Exhibit 10.23
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STOCK APPRECIATION RIGHT AGREEMENT
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THIS AGREEMENT dated as of May 17, 1996, is made by and between Howmet
Corporation, a Delaware corporation (the "Company"), and Xxxxxx Xxxx, (the
"Executive"):
WHEREAS, Executive is a key management employee of the Company or one of
the Company's Subsidiaries,
WHEREAS, the Board has determined that it would be to the advantage and
best interest of the Company, and the shareholders of the Company to grant the
Stock Appreciation Rights provided for herein to the Executive as an inducement
to remain in the service of the Company, its Parent Corporation or its
Subsidiaries and as an incentive for increased efforts during such service;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the Company and the Executive do hereby agree as follows:
ARTICLE I
DEFINITIONS
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The following terms shall have the meanings specified below. Other
capitalized terms are defined elsewhere in this Agreement and shall have the
meanings there specified.
Section 1.1 - Acceleration Event
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"Acceleration Event" shall mean one of the following events occurring prior
to March 31, 2001: (i) a Merger, (ii) a Sale, (iii) the acquisition by an
unaffiliated entity or person, of more than fifty percent (50%) of Blade Common
Stock then outstanding or of Company Common Stock then outstanding, (iv) the
liquidation, dissolution or winding up of the Company or Blade (other than in a
restructuring transaction which results in the continuation of the Company's (or
Blade's) business by an affiliated entity), (v) exercise of the Thiokol Option
and the transfer pursuant thereto of Blade Common Stock owned by Carlyle-Blade
Acquisition Partners, L.P. to Thiokol Holding Company, (vi) disposition by
Carlyle-Blade and its Affiliates (including, without limitation, in a series of
transactions) of the entirety of their interest in Blade Common Stock, or (vii)
a public offering of more than fifty percent (50%) of Blade Common Stock or
Company Common Stock then outstanding pursuant to a registration statement
(other than pursuant to Form S-8) filed under the Securities Act of 1933.
Section 1.2 - Affiliate
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"Affiliate" with respect to any entity, shall mean a person or entity
directly or indirectly controlling, controlled by, or under common control with,
such entity, where "control" has the meaning given such term under Rule 405 of
the Securities Act of 1933.
Section 1.3 - Appreciated Value
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"Appreciated Value" per Stock Appreciation Right shall mean (i) one
two-hundredth (1/200th) of the Fair Market Value per share of Blade Common Stock
as of the applicable Valuation Date minus (ii) the Base Value of the Stock
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Appreciation Right, but not less than zero.
Section 1.4 - Base Value
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"Base Value" shall mean One Hundred Dollars ($100) (subject to adjustment
pursuant to the provisions set forth in Section 2.4).
Section 1.5 - Blade
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"Blade" shall mean Blade Acquisition Corp., a Delaware corporation.
Section 1.6 - Blade Common Stock
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"Blade Common Stock" shall mean the common stock, par value $0.01 per
share, of Blade.
Section 1.7 - Board
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"Board" shall mean the Board of Directors of the Company.
Section 1.8 - Cash Flow
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"Cash Flow" shall mean, for any period, the difference between the level of
Net Debt as of the day prior to the first day of such period and the level of
Net Debt as of the last day of such period, without giving effect to any changes
in Net Debt resulting from extraordinary transactions, including the sale or
acquisition of assets or inventory not in the ordinary course of business, and
without giving effect to any changes in Net Debt resulting from any payment
pursuant to purchase price adjustment under the Stock Purchase Agreement dated
as of October 12, 1995 among Pechiney, Pechiney International, S.A. and Blade.
"Net Debt" shall equal the difference between "Consolidated Total Indebtedness"
and the total cash balance reported as a current asset on the Company's balance
sheet. "Consolidated Total Indebtedness" shall include outstanding balances,
including current portions, of all long-term indebtedness of the Company, its
Parent Corporations and its Subsidiaries including off-
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balance sheet financings, including, but not limited to, balances due to third
parties through accounts receivables securitization agreements.
Section 1.9 - Code
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.10 - Company Common Stock
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"Company Common Stock" shall mean the common stock par value $0.01 per
share, of the Company.
Section 1.11 - Cumulative Cash Flow
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"Cumulative Cash Flow" shall mean, with respect to a determination of the
vesting of any portion of the Stock Appreciation Rights pursuant to the
"deferred vesting" provisions of Section 3.1(c), the sum of Cash Flow for each
fiscal year within the period (i) commencing on the first day of the fiscal year
preceding the fiscal year in which falls the Vesting Date on which the
applicable portion of the Stock Appreciation Rights failed to vest pursuant to
the "performance related vesting" provisions of Section 3.1(b) and (ii) ending
on the last day of the fiscal year preceding the fiscal year in which falls the
applicable Deferred Vesting Date.
Section 1.12 - Cumulative Target Cash Flow
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"Cumulative Target Cash Flow" shall mean, with respect to a determination
of the vesting of any portion of the Stock Appreciation Rights pursuant to the
"deferred vesting" provisions of Section 3.1(c), the sum of Target Cash Flow for
each fiscal year within the period (i) commencing on the first day of the fiscal
year preceding the fiscal year in which falls the Vesting Date on which the
applicable portion of the Stock Appreciation Rights failed to vest pursuant to
the "performance related vesting" provisions of Section 3.1(b) and (ii) ending
on the last day of the fiscal year preceding the fiscal year in which falls the
applicable Deferred Vesting Date.
Section 1.13 - Fair Market Value
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"Fair Market Value" shall mean the fair market value of a share of Blade
Common Stock, which shall be equal to, at the Board's discretion either (i) the
value determined by a reputable firm experienced in valuation of similar
businesses, and selected by the Board, which firm's determination shall be final
and binding on the parties hereto or (ii) the per share value determined
pursuant to an Acceleration Event. Fair Market Value shall be determined as of
the applicable Valuation Date.
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Section 1.14 - GAAP
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"GAAP" shall mean generally accepted accounting principles, applied on a
basis consistent with prior periods.
Section 1.15 - Merger
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"Merger" shall mean a merger or consolidation of the Company or Blade
with another unaffiliated entity in which the stockholders of the Company or
Blade (as applicable) receive cash, securities and/or other marketable property
in exchange for their Company Common Stock or Blade Common Stock.
Section 1.16 - Parent Corporation
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"Parent Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if each of the corporations other than the
Company then owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
Section 1.17 - Payment Date(s)
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"Payment Date(s)" shall mean the date (or dates) on which the Executive is
entitled to receive payments with respect to the Stock Appreciation Rights, in
accordance with the provisions of Section 2.3(b).
Section 1.18 - Permitted Transfer
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"Permitted Transfer" shall mean the Transfer of Stock Appreciation Rights
by will or intestate succession to the Executive's executors, administrators,
testamentary trustees legatees or beneficiaries.
Section 1.19 - Sale
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"Sale" shall mean a sale to an unaffiliated entity of all or substantially
all of the assets of the Company or of Blade.
Section 1.20 - Stock Appreciation Rights
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"Stock Appreciation Rights" shall mean the rights granted under this
Agreement to receive the payments set forth in Section 2.3, hereof, calculated
with respect to each Stock Appreciation Right based on the appreciation in value
of one two-hundredth (1/200) of a share of Blade Common Stock over the Base
Value, subject to the limitations and conditions provided in this Stock
Appreciation Right Agreement.
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Section 1.21 - Subsidiary
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"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company, if each such corporation, other than
the last corporation in the unbroken chain, then owns 50% or more of the total
combined voting power in one of the other corporations in such chain.
Section 1.22 - Target Cash Flow
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"Target Cash Flow" shall mean, for each of the five fiscal years identified
on Exhibit A hereto, the amount specified for such year on such Exhibit;
provided, however, that in the case of divestiture or acquisition of a business
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unit by the Company or any of its Subsidiaries, the Board shall determine in
good faith an appropriate and equitable adjustment to Target Cash Flow for the
fiscal year in which such event occurs and each subsequent fiscal year, in the
case of a divestiture to reduce Target Cash Flow by the estimated contribution,
if any, that would have been made thereto by the divested unit during the
remainder of such periods, and in the case of an acquisition to increase Target
Cash Flow by the estimated contribution, if any, to be made thereto by the
acquired unit. In the event of such an adjustment, the Board shall notify the
Executive thereof; and any such adjustment made by the Board in good faith shall
be final and binding upon the parties.
Section 1.23 - Termination of Employment
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"Termination of Employment" shall mean the time when, for any reason, there
ceases to be an employee-employer relationship between the Executive, on the one
hand, and the Company, a Parent Corporation and/or one or more Subsidiaries of
the Company, on the other hand, including, without limitation, by reason of
resignation, discharge (with or without cause), termination, death, disability
or retirement. The Board, in its absolute discretion, shall determine the effect
of all matters and questions relating to Termination of Employment, including,
but not limited to, all questions of whether a particular leave of absence
constitutes a Termination of Employment.
Section 1.24 - Thiokol Option
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"Thiokol Option" shall mean the right granted to Thiokol Holding Company to
purchase Blade Common Stock from Carlyle-Blade Acquisition Partnership. L.P.,
pursuant to the Shareholders Agreement dated December 13, 1995.
Section 1.25 - Transfer
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"Transfer" when used in reference to the Stock Appreciation Rights shall
mean any sale, encumbrance, pledge, gift, assignment, alienation or other form
of disposition or transfer of the Stock Appreciation Rights, or any portion
thereof, or of
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any legal, beneficial or equitable interest therein or part thereof, whether
voluntary or involuntary or by operation of law. The terms "Transferred,"
"Transferring" and the like shall have similar meanings.
Section 1.26 - Unvested Percentage
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"Unvested Percentage" shall mean that percentage of the Stock Appreciation
Rights that has not become "vested" pursuant to Section 3.1 or Section 4.1
hereof.
Section 1.27 - Valuation Date
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"Valuation Date" shall mean the date as of which Appreciated Value is
determined, as set forth in Section 2.3.
Section 1.28 - Vested Percentage
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"Vested Percentage" shall mean that percentage of the Stock Appreciation
Rights that has become vested pursuant to Section 3.1 or Section 4.1 hereof.
Section 1.29 - Vesting Date
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"Vesting Date" shall mean a date on which a portion of the Stock
Appreciation Rights may become "Vested" pursuant to Section 3.1 hereof.
ARTICLE II
GRANT OF STOCK APPRECIATION RIGHT
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Section 2.1 - Grant of Stock Appreciation Right
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In consideration of the Executive's promises set forth in Section 2.2, and
for other good and valuable consideration, on the date hereof the Company grants
to the Executive, subject to the terms and conditions set forth in this
Agreement, 3,000 Stock Appreciation Rights, each with respect to one two-
hundredth (1/200th) of a share of Blade Common Stock.
Section 2.2 - Consideration to the Company
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In consideration of the granting of the Stock Appreciation Rights, the
Executive agrees to render faithful and efficient services to the Company or a
Parent Corporation or a Subsidiary of the Company, with such duties and
responsibilities as such employer shall from time to time prescribe. Nothing in
this Agreement shall confer upon the Executive any right to continue in the
employ of the Company, any Parent Corporation or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company, any Parent
Corporation or any Subsidiary of the Company to discharge the Executive. The
Executive also agrees that he shall not assert that any event occurring prior to
the date of execution
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thereof (including without limitation, the termination of the Company's 1993,
1994 and 1995 Long-Term Incentive plans and its Restructuring Cash Incentive
Plan) constitutes "Good Reason" as defined in the Employment Agreement dated as
of October 4, 1995 to which the Executive, the Company and Pechiney are parties.
Section 2.3 - Determination and Method of Payment
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(a) (i) Subject to the provisions of Section 3.1(e), the Stock
Appreciation Rights shall entitle the Executive to receive
payment, on the applicable Payment Date(s) set forth below, of
an aggregate amount (the "Aggregate Payment Amount") equal to
the product of
(A) the number of Stock Appreciation Rights granted pursuant to
Section 2.1,
(B) the Vested Percentage, and
(C) the Appreciated Value.
(ii) For purposes of determining Appreciated Value, the Valuation Date
shall be the earliest of
(A) Xxxxx 00, 0000,
(X) the date on which an Acceleration Event occurs, and
(C) a date selected by the Board in its discretion that is not
more than twelve months prior to, or more than six months
subsequent to the date of the Executive's first Termination
of Employment which precedes the earlier of the dates
described in (A) and (B) above (it being understood that the
Company does not intend to conduct a valuation of the Blade
Common Stock more frequently than once per fiscal year).
(b) The Aggregate Payment Amount shall be paid in cash, at the election of
the Company, either:
(i) in a lump sum on a date selected by the Board in its discretion
that is no more that sixty (60) days subsequent to the earlier of the
dates described in subsections(a)(ii)(A) and (B) above or
--
(ii) in three equal installments, the first such installment to be
paid on a date (the "Initial Installment Date") selected by the Board in
its discretion that is no more than sixty (60) days subsequent to the
earlier of the dates described in subsections (a)(ii)(A) and (B) above,
and the remaining two installments (the "Deferred Installments")
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to be paid on the first and second anniversaries of the Initial
Installment Date, respectively. Each Deferred Installment shall be paid
together with interest thereon, at the Applicable Federal Rate for short
term obligations (as set forth in Section 1274(d) of the Code or the
Treasury Regulations promulgated thereunder), calculated from the Initial
Installment Date to the date such Deferred Installment is actually paid.
(c) Notwithstanding anything to the contrary in the foregoing, the
Company's obligation to make any payment provided for in Section 2.3(b) shall be
suspended if:
(i) Such payment would render the Company unable to meet its
obligations in the ordinary course of business;
(ii) The Company is prohibited by applicable law from making such
payment; or
(iii) Such payment would constitute an unwaived breach of, or default
or event of default under, or is otherwise prohibited by, the terms of any
loan agreement or other agreement or instrument to which the Company or any
of the Company's Affiliates is a party,
any of such events constituting a "Payment Disability." In the event of a
Payment Disability, the Company shall make such payment as soon as reasonably
possible after all Payment Disabilities cease to exist. In the event that the
Company suspends its payment obligations pursuant to this Section 2.3(c), the
Company shall pay to the Executive an additional amount equal to interest
calculated on the amount of the suspended payment at the Applicable Federal Rate
for short term obligations (as set forth in Section 1274(d) of the Code or the
Treasury Regulations promulgated thereunder) from the date the payment would
have occurred but for the Payment Disability to (but not including) the date
such payment actually occurs (provided that no interest shall be due pursuant to
the foregoing to the extent that interest on account of such delay in payment
has accrued on such payment pursuant to Section 2.3(b).
Section 2.4 - Certain Adjustments
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In the event that Blade Common Stock is changed into or exchanged for a
different number or kind of shares of Blade or securities of another company by
reason of merger, consolidation, recapitalization, reclassification, stock split
up, stock dividend or combination of shares, then the Board shall make an
appropriate and equitable adjustment in the definition of Base Value and/or
Appreciated Value and/or the number of Stock Appreciation Rights to reflect such
event. Any such adjustment made by the Board in good faith shall be final and
binding upon the Executive, the Company and all other interested persons.
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Section 2.5 - Stock Appreciation Right Not Transferable
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No Stock Appreciation Right nor any interest or right therein or part
thereof shall be liable for the debts, contracts or engagements of the Executive
or his successors in interest or shall be subject to Transfer, whether by
alienation, anticipation, pledge, encumbrance, assignment or any other means,
and whether such Transfer be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted Transfer thereof shall be
null and void and of no effect; provided, however, that this Section 2.5 shall
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not prevent a Permitted Transfer upon the Executive's death (and in the event of
a Permitted Transfer, payments to be made hereunder to the Executive shall
thereafter be made to the Executive's personal representative or such other
person as is empowered under the Executive's will or the then applicable laws of
descent and distribution to enforce the Executive's rights hereunder).
ARTICLE III
VESTING
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Section 3.1 - Vesting
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Fifty percent of the Stock Appreciation Rights shall be subject to Time
Vesting and fifty percent shall be subject to Performance Vesting as follows:
(a) Time Vesting. Provided in each case that no Termination of Employment
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has occurred prior to the applicable Vesting Date, fifty percent of the Stock
Appreciation Rights shall become vested as follows:
(i) As of March 31, 1997 10% of the Stock Appreciation Rights
shall become Vested,
(ii) As of March 31, 1998, an additional 10% of the Stock
Appreciation Rights shall become vested,
(iii) As of March 31, 1999, an additional 10% of the Stock
Appreciation Rights shall become vested,
(iv) As of March 31, 2000, an additional 10% of the Stock
Appreciation Rights shall become vested, and
(v) As of March 31, 2001, an additional 10% of the Stock
Appreciation Rights shall become vested.
(b) Performance Related Vesting. Provided in each case that
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(i) no Termination of Employment has occurred prior to the
applicable Vesting Date, and
(ii) Cash Flow for the fiscal year immediately preceding the
fiscal year in which falls the applicable Vesting Date equals or exceeds
Target Cash Flow for such year,
the remaining fifty percent of the Stock Appreciation Right shall become vested
as follows:
(A) As of March 31, 1997, 10% of the Stock Appreciation
Rights shall become vested,
(B) As of March 31, 1998, an additional 10% of the Stock
Appreciation Rights shall become vested,
(C) As of the March 31, 1999, an additional 10% of the Stock
Appreciation Rights shall become vested,
(D) As of March 31, 2000, an additional 10% of the Stock
Appreciation Rights shall become vested, and
(E) As of March 31, 2001, an additional 10% of the Stock
Appreciation Rights shall become vested.
(c) Deferred Vesting. If any portion of the Stock Appreciation Rights does
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not become vested pursuant to the "performance related vesting" provisions of
Section 3.1(b) on the scheduled Vesting Date due to the failure of Cash Flow to
equal or exceed Target Cash Flow in the applicable fiscal year, then such
portion of the Stock Appreciation Rights shall become vested on the next Vesting
Date thereafter (the "Deferred Vesting Date") as of which Cumulative Cash Flow
equals or exceeds Cumulative Target Cash Flow, provided that (i) as of the last
day of the fiscal year preceding the fiscal year in which falls the Deferred
Vesting Date, all material obligations of the Company and Blade (including,
without limitation, satisfaction of financial covenants) under all outstanding
debt agreements have been satisfied and (ii) the Executive shall not have
incurred a Termination of Employment prior to such Deferred Vesting Date and
provided further that the last Deferred Vesting Date shall be March 31, 2001,
after which date the Unvested Percentage of the Stock Appreciation Rights as of
such date shall expire. That portion of the Stock Appreciation Rights that does
not become vested on the scheduled Deferred Vesting Date due to the failure of
the Company or Blade to satisfy debt agreement obligations in accordance with
clause (i) above shall expire and be cancelled as of such Deferred Vesting Date
and shall not be subject to vesting pursuant to Section 4.1.
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(d) Discretion of the Board. The Board may elect, in its discretion, to
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cause any portion of the Stock Appreciation Rights to become vested prior to the
date on which it would otherwise become vested pursuant to the provisions of
this Section 3.1 (and whether or not any other conditions to such vesting have
been met); provided, however that the Board shall have no obligation to cause
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any portion of the Stock Appreciation Rights to become vested pursuant to this
Section 3.1(d)).
(e) Effect of Termination of Employment.
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(i) No portion of the Stock Appreciation Rights shall become
vested (whether pursuant to this Section 3.1, Section 4.1, or otherwise)
following a Termination of Employment, except pursuant to an exercise of
the Board's discretion under Section 3.1(d) and then only in the event such
Termination of Employment is due to the Executive's death or disability,
(ii) If a Termination of Employment has occurred other than for
cause (as determined by the Board in its discretion), the Executive will
retain ownership of the portion of the Stock Appreciation Rights that has
become vested prior to the date of such Termination of Employment, but no
payments will be made to the Executive with respect to such Stock
Appreciation Rights prior to the applicable Payment Date(s) specified in
Section 2.3 provided, that, except as the Board may elect otherwise in its
discretion, all Stock Appreciation Rights granted to the Executive (vested
and unvested) shall be forfeited and cancelled as of any date on which the
Executive violates any provision of the Employment Agreement between the
Executive, the Company and Pechiney dated October 4, 1995, and
(iii) Except as the Board may elect otherwise, in its discretion,
in the event of the Executive's Termination of Employment for cause (as
determined by the Board in its discretion), all Stock Appreciation Rights
granted to the Executive (vested and unvested) shall be forfeited and
cancelled as of the date of Termination of Employment and the Executive
shall not be entitled to any payment with respect to such Stock
Appreciation Rights.
ARTICLE IV
ACCELERATION
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Section 4.1 - Acceleration Event
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(a) If an Acceleration Event shall occur, then the Stock Appreciation
Rights that have not been forfeited or cancelled shall be deemed to be vested to
the extent set forth in Section 4.1(b) below, notwithstanding that the Stock
Appreciation Rights may not yet have become vested to such extent under Section
3.1.
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Any "accelerated vesting" pursuant to this Section 4.1 shall be effective as of
the date the applicable Acceleration Event occurs; and thereafter, all further
vesting (pursuant to Section 3.1 or otherwise) shall cease.
(b) The portion of the Stock Appreciation Rights that shall be deemed to be
vested pursuant to Section 4.1(a) shall be (i) the entire portion of the Stock
Appreciation Rights subject to vesting pursuant to Section 3.1(a), plus (ii) the
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portion of the Stock Appreciation Rights subject to vesting pursuant to Section
3.1(b) that has not expired pursuant to Section 3.1(c), multiplied by a fraction
the numerator of which is the portion of the Stock Appreciation Rights that has
already become vested pursuant to the terms of Section 3.1(b) and Section
3.1(c), and the denominator of which is the portion of the Stock Appreciation
Rights that would have become vested pursuant to Section 3.1(b) and Section
3.1(c) on or prior to the date of the Acceleration Event had all applicable
performance tests been met. See the example on Exhibit B.
ARTICLE V
MISCELLANEOUS
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Section 5.1 - Stockholder Approval
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This Agreement shall be effective upon approval by the stockholders of the
Company as provided in Section 280G(b)(5)(A)(ii) of the Code and regulations
thereunder.
Section 5.2 - Notices
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Any and all notices and any other communications provided for herein shall
be given in writing and shall be delivered either personally, by registered or
certified mail, postage prepaid, or by courier service which shall be addressed,
(i) in the case of the Company to the Chief Executive Officer of the Company
(with a copy to the General Counsel of the Company) at the principal office of
the Company at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx, 00000, (203)
661-4600, or such other address as the Company may supply by notice from time to
time, and (ii) in the case of the Executive, to his address appearing in the
records of the Company or to such other address as may be designated in writing
by him. Any notice mailed as provided in this Section shall, unless provided to
the contrary elsewhere in this Agreement, be deemed effective four business days
after having been delivered to the U.S. Postal Service, postage prepaid, return
receipt requested, two business days after been delivered to a courier service,
or if earlier, when actually received.
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Section 5.3 - Invalid Provision
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The invalidity or unenforceability of any particular provision hereof shall
not affect the other provisions hereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision was omitted.
Section 5.4 - Modifications
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No change or modification of this Agreement shall be valid unless the same
is in writing and signed by the parties hereto.
Section 5.5 - Counterparts
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This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 5.6 - Assignment
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Except as otherwise provided herein, no party may assign this Agreement
or any of his or its rights, interests or obligations hereunder without the
prior written consent of the other parties, provided that the Company's rights
and obligations hereunder may be assigned to any Parent Corporation or
Subsidiary or to any successor pursuant to a merger, consolidation or similar
event. Subject to the foregoing, this Agreement and the respective rights and
obligations of the parties hereto shall inure to the benefit of and be binding
upon, the successors and assigns of the parties.
Section 5.7 - Administration
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The Board shall have the power to interpret this Agreement and to adopt
such rules for the administration, interpretation and application of this
Agreement as are consistent herewith and to interpret or revoke any such rules.
All actions taken and all interpretations and determinations made by the Board
in good faith shall be final and binding upon the Executive, the Company and all
other interested persons. No member of the Board shall be personally liable for
any action, determination or interpretation made in good faith with respect to
this Agreement or the Stock Appreciation Rights.
Section 5.8 - Withholding
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The Executive acknowledges that the Company, a Parent Corporation or a
Subsidiary may have an obligation to withhold a portion of the amounts otherwise
payable to the Executive hereunder pursuant to federal, state and local income
tax laws and regulations, and the Company, any Parent Corporation and any such
Subsidiary are hereby authorized to withhold any such required amount.
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Section 5.9 - Titles
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Titles are provided herein for convenience only and are not to serve an a
basis for interpretation or construction of this Agreement.
Section 5.10 - Law Governing
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The laws of the State of New York shall govern the interpretation, validity
and performance of the terms hereof, regardless of the law that might be applied
under principles of conflicts of law.
Section 5.11 - Entire Agreement
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This Agreement embodies the entire agreement and understanding of the
parties hereto with respect to the subject matter contained herein.
Section 5.12 - No Rights as Stockholder
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The parties acknowledge and agree that the provisions of this Agreement
shall not be construed as conferring upon the Executive any rights or privileges
of a stockholder of the Company, any Parent Corporation or any Subsidiary, the
rights and privileges of the Executive being limited to those expressly set
forth in this Agreement.
Section 5.13 - Effect of Plan Upon Other Compensation Plans
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(a) The implementation of this Stock Appreciation Right Agreement shall not
affect any other compensation or incentive plans in effect for the Company, any
Parent Corporation or any Subsidiary. Nothing in this Agreement shall be
construed to limit the right of the Company, any Parent Corporation or any
Subsidiary (i) to establish any other forms of incentives or compensation for
employees of the Company, any Parent Corporation or any Subsidiary or (ii) to
grant or assume options or stock appreciation rights otherwise than under this
Plan in connection with any proper corporate purpose, including, but not by way
of limitation, the grant or assumption of options or stock appreciation rights
in connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, firm or
association.
(b) Grants of Stock Appreciation Rights and any payments with respect
thereto shall not constitute "compensation" for purposes of any pension, welfare
or other benefit plan or policy of the Company unless provided for therein.
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Section 5.14 - Arbitration
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Any dispute or controversy arising under, out of, in connection with or in
relation to this Agreement and the Stock Appreciation Rights shall be finally
determined and settled by arbitration in the city of the New York in accordance
with the rules and procedures of the American Arbitration Association, and
judgment upon the award may be entered in any court having jurisdiction thereof.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
HOWMET CORPORATION
By /s/
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President
Sign: /s/ Xxxxxx Xxxx
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Print Name Here: Xxxxxx Xxxx
0 Xxxxxx Xxxx
-------------------------------
Address
Xxxxxxxx, XX 00000-0000
-------------------------------
City State Zip Code
###-##-####
-------------------------------
Executive's Taxpayer Identification Number
15
Exhibit A
---------
TARGET CASH FLOW
----------------
($ Millions)
----------
Fiscal Year Target Cash Flow
----------- ----------------
1996* 22.3
1997 35.3
1998 41.3
1999 47.6
2000 54.4
--------
* For purposes of this Agreement, fiscal year 1996 shall include the
period from December 13, 1995 through December 31, 1995 and the first
day of fiscal year 1996 shall be deemed to be December 13, 1995.
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Exhibit B
---------
EXAMPLE OF ACCELERATED VESTING:
Assume: Cash Flow for 1996 and 1997 exceed Cash Flow Targets for those years
and Cash Flow for 1998 is less than Target Cash Flow for 1998.
Acceleration Event occurs on June 1, 1999.
As of May 31, 1999, 50% of SARs vested: 30% pursuant to Time Vesting
and 20% pursuant to Performance Vesting.
Accelerated Vesting: Pursuant to Section 4.1(b)(i), all of the
20% of the SARs remaining subject to Time
Vesting becomes vested upon June 1, 1999.
Pursuant to Section 4.1(b)(ii), two thirds of the 30% of
the SARs remaining subject to Performance Vesting
becomes vested upon June 1, 1999 as follows:
Unexpired Performance Performance Vesting SARs
that have vested -------------------------
----------------
Vesting SARs X Performance Vesting SARs that
would have vested if all
targets met
= 30% X 20%
------------
30%
= 20%.
As of June 1, 1999, 50% + 20% + 20% = 90% of SARs vested.
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