1
Exhibit 10.11
[LOGO]
RTI X.X. Xxx 000
INTERNATIONAL 0000 XXXXXX XXXXXX
METALS, INC. XXXXX, XXXX 00000-0000
August 1, 1999
Xx. Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
RTI International Metals, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
Dear Xx. Xxxxxx:
This Letter Agreement sets forth the basis upon which I have been
authorized by the Board of Directors of RTI International Metals, Inc.
("Company") to continue your employment 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 August 1, 1999
through July 31, 2003; provided, however, that on August 1, 2003 and each August
1 thereafter, the Employment Period shall automatically be extended for one
additional year unless, not later than the immediately preceding April 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 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. This Letter Agreement supersedes and replaces
in its entirety the Letter Agreement between you and the Company dated September
1, 1996.
1. During the Employment Period, you will serve as President and Chief
Executive Officer 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 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.
2. During the Employment Period, the Company will pay you, in equal
monthly installments, as compensation for your services an annual salary of
$350,000. 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
2
Xx. Xxxxxxx X. Xxxxxx
August 1,1999
Page 2
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(d) 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.
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, the Greenbrier Clinic or comparable facility;
and (3) tax preparation and financial planning advice.
3
Xx. Xxxxxxx X. Xxxxxx
August 1, 1999
Page 3
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 the Company in substantially the same proportions as their
ownership of stock of the Company; 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
4
Xx. Xxxxxxx X. Xxxxxx
August 1, 1999
Page 4
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 Company's assets.
(b) In the event of a Change in Control of the Company, you
may, at your sole option, terminate your employment with the Company within the
initial 90 calendar days from the occurrence of such Change in Control (a "Sole
Option" termination). If your employment is involuntarily terminated by the
Company other than for Cause within such initial 90 calendar day period, if you
elect a Sole Option termination, or if, after the first 90 calendar days
following a Change in Control you terminate for Good Reason, you shall not be
required to remain in the Company's employ, and the benefits set forth in
paragraph 7(g) shall be applicable.
(c) 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(g) 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 after the first 90 calendar days after a Change
in Control has occurred, or (iv) on or after the date that you 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.
(d) 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 a Sole Option termination by you within the first 90 calendar
days after a Change in Control has occurred or thereafter 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
5
Xx. Xxxxxxx X. Xxxxxx
August 1, 1999
Page 5
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.
(e) 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;
(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 (f) 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.
6
Xx. Xxxxxxx X. Xxxxxx
August 1,1999
Page 6
(f) Any termination by the Company for Cause or by you for
Sole Option or 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.
(g) 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 by Sole Option or 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 by Sole Option or (iii) by you for Good Reason, you shall be
entitled to the benefits (the "Severance Payments") provided in paragraphs
7(g)(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
7
Xx. Xxxxxxx X. Xxxxxx
August 1, 1999
Page 7
payment (the "Severance Payment") equal to the product of (1) a fraction, the
numerator of which is equal to the lesser of (x) thirty-six (36) or (y) the
number of full and partial months existing between the date 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 highest annual bonus awarded to you under any annual
bonus plan of the Company during the four (4) years immediately preceding date
of termination;
(iii) the options 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 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 in
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)(l) 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 to 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
8
Xx. Xxxxxxx X. Xxxxxx
August 1, 1999
Page 8
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)(l) (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 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 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
9
Xx. Xxxxxxx X. Xxxxxx
August 1, 1999
Page 9
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.
(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.
10
Xx. Xxxxxxx X. Xxxxxx
August 1, 1999
Page 10
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 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 or any subsidiary or
affiliate thereof. In addition, you agree that during such 24-month period, you
will not directly or indirectly induce, or attempt to influence, any employee of
the Company or any subsidiary or affiliate thereof to terminate his or her
employment with the Company or any subsidiary or affiliate thereof or in any
manner seek to engage or seek to employ any such employee (whether or not for
compensation) such that such employee would thereafter be unable to devote his
or her full efforts to the business then conducted by the Company or any
subsidiary or affiliate thereof. These restrictions shall not apply if you
terminate your employment with the Company by Sole Option or 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 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
11
Xx. Xxxxxxx X. Xxxxxx
August 1, 1999
Page 11
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
noncompetition period.
10. The Company's Stock Plan Committee has granted to you 40,000 shares
of restricted stock subject to your execution of a Restricted Stock Grant in the
form attached hereto. The restriction period with regard to such shares shall
commerce August 1, 1999 and end July 31, 2003.
11. 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,
RTI International Metals, Inc.
By /s/ XXXXXX X. XXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxx
Chairman of the Board of Directors
Attachment
Confirmed:
/s/ XXXXXXX X. XXXXXX
-------------------------
Xxxxxxx X. Xxxxxx
8/9/99
-------------------------
Date
