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EXHIBIT 10.1
March 6, 1998
Xx. Xxxxxxxx X. Xxxxxx
00 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
This Letter Agreement sets forth the basis upon which I have been authorized by
the Board of Directors of RMI Titanium Company ("Company") to employ you 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 May 1, 1998 through April 30, 2001; provided, however, that on May 1,
2001 and each May 1 thereafter, the Employment Period shall automatically be
extended for one additional year unless, not later than the immediately
preceding January 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 sixty-five (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.
1. During the Employment Period, you will serve as Vice President &
Treasurer 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 Executive Vice President & Chief Financial Officer or 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
$100,000.00. 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
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(c) 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.
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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 or comparable facility and provided in accordance with terms and
conditions comparable to those applicable to medical examinations for
USX executive officers; and (3) tax preparation and financial planning
advice under terms and conditions comparable to those applicable to USX
executive management.
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, (v) USX Corporation;
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 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
Corporation's assets.
(b) 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(f) 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, 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
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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.
(c) 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 termination by you 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
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.
(d) 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 (e) 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.
(e) Any termination by the Company for Cause or by you for 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.
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(f) 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 for 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 for Good Reason, you shall be entitled to the benefits
(the "Severance Payments") provided in Paragraphs 7(f)(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 payment (the "Severance Payment")
equal to the product of (1) a fraction, the numerator of
which is equal to the lesser of (x) twenty-four (24) 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 arithmetic average of the annual bonuses
awarded to you under any annual bonus plan of the Company
calculated using the two (2) 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
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Company, any person whose actions result in a Change of
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)(1) 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 by 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 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)(1) (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 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);
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(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.
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 twenty-four (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; provided, that this restriction
shall not apply if you terminate your employment with the Company
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
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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 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 non-competition period.
10. 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,
RMI TITANIUM COMPANY
By:
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Xxxxxxx X. Xxxxxx
Executive Vice President &
Chief Financial Officer
CONFIRMED:
Date:
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XXXXXXXX X. XXXXXX
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