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EXECUTIVE SEVERANCE AGREEMENT
This AGREEMENT, dated as of September 27, 1996 is entered into
by and between Titanium Hearth Technologies, Inc., a Delaware corporation (the
"Company") and Xxxxxxx X. Xxxxx ("Executive").
TERMS AND CONDITIONS
In consideration of the respective covenants and agreements of
the parties contained in this Agreement, the parties agree as follows:
1. GENERAL. This Agreement is not an employment
contract nor does it in any way alter the status of Executive as an at-will
employee of the Company serving at the pleasure of the Company's Board of
Directors. Executive's employment with the Company may be terminated without
notice (except as required by section 2 hereof) at any time, for any reason by
the Company or by Executive.
Executive shall be entitled to the severance benefits set
forth in section 3 of this Agreement upon termination of Executive's employment
by the Company unless such termination is for Cause (as defined below).
Executive's termination of employment with the Company by virtue of death,
disability (as defined below), or retirement shall not be considered as a
termination of Executive by the Company. For purposes of this Agreement,
"Cause" shall mean (i) Executive's conviction of any criminal violation
involving dishonesty, fraud or breach of trust or any felony, or (ii)
Executive's gross negligence or misconduct in the performance of his duties
that materially and adversely affects the financial condition of the Company or
could reasonably have a material and adverse effect on the Company or its
business. The Executive shall be deemed to have a "disability" if, by reason
of physical or mental incapacity, Executive becomes unable to perform his
normal duties, and Executive shall be deemed to have a disability if Executive
is absent from employment for more than 90 days in the aggregate (excluding
infrequent and temporary absence due to ordinary transitory illness) during any
12-month period.
Executive shall be entitled to the severance benefits set
forth in section 3 of this Agreement upon termination of Executive's employment
with the Company by Executive only if such termination is for Good Reason. For
purposes of this Agreement, Executive shall be deemed to have resigned for
"Good Reason" if Executive resigns from employment with the Company within 90
days following the occurrence of any one of the following events without
Executive's consent: (i) the assignment of Executive to any duties
substantially inconsistent with his position, duties, responsibilities or
status with the Company immediately prior to such assignment, or a substantial
reduction of the duties or responsibilities, as compared with the duties or
responsibilities immediately prior to such reduction; or (ii) a Substantial
Reduction in Pay, which shall mean a substantial reduction by the Company in
the amount of Executive's annual base salary as in effect as of the date
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of this Agreement or as the same may be increased from time to time, except for
across-the-board salary reductions similarly affecting all executives of the
Company.
2. NOTICE OF CERTAIN TERMINATIONS. In the event that
either (i) the Company shall terminate Executive for Cause or (ii) Executive
shall resign for Good Reason, then any such termination shall be communicated
by written notice to the other party. Any such notice shall specify (i) the
effective date of termination (the "Termination Date"), which shall not be more
than 30 days after the date the notice is delivered; and (ii) in reasonable
detail the facts and circumstances underlying a determination that the
termination is for Cause or for Good Reason, as the case may be. If within 15
days after any notice is given, the party receiving such notice notifies the
other party in good faith that a good faith dispute exists concerning the
characterization of the termination, the Termination Date shall be the date on
which such dispute is finally resolved either by written agreement of the
parties or by a final judicial determination. Notwithstanding the pendency of
any such dispute, the Company shall continue Executive and his dependents as
participants in all medical, dental and any other health insurance and similar
benefit plans of the Company in which he or they were participating when the
notice giving rise to the dispute was given, until the dispute is finally
resolved. Benefits provided under this section 2 are in addition to all other
amounts due under this Agreement and shall not be offset against, or reduce any
other amounts due under, this Agreement.
3. SEVERANCE BENEFITS. Subject to the conditions set
forth in section 1, if Executive is terminated by the Company without Cause or
if Executive resigns for Good Reason, within 15 days after the Termination
Date, the Company shall pay to Executive (subject to any applicable payroll or
other taxes required to be withheld) a lump sum amount equal to Executive's
base salary as of the Termination Date for a period of 18 months, provided,
however, that if the Termination Date occurs after the third anniversary of the
effective date of this Agreement, such amount shall equal Executive's base
salary as of the Termination Date for a period of 12 months, and provided
further, that if Executive resigns for Good Reason following a Substantial
Reduction in Pay, Executive's base salary for this purpose shall be such base
salary prior to the Substantial Reduction in Pay. In addition, upon any
termination of Executive's employment with the Company, the Company shall,
within 15 days following the Termination Date, pay to Executive (subject to any
applicable payroll or other taxes required to be withheld) an amount equal to
(i) accrued but unpaid salary through the Termination Date and (ii) unpaid
salary with respect to any vacation days accrued but not taken as of the
Termination Date.
Executive is not required to seek other employment or
otherwise mitigate the amount of any payments to be made by the Company
pursuant to this Agreement. The payments provided in this Agreement shall not
be reduced by any compensation earned by Executive as the result of employment
by another employer after the Termination Date, or otherwise.
4. CONFIDENTIALITY AND PROPRIETARY RIGHTS.
(a) Executive recognizes and acknowledges that
the trade secrets and proprietary information and procedures of the Company and
its affiliates, as they may exist from time
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to time, are valuable, special and unique assets of the Company and its
affiliates' business, access to and knowledge of which are essential to the
performance of Executive's duties hereunder. Executive agrees to hold as the
Company and its affiliates' property, all memoranda, books, papers, letters,
formulas and other data, and all copies thereof and therefrom, in any way
relating to the Company and its affiliates' business and affairs, whether made
by him or otherwise coming into his possession, and on termination of his
employment, or on demand of the Company or any of its affiliates, at any time,
to deliver the same to the Company or any of its affiliates.
(b) Executive hereby agrees he will not at any
time during his employment or thereafter disclose to any third party (other
than in the ordinary course of business of the Company or any of its
affiliates) or use for the benefit of himself or any third party any
Confidential Information (as such term is defined in section 4(d) below)
without prior written authorization of the Company or one of its affiliates.
(c) Executive hereby sells, transfers and assigns
to the Company all of his entire right, title and interest to the Proprietary
Rights (as such term is defined in section 4(e) below) and agrees to promptly
take all action and sign and deliver all instruments as the Company or any of
its affiliates may require at any time hereafter: (i) to vest or perfect in
the Company and its successors, assigns and nominees all right, title and
interest in and to the Proprietary Rights; (ii) to assist the Company or any of
its affiliates in filing or prosecuting any application for registration, in
Executive's name, the Company's name, the name of any of its affiliates or any
other name, in any country, for any patent, trademark, service xxxx, copyright,
mask work or other registration on the Proprietary Rights, or any modification,
reissue, division, continuation, revival or extension thereof; or (iii) in
conducting any legal or administrative proceedings for securing, protecting or
enforcing any of the foregoing or otherwise relating to the Proprietary Rights.
Executive further agrees to disclose to the Company or any of its affiliates
promptly all information, details and data pertaining to the Proprietary Rights
to the extent such information, details or data are not presently known to the
Company or any of its affiliates.
(d) As used in this Agreement, "Confidential
Information" shall mean information which is not generally known to the public
in the form available to Executive and which was or is used, developed or
obtained by the Company or any of its affiliates relating to the business of
the Company or any of its affiliates, or research and development, including,
but not limited to, all client or customer lists, marketing strategies and
techniques, trade secrets, engineering or other know-how or other information
pertaining to the financial condition, business, research and development or
prospects of the Company or any of its affiliates.
(e) As used in this Agreement "Proprietary
Rights" shall mean any and all inventions, discoveries, research, engineering
methods, systems, formulas, designs, mask works, copyrights, software, data,
processes, products, projects, improvements and developments all whether or not
published, confidential, protected or susceptible of protection by patent,
trademark, service xxxx, copyright or other form of legal protection and
whether or not any attempt has been made to secure such protection, which were
made, conceived or reduced to practice at any time by Executive
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or by any other employee or consultant of the Company or any of its affiliates,
or in whole or in part at the expense of, on the premises of, or with the
assistance of the employees or consultants of, with the equipment or supplies
or those of the employees or consultants of, the Company or any of its
affiliates, and any and all other Confidential Information.
5. NON-COMPETITION AND NON-SOLICITATION AGREEMENT.
(a) In consideration of the Company's agreements
as set forth in this Agreement, as well as other agreements, Executive agrees
that during his employment and for a period of two (2) years thereafter
(provided, however, that such two year period shall be extended by any period
during which Executive is in violation of this section 5), he will not in any
way, directly or indirectly, except in the proper exercise of his employment
pursuant to this Agreement:
(i) engage in, represent, furnish consultant services to,
be employed by, or have any interest (whether as owner, principal,
director, officer, partner, agent, consultant, stockholder, or
otherwise) in any business that is engaged in designing, constructing,
fabricating or operating a hearth melting furnace for the melting of
(A) titanium or titanium alloys or (B) any other specialty metal in
which the Company or any of its affiliates is actively doing business
as of the Termination Date. Such restrictions shall apply in the
specific geographic and customer markets served by the Company or any
of its affiliates at any time during or upon termination of,
Executive's employment (which shall include but not be limited to the
United States). This section 5(a)(i) shall not prevent Executive from
owning up to one percent (1%) of the outstanding stock of any publicly
traded company which competes with the Company provided Executive does
not participate in the business of such entity;
(ii) (A) solicit, offer employment to, otherwise attempt
to hire, or assist in the hiring of any employee of the Company or any
of its affiliates, (B) encourage, induce, assist, or assist others in
inducing any such person to terminate his or her employment with the
Company or any of its affiliates, or (C) in any way interfere with the
relationship between the Company or any of its affiliates and their
employees; or
(iii) (A) contact or solicit, or direct or assist others to
contact or solicit, for the purpose of promoting any person's or
entity's attempt to compete with the Company or any of its affiliates,
in any business carried on by the Company or any of its affiliates
during Executive's employment, any customers, suppliers or other
business associates of the Company or any of its affiliates that were
existing or identified prospective customers, suppliers or associates
during Executive's employment, or (B) otherwise interfere in any way
in the relationships between the Company or any of its affiliates and
their customers, suppliers and business associates.
(b) If Executive resigns prior to the third
anniversary of the Effective Date (as defined in section 17 of this Agreement)
under circumstances in which Executive is not entitled to severance benefits
pursuant to section 3 of this Agreement, then the Company will (unless the
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obligations of Executive under this section 5 have been waived by the Company)
pay to the Executive (subject to any applicable payroll or other taxes required
to be withheld) an amount equal to Executive's base salary as of the
Termination Date, payable in equal monthly installments of 1/24 of such base
salary.
(c) Executive agrees that this covenant is
reasonable with respect to its duration, geographic area and scope. It is the
desire and intent of the parties that the provisions of this section 5 shall be
enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly, if
any particular portion of this section 5 shall be adjudicated to be invalid or
unenforceable, this section 5 shall be deemed amended to delete therefrom the
portion thus adjudicated to be invalid or unenforceable, such deletion to apply
only with respect to the operation of this section 5 in the particular
jurisdiction in which such adjudication is made.
6. FURTHER ASSISTANCE. During Executive's employment by
the Company and thereafter, Executive will not make any disclosure, issue any
public statements or otherwise cause to be disclosed any information which is
designed, intended or might reasonably be anticipated to discourage suppliers
or customers of the Company or any of its affiliates or otherwise have a
negative impact or adverse effect on the Company or any of its affiliates.
Following Termination Date, Executive will provide assistance reasonably
requested by the Company in connection with actions taken by Executive during
Executive's employment by the Company, including but not limited to assistance
in connection with any lawsuits or other claims against the Company arising
from events during Executive's employment by the Company.
7. COMPLETE AGREEMENT. This Agreement, those documents
expressly referred to herein and other documents executed by the parties of
even date embody the complete agreement between the parties in respect to the
subject matter of this Agreement, and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way. The
provisions herein shall be regarded as divisible, and if any of such provisions
or any part thereof are declared invalid or unenforceable, the validity and
enforceability of the remainder of such provisions or parts thereof and the
applicability thereof shall not be affected thereby. All rights of Executive
and Executive's beneficiaries under this Agreement shall at all times be
entirely unfunded and no provision shall at any time be made with respect to
segregating assets of the Company or payment of any amounts due hereunder.
Neither Executive nor his beneficiaries shall have any interest in or rights
against any specific assets of the Company, and Executive and his spouse or
other beneficiary shall have only the rights of a general unsecured creditor of
the Company.
8. COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.
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9. SUCCESSORS AND ASSIGNS. This Agreement is intended
to bind and inure to the benefit of and be enforceable by Executive, the
Company and their respective successors and assigns; provided that in no event
shall Executive's obligations under this Agreement be delegated or transferred
by Executive, nor shall Executive's rights be subject to encumbrance or to the
claims of Executive's creditors. This Agreement is for the sole benefit of the
parties hereto and shall not create any rights in third parties other than the
Company's affiliates.
10. REMEDIES. The Company will be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights to which it may be entitled. Executive agrees and acknowledges
that money damages may not be an adequate remedy for breach of the provisions
of this Agreement and that the Company may in its sole discretion apply to any
court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. In the event that either party files an action
against the other in any court to collect, enforce, protect or preserve its
rights under this Agreement, the prevailing party in such action shall be
entitled to receive reimbursement from such other party of all reasonable costs
and expenses, including attorneys' fees, which such prevailing party incurred
in prosecuting or defending such action, as the case may be.
11. REPRESENTATIONS AND WARRANTIES OF EXECUTIVE.
Executive represents and warrants that he has full power and authority to enter
into this Agreement and to perform his obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Executive, enforceable
in accordance with its terms and conditions. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
will not (a) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate modify of cancel or require any notice under any contract, lease,
sublease, license, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, security interest or other
obligation or liability to which Executive is a party or by which he is bound
or to which any of his assets is subject (including but not limited to
employment, nondisclosure and confidentiality agreements) or (b) violate any
statute, regulation, rule, judgment, order, decree or other restriction of any
government, government agency or court to which Executive is subject.
12. CHOICE OF LAW. All questions concerning the
construction, validity and interpretation of this Agreement will be governed by
the internal law, and not the law of conflicts, of the State of Colorado.
13. MODIFICATIONS AND WAIVERS. No provision of this
Agreement may be modified, altered or amended except by an instrument in
writing executed by the parties hereto. No waiver by any party hereto of any
breach by any other party hereto of any term or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar terms or provisions at the time or at any prior or subsequent time.
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14. HEADINGS. The headings contained herein are solely
for the purpose of reference, are not part of this Agreement and shall not in
any way affect the meaning or interpretation of this Agreement.
15. NOTICES. Except as otherwise expressly set forth in
this Agreement, all notices, requests and other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be given (and, except as otherwise provided in this
Agreement, shall be deemed to have been duly given if so given) in person, by
cable, telegram, facsimile transmission, mailed by first class registered or
certified mail, postage, prepaid or sent by overnight courier to the parties at
the following addresses (or such other address as shall be furnished in writing
by like notice, provided, however, that notice of change of address shall be
effective only upon receipt):
Notices to Executive:
---------------------
000 Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Notices to the Company:
-----------------------
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn.: General Counsel
16. EXPENSES. Each party will pay its own expenses in
connection with this Agreement and the performance of the transactions and
obligations contemplated by this Agreement.
17. EFFECTIVE DATE. This Agreement is entered into in
anticipation of the acquisition, by the Company, of substantially all of the
assets of Xxxx Xxxxxxx Metals, Inc. pursuant to an asset purchase agreement.
The parties agree that this Agreement shall become effective upon the closing
of such acquisition (the "Effective Date"), but shall be null and void and of
no further effect if such acquisition does not close on or prior to December
31, 1996.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the day and year first above written.
EXECUTIVE
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
TITANIUM HEARTH TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Its: President
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