Term. Executive’s employment will be for a term of three (3) years from the
Commencement Date, with automatic one (1) year renewal terms thereafter (collectively, the
“Term”) unless Executive or the Company give written notice to the other at least ninety (90)
days prior to the expiration of any Term of such party’s election not to further extend this
Agreement. Any termination of Executive’s employment will be governed by the terms set forth
in this Agreement. Termination of this Agreement shall be effectuated in writing, and notice of
which shall be provided at least thirty (30) days prior to the effective date of such termination.
3. Compensation and Benefits.
(a) Executive’s base pay shall be at an annual rate of $275,000.00, which shall be
payable in accordance with the Company’s customary payroll practices, minus customary
deductions for federal and state taxes and the like (the “Base Pay”). Executive’s Base Pay
shall
be subject to annual increases at the discretion of the Company based on merit.
(b) Bonuses shall be awarded at the discretion of the Company.
(c) The Company shall award Executive a stock option to purchase 500,000 shares of
the Company’s common stock (the “Option”) at the following strike prices: 1/3 of the Option
shall be priced at $6.25 (the “First Tranche”); 1/3 of the Option shall be priced at $8.50
(the
“Second Tranche”); and the final 1/3 of the Option shall be priced at $10.00 (the “Third
Tranche”). Provided Executive continues to be employed by the Company on each of the
following vesting dates, the First Tranche shall vest on the first anniversary of the Commencement
Date, the Second Tranche shall vest on the second anniversary of the Commencement Date, and the
Third Tranche shall vest on the third anniversary of the Commencement Date. The Option shall be
governed by a stock option plan to be adopted by the Company, except to the extent such plan is
inconsistent with any of the terms set forth in this Agreement. In the event of a Change in Control
as defined herein, all remaining then unvested Options shall immediately vest and become
exercisable on the effective date of such Change in Control.
Change in Control means the occurrence of any of the following events:
(i) any one person, entity or group acquires ownership of capital stock of the Company
that, together with the capital stock of the Company already held by such person, entity or group,
constitutes more than 50% of either the total fair market value or total voting power of the
capital stock of the Company; provided, however, if any one person, entity or group owns more than
50% of the total fair market value or total voting power of the capital stock of the Company, the
acquisition of additional capital stock by the same person, entity or group shall not be deemed to
be a Change in Control;
(ii) a majority of members of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the members of the Board
prior to the date of the appointment or election; or
(iii) any one person, entity or group acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person, entity or group) assets
from the Company that have a total gross fair market value at least equal to 80% of the total gross
fair market value of all of the assets of the Company immediately prior to such acquisition or
acquisitions; provided, however, a transfer of assets by the Company shall not deemed to be a
Change in Control if the assets are transferred to (A) a shareholder of the Company (immediately
before the asset transfer) in exchange for or with respect to its capital stock in the Company, (B)
an entity, 50% or more of the total value or voting power of which is owned, directly or
indirectly, by the Company, (C) a person, entity or group that owns, directly or indirectly, 50% or
more of the total value or voting power of all the outstanding capital stock of the Company, or (D)
an entity, at least 50% of the total value or voting power of which is owned, directly or
indirectly, by a person, entity or group described in subparagraph (C) above.
(iv) In all respects, the definition of “Change in Control” shall be interpreted to
comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the provisions of
Treasury Notice 2005-1, and any successor statute, regulation and guidance thereto (provided,
however, that the Company does not guarantee any tax treatment of any payment or benefit in this
Agreement).
(d) Executive shall be offered the various benefits currently offered by the Company
generally to its senior executives including, without limitation, life and health insurance. Any
such benefits may be modified or changed from time to time at the sole discretion of the Company.
Where a particular benefit is subject to a formal plan (for example, medical insurance),
eligibility to participate in and receive any particular benefit is governed solely by the
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applicable formal plan document. Executive shall be fully reimbursed for all reasonable and
necessary business expenses upon presentation of adequate documentation to the Company
demonstrating same.
(e) Executive will be granted twenty (20) paid time off days (“PTO” days) per year for
Executive’s use for vacation, personal or sick leave. Executive’s accrued but unused PTO days
shall not be paid to Executive upon termination of employment.
4. Severance.
(a) In the event Executive is terminated without “Cause” as such term is defined
below, or in the event that Executive resigns “For Good Reason” as such term is defined below,
Executive shall be entitled to severance in the amount of one year of his Base Pay, to be paid
on a payroll basis, provided Executive first executes a release in a form reasonably satisfactory
to
the Company. In addition, Executive shall be entitled to continued health insurance coverage
for
a one-year period at the Company’s expense (collectively, the “Severance Pay and Benefits”).
The Severance Pay and Benefits are conditioned upon Executive’s compliance with Section 6
below.
(b) For purposes of this Agreement, “Cause” shall mean termination for:
(i) Executive’s conviction or entry of nolo contendere to any felony or crime involving moral
turpitude, material fraud or embezzlement of the Company’s property or a charge or indictment of
any other felony; or
(ii) Executive’s breach of any of the material terms of this Agreement, including the
confidentiality obligations set forth herein, provided Executive has first been given notice by
the Company of such alleged breach and Executive has failed to cure same within ten (10) days of
receipt of such notice.
(c) For purposes of this Agreement, “For Good Reason” shall mean Executive’s
resignation following:
(i) a material breach by the Company of its obligations hereunder, provided Executive has
first given notice to the Company of such alleged breach and the Company has failed to cure same
within ten (10) days of receipt of such notice; or
(ii) Executive’s compensation having been materially reduced.
(d) Severance Pay shall not be required under this Agreement if (i) Executive
terminates employment voluntarily, other than For Good Reason; or (ii) Executive is terminated
for Cause; or (iii) this Agreement terminates because of Executive’s death.
(e) Notwithstanding any other provision with respect to the timing of payments under
this Section, if, at the time of Executive’s termination, Executive is deemed to be a
“specified
employee” of the Company within the meaning of Code Section 409A, then limited only to the
extent necessary to comply with the requirements of Code Section 409A, any payments to which
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Executive may become entitled under Section 4 which are subject to Code Section 409A (and not
otherwise exempt from its application) will be withheld until the first (1st) business day of the
seventh (7th) month following Executive’s termination of employment, at which time Executive shall
be paid an aggregate amount equal to the accumulated, but unpaid, payments otherwise due to
Executive under the terms of Section 4(a).
(f) The Company does not guarantee the tax treatment or tax consequences associated with any
payment or benefit set forth in this Agreement, including but not limited to consequences related
to Code Section 409A. Executive and the Company agree to both negotiate in good faith and jointly
execute an amendment to modify this Agreement to the extent necessary to comply with the
requirements of Code Section 409A; provided that no such amendment shall increase the total
financial obligation of the Company under this Agreement. In the event that the Company determines
in good faith that it is required to withhold taxes from any payment or benefit already provided to
Executive, Executive agree to pay on demand the amount the Company has determined to the Company.
5. Indemnity. The Company shall indemnify Executive and hold Executive harmless from any
and all claims arising from or relating to Executive’s performance of Executive’s duties hereunder
to the fullest extent permitted by law and/or the Company’s Directors and Officers Liability
Insurance or applicable certificate of incorporation or bylaws or other applicable document.
6. Confidentiality and Non-Solicitation.
(a) Definition: “Confidential Information” means all Company proprietary information,
technical data, trade secrets, know-how and any idea in whatever form, tangible or intangible,
including without limitation, research, product plans, customer and client lists,
developments,
inventions, processes, technology, designs, drawings, marketing and other plans, business
strategies and financial data and information. “Confidential Information” shall also mean
information received by the Company from customers or clients or other third parties subject
to a
duty to keep confidential.
(b) Duty Not to Disclose: Executive will be exposed to and have access to the
Company’s Confidential Information. Executive agree to hold all Confidential Information in
strict confidence and trust for the sole benefit of the Company and he will not disclose, use,
copy, publish, summarize, or remove any Confidential Information from the Company’s
premises, except as specifically authorized in writing by the Company or in connection with
the
usual course of Executive’s employment.
(c) Documents and Materials: Executive further agrees that Executive will return all
Confidential Information, including all copies and versions of such Confidential Information
(including but not limited to information maintained on paper, disk, CD-ROM, network server,
or any other retention device whatsoever) and other property of the Company, to the Company
immediately upon cessation of Executive’s employment with the Company. These terms are in
addition to any statutory or common law obligations that Executive may have relating to the
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protection of the Company’s Confidential Information or its property. These restrictions shall
survive the termination of employment.
(d) Nonsolicitation.
(i) During the Term and for a period of twelve (12) months after the
termination of Executive’s employment for any reason, Executive will not, directly or indirectly,
recruit, solicit or induce, or attempt to recruit, solicit or induce any employee or employees of
the Company to terminate their employment with, or otherwise cease their relationship with, the
Company.
(ii) During the Term and for a period of twelve (12) months after termination of
Executive’s employment for any reason, Executive will not, directly or indirectly, solicit, divert
or take away, or attempt to solicit, divert or take away, the business or patronage of any of the
clients, customers or accounts, or prospective clients, customers or accounts, of the Company.
(e) If any restriction set forth in this Section is found by any court of competent
jurisdiction to be unenforceable because it extends for too long a period of time or over too
great
a range of activities or in too broad a geographic area, it shall be interpreted to extend
only over
the maximum period of time, range of activities or geographic area as to which it may be
enforceable.
(f) The restrictions contained in this Section are necessary for the protection of the
business and goodwill of the Company and are considered by Executive to be reasonable for
such purpose. Executive agrees that any breach of this Section will cause the Company
substantial and irrevocable damage and therefore, in the event of any such breach, in addition
to
such other remedies which may be available, the Company shall have the right to seek specific
performance and injunctive relief.
(g) Executive represents that his performance of all the terms of this Agreement as an
employee of the Company does not and will not breach any (i) agreement to keep in confidence
proprietary information, knowledge or data acquired by him in confidence or in trust prior to
his
employment with the Company or (ii) agreement to refrain from competing, directly or
indirectly, with the business of any previous employer or any other party.
7. Notices. All notices required or permitted under this Agreement shall be in writing and
shall be deemed effective upon (a) the date of receipt, if sent by personal delivery (including
delivery by reputable overnight courier), or (b) the date of receipt or refusal, if deposited in
the
United States Post Office, by registered or certified mail, postage prepaid and return receipt
requested, or (c) by facsimile transmission at the address of record of Executive or the Company,
or at such other place as may from time to time be designated by either party in writing.
8. Assignment. This Agreement is not assignable by Executive but may be assigned by the
Company without Executive’s prior consent.
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9. Merger Clause/Governing Law/Jury Waiver. This Agreement constitutes the entire agreement
regarding the terms and conditions of Executive’s employment with the Company. This Agreement
supersedes any prior agreements, or other promises or statements (whether oral or written)
regarding the terms of employment. This Agreement may only be amended in a writing that is executed
by both Executive and the Company. This Agreement shall be governed by the law of the State of
Delaware without regard to conflicts of laws. Executive hereby waives trial by jury with respect to
any action arising out of or relating to this Agreement or Executive’s employment by the Company.
| Globe Specialty Metals, Inc. | ||||
| /s/ Xxxx Xxxxxxxxxx | ||||
| By: Xxxx Xxxxxxxxxx | ||||
| Its: Chairman | ||||
| /s/ Xxxxxxxx Xxxxxxx | ||||
| 11/13/06 | ||||
| Date executed |
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