SPECIAL METALS CORPORATION
RESTRICTED STOCK AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), is made, effective as of the 16th day
of April, 1999 (hereinafter the "date of grant"), between SPECIAL METALS
CORPORATION, a Delaware corporation (hereinafter called the "Company"), and T.
Xxxxx Xxxx (hereinafter called the "Participant").
R E C I T A L S:
WHEREAS, the Company has adopted the Special Metals Corporation 1997
Long-Term Stock Incentive Plan (the "Plan"), which Plan is incorporated herein
by reference and made a part of this Agreement. Capitalized terms not otherwise
defined herein shall have the same meanings as in the Plan; and
WHEREAS, the Committee has determined that it would be in the best
interests of the Company and its stockholders to grant the restricted stock
award provided for herein (the "Restricted Stock Award") to the Participant
pursuant to the Plan and the terms set forth herein.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Grant of the Restricted Shares. Subject to the terms and conditions
of the Plan and the additional terms and conditions set forth in this Agreement,
the Company hereby grants to the Participant a Restricted Stock Award consisting
of twenty thousand four hundred sixty five (20,465) Shares (representing 40% of
$275,000 (the Participant's base salary) divided by $5.375, the share value as
of the date of grant) (hereinafter called the "Restricted Shares"). The
Restricted Shares shall vest and become nonforfeitable in accordance with
Section 2 hereof.
2. Vesting.
(a) Except as otherwise provided in this Section 2 or in Section 4,
one-half (1/2) of the Restricted Shares (the "Time-Vesting Restricted Shares")
shall vest and become nonforfeitable, subject to the Participant's continued
employment with the Company, in one-third (1/3) increments as of each of April
16, 2000, 2001, and 2002. The remaining half of the Restricted Shares (the
"Performance-Vesting Restricted Shares") shall vest and become nonforfeitable
within twelve (12) months of
the date of grant (or at such later time as is mutually agreed to by the
Participant and the Chief Executive Officer as provided in the April 16, 1999
employment agreement between the Participant and the Company (the "Employment
Agreement") based on the Participant's achievement of performance objectives as
negotiated with the Chief Executive Officer of the Company and set within ninety
(90) days of this Agreement. Such performance objectives will be annexed hereto
and incorporated into this Agreement when mutually agreed to in writing as
contemplated by the Employment Agreement.
(b) If the Participant's employment is terminated by the Company at any
time upon ninety (90) days advance written notice for any reason other than for
"Cause" or for no reason or by the Participant for "Good Reason" as provided in
Sections 9.1(a) and 9.2(c), respectively, of the Employment Agreement, the Time-
Vesting Restricted Shares shall, to the extent not then vested, become fully
vested and with respect to the Performance-Vesting Restricted Shares, the
Participant shall only be entitled to vesting the Restricted Shares for which
performance objectives have been achieved on the date of termination. Except as
otherwise set forth above, all Restricted Shares which have not vested as of the
date of termination of employment shall be immediately forfeited.
(c) Any vested Restricted Shares will be transferred to the
Participant twenty-four (24) months after the vesting date or at a later date
elected by the Participant (such election to be made at least 24 months before
the scheduled transfer date, unless the Company consents to a shorter election
period).
(d) For purposes of this Agreement:
"Cause" shall mean "Cause" as defined in the Employment Agreement or, if
not then in effect, any other employment agreement then in effect between the
Participant and the Company or if not defined therein or, if there shall be no
such agreement, (i) Participant's engagement in misconduct which is materially
injurious to the Company or its affiliates, (ii) Participant's continued failure
to substantially perform his duties to the Company, (iii) Participant's repeated
dishonesty in the performance of his duties to the Company, (iv) Participant's
commission of an act or acts constituting any (x) fraud against, or
misappropriation or embezzlement from the Company or any of its affiliates, (y)
crime involving moral turpitude, or (z) offense that could result in a jail
sentence of at least 30 days or (v) Participant's material breach of any
confidentiality or non-competition covenant entered into between the Participant
and the Company. The determination of the existence of Cause shall be made by
the Committee in good faith, which determination shall be conclusive for
purposes of this Agreement;
(e) Notwithstanding any other provision of this Agreement to the
contrary, in the event of a Change of Control (as defined in the Plan) the
Restricted
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Shares shall, to the extent not then vested, immediately become fully vested as
contemplated by Section 13 of the Plan and as more fully described in the
Employment Agreement.
3. Certificates. Certificates evidencing the Restricted Shares shall be
issued by the Company and shall be registered in the Participant's name on the
stock transfer books of the Company promptly after the date hereof, but shall
remain in the physical custody of the Company or its designee at all times prior
to the vesting of such Restricted Shares pursuant to Section 2. As a condition
to the receipt of this Restricted Stock Award, the Participant shall deliver to
the Company a stock power, duly endorsed in blank, relating to the Restricted
Shares. No certificates shall be issued for fractional Shares.
4. Cancellation of Award. Notwithstanding any other provision of the
Plan or this Agreement to the contrary, any unvested portion of the Restricted
Shares shall be forfeited by the Participant at any time if the Committee
determines that the Participant is not in compliance with the following
conditions and any vested Restricted Shares shall be subject to forfeiture to
the extent and under the circumstances described in Section 4(e), below:
(a) Participant shall not render services for any organization or engage
directly or indirectly in any business which, in the judgment of the Committee,
is or becomes competitive with the Company, or which organization or business,
or the rendering of services to such organization or business, is or becomes
otherwise prejudicial to or in conflict with the interests of the Company (such
organization is referred to herein as a "competing organization"). For a
Participant whose employment has terminated, the judgment of the Committee shall
be based on the Participant's position and responsibilities while employed by
the Company, the Participant's post-employment responsibilities and position
with the competing organization or business, the extent of past, current and
potential competition or conflict between the Company and the competing
organization or business, the effect on the Company's customers, suppliers and
competitors of the Participant's assuming the post-employment position, the
guidelines established in any then current employment policies of the Company
and such other considerations as are deemed relevant given the applicable facts
and circumstances. A Participant shall be free, however, to (i) purchase as an
investment or otherwise, stock or other securities of such competing
organization or business so long as they are listed upon a recognized securities
exchange or traded over-the-counter, and such investment does not represent a
substantial investment to the Participant or a greater than 5 percent equity
interest in the competing organization or business and (ii) serve as a director
of such competing organization if such service is approved by the Committee.
(b) Participant shall not, without prior written authorization from the
Company, disclose to anyone outside the Company, or use in other than the
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Company's business, any confidential information or material relating to the
business of the Company, acquired by the Participant either during or after
employment with the Company.
(c) Participant shall disclose promptly and assign to the Company all
right, title, and interest in any invention or idea, patentable or not, made or
conceived by the Participant during employment by the Company, relating in any
manner to the actual or anticipated business, research or development work of
the Company and shall do anything reasonably necessary to enable the Company to
secure a patent where appropriate in the United States and in other countries.
(d) Participant shall comply with the terms and conditions of any other
written agreement between the Company and the Participant relating to non-
competition, confidentiality, intellectual property and non-solicitation.
(e) Prior to the delivery of certificates representing any portion of
the Restricted Shares pursuant to this Agreement, the Participant shall certify
on a form acceptable to the Committee that he is in compliance with the terms
and conditions of this Agreement and the Plan. Failure to so certify as to
compliance or failure to otherwise comply with the provisions of paragraph (a),
(b), (c) or (d) above shall cause such Restricted Shares and all remaining
unvested Restricted Shares to be forfeited without consideration.
5. Rights as a Stockholder. The Participant shall be the record owner of
the Restricted Shares until or unless such Shares are forfeited pursuant to
Section 2 or Section 4 hereof, and as record owner shall be entitled to all
rights of a common stockholder of the Company, including, without limitation,
voting rights with respect to the Restricted Shares; provided that (i) any cash
or in-kind dividends paid with respect to the Restricted Shares which have not
previously vested shall be withheld by the Company and shall be paid to the
Participant only when, and if, such Restricted Shares shall become fully vested
pursuant to Section 2 and (ii) the Restricted Shares shall be subject to the
limitations on transfer and encumbrance set forth in Section 8. As soon as
practicable following the vesting of any Restricted Shares pursuant to Section
2, certificates for the Restricted Shares which shall have vested shall be
delivered to the Participant or to the Participant's legal guardian or
representative along with the stock powers relating thereto.
6. Legend on Certificates. The certificates representing the
vested Restricted Shares delivered to the Participant as contemplated by Section
3 above shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock exchange
upon which such Shares are listed, and any applicable Federal or state laws, and
the Committee may cause a
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legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
7. No Right to Continued Employment. Neither the Plan nor this Agreement
shall be construed as giving the Participant the right to be retained in the
employ of, or in any consulting relationship to, the Company or any Affiliate.
Further, the Company or an Affiliate may at any time dismiss the Participant or
discontinue any consulting relationship, free from any liability or any claim
under the Plan or this Agreement, except as otherwise expressly provided herein.
8. Transferability.
(a) The Restricted Shares may not, at any time prior to becoming vested
pursuant to Section 2, be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by the Participant and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or any Affiliate; provided that
the designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.
(b) Neither the Participant nor any transferee of the Participant
(including any beneficiary, executor or administrator) shall sell or otherwise
transfer any Restricted Shares upon or subsequent to their vesting, except in
accordance with the following procedure. The Participant shall deliver to the
Secretary of the Company a notice of sale (the "Notice of Sale") stating the
Participant's name and the number of Restricted Shares he desires to sell. Upon
receipt of a Notice of Sale, the Company shall have the right and option, for a
period ending at 3:30 P.M., Eastern time, on the next business day following
receipt of the Notice of Sale, to purchase all or a portion of the Restricted
Shares referred to in the Notice of Sale at the Fair Market Value of the Shares
on the day that the Notice of Sale is received by the Company. In the event that
the Company exercises its right to purchase any or all of the Restricted Shares
referred to in the Notice of Sale, such purchase shall be made at the offices of
the Company on the third business day following the day on which the Company
notifies Participant of the exercise of its right hereunder or on another
mutually satisfactory business day, provided that Participant has received all
necessary consents and other approvals and is able to transfer good title to the
Restricted Shares to be purchased by the Company. Delivery of certificates or
other instruments evidencing such Restricted Shares, duly endorsed for transfer,
shall be made on such date against payment of the purchase price therefor due at
the closing. In the event that the Company does not exercise its right to
purchase all or a portion of the Restricted Shares referred to in the Notice of
Sale, Participant shall be free to sell or otherwise transfer such Restricted
Shares at any time within 10 business days after the date on which the Notice of
Sale was given. If all of the Restricted Shares referred to in the Notice of
Sale are not sold within such 10 day period, then the right of the
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Participant to sell such Restricted Shares without providing a further Notice of
Sale shall expire and the obligations of this Section 8(b) shall be reinstated.
9. Withholding. The Participant agrees to make appropriate arrangements
with the Company for satisfaction of any applicable federal, state or local
income tax, withholding requirements or like requirements, including the payment
to the Company upon the vesting of the Restricted Shares (or such later date as
may be applicable under Section 83 of the Code), or other settlement in respect
of, the Restricted Shares of all such taxes and requirements and the Company
shall be authorized to take such action as may be necessary in the opinion of
the Company's counsel (including, without limitation, withholding vested Shares
otherwise deliverable to Participant hereunder and/or withholding amounts from
any compensation or other amount owing from the Company to the Participant ) to
satisfy all obligations for the payment of such taxes.
10. Securities Laws. Upon the vesting of any Restricted Shares, the
Participant will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with
applicable securities laws or with this Agreement.
11. Notices. Any notice necessary under this Agreement shall be
addressed to the Company in care of its Secretary at the principal executive
office of the Company and to the Participant at the address appearing in the
personnel records of the Company for such Participant or to either party at such
other address as either party hereto may hereafter designate in writing to the
other. Any such notice shall be deemed effective upon receipt thereof by the
addressee.
12. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
13. Restricted Stock Award Subject to Plan. By entering into
this Agreement the Participant agrees and acknowledges that the Participant has
received and read a copy of the Plan. The Restricted Stock Award is subject to
the Plan. The terms and provisions of the Plan as it may be amended from time to
time are hereby incorporated herein by reference. In the event of a conflict
between any term or provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan will govern and prevail.
14. Signature in Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
SPECIAL METALS CORPORATION
/s/ Xxxxxx X. Xxxxxxxxxxx
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By: Xxxxxx X. Xxxxxxxxxxx
Title: Chairman
/s/ T. Xxxxx Xxxx
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T. Xxxxx Xxxx
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