AMCAST INDUSTRIAL CORPORATION
0000 Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Xxxxx X. Xxxx
Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxx
Re: Retention Agreement
Gentlemen:
Amcast Industrial Corporation, an Ohio corporation ("Amcast"), is
entering into an Amended and Restated Restructuring Agreement dated as of July
15, 2003 with the Guarantors, the Restructuring Lenders and the Collateral Agent
(each as defined therein) (the "Existing Credit Agreement Restructuring
Agreement"), and an Amended and Restated LIFO Restructuring Agreement dated as
of July 15, 2003 with the Guarantors, the LIFO Lenders (as defined therein) and
the Collateral Agent (the "LIFO Credit Agreement Restructuring Agreement" and,
with the Existing Credit Agreement Restructuring Agreement, the "Restructuring
Agreement"), under which the Restructuring Lenders and the LIFO Lenders
(collectively, the "Lenders") have agreed to extend the restructuring period
under such agreements and grant certain other concessions to Amcast, and Amcast
has agreed to use its good faith best efforts: (i) to refinance all of the
Restructuring Lender Obligations and LIFO Lender Obligations (each as defined in
the Restructuring Agreements) by a third party, or (ii) to sell substantially
all of its assets (either of the foregoing, whether completed in one or multiple
transactions, being referred to as a "Transaction"). Amcast considers the
retention of each of you (collectively, the "Executives" and, individually, an
"Executive") as essential to the successful continued operation of Amcast and
its subsidiaries pending a Transaction and to the successful completion of a
Transaction, and considers it to be in the best interests of Amcast and its
shareholders and creditors to provide an inducement to you to remain in the
employ of the Company until a Transaction is completed.
In order to induce you to remain in the employ of the Company pending a
Transaction, this letter provides for the payment to you, on the terms and
conditions set forth herein, of an incentive payment if Amcast successfully
completes a Transaction. Except where the context otherwise indicates, "Amcast"
as used herein includes any successor to Amcast.
1. Payment of Transaction Incentive. If, prior to the termination of
this agreement, Amcast completes a Transaction, Amcast shall, concurrently with
the closing of the Transaction, pay from the "Net Proceeds," as that term is
hereinafter defined, an aggregate amount calculated as provided in Section 2 (a
"Transaction Incentive"), which shall be shared by: (i) each of the Executives
who is employed by Amcast or a subsidiary immediately prior to the closing of
the Transaction, and (ii) any Executive who, immediately prior to the 30-day
period ending with the close of the Transaction, was employed by Amcast or a
subsidiary and who, during such 30-day period ending with the close of the
Transaction, either dies or has his employment with Amcast or a subsidiary
terminated without "Cause" (as defined on Exhibit "A").
2. Calculation of the Transaction Incentive and Allocation among the
Executives. (a) The aggregate amount of the entire Transaction Incentive payable
to the Executives who are entitled to share in such Transaction Incentive
pursuant to Section 1 shall be the sum of: (i) $1,600,000 (the "Base Amount"),
plus (ii) an additional amount (the "Additional Amount") which shall be
calculated based on the amount of the Net Proceeds (as hereinafter defined)
payable in the Transaction in accordance with the following table (the
"Additional Amount Table"), as follows (subject to adjustment in the manner
provided in Section 3):
If the Net Proceeds are: The amount of the Additional Payment shall be:
----------------------- ---------------------------------------------
$137 million or less $0
$145 million $171,200 (10.7% of the Base Amount)
$155 million $384,000 (24% of the Base Amount)
$165 million $640,000 (40% of the Base Amount)
$175 million $800,000 (50% of the Base Amount)
$205 million $1,280,000 (80% of the Base Amount)
$225 million $1,600,000 (100% of the Base Amount)
$245 million or more $1,920,000 (120% of the Base Amount)
Each amount referred to in the first column above is referred to as a Net
Proceeds Threshold. In the event that the Net Proceeds from the Transaction fall
between two Net Proceeds Thresholds, the amount of the Additional Payment shall
be the sum of (i) the amount of the Additional Payment payable at the lower of
such two Net Proceeds Thresholds, plus (ii) an additional amount calculated by
(x) determining the difference between the Additional Payment payable at the
lower of such two Net Proceeds Thresholds and the Additional Payment payable at
the higher of such two Net Proceeds amounts, and (y) multiplying such difference
by a fraction, the numerator of which is the amount by which the actual Net
Proceeds exceed the lower of such two Net Proceeds Thresholds and the
denominator of which is the difference between such two Net Proceeds Thresholds.
(b) The aggregate Transaction Incentive payable under this agreement
shall be allocated among, and paid to, the Executives based on the respective
percentages set forth in the written agreement of the Executives which is being
submitted by them to Amcast concurrently with the execution of this agreement
(the "Allocation Agreement" and each Executive's share being the "Allocated
Transaction Incentive"). In the event that fewer than all of the Executives are
entitled under Section 1 to share in the Transaction Incentive, the Allocated
Transaction Incentive shall be paid only to the remaining Executive(s) who are
entitled to share in such payment.
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(c) For purposes of this agreement, "Net Proceeds" means:
(i) for a Transaction which is a refinancing by a third party
of the Restructuring Lender Obligations and the LIFO Lender
Obligations, an amount equal to the net proceeds payable to the Lenders
in such refinancing, and
(ii) for a Transaction which is the sale of substantially all
of the assets of the Company, the value, as of the date of closing (or
closings, if the Transaction consists of more than one sale
transaction), of all consideration received by Amcast in the
Transaction, whether in the form of cash, promissory notes, payments
for not competing, assets, securities or other property. The value of
any contingent, earn-out or other similar amounts to be paid after such
closing shall be determined in good faith by the Board of Directors of
Amcast and as consented to by the Lenders. Any securities or other
assets received by Amcast as consideration in a sale shall be valued:
(x) for securities which are freely tradable in an established public
securities market, at the last closing price in the market prior to
such closing; (y) for securities that are not freely tradable or have
no established public market and for other assets (other than cash), at
the fair market value thereof as set forth in, or determined in
accordance with, the sale agreement between Amcast and the purchaser in
the Transaction, or if such agreement does not provide a basis for
valuing such securities or other assets, at their fair market value as
reasonably determined in good faith by the Board of Directors of Amcast
and as consented to by the Lenders.
3. Transaction Incentive Not in Lieu of Other Compensation and
Benefits. Any Transaction Incentive payable pursuant to this Agreement shall be
in addition to, and not in lieu of, all other compensation and benefits to which
the Executives may be entitled under any agreement, plan or arrangement. The
Transaction Incentive shall not be taken into account for purposes of
determining any of the Executives' benefits under any pension, savings,
insurance, compensation or other benefit plan maintained by Amcast or any of its
subsidiaries.
4. Notice of Voluntary Termination. In consideration of this agreement,
each of the Executives shall provide Amcast with at least two months prior
written notice of the effective date of any voluntary termination by such
Executive of his employment with Amcast or a subsidiary, and any such voluntary
termination of employment shall become effective only on the effective date set
forth in such written notice. If an Executive voluntarily terminates his
employment by giving written notice as required by this section, he shall
continue to receive his normal compensation and benefits during the period after
such notice is given through the effective date of such termination so long as
he continues to perform his job function in a manner satisfactory to Amcast. If
an Executive voluntarily terminates his employment more than thirty (30) days
prior to a Transaction, that Executive shall not be entitled to participate in
the Transaction Incentive.
5. Fiduciary Duties. Nothing in this agreement shall be construed to
limit or eliminate the fiduciary duties owed by each of the Executives to Amcast
and its subsidiaries.
3
6. Effectiveness and Termination of this Agreement. (a) This agreement
shall become effective only upon the last to occur of the following: (i)
approval of this agreement and the Allocation Agreement by the Board of
Directors of Amcast, and (ii) approval of this agreement by the requisite
Lenders in accordance with the Restructuring Agreements. If this agreement
becomes effective, it shall terminate upon the first to occur of the following
(the "Termination Date"): (x) as to an Executive, upon the termination of such
Executive's employment with Amcast or a subsidiary prior to the completion of a
Transaction either by Amcast for Cause (as defined on Exhibit "A") or
voluntarily by such Executive, (y) the completion of a Transaction and full
payment of any Transaction Incentive payable under this agreement, or (z)
January 1, 2007, if a Transaction has not been completed prior to such date.
7. Transaction Effective in Bankruptcy. In the event that Amcast files
for bankruptcy protection or a bankruptcy action is filed against Amcast, and in
either such case Amcast completes a Transaction or series of Transactions, the
Lenders, as evidenced by the execution of this letter agreement by the Agent,
agree that the Transaction Incentive may be paid to the Executives from the
proceeds of the Lenders' collateral, so long as the proceeds from the
Transaction which generates the obligation to pay the Transaction Incentive has
been distributed to the Lenders.
8. Successors. This agreement shall inure to the benefit of, and be
enforceable by, the personal and legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees. If an
Executive dies after a Transaction has occurred (or during the 30-day period
prior to the closing of a Transaction) and any amounts are payable to him
pursuant to this Agreement, such amounts shall be paid to such beneficiary or
beneficiaries as the Executive may have designated by written notice given to
Amcast prior to his death or, in the absence of any such designation, to his
estate.
9. Notices. All notices required or permitted to be given under this
agreement shall be in writing and shall be mailed (postage prepaid, by either
registered or certified mail) or delivered, addressed as follows:
If to Amcast: Amcast Industrial Corporation
0000 Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Chairman of the Compensation Committee
If to an Executive: Xxxxx X. Xxxx
000 X. Xxxxx Xxxxxx
Xxxx #0000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxx
000 Xxxx Xxxxx
Xxxxxx, XX 00000
4
Xxxxxxx X. Xxxx
0000 Xxxx-Xxx Xxxxx X.X.
Xxxxx Xxxxxx, XX 00000
Any party may change the address to which notices to such party are to be
directed by giving written notice of such change to the other parties in the
manner specified in this section. All notices shall be deemed to have been given
on the date the notice is actually received by the party to which it is given.
10. Arbitration. Any dispute or controversy arising out of or relating
to this agreement shall be settled by arbitration in Dayton, Ohio, in accordance
with the applicable rules of the American Arbitration Association. The award of
the arbitrator shall be final and binding on the parties, and judgment upon the
award of the arbitrator may be entered in any court having jurisdiction thereof.
11. Waiver. The failure of any party to insist in any one or more
instances upon performance of any of the provisions of this agreement or to take
advantage of any of its rights hereunder shall not be construed as a waiver of
any such provisions or the relinquishment of any such rights, and the same shall
continue and remain in full force and effect. No single or partial exercise by
any party of any right or remedy shall preclude other or future exercise thereof
or the exercise of any other right or remedy. Waiver by any party of any breach
of any provision of this agreement shall not constitute or be construed as a
continuing waiver or as waiver of any other breach of any other provision of
this agreement.
12. Severability. It is the intention of the parties that this
agreement shall be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, to the extent that any provision of this agreement is adjudicated
to be invalid or unenforceable in any such jurisdiction, the court making such
determination shall have the power to limit, construe or reduce the duration,
scope, activity and/or area of such provision to the extent necessary to render
such provision enforceable to the maximum reasonable extent permitted by
applicable law, such limited form to apply only with respect to the operation of
this section in the particular jurisdiction in which such adjudication is made.
13. Entire Agreement; Amendment. This agreement and any other
agreements expressly referred to in this agreement shall constitute the complete
and entire agreement with respect to the subject matter hereof and shall
supersede all previous oral and written negotiations and commitments and any
other writings with respect to such subject matter. This agreement may not be
modified or amended except in a writing duly executed by all of the parties
hereto.
14. Captions. The captions contained in this agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this agreement.
15. Governing Law. This agreement shall be construed and enforced in
accordance with the laws of the State of Ohio, as applicable to agreements
executed and entirely performed in such state.
5
16. Counterparts. This agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
If this letter correctly sets forth our agreement on the subject matter
hereof, please confirm your agreement by signing and returning the enclosed copy
of this letter.
AMCAST INDUSTRIAL CORPORATION
By:_________________________________
Name:
Title:
Confirmed and agreed to:
----------------------- ------------------- -----------------------
Xxxxx X. Xxxx Xxxxxx X. Xxxxx Xxxxxxx X. Xxxx
----------------------- ------------------- -----------------------
Date Date Date
The Agent, on behalf of the Lenders, consents to the above described transaction
KeyBank, NA, as Agent to the Lenders
---------------------------------------
Xxxx Xxxxxxx, Vice-President, KeyBank NA
6
EXHIBIT "A"
"Cause" means (a) the willful and continued failure by the Executive to
substantially perform his duties to Amcast (other than any such failure
resulting from the Executive's physical or mental illness or other physical or
mental incapacity), after a demand for substantial performance is delivered to
him by the Board of Directors of Amcast which specifically identifies the manner
in which the Board of Directors believes that the Executive has not
substantially performed his duties, or (b) the willful engaging by the Executive
in gross misconduct which is materially and demonstrably injurious to Amcast
resulting or intended to result, directly or indirectly, in substantial personal
gain or substantial personal enrichment at the expense of Amcast. For purposes
of this definition, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interests of Amcast. Notwithstanding the foregoing, however, "Cause" shall not
be deemed to exist unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-fourths of the number of directors then in office at a meeting
of the Board of Directors of Amcast called and held for that purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board of Directors), finding
that in the good faith opinion of the Board of Directors of Amcast the Executive
was guilty of conduct described in clauses (a) or (b) of the first sentence of
this definition and specifying the particulars thereof in detail.
307397.2
