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EXHIBIT 8
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of April
29, 1997, is made and entered by and between Sinter Metals, Inc., a Delaware
corporation (the "Company"), and __________________ (the "Key Employee").
WITNESSETH:
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WHEREAS, the Key Employee is a senior employee of the Company
and has made and is expected to continue to make major contributions to the
short- and long-term profitability, growth and financial strength of the
Company;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
below) exists;
WHEREAS, the Company desires to assure itself of both present
and future continuity of management and desires to establish certain minimum
severance benefits for certain of its senior employees, including the Key
Employee, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior
employees are not practically disabled from discharging their duties in respect
of a proposed or actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement
for the Key Employee to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Key Employee agree as
follows:
1. CERTAIN DEFINED TERMS. In addition to terms defined
elsewhere herein, the following terms have the following meanings when used in
this Agreement with initial capital letters:
(a) "Base Pay" means the Key Employee's annual base salary at
a rate not less than the Key Employee's annual fixed or base
compensation as in effect for Key Employee immediately prior to the
occurrence of a Change in Control or such higher rate as may be
determined from time to time by the Board or a committee thereof.
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(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means that, prior to any termination pursuant to
Section 3(b) or Section 3(c), the Key Employee shall have committed:
(i) an intentional act of fraud, embezzlement or theft
in connection with his duties or in the course of his employment with
the Company or any Subsidiary;
(ii) intentional wrongful damage to property of the
Company or any Subsidiary;
(iii) intentional wrongful disclosure of secret
processes or confidential information of the Company or any Subsidiary;
(iv) intentional wrongful engagement in any Competitive
Activity; or
(v) a willful failure or refusal to follow the lawful
and proper directives of the Chief Executive Officer of the company
(the "CEO") consistent with the Key Employee's position, after receipt
by the Key Employee of written notice from the CEO specifying in
reasonable detail the alleged failure or refusal and, after a
reasonable opportunity for the Key Employee to cure such alleged
failure or refusal;
and any such act shall have been materially harmful to the Company.
For purposes of this Agreement, no act or failure to act on the part
of the Key Employee shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but shall be deemed
"intentional" only if done or omitted to be done by the Key Employee
not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Key Employee shall not be deemed to have been
terminated for "Cause" hereunder unless and until there shall have
been delivered to the Key Employee a copy of a resolution duly adopted
by the affirmative vote of not less than three quarters of the Board
then in office at a meeting of the Board called and held for such
purpose, after reasonable notice to the Key Employee and an
opportunity for the Key Employee, together with his counsel (if the
Key Employee chooses to have counsel present at such meeting), to be
heard before the Board, finding that, in the good faith opinion of the
Board, the Key Employee had committed an act constituting "Cause" as
herein defined and specifying the particulars thereof in detail.
Nothing herein will limit the right of the Key Employee or his
beneficiaries to contest the validity or
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propriety of any such determination.
(d) "Change in Control" means the occurrence during the Term
of any of the following events:
(i) The Company is merged, consolidated or reorganized
into or with another corporation or other legal person, and as a result
of such merger, consolidation or reorganization less than a majority of
the combined voting power of the then-outstanding Voting Stock of such
corporation or person immediately after such transaction are held in
the aggregate by the holders of Voting Stock of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal
person, and as a result of such sale or transfer less than a majority
of the combined voting power of the then-outstanding Voting Stock of
such corporation or person immediately after such sale or transfer is
held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any person (as
the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing 20% or
more of the combined voting power of the then-outstanding Voting Stock
of the Company; or
(iv) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
Directors of the Company cease for any reason to constitute at least a
majority thereof; PROVIDED, HOWEVER, that for purposes of this clause
(iv) each Director who is first elected, or first nominated for election
by the Company's stockholders, by a vote of at least two-thirds of the
Directors of the Company (or a committee thereof) then still in office
who were Directors of the Company at the beginning of any such period
will be deemed to have been a Director of the Company at the beginning
of such period.
Notwithstanding the foregoing provisions of Section 1(d)(iii), unless
otherwise determined in a specific case by majority vote of the Board,
a "Change in Control" shall not be deemed to have occurred for purposes
of Section 1(d)(iii) solely because (A) the Company, (B) a Subsidiary,
or (C) any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the
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Company or any Subsidiary either files or becomes obligated to file a
report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) under the Exchange Act disclosing
beneficial ownership by it of shares of Voting Stock, whether in excess
of 20% or otherwise, or because the Company reports that a change in
control of the Company has occurred or will occur in the future by
reason of such beneficial ownership.
(e) "Competitive Activity" means the Key Employee's
participation as an employee, officer, director or partner, without the
written consent of the Board, in the management, operation or control
of any business enterprise if such enterprise is engaged in the powder
metallurgy business in any geographic area in which the Company or any
of its subsidiaries is engaged in such business. "Competitive Activity"
will not include the mere ownership of less than five percent of the
outstanding Voting Stock in any such enterprise and the exercise of
rights appurtenant thereto.
(f) "Employee Benefits" means the perquisites, benefits and
service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs or
arrangements in which Key Employee is entitled to participate,
including without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement, or
other retirement income or welfare benefit, deferred compensation,
incentive compensation, group or other life, health, medical/hospital
or other insurance (whether funded by actual insurance or self-insured
by the Company), disability, expense reimbursement and other employee
benefit policies, plans, programs or arrangements that may now exist or
any equivalent successor policies, plans, programs or arrangements that
may be adopted hereafter by the Company, providing perquisites,
benefits and service credit for benefits at least as great in the
aggregate as are payable thereunder prior to a Change in Control.
(g) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(h) "Incentive Pay" means an annual amount equal to not less
than the highest aggregate annual cash bonus, cash incentive or other
payments of cash compensation, in addition to Base Pay, made or to be
made in regard to services rendered in any calendar year during the
three calendar years immediately preceding the year in which the Change
in Control occurred pursuant to any bonus, incentive, profit-sharing,
performance, discretionary pay or similar agreement, policy, plan,
program or arrangement (whether or
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not funded) of the Company, or any successor thereto providing benefits
at least as great as the benefits payable thereunder prior to a Change
in Control.
(i) "Severance Period" means the period of time commencing on
the date of the first occurrence of a Change in Control and continuing
until the earliest of (i) the 30- month anniversary of the occurrence
of the Change in Control, (ii) the Key Employee's death, or (iii) the
Key Employee's attainment of age 65.
(j) "Subsidiary" means an entity in which the Company directly
or indirectly beneficially owns 50% or more of the outstanding Voting
Stock.
(k) "Term" means the period commencing as of the date hereof
and expiring as of the later of (i) the close of business on December
31, 2000, or (ii) the expiration of the Severance Period; PROVIDED,
HOWEVER, that (A) commencing on January 1, 1998 and each January 1
thereafter, the term of this Agreement will automatically be extended
for an additional year unless, not later than September 30 of the
immediately preceding year, the Company or the Key Employee shall have
given notice that it or the Key Employee, as the case may be, does not
wish to have the Term extended and (B) subject to the last sentence of
Section 8, if, prior to a Change in Control, the Key Employee ceases
for any reason to be an employee of the Company and any Subsidiary,
thereupon without further action the Term shall be deemed to have
expired and this Agreement will immediately terminate and be of no
further effect. For purposes of this Section 1(k), the Key Employee
shall not be deemed to have ceased to be an employee of the Company and
any Subsidiary by reason of the transfer of Key Employee's employment
between the Company and any Subsidiary, or among any Subsidiaries.
(l) "Termination Date" means the date on which the Key
Employee's employment is terminated (the effective date of which shall
be the date of termination.
(m) "Voting Stock" means securities entitled to vote generally
in the election of directors.
2. OPERATION OF AGREEMENT. This Agreement will be effective
and binding immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, this Agreement will not be operative unless and
until a Change in Control occurs. Upon the occurrence of a Change in Control at
any time during the Term, without further action, this Agreement shall become
immediately operative.
3. TERMINATION FOLLOWING A CHANGE IN CONTROL. (a) In
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the event of the occurrence of a Change in Control, the Key Employee's
employment may be terminated by the Company during the Severance Period and the
Key Employee shall be entitled to the benefits provided by Section 4 unless such
termination is the result of the occurrence of one or more of the following
events:
(i) The Key Employee's death;
(ii) If the Key Employee becomes permanently disabled within
the meaning of, and begins actually to receive disability benefits
pursuant to, the long-term disability plan in effect for, or applicable
to, Key Employee immediately prior to the Change in Control; or
(iii) Cause.
If, during the Severance Period, the Key Employee's employment is terminated by
the Company or any Subsidiary other than pursuant to Section 3(a)(i), 3(a)(ii)
or 3(a)(iii), the Key Employee will be entitled to the benefits provided by
Section 4 and, if applicable, Section 5.
(b) In the event of the occurrence of a Change in Control, the
Key Employee may terminate employment with the Company and any Subsidiary during
the Severance Period with the right to severance compensation as provided in
Section 4 and, if applicable, Section 5 upon the occurrence of one or more of
the following events (regardless of whether any other reason for such
termination exists or has occurred, including without limitation other
employment):
(i) Failure to elect or reelect or otherwise to maintain the
Key Employee in the office or the position, or a substantially
equivalent office or position, of or with the Company and/or a
Subsidiary, as the case may be, which the Key Employee held immediately
prior to a Change in Control;
(ii) (A) A significant diminution in the nature or scope of
the authorities, powers, functions, responsibilities or duties attached
to the position with the Company and any Subsidiary which the Key
Employee held immediately prior to the Change in Control, (B) a
reduction in the Key Employee's Base Pay, (C) a reduction in the Key
Employee's opportunity for Incentive Pay, or (D) the termination or
denial of the Key Employee's rights to Employee Benefits or a reduction
in the scope or value thereof, any of which is not remedied by the
Company within 10 calendar days after receipt by the Company of written
notice from the Key Employee of such change, reduction or termination,
as the case may be; provided, however, that the Key Employee agrees
that changes resulting solely from the fact that the Company is not an
independent public company
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following a Change in Control shall not provide the basis for the Key
Employee to terminate employment with the Company;
(iii) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all
of its business and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization, transfer or
otherwise) to which all or substantially all of its business and/or
assets have been transferred (directly or by operation of law) assumed
all duties and obligations of the Company under this Agreement pursuant
to Section 11(a);
(iv) The Company relocates its principal executive offices, or
requires the Key Employee to have his principal location of work
changed, to any location that is in excess of 25 miles from the
location thereof immediately prior to the Change in Control; or
(v) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or any
successor thereto.
(c) Notwithstanding anything contained in this Agreement to
the contrary, in the event of a Change in Control at a time during which Xxxxxx
X. Xxxxxxxx is the Chief Executive Officer of the Company and during the one
year period immediately following such change in control Xx. Xxxxxxxx'
employment with the Company is terminated, the Key Employee may terminate
employment with the Company and any Subsidiary for any reason, or without
reason, during the 30-day period following the termination of Xx. Xxxxxxxx'
employment with the Company with the right to severance compensation as provided
in Section 6 and, if applicable, Section 7. It is expressly acknowledged that
the Key Employee may exercise his rights under this Section 3(c) notwithstanding
that the Company may have terminated the Key Employee's employment pursuant to
Section 3(a).
(d) A termination by the Company pursuant to Section 3(a) or
by the Key Employee pursuant to Section 3(b) or Section 3(c) will not affect any
rights that the Key Employee may have pursuant to any agreement, policy, plan,
program or arrangement of the Company providing Employee Benefits, which rights
shall be governed by the terms thereof; provided however, that [, subject to
Section 17,]** in the event that the Key Employee's employment with the Company
is terminated during the Severance Period, the Key Employee acknowledges that
he shall not be entitled to severance benefits under any other plan, policy,
practice or agreement of the Company other than this Agreement.
4. SEVERANCE COMPENSATION. (a) If, following the occurrence of
a Change in Control, the Company terminates the Key
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Employee's employment during the Severance Period other than pursuant to Section
3(a), or if the Key Employee terminates his employment pursuant to Section 3(b)
or Section 3(c), the Company will pay to the Key Employee the following amounts
within 10 business days after the Termination Date and continue to provide to
the Key Employee the following benefits:
(i) if the Key Employee's employment with the Company is
terminated on or prior to the first anniversary of the Change in
Control, an amount equal to $__________. If the Key Employee's
employment with the Company is terminated after the first anniversary
of the Change in Control, an amount equal to $__________ less
$__________ for each full calendar month the Key Employee remains in
the employ of the Company following the first anniversary of the
Change in Control.
(ii) For a period of eighteen months following the Termination
Date (the "Continuation Period"), the Company will arrange to provide
the Key Employee with Employee Benefits that are welfare benefits (but
not stock option, stock purchase, stock appreciation or similar
compensatory benefits) substantially similar to those that the Key
Employee was receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the reduction,
termination, or denial described in Section 3(b)(ii)). If and to the
extent that any benefit described in this Section 4(a)(ii) is not or
cannot be paid or provided under any policy, plan, program or
arrangement of the Company or any Subsidiary, as the case may be, then
the Company will itself pay or provide for the payment to the Key
Employee, his dependents and beneficiaries, of such Employee Benefits.
Without otherwise limiting the purposes or effect of Section 5,
Employee Benefits otherwise receivable by the Key Employee pursuant to
this Section 4(a)(ii) will be reduced to the extent comparable welfare
benefits are actually received by the Key Employee from another
employer during the Continuation Period following the Key Employee's
Termination Date, and any such benefits actually received by the Key
Employee shall be reported by the Key Employee to the Company.
(b) Without limiting the rights of the Key Employee at law or
in equity, if the Company fails to make any payment or provide any benefit
required to be made or provided hereunder on a timely basis, the Company will
pay interest on the amount or value thereof at an annualized rate of interest
equal to the so-called composite "prime rate" as quoted from time to time during
the relevant period in the Northeast Edition of THE WALL STREET JOURNAL. Such
interest will be payable as it accrues on demand. Any change in such prime rate
will be effective on and as of the date of such change.
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(c) Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under this Section 4
and under Sections 5 and 7 will survive any termination or expiration of this
Agreement or the termination of the Key Employee's employment following a Change
in Control for any reason whatsoever.
5. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in
this Agreement to the contrary notwithstanding, in the event that this Agreement
shall become operative and it shall be determined (as hereafter provided) that
any payment (other than the payment or payments provided for in this Section 5)
or distribution by the Company or any of its affiliates to or for the benefit of
the Key Employee, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise pursuant to or by reason of
any other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of
any of the foregoing (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 successor provision thereto) by reason of being considered "contingent
on a change in ownership or control" of the Company, within the meaning of
Section 280G of the Code (or any successor provision thereto) or to any similar
tax imposed by state or local law, or any interest or penalties with respect to
such tax (such tax or taxes, together with any such interest and penalties,
being hereafter collectively referred to as the "Excise Tax"), then the Key
Employee shall be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"). The Gross-Up Payment shall be in an amount
such that, after payment by the Key Employee of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed upon the Gross-Up Payment, the Key Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment. The intent of
this Section 5 is that the Key Employee shall suffer no detriment as a result of
the imposition of the Excise Tax on any Payment and it shall be construed
accordingly.
(b) Subject to the provisions of Section 5(f), all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Key Employee and the amount of such Excise Tax and
whether a Gross-Up Payment is required to be paid by the Company to the Key
Employee and the amount of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the "Accounting Firm") selected by the
Key Employee in his sole discretion. The Key Employee shall direct the
Accounting Firm to submit its determination and detailed supporting calculations
to both the Company and the Key Employee within 30 calendar days after the
Termination Date, if applicable, and any such other time or times
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as may be requested by the Company or the Key Employee. If the Accounting Firm
determines that any Excise Tax is payable by the Key Employee, the Company shall
pay the required Gross-Up Payment to the Key Employee within five business days
after receipt of such determination and calculations with respect to any Payment
to the Key Employee. If the Accounting Firm determines that no Excise Tax is
payable by the Key Employee, it shall, at the same time as it makes such
determination, furnish the Company and the Key Employee an opinion that the Key
Employee has substantial authority not to report any Excise Tax on his federal,
state or local income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts or fails
to pursue its remedies pursuant to Section 5(f) and the Key Employee thereafter
is required to make a payment of any Excise Tax, the Key Employee shall direct
the Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting calculations to
both the Company and the Key Employee as promptly as possible. Any such
Underpayment shall be promptly paid by the Company to, or for the benefit of,
the Key Employee within five business days after receipt of such determination
and calculations.
(c) The Company and the Key Employee shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Key Employee, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Section 5(b). Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment shall be binding upon the Company
and the Key Employee.
(d) The federal, state and local income or other tax returns
filed by the Key Employee shall be prepared and filed on a consistent basis with
the determination of the Accounting Firm with respect to the Excise Tax payable
by the Key Employee. The Key Employee shall make proper payment of the amount of
any Excise Payment, and at the request of the Company, provide to the Company
true and correct copies (with any amendments) of his federal income tax return
as filed with the Internal Revenue Service and corresponding state and local tax
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return, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Key Employee's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the Key
Employee shall within five business days pay to the Company the amount of such
reduction. If after filing the Key Employee's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the Key
Employee, at the direction of the Company, following procedures similar to those
described in Section 5(f) shall file a claim for refund. The Key Employee will
promptly pay to the Company the amount of any refund received (together with any
interest paid or credited thereon after any taxes applicable thereto).
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Section 5(b) shall be borne by the Company. If such fees and expenses are
initially paid by the Key Employee, the Company shall reimburse the Key Employee
the full amount of such fees and expenses within five business days after
receipt from the Key Employee of a statement therefor and reasonable evidence of
his payment thereof.
(f) The Key Employee shall notify the Company in writing of
any claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than 10
business days after the Key Employee actually receives notice of such claim and
the Key Employee shall further apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid (in each case, to the
extent known by the Key Employee). The Key Employee shall not pay such claim
prior to the earlier of (i) the expiration of the 30-calendar-day period
following the date on which he gives such notice to the Company and (ii) the
date that any payment of amount with respect to such claim is due. If the
Company notifies the Key Employee in writing prior to the expiration of such
period that it desires to contest such claim, the Key Employee shall:
(i) provide the Company with any written records or
documents in his possession relating to such claim reasonably
requested by the Company;
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including
without limitation accepting legal representation with respect to such claim by
an attorney competent in respect of the subject matter and reasonably selected
by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
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(iv) permit the Company to participate in any proceedings
relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Key Employee, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 5(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Key Employee may participate therein at his own
cost and expense) and may, at its option, either direct the Key Employee to pay
the tax claimed and xxx for a refund or contest the claim in any permissible
manner, and the Key Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; PROVIDED, HOWEVER,
that if the Company directs the Key Employee to pay the tax claimed and xxx for
a refund, the Company shall advance the amount of such payment to the Key
Employee on an interest-free basis and shall indemnify and hold the Key Employee
harmless, on an after-tax basis, from any Excise Tax or income or other tax,
including interest or penalties with respect thereto, imposed with respect to
such advance; and PROVIDED FURTHER, HOWEVER, that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the Key
Employee with respect to which the contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
any such contested claim shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Key Employee shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(g) If, after the receipt by the Key Employee of an amount
advanced by the Company pursuant to Section 5(f), the Key Employee receives any
refund with respect to such claim, the Key Employee shall (subject to the
Company's complying with the requirements of Section 5(f)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the Key
Employee of an amount advanced by the Company pursuant to Section 5(f), a
determination is made that the Key Employee shall not be entitled to any refund
with respect to such claim and the Company does not notify the Key Employee in
writing of its intent to contest such denial or refund prior to the expiration
of 30 calendar days after such determination, then
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such advance shall be forgiven and shall not be required to be repaid and the
amount of any such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid by the Company to the Key Employee pursuant
to this Section 5.
6. NO MITIGATION OBLIGATION. The Company hereby acknowledges
that it will be difficult and may be impossible for the Key Employee to find
reasonably comparable employment following the Termination Date. Accordingly,
the payment of the severance compensation by the Company to the Key Employee in
accordance with the terms of this Agreement is hereby acknowledged by the
Company to be reasonable, and the Key Employee will not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor will any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Key Employee hereunder or otherwise,
except as expressly provided in the last sentence of Section 4(a)(ii).
7. LEGAL FEES AND EXPENSES. It is the intent of the Company
that the Key Employee not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense of Key
Employee's rights under this Agreement by litigation or otherwise because the
cost and expense thereof would substantially detract from the benefits intended
to be extended to the Key Employee hereunder. Accordingly, if it should appear
to the Key Employee that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or any other
person takes or threatens to take any action to declare this Agreement void or
unenforceable, or institutes any litigation or other action or proceeding
designed to deny, or to recover from, the Key Employee the benefits provided or
intended to be provided to the Key Employee hereunder, the Company irrevocably
authorizes the Key Employee from time to time to retain counsel of Key
Employee's choice, at the expense of the Company as hereafter provided, to
advise and represent the Key Employee in connection with any such
interpretation, enforcement or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to the Key Employee's entering into an
attorney-client relationship with such counsel, and in that connection the
Company and the Key Employee agree that a confidential relationship shall exist
between the Key Employee and such counsel. Without respect to whether the Key
Employee prevails, in whole or in part, in connection with any of the foregoing,
the Company will pay and be solely financially responsible for any and all
reasonable attorneys' and related
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fees and expenses incurred by the Key Employee in connection with any of the
foregoing.
8. COMPETITIVE ACTIVITY. During a period ending at the later
of (a) three years following the first occurrence of a Change in Control, and
(b) one year following the Termination Date, if the Key Employee shall have
received or shall be receiving benefits under Section 4 and, if applicable,
Section 5, the Key Employee shall not, without the prior written consent of the
Company engage in any Competitive Activity.
9. EMPLOYMENT RIGHTS. Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the Key
Employee to have the Key Employee remain in the employment of the Company or any
Subsidiary prior to or following any Change in Control. Any termination of
employment of the Key Employee or the removal of the Key Employee from the
office or position in the Company or any Subsidiary following the commencement
of any discussion with a third person that ultimately results in a Change in
Control shall be deemed to be a termination or removal of the Key Employee after
a Change in Control for purposes of this Agreement.
10. WITHHOLDING OF TAXES. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
the Company is required to withhold pursuant to any law or government regulation
or ruling.
11. SUCCESSORS AND BINDING AGREEMENT. (a) The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the
business or assets of the Company, by agreement in form and substance
satisfactory to the Key Employee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement will
be binding upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor shall thereafter be deemed the "Company" for the purposes of this
Agreement), but will not otherwise be assignable, transferable or delegable by
the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Key Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other,
15
assign, transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 11(a) and 11(b). Without
limiting the generality or effect of the foregoing, the Key Employee's right to
receive payments hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest, or otherwise, other than by
a transfer by Key Employee's will or by the laws of descent and distribution
and, in the event of any attempted assignment or transfer contrary to this
Section 11(c), the Company shall have no liability to pay any amount so
attempted to be assigned, transferred or delegated.
12. NOTICES. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof confirmed), or five
business days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business days after
having been sent by a nationally recognized overnight courier service such as
Federal Express, UPS, or Purolator, addressed to the Company (to the attention
of the Secretary of the Company) at its principal executive office and to the
Key Employee at his principal residence, or to such other address as any party
may have furnished to the other in writing and in accordance herewith, except
that notices of changes of address shall be effective only upon receipt.
13. GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement will be governed by and construed in
accordance with the substantive laws of the State of Delaware, without giving
effect to the principles of conflict of laws of such State.
14. VALIDITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances will not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
15. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Key Employee and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or
16
otherwise, expressed or implied with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
References to Sections are to references to Sections of this Agreement.
16. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
[17. EMPLOYMENT AGREEMENT. The Company acknowledges that as
of the date of this Agreement, the Company and the Executive are parties to an
Employment Agreement, dated as of January 1, 1992 (as such agreement may be
hereinafter amended from time to time, the "Employment Agreement"). In the
event the Executive terminates employment with the Company under circumstances
pursuant to which he is entitled to receive severance compensation under both
this Agreement and the Employment Agreement, the Executive shall give written
notice to the Company within three business days after his Termination Date
electing to receive the benefits provided under either this Agreement or the
Employment Agreement. Should the Executive elect to receive benefits under this
Agreement as contemplated by the preceding sentence or should the
Executive terminate employment with the Company under circumstances in which he
is not entitled to receive severance compensation under the Employment
Agreement, the Company and the Executive agree that the Employment Agreement
shall, without further action, be deemed to have been terminated and neither
the Company nor the Executive shall have any further obligations hereunder.]**
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the ___ day of April, 1997.
SINTER METALS, INC.
By:
-------------------------
Xxxxxx X. Xxxxxxxx
Chairman and
Chief Executive Officer
-------------------------
Key Employee
** Bracketed language is included only in the Severance Agreement of Xxxxxx X.
XxXxxxx.
