Employment Agreement
Exhibit 10.3
This
Employment Agreement (the “Agreement”) is entered into this
13th day of November,
2006 by and between Globe Specialty Metals, Inc. (the “Company”) and Xxxx Xxxxxxxxxx (“Executive”).
WHEREAS, the Company desires to employ Executive on the terms and conditions set forth herein;
and
WHEREAS, Executive has agreed to perform services for the Company as set forth below.
NOW THEREFORE, in consideration of the mutual covenants set forth herein, the parties agree as
follows:
1. Position. Executive shall serve as the Company’s Chairman and Chief Executive Officer
(“CEO”), reporting to the Company’s Board of Directors (the “Board”), although Executive shall
have sole discretion to decline to continue to hold either the Chairman or the CEO position
without breach of this Agreement or modification of Executive’s compensation. Executive shall
perform such responsibilities that are normally associated with the CEO position, or Chairman
position if he shall decline to continue as CEO, and as otherwise may be assigned to Executive
from time to time by the Board, although the Company and Executive agree that Executive currently
engages in other businesses, including businesses in the metals industry, and he shall not perform
any of the services set forth in this Agreement on a full-time basis for the Company, but rather
shall devote at least 70% of his time as service as the Company’s Chairman and/or CEO. During the
term of this Agreement, Executive shall serve as a member of the Company’s Board of Directors with
no additional compensation other than as provided in this Agreement. Executive’s position shall
commence on the date this Agreement is executed (the “Commencement Date”).
2. Term. Executive’s employment will be for a term of four (4) years from the Commencement
Date, with automatic one (1) year renewal terms thereafter (collectively, the “Term”) unless
Executive or the Company give written notice to the other at least ninety (90) days prior to the
expiration of any Term of such party’s election not to further extend this Agreement. Any
termination of Executive’s employment will be governed by the terms set forth in this Agreement.
Termination of this Agreement shall be effectuated in writing, and notice of which shall be
provided at least thirty (30) days prior to the effective date of such termination.
3. Compensation and Benefits.
(a) Executive’s base pay shall be at an annual rate of no less than $500,000.00, which shall
be payable in accordance with the Company’s customary payroll practices, minus customary
deductions for federal and state taxes and the like (the “Base Pay”). Executive’s Base Pay shall
be subject to annual upward adjustments at the discretion of the Board.
(b) Bonuses and stock options shall be awarded at the discretion of the Board.
(c) Executive shall be offered the various benefits currently offered by the Company
generally to its employees including, without limitation, life and health insurance. Any such
benefits may be modified or changed from time to time at the sole discretion of the Company. Where
a particular benefit is subject to a formal plan (for example, medical insurance), eligibility to
participate in and receive any particular benefit is governed solely by the applicable formal plan
document. Executive shall also be entitled to receive an automobile allowance in the sum of
$1200.00 per month. Executive shall be fully reimbursed for all reasonable and necessary business
expenses upon presentation of adequate documentation to the Company demonstrating same.
(d) Executive will be granted forty (40) paid time off days (“PTO” days) for Executive’s use
for vacation, personal or sick leave. Executive’s accrued but unused PTO days shall not be paid to
Executive upon termination of employment. Executive shall also be entitled to observe as paid
holidays, in addition to state or Federal holidays that the Company observes, as many days of
religious observance as Executive chooses.
4. Change of Control and Severance.
(a) In the event a Change of Control occurs during Executive’s employment, Executive shall be
entitled to a severance payment of $2.5 million ($2,500,000) to be paid in a lump sum within ten
(10) business days following the Change of Control, minus customary deductions for federal and
state taxes and the like.
(b) A Change of Control means the occurrence of any of the following events:
(i) Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or
more of the total voting power represented by the Company’s then outstanding voting securities
(excluding for this purpose any such voting securities held by the Company or its Affiliates or by
any employee benefit plan of the Company) pursuant to a transaction or a series of related
transactions; or
(ii) Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not
approved by the Board, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity or the
parent of such corporation) at least 50% of the total voting power represented by the voting
securities of the Company or such surviving entity or parent of such corporation, as the case may
be, outstanding immediately after such merger or consolidation; or (B) the stockholders of the
Company approve an agreement for the sale or disposition by the Company of all or substantially all
of the Company’s assets; or
(iii) Change in Board Composition. A change in the composition of the Board, as a result of
which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall
mean directors who either (A) are directors of the Company as of the Commencement Date, or (B) are
elected, or nominated for election, to the Board with the
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affirmative votes of at least a majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or nomination is in connection with
an actual or threatened proxy contest relating to the election of directors to the Company).
(d) In the event Executive is terminated without “Cause” as such term is defined below, or in
the event that Executive resigns “For Good Reason” as such term is defined below, Executive shall
be entitled to the payment of $2.5 million ($2,500,000), provided Executive first executes a
release in a form reasonably satisfactory to the Company, and shall likewise be entitled to
continued health insurance coverage for the balance of the Term at the Company’s expense
(respectively, the “Severance Pay” and “Benefits”). The Severance Pay shall be provided in a lump
sum and Benefits shall be paid and provided in equal regular installments until fully retired and
shall be further conditioned upon Executive’s compliance with Section 6 below. The Severance Pay
and Benefits set forth in this section are in lieu of, not in addition to, the payment set forth in
Section 4(a).
(e) For purposes of this Agreement, “Cause” shall mean termination for:
(i) Executive’s conviction or entry of nolo contendere to any felony or crime involving
moral turpitude, material fraud or embezzlement of the Company’s property; or
(ii) Executive’s breach of any of the material terms of this Agreement, including the
confidentiality obligations set forth herein.
(f) For
purposes of this Agreement, “For Good Reason” shall mean Executive’s resignation following:
(i) a material breach by the Company of its obligations hereunder, provided Executive has
first given notice to the Company of such alleged breach and the Company has failed to cure same
within ten (10) days of receipt of such notice; or
(ii) Executive’s compensation and benefits are materially reduced.
(g) Severance Pay shall not be required under this Agreement if (i) Executive
terminates employment voluntarily, other than For Good Reason; or (ii) Executive is terminated
for Cause; or (iii) this Agreement terminates because of Executive’s death.
(h) Notwithstanding any other provision with respect to the timing of payments under
this Section, if, at the time of Executive’s termination, Executive is deemed to be a “specified
employee” of the Company within the meaning of Code Section 409A, then limited only to the extent
necessary to comply with the requirements of Code Section 409A, any payments to which Executive may
become entitled under Section 4 which are subject to Code Section 409A (and not otherwise exempt
from its application) will be withheld until the first (1st) business day of the seventh (7th)
month following Executive’s termination of employment, at which time Executive shall be paid an
aggregate amount equal to the accumulated, but unpaid, payments otherwise due to Executive under
the terms of Section 4(d).
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(i) The Company does not guarantee the tax treatment or tax consequences associated with any
payment or benefit set forth in this Agreement, including but not limited to consequences related
to Code Section 409A. Executive and the Company agree to both negotiate in good faith and jointly
execute an amendment to modify this Agreement to the extent necessary to comply with the
requirements of Code Section 409A; provided that no such amendment shall increase the total
financial obligation of the Company under this Agreement.
5. Indemnity. The Company shall indemnify Executive and hold Executive harmless from any
and all claims arising from or relating to Executive’s performance of Executive’s duties hereunder
to the fullest extent permitted by law and/or the Company’s Directors and Officers Liability
Insurance or applicable certificate of incorporation or bylaws or other applicable document.
6. Confidentiality and Non-Solicitation.
(a) Definition: “Confidential Information” means all Company proprietary information,
technical data, trade secrets, know-how and any idea in whatever form, tangible or intangible,
including without limitation, research, product plans, customer and client lists, developments,
inventions, processes, technology, designs, drawings, marketing and other plans, business
strategies and financial data and information. “Confidential Information” shall also mean
information received by the Company from customers or clients or other third parties subject to a
duty to keep confidential.
(b) Duty Not to Disclose: Executive will be exposed to and have access to the
Company’s Confidential Information. Executive agree to hold all Confidential Information in strict
confidence and trust for the sole benefit of the Company and he will not disclose, use, copy,
publish, summarize, or remove any Confidential Information from the Company’s premises, except as
specifically authorized in writing by the Company or in connection with the usual course of
Executive’s employment.
(c) Documents and Materials: Executive further agrees that Executive will return all
Confidential Information, including all copies and versions of such Confidential Information
(including but not limited to information maintained on paper, disk, CD-ROM, network server, or any
other retention device whatsoever) and other property of the Company, to the Company immediately
upon cessation of Executive’s employment with the Company. These terms are in addition to any
statutory or common law obligations that Executive may have relating to the protection of the
Company’s Confidential Information or its property. These restrictions shall survive the
termination of employment.
(d) Nonsolicitation.
(i) During the Term and for a period of twelve (12) months after the termination of
Executive’s employment for any reason, Executive will not, directly or indirectly, recruit, solicit
or induce, or attempt to recruit, solicit or induce any employee or employees of the Company to
terminate their employment with, or otherwise cease their relationship with, the Company.
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(ii) During the Term and for a period of twelve (12) months after termination of
Executive’s employment for any reason, Executive will not, directly or indirectly, solicit, divert
or take away, or attempt to solicit, divert or take away, the business or patronage of any of the
clients, customers or accounts, or prospective clients, customers or accounts, of the Company for
similar products that the Company produces.
(e) If any restriction set forth in this Section is found by any court of competent
jurisdiction 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 area as to which it may be
enforceable.
(f) The restrictions contained in this Section are necessary for the protection of the
business and goodwill of the Company and are considered by Executive to be reasonable for such
purpose. Executive agrees that any breach of this Section will cause the Company substantial and
irrevocable damage and therefore, in the event of any such breach, in addition to such other
remedies which may be available, the Company shall have the right to seek specific performance and
injunctive relief.
(g) Executive represents that his performance of all the terms of this Agreement as an
employee of the Company does not and will not breach any (i) agreement to keep in confidence
proprietary information, knowledge or data acquired by him in confidence or in trust prior to his
employment with the Company or (ii) agreement to refrain from competing, directly or indirectly,
with the business of any previous employer or any other party.
7. Notices. All notices required or permitted under this Agreement shall be in writing and
shall be deemed effective upon (a) the date of receipt, if sent by personal delivery (including
delivery by reputable overnight courier), or (b) the date of receipt or refusal, if deposited in
the United States Post Office, by registered or certified mail, postage prepaid and return receipt
requested, or (c) by facsimile transmission at the address of record of Executive or the Company,
or at such other place as may from time to time be designated by either party in writing.
8. Assignment. This Agreement is not assignable by Executive but may be assigned by the
Company without Executive’s prior consent.
9. Merger Clause/Governing Law/Jury Waiver. This Agreement constitutes the entire agreement
regarding the terms and conditions of Executive’s employment with the Company. This Agreement
supersedes any prior agreements, or other promises or statements (whether oral or written)
regarding the terms of employment. This Agreement may only be amended in a writing that is executed
by both Executive and the Company. This Agreement shall be governed by the law of the State of
Delaware without regard to conflicts of laws. Executive hereby waives trial by jury with respect to
any action arising out of or relating to this Agreement or Executive’s employment by the Company.
[signature page follows]
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| Globe Specialty Metals, Inc. | ||||||
| By: | /s/ Xxxxxxxx X. Xxxxxxx, Xx. | |||||
| Its: | ||||||
| /s/ Xxxx Xxxxxxxxxx | ||||||
| Xxxx Xxxxxxxxxx | ||||||
| Date executed | ||||||
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