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Exhibit 10.12
[LOGO]
RTI
INTERNATIONAL
METALS, INC.
August 1, 1999
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Vice President & General Counsel
RTI International Metals, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇. ▇▇▇▇▇▇▇:
This Letter Agreement sets forth the basis upon which I have been authorized by
the Board of Directors of RTI International Metals, Inc. ("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 August 1, 1999 through July 31, 2003; provided, however,
that on August 1,2003 and each August 1 thereafter, the Employment Period shall
automatically be extended for one additional year unless, not later than the
immediately preceding April 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. This Letter Agreement supersedes and replaces
in its entirety the Letter Agreement between you and the Company dated May
1,1997.
1. During the Employment Period, you will serve as Vice President
& General Counsel 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 President & Chief
Executive 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 $150,000. 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
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RTI
INTERNATIONAL
METALS, INC.
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August 1, 1999
Page 2
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.
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, the
Greenbrier Clinic or comparable facility; and (3) tax
preparation and financial planning advice.
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
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RTI
INTERNATIONAL
METALS, INC.
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August 1, 1999
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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; 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 Company's
assets.
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INTERNATIONAL
METALS, INC.
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(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 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
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RTI
INTERNATIONAL
METALS, INC.
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August 1, 1999
Page 5
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.
(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.
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RTI
INTERNATIONAL
METALS, INC.
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August 1, 1999
Page 6
(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)
thirty-six (36) 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
highest annual bonus awarded to you
under any annual bonus plan of the
Company during the four (4) 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
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RTI
INTERNATIONAL
METALS, INC.
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August 1, 1999
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(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 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)(l) (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
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RTI
INTERNATIONAL
METALS, INC.
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August 1, 1999
Page 8
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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INTERNATIONAL
METALS, INC.
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August 1, 1999
Page 9
(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
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INTERNATIONAL
METALS, INC.
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August 1, 1999
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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 has as its principal
business the production of titanium or titanium-related
products. In addition, you agree that during such 24-month
period, you will not directly or indirectly induce, or attempt
to influence, any employee of the Company or any subsidiary or
affiliate thereof to terminate his or her employment with the
Company or any subsidiary or affiliate thereof or in any
manner seek to engage or seek to employ any such employee
(whether or not for compensation) such that such employee
would thereafter be unable to devote his or her full efforts
to the business then conducted by the Company or any
subsidiary or affiliate thereof. These restrictions 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 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 Company's Stock Plan Committee has granted to you 8,000
shares of restricted stock subject to your execution of a
Restricted Stock Grant in the form attached hereto. The
restriction period with regard to such shares shall commence
August 1, 1999 and end July 31, 2003.
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INTERNATIONAL
METALS, INC.
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August 1, 1999
Page 11
11. 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,
RTI International Metals, Inc.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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President & Chief Executive Officer
Attachment
CONFIRMED:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ DATE: 8-1-99
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