Document:

Exhibit 10.17

 

[date]

 

[name] 
 [address]

 

Dear [first name]:

 

The Board of Directors (the “Board”) of GrafTech International Ltd. (the “Corporation”) has authorized the grant to you of this Severance Compensation Agreement (this “Agreement”).  The Board recognizes that the possibility of a Change in Control of the Corporation exists, as is the case with many publicly held corporations, and that the uncertainty and questions which it may raise among management may result in the departure or distraction of management personnel to the detriment of the Corporation and its stockholders.

 

The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including yourself, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from a possible Change in Control of the Corporation.  The Board has also determined that it is in the best interests of the Corporation and its stockholders to ensure your continued availability to the Company in the event of a potential Change in Control of the Corporation.  References herein to the “Company” mean the Corporation and its subsidiaries.

 

In order to induce you to remain in the employ of the Company and in consideration of your continued service to the Company, the Corporation and its subsidiary or subsidiaries signing the signature page of this Agreement jointly and severally agree that you shall receive the severance benefits set forth in this Agreement in the event your employment with the Company is terminated subsequent to a Change in Control of the Corporation under the circumstances described below.

 

1.                                      Definitions.

 

a.                                      “Change in Control of the Corporation” shall be deemed to occur if any of the following circumstances shall occur:

 

(i)                                     any “person” or “group” within the meaning of Section 13(d) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Act”) becomes the beneficial owner of 15% or more of the then outstanding Common Stock or 15% or more of the then outstanding voting securities of the Corporation;

 

(ii)                                  any “person” or “group” within the meaning of Section 13(d) or 14(d)(2) of the Act acquires by proxy or otherwise the right to vote on any matter or question with respect to 15% or more of the then outstanding Common Stock or 15% or more of the combined voting power of the then outstanding voting securities of the Corporation;

 

(iii)                               Present Directors and New Directors cease for any reason to constitute a majority of the Board (and, for purposes of this clause (iii), “Present

 

 

Directors” shall mean individuals who at the beginning of any consecutive twenty-four month period were members of the Board and “New Directors” shall mean individuals whose election by the Board or whose nomination for election as directors by the Corporation’s stockholders was approved by a vote of at least two-thirds of the directors then in office who were Present Directors or New Directors);

 

(iv)                              the stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation; or

 

(v)                                 consummation of: (x) a reorganization, restructuring, recapitalization, reincorporation, merger or consolidation of the Corporation (a “Business Combination”) unless, following such Business Combination, (a) all or substantially all of the individuals and entities who were the beneficial owners of the Common Stock and the voting securities of the Corporation outstanding immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the common equity securities and the combined voting power of the voting securities of the corporation or other entity resulting from such Business Combination outstanding after such Business Combination (including, without limitation, a corporation or other entity which as a result of such Business Combination owns the Corporation or all or substantially all of the assets of the Corporation or the Company either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of outstanding Common Stock and the combined voting power of the outstanding voting securities of the Corporation, respectively, (b) no “person” or “group” within the meaning of Section 13(d) or 14(d)(2) of the Act (excluding (1) any corporation or other entity resulting from such Business Combination and (2) any employee benefit plan (or related trust) of the Company or any corporation or other entity resulting from such Business Combination) beneficially owns 15% or more of the common equity securities or 15% or more of the combined voting power of the voting securities of the corporation or other entity resulting from such Business Combination outstanding after such Business Combination, except to the extent that such beneficial ownership existed prior to such Business Combination with respect to the Common Stock and the voting securities of the Corporation, and (c) at least a majority of the members of the board of directors (or similar governing body) of the corporation or other entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement providing for such Business Combination or at the time of the action of the Board approving such Business Combination, whichever is earlier; or (y) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation or the Company, whether held directly or indirectly through one or more subsidiaries (excluding any pledge, mortgage, grant of security interest, sale-leaseback or similar transaction, but including any foreclosure sale), provided, that, for purposes of clauses (v)(x) and (v)(y) above, the divestiture of less than substantially all of the assets of the Corporation or the Company in one transaction or a series of related transactions,

 

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whether effected by sale, lease, exchange, spin-off, sale of stock of or merger or consolidation of a subsidiary, transfer or otherwise, shall not constitute a Change in Control of the Corporation.

 

Notwithstanding the foregoing, a Change in Control of the Corporation shall not be deemed to occur pursuant to clause (i) or (ii) above, solely because 15% or more of the then outstanding Common Stock or the then outstanding voting securities of the Corporation is or becomes beneficially owned or is directly or indirectly held or acquired by one or more employee benefit plans (or related trusts) maintained by the Company.

 

For purposes of this Agreement, references to “beneficial owner” and correlative phrases shall have the same definition as set forth in Rule 13d-3 under the Act (except that ownership by underwriters for purposes of a distribution or offering shall not be deemed to be “beneficial ownership”), references to the Act or rules and regulations thereunder shall mean those in effect on June 20, 2000 and references to “Common Stock” shall mean the common stock of the Corporation.

 

b.                                      “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

c.                                       “Date of Termination” shall mean:

 

(i)                                     in case employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your duties during such thirty (30) day period); and

 

(ii)                                  in all other cases, the date specified in the Notice of Termination (which shall not be less than thirty (30) nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

 

d.                                      “Disability” shall mean a disability for purposes of the then current or most recent GrafTech International Holdings Inc. Long-Term Disability Plan, regardless of whether you are or would have been covered thereby.  Any question as to the existence of your Disability upon which you and the Company cannot agree shall be determined by a qualified physician (not employed by the Company) selected by you (or, if you are unable to make such selection, made by any adult member of your immediate family) and approved by the Company.  The determination of such physician made in writing to the Company and to you shall be final and conclusive for all purposes of this Agreement.

 

e.                                       “Good Reason for Resignation” shall mean the occurrence of any of the following:

 

(i)                                     (A)                               a change in your status or position with the Company, which in your reasonable judgment does not represent a status or position comparable to your status or position immediately prior to a Change in Control of the Corporation or a promotion from your status or position immediately prior to a Change in Control of the Corporation; or

 

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(B)                               a reduction in the level of your reporting responsibility as it existed immediately prior to a Change in Control of the Corporation; or

 

(C)                               the assignment to you of any duties or responsibilities or a diminution of duties or responsibilities, which in your reasonable judgment are inconsistent with your status or position with the Company in effect immediately prior to a Change in Control of the Corporation;

 

it being understood that any of the foregoing in connection with a termination of your employment for Retirement, Disability or Termination for Cause shall not constitute Good Reason for Resignation;

 

(ii)                                  a reduction by the Company in the annual rate of your base salary as in effect immediately prior to the date of a Change in Control of the Corporation or as the same may be increased from time to time thereafter, or the Company’s failure to increase the annual rate of your base salary for a calendar year in an amount at least equal to the average percentage increase in base salary for all employees of the Company with Severance Compensation Agreements in the preceding calendar year (and the Company agrees that, within three (3) days after your request, the Company shall notify you of the average percentage increase in base salary for all such employees in the calendar year preceding your request);

 

(iii)                               the failure by the Company to continue in effect any compensation plan in which you participate as in effect immediately prior to a Change in Control of the Corporation, including but not limited to the Savings Program, any of the Incentive Compensation Plans or any substitute plans adopted prior to a Change in Control of the Corporation, unless an arrangement satisfactory to you (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue your participation therein on at least as favorable a 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 a Change in Control of the Corporation;

 

(iv)                              the Company requiring you to be based outside of a thirty-five (35) mile radius from where your office is located immediately prior to a Change in Control of the Corporation, except for required travel on the Company’s business to an extent substantially consistent with your business travel obligations immediately prior to a Change in Control of the Corporation;

 

(v)                                 the failure by the Company to continue to provide you with benefits at least as favorable as those enjoyed by you (and your dependents, if applicable) under any of the Company’s pre-retirement and post-retirement life insurance, medical, health and accident, and disability plans or any other plan of the Company intended to benefit employees in which you (or your dependents) were participating immediately prior to a Change in Control of the Corporation, the taking of any action by the Company which would directly or indirectly

 

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materially reduce any of such benefits or deprive you (or your dependents) of any material fringe benefit enjoyed by you (or your dependents) immediately prior to a Change in Control of the Corporation, or the failure by the Company to provide you with the number of annual paid vacation days to which you were annually entitled immediately prior to a Change in Control of the Corporation;

 

(vi)                              the failure of the Company to obtain a satisfactory agreement from any Successor (as defined in Paragraph 4(a) hereof) to assume and agree to perform this Agreement, as contemplated in Paragraph 4(a) hereof; or

 

(vii)                           the failure of the Company to pay to you an Incentive Compensation Award, deferred compensation or other compensation award earned, but not paid, prior to a Change in Control of the Corporation.

 

f.                                        “Incentive Compensation” means any compensation, variable compensation, bonus, stock option, restricted stock or other benefit or award paid or payable, or made or to be made, under an Incentive Compensation Plan.

 

g.                                       “Incentive Compensation Award” shall mean a payment or other benefit or award to you under any Incentive Compensation Plan.

 

h.                                      “Incentive Compensation Plan” shall mean any variable compensation or incentive compensation plan maintained by the Company in which you were a participant immediately prior to a Change in Control of the Corporation, including but not limited to the GrafTech International Ltd. Incentive Compensation Plan (or a successor plan), the GrafTech International Ltd. Executive Incentive Compensation Plan, and the GrafTech International Ltd. 2005 Equity Incentive Plan (or a successor plan).

 

i.                                          “Notice of Termination” shall mean a written notice as provided in Paragraph 8 hereof.

 

j.                                         “Retirement” shall mean your voluntary termination from employment by the Company (i) (A) with the right to receive a non-actuarially reduced pension benefit under the Retirement Program (or a successor plan) or (B) if not eligible to participate therein or if the Retirement Program (or a successor plan) is not then in effect or shall have been changed in a manner which makes it materially more onerous to become eligible to receive such a benefit than it was on July 13, 2000, at any time after attaining age 62 with at least 10 years of employment with the Company or after attaining age 65 or after attaining that age where the sum of your age and years of employment with the Company equals or exceeds 85 or (ii) in accordance with any other retirement arrangement which is established with your consent with respect to you.

 

k.                                      “Retirement Program” shall mean the GrafTech International Holdings Inc. Retirement Plan (together with all supplemental and excess plans related thereto), regardless of whether you are or would have been covered thereby.

 

l.                                          “Savings Program” shall mean the GrafTech International Holdings Inc. (or a successor plan).

 

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m.                                  “Termination for Cause” shall mean termination of your employment upon your willfully engaging in conduct demonstrably and materially injurious to the Company, monetarily or otherwise, provided that there shall have been delivered to you a copy of a resolution, duly adopted by the unanimous affirmative vote of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of the conduct set forth and specifying the particulars thereof in detail.

 

For purposes of this clause (m), no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in the best interest of the Company.  Any act or failure to act based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done or omitted to be done by you in good faith and in the best interests of the Company.

 

n.                                      “Variable Compensation Year” means a calendar year of an Incentive Compensation Plan.

 

2.                                      Compensation Upon Termination or While Disabled.  Following a Change in Control of the Corporation, you shall be entitled to the following benefits:

 

a.                                      Termination Other Than for Retirement, Death, Disability or Termination for Cause; Termination By Your Resignation with Good Reason for Resignation.  If your employment by the Company shall be terminated subsequent to a Change in Control of the Corporation and during the term of this Agreement (x) by the Company other than for Retirement, Death, Disability or Termination for Cause or (y) by you for Good Reason for Resignation, then you shall be entitled to the benefits provided below, without regard to any contrary provision of any plan:

 

(i)                                     Accrued Salary.  The Company shall pay you, not later than the fifth day following the Date of Termination, your base salary and vacation pay accrued through the Date of Termination (including any banked vacation and any vested vacation for the calendar year in which the Date of Termination occurs) at the rate in effect at the time the Notice of Termination is given (or at the rate in effect immediately prior to a Change in Control of the Corporation, if such rate was higher).

 

(ii)                                  Accrued Incentive Compensation.  The Company shall pay you, not later than thirty (30) days following your Date of Termination, the amount of your accrued Incentive Compensation which shall be determined as follows:

 

(A)                               If the Date of Termination is after the end of a Variable Compensation Year, but before Incentive Compensation for said Variable Compensation Year has been paid, the Company shall pay to you under this Agreement for your service during such Variable Compensation Year the amount of your target variable compensation payment (i.e., the percent

 

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of your salary grade midpoint at risk) for such Variable Compensation Year.

 

(B)                               In addition, if the Date of Termination is other than the first day of a Variable Compensation Year, the Company shall pay to you under this Agreement for your service during such Variable Compensation Year up to the Date of Termination, the amount of your target variable compensation payment (i.e., the percent of your salary grade midpoint at risk) for such Variable Compensation Year (or if such target has not then been established, your target variable compensation award for the immediately preceding Variable Compensation Year), multiplied by a fraction, the numerator of which is the total number of days which have elapsed in the current Variable Compensation Year to the Date of Termination and the denominator of which is three hundred sixty-five (365).

 

If there is more than one Incentive Compensation Plan, your accrued Incentive Compensation under each Incentive Compensation Plan shall be determined separately for each such Plan.

 

For the purpose of this Paragraph 2(a)(ii), the amount of your target variable compensation payment shall be used, whether or not such Incentive Compensation was actually paid to you or was includible in your gross income for Federal, state, local, commonwealth or foreign income tax purposes.

 

(iii)                               Insurance Coverage.  The Company shall arrange to provide you (and your dependents, if applicable) with life, disability, accident, dental and medical benefits substantially equivalent to those which you are receiving, or were entitled to receive, from the Company immediately prior to a Change in Control of the Corporation.  Such benefits shall be provided to you for the longer of (x) thirty-six (36) months after such Date of Termination or (y) the period during which such benefits would have been provided to you, as a terminated employee, under the applicable life, disability, accident, dental and medical plans in effect immediately prior to a Change in Control of the Corporation (except that after a period of thirty six (36) months such benefits shall be provided to you on the same financial terms and conditions as provided for under the respective plans). Such benefits shall be provided to you in lieu of any continuation coverage you would be eligible for under COBRA.

 

(iv)                              Severance Payment.  The Company shall pay as a severance payment to you, not later than the fifth day following the Date of Termination, a lump sum severance payment (the “Severance Payment”) equal to (x) 2.0 times the sum of the amounts set forth in the following subparagraphs (A) and (B), less (y) the amount set forth in the following subparagraph (C).

 

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(A)                               The amount of your annual base salary, which shall be deemed to be the greater of your annual base salary which was payable to you by the Company immediately prior to the Date of Termination or your annual base salary which was payable to you by the Company immediately prior to a Change in Control of the Corporation.

 

(B)                               The amount of your Incentive Compensation (excluding stock option, restricted stock and other equity compensation awards that are not part of, or in lieu of, awards under annual cost bonuses and similar benefits), which shall be deemed to be the greater of:

 

(I)                                   the amount of your target variable compensation payment (i.e., the percent of your salary grade midpoint at risk) for the year in which the Date of Termination occurs (or if such target has not then been established, your target variable compensation award for the immediately preceding Variable Compensation Year); or

 

(II)                              the amount of your target variable compensation payment (i.e., the percent of your salary grade midpoint at risk) for the year in which the Change in Control of the Corporation occurs (or if such target has not then been established, your target variable compensation award for the immediately preceding Variable Compensation Year).

 

(C)                               Your other severance payments which shall be deemed to be the amount of any severance payment or the value of any severance benefit received or to be received by you from the Company pursuant to any other plan of the Company.

 

For purposes of calculations under this subparagraph (iv), the value attributable to any stock options, restricted stock or other equity-based benefit or award included in your Incentive Compensation shall be the value thereof as determined by the Company at the time of the grant (and, in determining such value, the Black-Scholes method or other similar methodology (and assumptions and data) used by the Company at the time of grant shall be used and, if at the time of such grant, it was specified in writing that the grant covered a period of more than one year, then the value of such grant shall be annualized by dividing such value by the number of years (or parts thereof) the grant was specified to cover) and the amounts of base salary and target variable compensation payments and the values of stock options shall be the amounts calculated without regard to whether or not such amounts were actually paid to you or includible in your gross income for Federal, state, local, commonwealth or foreign income tax purposes.

 

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(v)                                 Reduction in Severance Payment.  The Severance Payment shall be reduced only in the event specifically provided in this subparagraph (v).  If the aggregate present value, as determined for purposes of Code Section 280G, of all amounts that are parachute payments for purposes of such Section exceeds the limitation set forth in Code Section 280G(b)(2)(A)(ii), then there shall be a reduction in the amount of your Severance Payment so that such limit is not exceeded.

 

b.                                      Payments While Disabled.  During any period prior to the Date of Termination and during the term of this Agreement that you are unable to perform your full-time duties with the Company, whether as a result of your Disability or as a result of a physical or mental disability that is not a Disability, you shall continue to receive your base salary at the rate in effect at the commencement of any such period, together with all other compensation and benefits that are payable or provided under the Company’s benefit plans, including its disability plans. After the Date of Termination for Disability, your benefits shall be determined in accordance with the Retirement Program and the disability, benefit, insurance and other applicable plans of the Company.  The compensation and benefits, other than salary and payments under the Retirement Program, payable or provided pursuant to this subparagraph (b) shall be the greater of (x) the amounts computed under the disability, benefit, insurance and other applicable plans in effect immediately prior to a Change in Control of the Corporation and (y) the amounts computed under the disability, benefit, insurance and other applicable plans in effect at the time the compensation and benefits are paid.

 

c.                                       Payments if Terminated for Cause, or Termination by You Other Than With Good Reason for Resignation.  If your employment shall be terminated by the Company as a Termination for Cause or by you other than with Good Reason for Resignation, the Company shall pay you your full base salary and accrued vacation pay (including any banked vacation and any vested vacation for the calendar year in which the Date of Termination occurs) through the Date of Termination, at the rate in effect at the time Notice of Termination is given, plus any benefits or awards which have been earned or become payable but which have not yet been paid to you. You shall receive any payment due under this subparagraph (c) on your Date of Termination.  Thereafter, the Company shall have no further obligation to you under this Agreement.

 

d.                                      After Retirement or Death.  If your employment shall be terminated by your Retirement, or by reason of your death, your benefits shall be determined in accordance with the Company’s retirement and insurance programs then in effect.

 

3.                                      Term of Agreement.  This Agreement shall commence on the date hereof and, subject to the following two sentences, shall continue in effect through December 31, 2015; provided, however, that commencing on January 1, 2016 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Company or you shall have given written notice that it or you does not wish to extend this Agreement on the following January 1; provided further, however, that, if the Company shall have given such a notice and if a Change in Control of the Corporation shall have occurred or been publicly reported, proposed or announced (regardless of whether done so by the Company or a third party) during the original or any extended term of

 

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this Agreement or within three months thereafter, this Agreement shall be reinstated (if it shall have otherwise terminated pursuant to such notice by the Company) and shall continue in effect. In any event, the term of this Agreement shall expire on the third (3rd) anniversary of the date of a Change in Control of the Corporation.  In addition, in any event, this Agreement shall terminate if your employment is terminated by you or the Company prior to the occurrence of a Change in Control of the Corporation.

 

4.                                      Successors; Binding Agreement.

 

a.                                      Successors of the Company.  The Company will require any Successor to expressly assume and agree to perform this 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 assent at least five business days prior to the time a person becomes a Successor (or where the Company does not have at least five business days advance notice that a person may become a Successor, within three business days after having notice that such person may become or has become a Successor) shall constitute Good Reason for Resignation by you and, if a Change in Control of the Corporation has occurred or thereafter occurs, shall entitle you immediately to the benefits provided in Paragraph 2(a) hereof upon delivery by you of a Notice of Termination. For purposes of this Agreement, “Successor” shall mean any person that obtains or succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Company’s business directly, by merger or consolidation, or indirectly, by purchase of voting securities of the Company, by acquisition of rights to vote voting securities of the Company or otherwise, including but not limited to any person or group that acquires the beneficial ownership or voting rights described in Paragraph 1(a)(i) or 1(a)(ii).

 

b.                                      Your Successor.  This 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 following your Date of Termination while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.

 

5.                                      Nature of Payments.  All payments to you under this Agreement shall be considered severance payments in consideration of your past service to the Company.

 

6.                                      Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

7.                                      Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

8.                                      Notice.  Any purported termination of your employment by the Company or by you following a Change in Control of the Corporation shall be communicated to the other party

 

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by a written Notice of Termination.  A Notice of Termination by you shall indicate in reasonable detail the facts and circumstances claimed to provide a basis for a Good Reason for Resignation.  For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

 

9.                                      Fees and Expenses.  The Company shall pay all legal fees and related expenses incurred by you as a result of your termination following a Change in Control of the Corporation or by you in seeking to obtain or enforce any right or benefit provided by this Agreement (including all fees and expenses, if any, incurred in contesting or disputing any such termination or incurred by you in seeking advice in connection therewith).

 

10.                               Miscellaneous.  No provision of this Agreement may be amended, modified, waived or discharged unless such amendment, modification, waiver or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall 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 otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  References in this Agreement to “plans” in the context of employee incentive, compensation, retirement, severance, medical, benefit, welfare, perquisite or related matters shall include agreements, policies, arrangements, commitments, practices, resolutions and programs.

 

11.                               Conflicting Employment Agreements.  To the extent that you have or obtain after the date hereof a written employment agreement with the Company which contains provisions that conflict with this Agreement, this Agreement shall govern unless such employment agreement specifically refers to this Paragraph 11 and states that such employment agreement governs.  To the extent that such employment agreement provides for rights or benefits which are duplicative of those set forth in this Agreement, you shall be entitled to only one such right or benefit (which shall be the one which, in your judgment if timely made, is most favorable to you).  To the extent that such employment agreement provides for rights or benefits which are additional to those set forth in this Agreement, this Agreement shall not impair in any way your entitlement to those additional rights or benefits.

 

12.                               Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware (without regard to the choice of laws provisions thereof).  The Company and you hereby agree to irrevocably submit to the jurisdiction of any State or Federal court sitting in the State of Delaware, and any appellate court thereof, in any action or proceeding arising out of or relating to this Agreement.  The Company and you hereby irrevocably agree that all claims in respect of such action or

 

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proceeding shall only be heard and determined in a State or Federal court sitting in the State of Delaware.

 

If you agree with this letter, kindly sign and return the enclosed copy of this letter which will then constitute our agreement on the subject matter hereof.

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
GRAFTECH INTERNATIONAL LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
GRAFTECH INTERNATIONAL HOLDINGS   INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Agreed to as of the date 
   first above written
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
				

 

12Exhibit 10.18

 

BUSINESS CONFIDENTIAL

 

 

2017-2019

 

SELECTIVE SEVERANCE PROGRAM

 

GRAFTECH INTERNATIONAL HOLDINGS INC.

 

 

JUNE 1, 2017 THROUGH DECEMBER 31, 2019

 

(All U.S. Salaried Employees)

 

 

PROGRAM OUTLINE

 

This 2017-2019 Selective Severance Program (“SSP” or “Program”) is being implemented to assist US-based employees whose employment is terminated as the result of management implementation of a restructuring, reorganization or downsizing of GrafTech International Holdings Inc. and/or any of its U.S. subsidiaries or affiliates (collectively, the “Company”).

 

A.            COVERAGE AND TERMS

 

The provisions of this Program are in effect between the dates of June 1, 2017 and December 31, 2019, as determined by the Company, and are applicable to any U.S.-based salaried employee whose employment is terminated by Company action because of restructuring, reorganization, or downsizing of the organization.

 

This Program does not constitute a contract and is subject to termination and/or modification at the sole discretion of the Company without prior notice.

 

B.            NOTIFICATION AND RELEASE

 

·                  An eligible employee whose employment is to be terminated will be notified of his or her eligibility to participate in this Program using an employee Notification Letter.  Such notification will provide eligible employees with a minimum of 45 days’ notice prior to their effective date of termination (“Notice Period”).  This Notice Period does not apply to employees listed on Appendix 1 of Attachment A.  This may result in termination other than at the end of a calendar month.

 

·                  The employee will be paid during this Notice Period and will continue working or will be asked not to work during this Notice Period at the Company’s option.  During this Notice Period, employees will be eligible to participate in Company benefits at active employee rates.  If the employee and the Company agree to continue the employee’s work beyond the Notice Period, such period of work will be in addition to and not in lieu of the Notice Period.  The expiration of the Notice Period is referred to herein as the “Release Date.”

 

·                  If required under applicable law, employees will be told which other positions in their organizational unit or group were selected or not selected for termination.

 

·                  In order for a notified employee to be eligible for participation, in addition to the other Program conditions, he/she must complete, sign and not revoke the applicable form of Release and return it to his/her Human Resources Manager within the time frame identified in the Notification Letter following receipt of the Notification Letter and Release.

 

·                  Benefits from this Program will commence immediately following the Release Date and will continue for the period applicable to the employee based on service to the

 

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Company as described below provided the employee complies with all applicable terms and conditions.

 

An employee who is otherwise eligible for this Program will not receive Program benefits if the employee:

 

·                  Voluntarily terminates employment prior to the Release Date.

 

·                  Is discharged by the Company for unsatisfactory work performance prior to the Release Date.

 

·                  Is discharged by the Company for misconduct or other violation of Company policy or rules prior to the Release Date.

 

·                  Breaches any contractual or legal obligation to the Company, including but not limited to any noncompetition, confidentiality or other restrictive covenant in effect with the Company.

 

·                  Elects normal/early voluntary retirement prior to the employee being informed of his or her Release Date.

 

·                  Is employed in a facility, activity, function or business which is being divested or outsourced and whose employment is to be continued by the purchaser (or outsourcing party, as applicable) of the activity, facility, business or function

 

Is employed by a non-U.S. business or affiliate of the Company.

 

·                  Is employed by a U.S. business or affiliate of the Company but is based outside the U.S.

 

·                  Does not sign and return the Release within the applicable time period, or elects in writing to revoke the Release within seven (7) calendar days after its execution.

 

·                  Is offered by the Company and subsequently rejects a position not more than two (2) salaried grades lower than the employee’s current grade level at the same site (not applicable for an employee who is identified on Appendix 1 to Attachment A).  In applying this provision, all sites in Northeast Ohio are considered to be the same site.

 

·                  Is offered by the Company and subsequently rejects a position in the same or higher salaried grade than the employee’s current grade level at a different GrafTech site (not applicable for an employee who is identified on Appendix 1 to Attachment A).

 

An employee who was eligible for this SSP will not continue to receive any additional or future SSP benefits (that is, any benefits that commenced shall cease) if, prior to the expiration of the Program benefits, the employee:

 

·                  Is employed in a facility, activity, function or business which has been divested or outsourced by the Company and the employee is employed by the purchaser of, successor to, or outsourcing party of the facility, activity or business.

 

·                  Is employed by any business or affiliate of the Company.

 

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An employee who was eligible for this SSP will not continue to receive any additional or future SSP benefits (that is, any benefits that commenced shall cease), and the employee will be required to return any benefits previously received under this SSP, if, prior to the expiration of the Program benefits, the employee:

 

·                  Violates the terms of the Release (as set forth in the Release).

 

·                  Fails to return to the Company all records, files, equipment, desk or office or file keys, credit cards, computer programs and disks, or other Company property which is in employee’s possession, custody or control.

 

·                  Fails to continue to respect the trade secrets and other confidential information to which the employee had access while employed or fails to abide by all of the employee1s contractual and legal obligations with the Company.

 

·                  Makes any critical or derogatory remarks concerning the management, operation or products of the Company or the Company’s officers, managers, employees, shareholders and affiliates, board members, customers, or vendors, or, without limiting the foregoing, takes any other action which could reasonably affect the Company’s reputation or the reputation of the previously mentioned parties, unless such comments are made pursuant to legal process.

 

·                  Fails to cooperate in any legal disputes and/or proceedings and/or business matters relating to issues and/or incidents which took place during the term of the employee’s employment.

 

An employee who was eligible for this SSP will not receive any additional or future salary continuation benefits (that is, any benefits that commenced shall cease), and the employee will be paid a lump sum equal to 60% of the remaining balance of salary continuation benefits, if, prior to the expiration of the Program benefits, the employee:

 

·                  Becomes re-employed by another organization and their new salary with the new organization is at least 70% of their GrafTech salary as of the Release Date

 

C.            TERMINATION WITHOUT RELEASE

 

·                  If a notified employee fails or elects not to execute and deliver the Release within the appropriate time period or elects in writing to revoke the Release within seven (7) calendar days after its execution, the employee will not be eligible for participation in this Program.

 

D.            TERMINATION OF EMPLOYMENT

 

·                  For purposes of this Program, references to “termination of employment, “separation from employment” and the like, when referenced for purposes of determining when an employee is eligible to commence receipt of payments, refers to a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).  This Program is intended to be a “separation pay plan” within the meaning of Section 409A, such that payments made under this Program are exempt from Section 409A.  Notwithstanding anything in this Program to the contrary, in the event it is determined, that this Program is not a separation pay plan or any payments hereunder are not exempt from the application of Section 409A, then any payments of “deferred compensation” (within the meaning of Section 409A) payable upon a separation from service to a “specified employee” 

 

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(within the meaning of Section 409A) shall not commence until the first scheduled payroll date following the six month anniversary of such employee’s “separation from service” (within the meaning of Section 409A) (referred to in Program documents as the Release Date).

 

E.            PROGRAM ADMINISTRATION

 

·                  Corporate HR will administer this Program and is responsible for the overall operation of the Program and its operations.  Corporate HR will maintain records of the Program’s provisions and will be responsible for the handling, processing and payment of any claims for benefits under the Program.

 

·                  The Company or its delegate will have sole and discretionary authority to interpret any term of the Program and to decide all questions concerning the eligibility of any employee to participate in the Program, the right to and the amount of any benefit payable under the Program to any employee, and the date on which any employee ceases to be eligible for Program benefits.  The Company or its delegate has the sole and absolute discretion to interpret this Program.  The Company’s decisions will be final and binding on all parties.  The Company may allocate to any one or more of its employees any responsibility it may have under the Program and may designate any other person or persons to carry out any of its responsibilities under the Program.

 

·                  Questions concerning this Program, and related approvals and interpretation should be addressed to the Benefits Manager at 216-676-2002

 

PROGRAM BENEFITS

 

A.            SEVERANCE PAYMENTS

 

·                  Upon expiration of the 45-day Notice Period, except as otherwise provided on Attachment A, employees who elect to participate in this Program and timely sign and return (and do not revoke) a Release in a form acceptable to the Company, are eligible to receive Severance Payments in accordance with the following schedule:

 

	
Company Service Credit (thru last day worked)
    	
 
    	
Severance
    
	
 
    	
 
    	
 
    
	
Under 1 year
    	
 
    	
1 month’s pay
    
	
 
    	
 
    	
 
    
	
At least 1 year and under 5 years
    	
 
    	
2 months’ pay
    
	
 
    	
 
    	
 
    
	
At least 5 years and under 7 years
    	
 
    	
3 months’ pay
    
	
 
    	
 
    	
 
    
	
At least 7 years and under 10 years
    	
 
    	
4 months’ pay
    
	
 
    	
 
    	
 
    
	
At least 10 Years
    	
 
    	
4 months’ pay plus 0.4 month’s pay for each year of   Company Service (prorated to the number or full months) in excess of 10 years   of service
    

 

5

 

·                  Minimum severance benefit is one (1) month.

 

·                  Maximum severance benefit is twelve (12) months.

 

·                  Generally, severance payments, subject to applicable withholdings, will be made on regular paydays for the respective period authorized (and no provisions of this Program will provide for lump sum payments, except vacation pay) commencing with the first payday following the Release Date.

 

·                  The amount payable will be calculated on the basis of base salary in effect at the time of termination (excluding the impact of any temporary pay cuts), including extended hours pay and shift differential, if any, but excluding all overtime premiums and variable pay.

 

·                  In the event of an employee’s death at any time during which severance payments remain payable under this Program, such payments shall be made to the employee’s estate or legal representative.

 

·                  The severance payments will be in addition to pension payments for eligible employees who are retirement eligible and elect to concurrently retire.

 

·                  Employees who are terminated under this Program and are participants in the GrafTech International Holdings Inc. Retirement Plan (“Retirement Plan”) will receive credit (up to a maximum of two years) in order to satisfy the age and/or service requirements under the Retirement Plan in accordance with the terms of the Retirement Plan.

 

B.            VACATION

 

·                  Employees participating in the Program will receive pay in lieu of any accrued unused current year vacation.  Vacation payment will be paid in a lump sum as of the Release Date.

 

C.            MEDICAL, DENTAL AND LIFE INSURANCE

 

·                  Medical Coverage:  All employees participating in this Program who have signed and returned the Release within the applicable time frame and have not revoked the Release will be eligible to continue group medical coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) at active employee rates for up to six (6) months from the Release Date, but only until eligible for coverage under another group plan.  The continuation of medical insurance coverage for employees 

 

6

 

terminated under the Program will be coordinated with applicable state and federal laws.  Any such continuation of medical insurance will be included as part of the continuation of benefits under COBRA.

 

·                  Dental Coverage:  All employees participating in this Program who have signed and returned the Release within the applicable time frame and have not revoked the Release will be eligible to continue group dental coverage under COBRA at active employee rates for up to six (6) months from the Release Date, but only until eligible for coverage under another group plan.  The continuation of dental coverage for employees terminated under the Program will be coordinated with applicable state and federal laws.  Any such continuation of dental insurance will be included as part of the continuation of benefits under COBRA.

 

·                  Life Insurance Coverage:  Coverage under the Basic Life Insurance Group Policy (“Life Policy”) will terminate as of the Release Date.  The employee will have the option to convert to a private policy as provided in the Life Policy.  The retiree life insurance benefit for eligible employees is capped at $10,000.

 

·                  Short and Long Term Disability Coverage:  For all employees, this coverage will terminate as of the Release Date.  For any employee who becomes eligible for (and receives) a long term disability benefit following the date of the Notification Letter, such disability benefits may be reduced by Severance Payments, as and when such Severance Payments are made, in accordance with the terms of the Long Term Disability Plan.

 

·                  Employee Assistance Program:  A terminated employee who is receiving benefits under this Program but declines medical coverage may continue participation in the Employee Assistance Program (EAP) for up to six (6) calendar months following the release date (EAP Coordinated Care is included as part of the medical plan coverage) and under the same terms as noted above for the medical plan.

 

·                  The Company may require verification of employment status to determine when to terminate extended benefit plan coverage under any of the above defined enhanced benefits.

 

D.            INCENTIVE COMPENSATION PLANS

 

Employees participating in this Program who have signed and returned the Release within the applicable time frame and have not revoked the Release are entitled to the following:

 

·                  Participants in the GrafTech International Ltd. Incentive Compensation Program or Sales Incentive Plan, who are on the payroll as an active employee on the last day of the applicable performance period and were eligible to receive an “Award” (as defined in the applicable incentive plan) for such performance period, shall receive their Award at an

 

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80% level.  The Award will be payable in accordance with the terms of the applicable incentive plan.

 

E.            OUTPLACEMENT ASSISTANCE

 

·                  The Company will provide Outplacement Assistance for three (3) months from the date the employee initiates this service with the vendor (which initiation may commence upon receipt of notice of eligibility to participate in this Program}, but shall be no later than six (6) months after the Release Date.  An employee interested in Outplacement Assistance must so indicate to his or her Human Resources manager.  If the employee fails or refuses to sign or return the Release or revokes a signed Release, Outplacement Assistance will be discontinued.  Local availability of services will determine the format through which outplacement assistance is provided.

 

F.             SUPPLEMENTAL BENEFITS

 

·                  Certain employees listed in Appendix 1 of Attachment A will be entitled to the Program Benefits described in Attachment A, either in lieu of or in addition to the benefits described in the Program Benefits portion of this Program as set forth in Attachment A.

 

G.           PROGRAM ADMINISTRATION

 

·                  Corporate HR will administer this Program and is responsible for this Program and its operation.  Corporate HR will maintain records of Program operations and will be responsible for the handling, processing and payment of any claims for benefits under this Program.

 

·                  The Company or its delegate will have sole and discretionary authority to interpret any term of this Program and to decide all questions concerning the eligibility of any person to participate in this Program, the right to and the amount of any benefit payable under this Program to any individual, and the date on which any individual ceases to be eligible for Program benefits.  The Company or its delegate has the sole and absolute discretion to interpret this Program, including without limitation adjusting benefits of this Program for one or more participants consistent with the purposes and intent of this Program.  The Company’s or its delegate’s decisions will be final and binding on all parties.  The Company has allocated to the Vice President of Organizational Development and Administration any responsibility it may have under this Program and he/she may designate any other person or persons to carry out any of its responsibilities under this Program.

 

·                  Questions concerning this Program, and related approvals and interpretation, should be addressed to the Benefits Manager at 216-676-2002.

 

Except as otherwise provided in Attachment A, the Company shall have the right to amend, suspend, or terminate the Program at any time.  A Program amendment or termination will not impact employees (and former employees) who have received written notice of eligibility to

 

8

 

participate in this Program before the date such amendment or termination is executed.  The Company’s exercise of its discretion to amend or terminate this Program shall comply with Section 409A and other applicable law.

 

	
 
    	
Approved on behalf of
    
	
 
    	
GRAFTECH   INTERNATIONALHOLDINGS INC.
    
	
 
    	
and its U S.   Subsidiaries and Affiliates
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Brian E. Blowes
    
	
 
    	
Name: Brian E. Blowes
    
	
 
    	
Title: VP-HR
    

 

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