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Exhibit 10.5
June 18, 2001
Dr. T. Xxxxx Xxxx
0000 Xxxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000
RE: EMPLOYMENT AGREEMENT
Dear Dr. John:
By letter dated April 15, 1999, Special Metals Corporation (the
"Company") and you entered into an employment agreement for the term beginning
on April 19, 1999 and ending on April 19, 2002. The Company desires to change
the terms of your employment and to employ you on the terms set forth herein,
and by your signature below you have indicated that you desire to be employed by
the Company on the terms set forth herein. In consideration of the mutual
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which consideration are hereby
acknowledged, the parties agree as follows:
1. Duties. You shall serve as the President and senior-most officer of
the Company, with responsibility for all operations of the Company's core
business, including the commercial functions, performing all duties reasonably
or necessarily relating to your position as shall be assigned to you from time
to time by the Board of Directors of the Company, devoting your full business
time, attention, best energies and abilities in the furtherance of the business
of the Company and will faithfully, diligently and to the best of your ability
perform the duties described herein and further the best interests of the
Company. You shall perform all duties of President and senior-most officer
consistent with the powers and duties of such offices set forth in the Company's
by-laws, as well as any other duties, commensurate with positions assigned to
you by the Board of Directors of the Company. During the Employment Period (as
defined below), your employment hereunder shall be your exclusive employment,
and you shall not be engaged in any other trade or business, without the consent
of the Company. You shall report to the Board of Directors of the Company. You
will be appointed to the Boards of Directors of the Company and various other
subsidiaries of the Company, and shall enjoy the duties and privileges of such
directorships as provided by the by-laws of these respective corporations. You
shall serve on these Boards without further compensation.
2. Term. The initial term of employment with the Company shall be for
the period commencing on January 1, 2001 or earlier (the "New Commencement
Date") and ending on April 19, 2004 (the Employment Period"). The term shall be
automatically extended for successive one year terms commencing upon each one
year anniversary date thereafter upon the terms and conditions set forth
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herein, unless either party gives not less than six (6) months prior written
notice of his or its intention not to extend the term of this Agreement prior to
the end of the Employment Period or any succeeding term. The parties agree that
they shall meet to discuss any extension of this Agreement no less than six (6)
months prior to the end of the Employment Period or any succeeding term of this
Agreement.
3. Base Salary. Your base salary shall be $380,000 for the year 2001,
commencing as of January 1, 2001; $420,000 for the year 2002; and at a rate to
be set for 2003 and 2004 but not less than Four Hundred Twenty Thousand Dollars
($420,000) per annum. Your base salary shall be payable in periodic installments
no less frequently than on a monthly basis (except that the payment to make up
for the difference between the rate at which you have been paid and your salary
for 2001 shall be paid on or before June 30, 2001). You shall be eligible for
annual salary increases based on your performance during the term of this
Agreement. Salary reviews will be in accordance with the Company's salary review
policy then applicable.
4. Incentive Compensation. You were eligible to receive a contingent
grant of 20,465 shares of restricted stock in accordance with your Employment
Agreement dated April 15, 1999. Of these shares, 12,010 vested on April 19,
2000; 3,410 vested on April 19, 2001; and 3,410 shall vest on April 19, 2002
subject to your continued employment on that date. The vested restricted shares
that you are eligible to receive shall be transferred to you twenty-four (24)
months after the vesting date or at a later date elected by you (such election
to be made at least 24 months before the scheduled transfer date, unless the
Company consents to a shorter election period). All incentive compensation based
upon the Company's shares will be adjusted for splits, dilution, dividends and
other such events as set forth in the Company's Stock Option Plan.
As of the New Commencement Date, you will be eligible to participate
in, and be subject to, the Company's Management Incentive Plan as it may then
exist, at the seventy-five percent (75%) target level as defined in the
applicable plan.
As of the New Commencement Date and for each year thereafter, you will
be eligible to participate in, and be subject to, the Company's Performance Unit
Award Plan as it may then exist at a one hundred ten percent (110%) of your base
salary target level as defined in the applicable plan for the 2002-2004 cycle
and, subsequent to the 2002-2004 cycle, at a one hundred and ten percent (110%)
of base salary target level as defined in the applicable plan. Upon retirement,
any outstanding long term incentive compensation owed to you for any cycle shall
be paid out to you on a pro rata basis as of the date of retirement in
accordance with the plan.
5. Pension Plan. You shall be entitled to participate in the Company's
pension plan under the terms and provisions of the Special Metals Corporation
Salaried Employees Pension Plan (the "SMC Salaried Pension Plan"), as amended
from time to time.
(a) Accelerated/Additional Vesting Service Schedule. With respect to
any benefits payable from the SMC Salaried Pension Plan Trust, a 5-year vesting
schedule applies. However, for purposes of determining any benefits payable
pursuant to Paragraph 5 of this Agreement, the Company agrees that it will
multiply your pension benefits as if you were fully vested by one and two-thirds
(1-2/3) after three (3) years of your employment (which commenced on April 19,
1999), so that you will have five (5) years of credited service after three (3)
years of actual employment, and your years of employment will continue to be
multiplied as if you were fully vested by one and two-thirds (1-2/3) for the
balance of your service until the termination of your employment. Your rights
shall accrue and vest monthly.
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(b) Funding and Payment of Benefits. To the maximum extent possible,
benefits accrued pursuant to this Section 5 shall be funded through and paid
from the Company's existing qualified plans, with any remainder to be provided
through a non-qualified SERP arrangement to be established by the Company.
6. Supplemental Employee Retirement Plan. The Company shall provide you
with, and make all contributions on your behalf to, a Supplemental Employee
Retirement Plan ("SERP") which will provide you with the following:
(a) Accrued Benefits. A supplemental retirement benefit equal to, for
the first five (5) years of credited service (calculated, accruing and vesting
as set forth in Section 5(a) above), twenty percent (20%) plus four percent (4%)
for each additional year of credited service (calculated, accruing and vesting
as set forth in Section 5(a) above) beyond five (5) years of credited service
equal to the average of your annual base salary for the two calendar years
during which your base salary was the highest.
(b) Vesting Schedule. All such SERP benefits hereunder shall be 100%
vested and non-forfeitable.
(c) Funding and Payment of Benefits. All such SERP benefits shall be
paid, either commencing at your age 65 (or in the event of your termination,
death or disability before you reach age 65, at the time of such event), in a
lump sum or such other manner selected by you or your designated beneficiary no
less than two years prior to the calendar year in which you attain age 65, or at
the time of your death or disability. To the maximum extent possible, these SERP
benefits will be funded through and paid from the Company's existing qualified
plans, with any remainder to be provided through a non-qualified SERP
arrangement to be established by the Company. SERP benefits paid hereunder will
be calculated and paid on a 50% Joint and Survivor Annuity basis as the normal
form of benefit.
(d) Coordination of Benefits. The payment of these SERP benefits
through the SMC Salaried Pension Plan is not intended to increase the basic
qualified benefit otherwise payable to you pursuant to the Company's qualified
pension plan described in Section 5 above.
7. Other Benefits.
7.1 Stock Option Grant. During the Employment Period, you will be
eligible to participate in the Company's Stock Option Plan as it may then exist.
Upon the original Commencement Date, April 19, 1999, you received a grant of
forty thousand (40,000) shares, vesting one-third (1/3), on each of the first
three (3) anniversary dates of the Commencement Date, as described in the Stock
Option Plan.
7.2 Stock Option Grant Evaluation. By December 31, 2001, the Company
will seriously consider granting stock options, stock appreciation rights or
their equivalent to you and senior management in the year 2001 in amounts to be
determined.
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7.3 Employee Fringe Benefits. During the Employment Period, you will be
eligible to participate in the standard management employee fringe benefits
plans, including, without limitation, 401(k), medical, disability, dental and
life insurance and other fringe benefits, pursuant to their respective terms and
conditions as they may be modified, amended or terminated from time to time to
the same extent as the Company's other senior executive officers. If your
employment with the Company is terminated between April 19, 2002 and April 19,
2004 for any reason, except for "cause" as defined in paragraph 10.3(e) in this
Agreement, the Company will at that time provide medical benefits to you and
your wife until either of you becomes eligible for Medicare and thereafter as
provided in paragraph 7.4. If your employment is terminated for "cause," your
wife will not receive the Company's medical benefits.
7.4 Post-Retirement Medical Benefits. Upon and after your retirement,
you and your wife will each be eligible to participate, for the duration of each
of your lifetimes, in the standard management employee fringe benefits plans for
medical and dental benefits, pursuant to their respective terms and conditions
as they may be modified, amended or terminated from time to time.
7.5 Reimbursement of Business Expenses. The Company will, upon proper
accounting, reimburse you for all reasonable expenses and disbursements incurred
by you in connection with the performance of your duties hereunder. You must
regularly submit to the Company's Chief Financial Officer a statement of these
expenses and comply with such other accounting and reporting requirements that
the Company may from time to time establish.
7.6 Vacation. You are entitled to four (4) weeks paid vacation during
the balance of calendar year 2001 and, during the remainder of your Employment
Period, to four (4) weeks paid vacation per calendar year or such longer period
as shall be provided to senior executives of the Company.
8. Automobile and Club Membership. The Company will reimburse you for
your use of your personal car for Company business when automobile
transportation is called for and it is reasonable to expect you to use your
personal car. Such reimbursement shall be at the mileage rate typically paid at
the time by the Company for reimbursement for use of a personal car for Company
business. In addition, the Company will reimburse you for one club membership
pursuant to the terms of its applicable policy relating to same with the
approval of the Board of Directors in advance and with reimbursement at a level
consistent with Company established practice. The Company agrees that your
current club membership has been approved by the Company. The foregoing
reimbursement arrangements may be modified by the Company from time to time.
9. Change of Control. For the purposes of this Agreement, a "Change in
Control" means (i) the direct or indirect, sale, lease, exchange or other
transfer, in a single transaction or series of transactions (whether related or
unrelated), of all or substantially all (50% or more) of the assets of Company
to any Person or entity or group of Persons or entities acting in concert as a
partnership or other group (a "Group of Persons") other than a wholly owned
subsidiary of the Company provided such subsidiary enters into this Agreement
and agrees to be bound by the terms of this Agreement to the same extent as
Company (ii) any person or group is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), except that a person
shall be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 50% of
the total voting power of the voting stock of the Company, including by way of
merger, consolidation or otherwise (iii) the merger,
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consolidation or other business combination of Company with or into another
corporation with the effect that the shareholders of Company, as the case may
be, immediately prior to the business combination hold 50% or less of the
combined voting power of the then outstanding securities of the surviving Group
of Persons of such merger ordinarily (and apart from rights accruing under
special circumstances) having the right to vote in the election of directors, or
(iv) the replacement of a majority of the Board of Directors of Company, over
any period of two years or less, from the directors who constituted the Board of
Directors at the beginning of such period, and such replacement shall not have
been approved by the Board of Directors of Company, as the case may be (or
replacements approved by the Board of Directors of Company) as constituted at
the beginning of such period.
10. Termination.
10.1 By the Company. The Company may terminate your employment with the
Company:
(a) at any time upon not less than ninety (90) days advance
written notice to you for any reason other than for "cause" (as defined below)
or for no reason ("Termination Without Cause"), subject to the requirement that
the Company pay to you the amounts set forth in Sub-section 10.3 hereof,
(b) at any time without notice for "cause" (as defined below);
(c) upon your death;
(d) in the event of your disability as defined below; or
(e) by not extending the Employment Period, subject to the
requirement that the Company shall pay the amounts set forth in Sub-section 10.3
hereof.
"Disability" shall mean that due to illness, accident or other physical or
mental incapacity, the Board has in good faith determined that you are unable to
substantially perform your usual and customary duties under this Agreement for
more than six (6) consecutive months. During any period that you fail to perform
your duties hereunder as a result of incapacity due to disability ("disability
period"), you shall continue to receive your full base salary, together with all
benefits provided in this Agreement.
10.2 By the Employee. You may terminate your employment with the
Company:
(a) at any time upon ninety (90) days advance written notice;
(b) if there is a Change in Control of the Company, and,
within two years thereafter, there is a material change in your authority or job
responsibilities or any other material change in the scope of your powers which
results in lower salary or less responsibility than your assignment as President
and senior-most Officer; or
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(c) for "Good Reason," upon ninety (90) days advance written
notice and the Company's failure to cure the "Good Reason" within the ninety
(90) day period. "Good Reason" is defined as (i) any material breach of this
Agreement by the Company; (ii) any material reduction in your authority or job
responsibilities which results in lower salary or less responsibility than your
assignment as President and senior-most Officer; (iii) any required relocation
of your position from Huntington, West Virginia without your consent; or (iv)
the creation by the Company of intolerable working conditions.
10.3. Payments upon Termination.
(a) Upon termination of this Agreement by the Company other
than for cause during the Employment Period or termination by you pursuant to
Sub-sections 10.2(b) and/or (c) hereof, the Company shall provide you with:
(1) all amounts accrued but unpaid hereunder up to
and including the date of termination including, without limitation,
any pro rata portion of the your salary, incentive compensation earned,
and stock options remaining unpaid as of the date of termination,
subject to the following:
(2) incentive compensation and stock options under
Sections 4 and 7 hereof shall be subject to accelerated vesting, but
payable after the date of such termination, subject to the terms of the
Company's incentive compensation and stock option plans, provided,
however, that you shall be entitled to only so much of the Restricted
Shares of incentive compensation for which your performance objectives
are achieved, and further provided, however, that your right to
exercise vested options shall be extended for a period of one (1) year
following the termination, notwithstanding any contrary language in the
plan documents;
(3) a severance payment equal to (i) base
compensation for the greater of the remaining term of this Agreement or
one year plus (ii) the average of the last two annual awards made to
you under Company's Management Incentive Plan and the Performance Unit
Award Plan for the remaining term of the contract or one year,
whichever is longer (pro rated for any partial years);
(4) all of the deferred compensation accrued under
Sections 5 and 6 hereof; provided however, if this Agreement is
terminated on or before April 19, 2002, employee shall be vested with 5
years of credited service; and
(5) the continuation of all employee fringe benefits
provided to you as contemplated by Section 7.3 hereof through the
scheduled term of this Agreement or for three (3) years after the date
of termination, whichever is longer.
Notwithstanding the foregoing, if the Company terminates this
Agreement "for cause," the termination payment will be limited to all accrued
but unpaid amounts (salary and deferred compensation, including incentive
compensation earned and Pension Plan and SERP vested) through the date of the
termination.
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(b) The payments specified in the preceding paragraph (a) of
this Sub-section 10.3 shall be in full satisfaction of any and all claims that
you may have against the Company or any subsidiary or affiliate thereof and, as
a condition to the making of such payments by the Company, you and the Company
shall be required to execute mutual releases of claims arising from events or
occurrences prior to the date of such Termination without Cause or Change of
Control or termination by you for Good Reason if there is no disagreement about
the payments that you are owed, provided, however, that any disagreement about
the payments will be subject to arbitration as set forth in paragraph 17.6 of
this Agreement.
(c) Upon termination of this Agreement by the Company pursuant
to clauses (c), (d) or (e) of Sub-section 10.1 hereof, or by you pursuant to
Sub-section 10.2(a) hereof, you or your estate, as the case may be, shall not be
entitled to any compensation, severance, or any other benefits and/or payments
hereunder, except for base salary, incentive compensation, stock options and
pension benefits earned and vested as of the date of such termination, and the
proceeds of all applicable life and disability insurance policies.
(d) Upon termination of this Agreement by the Company for
cause, pursuant to sub-section 10.1(b), or by you for any reason, pursuant to
Sub-section 10.2(a), you shall not be entitled to any compensation, severance,
or any other benefits and/or payments hereunder, except for base salary,
incentive compensation, stock options and pension benefits earned and vested as
of the date of such termination.
(e) A termination for "cause" is defined as: (i) your willful
neglect of your duties hereunder; (ii) conviction for, or entry of a pleading of
guilty or nolo contendre by you with respect to a felony; (iii) material,
knowing and intentional failure to comply with applicable laws with respect to
the execution of the Company's business operations; (iv) theft, fraud,
embezzlement, dishonesty or similar conduct which has resulted or is likely to
result in material economic damage to the Company or any of its affiliates or
subsidiaries; (v) repeated failure to perform the directives of the Company's
Board of Directors; or (vi) dependence or addiction to alcohol or use of drugs
(except those legally prescribed by and administered pursuant to the directions
of a practitioner licensed to do so under the laws of the state or county of
licensure) which in the opinion of Company's Board of Directors interferes with
your ability to perform your assigned duties and responsibilities. If you are
terminated for cause under subparagraphs (i), (iii), (iv), (v) or (vi), you will
be entitled to thirty (30) days prior written notice and the opportunity to
cure, and if, in the Company's reasonable discretion, you have not cured the
cause for your termination within that time, the Company shall have the right to
declare your employment terminated.
11. Certain Additional Payments by the Company. Anything in this
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by the Company to or for your benefit that is
considered paid or payable or distributed or distributable in connection with a
Change in Control (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties are incurred by you with respect to such excise tax
(such excise tax, together with any such interest and penalties, being
collectively the "Excise Tax"), then you shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by you of all taxes on the Gross-Up Payment (including, without limitation, any
income taxes and Excise Tax imposed upon the Gross-Up Payment
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and any interest or penalties imposed with respect to such taxes), you retain an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments
(as determined without regard to the Gross-Up Payment). All determinations
required to be made under this Section 11, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment, shall be made by a
nationally recognized independent accounting firm selected by the Company (the
"Accounting Firm") which shall provide detailed supporting calculations to the
Company and you within 30 business days following the date of termination, if
applicable, or such earlier time as the Company may request. All fees and
expenses of the Accounting Firm shall be borne by the Company. The Gross-Up
Payment, if any, as determined pursuant to this Section 11 shall be paid to you
within ten days following receipt by the Company of the Accounting Firm's
determination. The Accounting Firm shall either make the determination that a
Payment is subject to the Excise Tax or it shall furnish you with an opinion
that failure to report the Excise Tax on your applicable Federal income tax
return would not result in the imposition of a negligence or similar penalty,
and, in the latter case (subject to the last sentence of this paragraph), no
Gross-Up Payment shall be required. Any determination by the Accounting Firm
shall be binding upon the Company and you. As a result of the uncertainty in the
application of Section 4999 of the Code, it is possible that Gross-Up Payments
which were to have been made by the Company should have been made (an
"Underpayment") or that Gross-Up Payments which have been made by the Company
should not have been made (an "Overpayment"), consistent with the calculations
required to be made hereunder. The Accounting firm shall determine the amount of
any Underpayment or Overpayment that has occurred and (i) an amount equal to any
such Underpayment shall be promptly paid by the Company to or for your benefit;
and (ii) any amount refunded to you as a result of such Overpayment shall be
promptly paid by you to the Company in an amount which will result in your being
made whole on an after-tax basis.
12. Residence. You agree to maintain your residence in Huntington, West
Virginia.
13. Indemnification. The Company shall defend and hold you harmless to
the fullest extent permitted by applicable law and the Company's by-laws and
Certificates of Incorporation in connection with any claim, action, suit,
investigation or proceeding arising out of or relating to performance by you of
services for, or action of you as, or arising by reason of the fact that you are
or were, a Director, officer, employee or agent of the Company or any parent,
subsidiary or affiliate of the Company, or of any other person or enterprise at
the Company's request. Expenses incurred by you in defending a claim, action,
suit or investigation or proceeding shall be paid by the Company in advance of
the final disposition thereof upon the receipt by the Company of any undertaking
by or on behalf of you to repay such amount if it shall ultimately be determined
that you are not entitled to be indemnified hereunder. The foregoing rights are
not exclusive and do not limit any rights accruing to you under the by-laws of
the Company or any other agreement or contract or under applicable law.
14. Non-Disclosure; Non-Competition, Non-Solicitation.
14.1 Proprietary Information.
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(a) You agree that all information and know-how, whether or
not in writing, of a private, secret or confidential nature concerning the
business or financial affairs of the Company, or any subsidiary or affiliate of
the Company, (collectively, "Proprietary Information") is and will be the
exclusive property of the Company, or such subsidiary or affiliate, as the case
may be. By way of illustration, but not limitation, Proprietary Information
includes manufacturing methods, processes or techniques; inventions; products;
projects: developments; compositions; plans; research data; financial data;
trade secrets; patents; personnel data; computer programs; designs; and client
and supplier lists, whether or not copyrightable, trademarkable or licensable.
You shall not disclose any Proprietary Information to others outside the Group
(as defined below) except when disclosure is compelled by law or use the
Proprietary Information for any unauthorized purposes without written approval
by an officer of the Company, either during or after your employment, unless and
until such Proprietary Information has become public knowledge without your
fault. For purposes hereof, the "Group" shall mean the Company, any subsidiary
or affiliate.
(b) You agree that all files, letters, memoranda, reports,
records, data, sketches, drawings, notebooks, notes, specifications, computer
programs, listings, or other written, photographic, or other tangible material
containing Proprietary Information, whether created by you or others, which
comes into your custody or possession, is the exclusive property of the Group,
to be used by you only in the performance of your duties for the Company and
will remain in the custody of the Company if for any reason you leave your
employment with the Company and it will not be available to you after
termination of your employment.
(c) You agree that your obligation not to disclose or use
information, know-how and records of the types set forth in paragraphs (a) and
(b) above also extends to such types of information, know-how, records and
tangible property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
or to you in the course of the Company's business.
14.2 Developments.
(a) You will make full and prompt disclosure to the Company of
all patents, inventions, improvements, ideas, concepts, approaches, discoveries,
methods, developments, software, and works of authorship, whether or not
copyrightable, patentable, trademarkable or licensable, which are created, made,
conceived or reduced to practice by you or under your direction or jointly with
others in connection with your employment by the Company and relating to clients
or prospective clients of the Company, whether or not during normal working
hours or on the premises of the Company (all of which are collectively referred
to in this Agreement as "Developments").
(b) You agree to cooperate fully with the Company, both during
and after your employment with the Company, with respect to the procurement,
maintenance and enforcement of patents, copyrights, licenses and trademarks
(both in the United States and foreign countries) relating to Developments. To
the extent that such cooperation requires the expenditure of any money, the
Company will be responsible for the payment of any such money. If pursuant to
this Section 14.2 you assist the Company subsequent to the termination of your
employment with the Company, the Company will compensate you for your time at a
rate to be mutually agreed upon. You will sign all papers, including, without
limitation, copyright applications, trademark applications, patent applications,
license applications, declarations, oaths, formal assignments, assignments of
priority rights and powers of
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attorney, which the Company may deem necessary or desirable in order to protect
its rights and interest in any Developments.
14.3. Non-Competition.
(a) During your Employment Period with the Company and for an
additional period equal to eighteen (18) months after the end of the Employment
Period or until the end of Payments upon Termination set forth in Sub-section
10.3 hereof, whichever is longer, and regardless of the reason for the
termination of your employment, you will not, without the Company's prior
written approval (such approval not to be unreasonably withheld), directly or
indirectly:
(1) hire any employee of the Group or recruit,
solicit or induce, or attempt to induce, any employee or consultant of the Group
to terminate his employment or consulting relationship with, or otherwise cease
his relationship with, the Group; or
(2) solicit, divert or take away, or attempt to
divert or to take away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or accounts, of the
Group which were contacted, solicited or served by the Group at any time during
or prior to the term of this Agreement; or
(3) engage (whether for compensation or without
compensation), directly or indirectly, as an individual proprietor, partner,
stockholder, officer, employee, member, agent, independent contractor,
consultant, director, joint venturer, investor, lender, or in any other capacity
whatsoever (other than as the holder of not more than one percent (1%) of the
total outstanding stock of a publicly-held company), in the business of
developing, producing, marketing or selling products or services in the high
performance nickel alloy and superalloy industry throughout the world (a
"Competitive Business"), provided, however, that nothing in this Subparagraph
14.3. shall prevent you from holding or maintaining any positions or interests
presently held by you and disclosed to the Board of Directors of the Company,
or, held by you subsequent hereto with the consent of the Board of Directors of
the Company. You acknowledge and agree that your engagement (whether for
compensation or without compensation), directly or indirectly, as an individual
proprietor, partner, stockholder, officer, employee, member, agent, independent
contractor, consultant, director, joint venturer, investor, lender, or in any
other capacity whatsoever (other than as the holder of not more than one percent
(1%) the total outstanding stock of a publicly-held company), with or for any
Competitive Business without consent of the Board of Directors of the Company
shall be deemed to constitute engagement in a Competitive Business. You
acknowledge and agree that your duties for the Company require you to conduct
business worldwide and that the Group's business, clients, customers, accounts
or prospective business, customers or accounts are and/or could be worldwide.
(b) If any restriction set forth in this Sub-section 14.3 is
found by any court of competent jurisdiction or American Arbitration Association
panel to be unenforceable because it extends for too long a period of time or
over too great a range of activities or in too broad a geographic area, it shall
be interpreted to extend only over the maximum period of time, range of
activities or geographic areas to which it may be enforceable.
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(c) The restrictions contained in this Sub-section 14.3 are
necessary for the protection of the business and goodwill of the Group and are
considered by you to be reasonable for this purpose, and you acknowledge that
but for your agreement to comply with such restrictions the Company would not
have entered into this Agreement. You agree that for purposes of this paragraph
that the services to be provided by you hereunder are special, unique and/or
extraordinary and that any breach of this Sub-section 14.3 will cause the Group
substantial and irreparable damage and, therefore, in the event of any such
breach, in addition to such other remedies, which at law or in equity may be
available, the Group will have the right to seek equitable and injunctive relief
as may be necessary to enforce the provisions of this Sub-section 14.3 against
you. The period of time during which the restrictions contained in Sub-section
14.3 shall be in effect shall be extended by the length of time during which you
are in breach of any such restrictions, as determined by the American
Arbitration Association, pursuant to Sub-section 17.6.
14.4 Survival of Obligations. The obligations of the Employee under
Sub-sections 14.1, 14.2 and 14.3 will survive the termination of this Agreement.
15. Notices.
All notices, requirements, demands and other communications under this Agreement
must be in writing and must be delivered by hand or by facsimile transmission or
mailed by certified or registered mail, postage prepaid, return receipt
requested, to the parties as follows:
If to the Company:
Special Metals Corporation
0000 Xxxxxx Xxxxxxxxxx Xxxx
Xxx Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to you:
To the address set forth on the first page of this Agreement, with a
copy to (which shall not constitute notice):
Xxxxxxx X. Xxxxxxxxx, Esq.
Xxxxx Xxxxxx Xxxxxx & Xxxxxxxxx
A professional corporation
00xx Xxxxx, Xxx Xxxxx Xx.
Xxxxxxxxxxxx, XX 00000
Facsimile: 215-567-2737
or to such other address as is specified in a notice complying with this Section
15. Any such notice is deemed given on the date delivered by hand or facsimile
transmission or three days after the date of mailing.
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16. Other Agreements. You hereby represent that you are not bound by
the terms of any agreement with any previous employer or other party to refrain
from competing, directly or indirectly, with the business of such previous
employer or any other party, except as disclosed to the Company. You further
represent that your performance of all the terms of this Agreement and as an
employee of the Company does not and will not breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by you in
confidence or in trust prior to your employment with the Company.
17. Miscellaneous.
17.1 Modification. This Agreement constitutes the entire Agreement
between the parties with regard to the subject matter hereof, superseding all
prior understandings and agreements, whether written or oral. None of the
Company's employee handbooks, manuals, or policy statements shall explicitly or
implicitly create any additional rights or obligations with respect to your
employment except as otherwise explicitly provided herein. This Agreement may
not be amended, modified or revised except by a writing signed by the parties
hereto.
17.2 Successors and Assigns. This Agreement is binding upon and inures
to the benefit of both parties and their respective heirs, beneficiaries,
executors, trustees, administrators, successors and assigns, including any
corporation with which or into which the Company may be merged or which may
succeed to its assets or business, although your obligations are personal and
may be performed only by you. The Company shall require any successor (whether
direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation or otherwise) to all or a
significant portion of the assets of the Company, by agreement in form and
substance satisfactory to you and your legal counsel, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed by a successor, this Agreement
shall be binding upon any successor in accordance with the operation of law and
such successor shall be deemed the "Company" for purposes of this Agreement.
17.3 Captions. Captions have been inserted in this Agreement solely for
convenience of reference, and in no way define, limit or affect the scope or
substance of any provision of this Agreement.
17.4 Severability. The provisions of this Agreement are severable, and
invalidity of any provision does not affect the validity of any other provision.
In the event that any court of competent jurisdiction or an American Arbitration
Association panel determines that any provision of this Agreement or the
application thereof is unenforceable because of its duration or scope, the
parties agree that the court or American Arbitration Association panel in making
such determination will have the power to reduce the duration and scope of such
provision to the extent necessary to make it enforceable, and that the Agreement
in its reduced form is valid and enforceable to the full extent permitted by
law.
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17.5 Delays or Omissions. No delay or omission by the Company in
exercising any right under this Agreement (including without limitation, any
failure to strictly enforce any provision hereof) shall operate as a waiver of
that or any other right. A waiver or consent given by the Company on any one
occasion shall be effective only in that instance and shall not be construed as
a bar or waiver of any right on any other occasion.
17.6 Submission to Jurisdiction. Each party to this Agreement hereby
irrevocably and unconditionally:
(a) (i) agrees that any suit, action or proceeding
arising out of or relating to this Agreement or a breach of this Agreement shall
be instituted only with the American Arbitration Association ("AAA") located in
the State of New York, (ii) consents and submits to the jurisdiction of such
suit, action or proceeding instituted by the other, (iii) agrees that the
parties will share equally all fees and expenses of the AAA (not including each
party's own attorneys' fees and costs), subject to the right of the AAA to award
such fees and costs to the prevailing party as part of any arbitration award;
(iv) the arbitration award shall be final and binding subject to enforcement in
any other jurisdictions by suit on the judgment or in any other manner provided
by law; (v) agrees that for each arbitration three arbitrators shall be
appointed, one of whom shall be appointed by the Company, one by you and the
third of whom shall be appointed by the first two arbitrators; if the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the AAA; and (v) agrees that the
arbitration shall be conducted in accordance with the rules of the AAA, except
with respect to the selection of arbitrators which shall be as provided in this
section; and
(b) (i) waives any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement brought as specified in sub-section
17.6(a), (ii) waives any claim that any such suit, action or proceeding has been
brought in an inconvenient forum, and (iii) agrees not to plead or claim either
of the foregoing.
17.7 Reimbursement of Legal Counsel. The Company agrees that in the
event that it shall be necessary or desirable for you to retain legal counsel
and/or incur other costs and expenses in connection with the enforcement of any
or all of your rights under this Agreement, including the defense of an action
by the Company over the terms of this Agreement, and provided that you
substantially prevail in the enforcement of such rights, the Company shall pay
(or you shall be entitled to recover from the Company, as the case may be) your
reasonable attorneys' fees and other costs and expenses in connection with the
enforcement of your rights, including the enforcement of any arbitration award.
17.8 Acknowledgment. You hereby acknowledge that you have read this
Agreement carefully; you have been afforded sufficient time to understand the
terms and effects of this Agreement; you have been given the opportunity to
consult with counsel and in fact have been advised by counsel as to all terms
and effects of this Agreement prior to executing this Agreement, or have
knowingly, freely and voluntarily declined to do so; any ambiguity that might be
alleged to exist herein shall not be construed against or in favor of any party
hereto; you are voluntarily entering into and executing this Agreement; neither
the Company nor its agents or representatives have made any representations
inconsistent with the terms and effects of this Agreement; no promise,
inducement, or agreement not expressed herein has been made to you: and you
fully understand and voluntarily accept the terms and conditions of this
Agreement.
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17.9 Governing Law. This Agreement is to be interpreted and construed
under and governed by the laws of State of New York.
17.10 Prior Agreement. This Agreement is intended to supercede the
letter agreement dated April 19, 1999. To the extent that the terms of the April
19, 1999 Agreement are inconsistent with the terms of this Agreement, the terms
of this Agreement shall control.
If the foregoing is acceptable to you, please execute the
duplicate original of this letter in the space provided below and return to me.
Very truly yours,
SPECIAL METALS CORPORATION
By: /s/ Xxxxxxxx Xxxxxxx de Janvry
----------------------------------
Xxxxxxxx Xxxxxxx de Janvry
Chairman of the Board
ACCEPTED AND AGREED to
this 18th day of June, 2001
/s/ T. Xxxxx Xxxx
---------------------------
T. Xxxxx Xxxx
